April, 1999
Year 6, Issue 4

1st Place Outstanding Local Publication
American Numismatic Association 1995, 1996, and 1997

Meeting 7:30pm, Wednesday, April 6
Talk and trading 7:00-7:30pm
VFW, 1601 Weld Road, Elgin, IL
Not a member? Come and join us anyway!
April Meeting
April Prizes
March Minutes
Board Meeting
Numismatics in Poland
George Smith's Certificates of Deposit
Part 2

Index to other ECC Newsletter articles

April Meeting

Other hobbies month has worked well the last few times we have had it. So this month we are going to do it again. Bring in something from another of your hobbies, collectibles, or something else. Someone must love to play the clarinet or saxophone or harp. And I suspect there is someone besides me who is a photographer. Share it.

If you haven't paid your 1999 dues, please do so during the meeting. You aren't supposed to be getting this Newsletter if you haven't paid your dues by March. You have a reprieve because I forgot to check Don's roster this month.

April Prizes

March Minutes

ECC Meeting 495
March 3, 1999
Opened:around 7:50
Closed:around 8:50
Guests:no one

President Doug Nelson called the meeting to order around 7:50.

Secretary's Report

The minutes were accepted as published.

Treasurer's Report

The Treasurer's Report was accepted.

Old Business

There was none.

New Business

The show mailing should be in March with 18 people already signed up for the show. Raffle tickets will be here in May.

There was some more discussion regarding the Club Show Conflict. The final word is the date is set, it was booked one year in advance and that's the end of that.

Rich mentioned the new quarter proof sets will be available in silver and uncirculated sets.

Mike asked if anyone was interested in volunteering for the ANA show on August 11-15 at the Rosemont Convention Center, they should contact any of the people listed in the February Newsletter.

Caveat emptor (buyer beware). Jerry asked about purchasing merchandise over the internet and how safe it actually is. Some of the things you should look for and remember when purchasing over the internet are:

The book brought in by Don D. of the 50 State Commemorative Quarter Album can be purchased through the Coin Club at a 20% discount. See Don for orders.

March Prize Winners
Membership: Mike C.
YN: Shane R.
Raffle winners: We do not know who you were
Door: Jim, Shane R., Adam R., Marty, and Mike M.

After the raffle we broke for some trading. [Editor's question: How did you do on the trading? Did the special effort to get out the coins help you to get what you were looking for or to trade that coin you wanted to pass on? I was pleased with the half cent I traded for a two cent piece.]

Meeting adjourned around 8:50 pm.

Submitted by Jennifer Schulze

Board Meeting

Don, Jim D., Doug, and I got together March 17 at Don's for the board meeting.

Don is looking for a 1984D Kennedy half for a friend who is unable to find one. Can anyone help?

We discussed the 500th meeting of the Elgin Coin Club coming up in August. We plan on doing some special things during that meeting. So plan in advance on making the meeting.

In conjunction with that meeting, I would like to give a talk on the history of the club. But my resources are slim. So I am starting at this early date to ask for your help. I would like to interview all long-time members about earlier times in the club to learn as much as I can. Afterwards, maybe I'll publish a special issue of the Newsletter with the club history. I would also like to borrow any items the club has issued in the past so I can scan them for the history and have them for the 500th meeting. I will take very good care of anything you can lend me. I am especially interested in any historical information you can provide. Thanks in advance. I need to start this early because there is a lot for me to learn.

Numismatics in Poland

[Editor's note: The following article appeared in the Warsaw Voice, an English language newspaper published in Warsaw, Poland. A friend and Peace Corps teacher sent it to me and I thought you would like to read it. I reprinted it in the Newsletter with permission of the Warsaw Voice. I leave you with a link to it here so that you can directly access it from the Warsaw Voice's internet page.]

Other Sides of the Coins by Monica Wysocka of the Warsaw Voice

George Smith's Certificates of Deposit

[Editor's note: This is the second part of an article written by Mike Metras. It was originally published by The Chicago Coin Club as part of a souvenir sheet giveaway at the February, 1999 Chicago Paper Money Expo. It is copyrighted in its current form.

Last month we left as George Smith had just obtained a charter from the Wisconsin Territorial legislature to set up the Wisconsin Marine and Fire Insurance Company.]

The Wisconsin Marine and Fire Insurance Company, with $225,000 stock (half held in Scotland) and operated by the secretary, Alexander Mitchell, issued certificates of deposit engraved to look like bank notes. They were payable to the bearer in specie, that is, in hard money, at the office in Milwaukee or at the office of Strachan and Scott in Chicago. When the latter retired in 1841, the Chicago redemption office transferred to George Smith and Company.

The issue worked its way into circulation in Wisconsin and Illinois. The bills were promptly paid on demand, immediately gaining respect for their reliability. Illinois and other bank notes were being exchanged at below face value while these "illegal" notes of the Wisconsin Marine and Fire Insurance Company were not only exchanged at face, they were preferred. By 1841 $35,000 of these certificates were outstanding. This increased to $100,00 in 1843 and $300,000 in 1847. In 1846 Smith pledged that, if necessary, he would use his personal wealth to guarantee the notes' redemption. By 1851 when Illinois was finally passing a law to establish banks again, over $1,470,000 of these bills were outstanding. Smith's certificates circulated in six states and he had redemption agencies set up in Galena, St Louis, Cincinnati, and Detroit.

The state auditor first officially recognized certificates of deposit in 1852 when his report said, "Some legislation seems to be necessary to prevent further issuings of certificates of deposit...and for the immediate redemption of these now in circulation." They had been in circulation fifteen years by then.

Our subject Smith, kept up with the certificate of deposit business as usual. Rivals tried to drive him out of business by gathering large sums of his certificates and presenting them all at once. But they always received the requisite specie. Enemies deliberately spread rumors that the institution had failed. After one such incident when they spread rumors and turned in $100,000 in bills at once the day after Thanksgiving in 1849, the public's faith was so great that customers deposited almost as much as others withdrew.

In 1852, Smith secured a charter for the Bank of America in Chicago and obtained control of the Bank of America in Washington, D.C.. As was common in those days, he circulated the Washington notes in Chicago and the Chicago notes in Washington. That made them harder to redeem for specie at the home bank. He also circulated notes of his Atlanta Bank and International Bank of Griffin (both in Georgia) in Illinois. The bills of all three of the latter banks, unlike those of the Chicago bank, were not backed by security deposits, though they were always redeemed.

Cyril James declares, "No single Chicago bank, nor all the other banks in the city taken together, could boast an issue as large as that which circulated on Smith's reputation and, since the issue of notes was regarded as one of the major sources of banking profits, other Chicago bankers were naturally indignant." Smith's notes were backed by his personal reputation and that of the other institutions he had long ran soundly. No matter the technical legality of his certificates, bearers were always paid specie on demand. The same could not be said for many of his competitors.

His rivals continually attacked both his legal notes and his certificates of deposit. At the same time, his friends, the general public, confidently used the notes, relying on the now time-proven soundness of these bills that were always redeemed.

The attacks developed into a full fledged "bank war." At one point, several Chicago bankers collected as many notes of Smith's Georgia banks as they could get and sent someone to Georgia to present them for payment. Smith was ready. He paid them in full-- in the smallest coins he could find. The messenger had to return to Chicago with a very heavy burden.

One of Smith's prime attackers and defender of the legal free banks was Jonathan Young Scammon, president of the Marine Bank, the descendant of the old Chicago Marine and Fire Insurance Company. In the middle of these runs in an incident originally reported by Andreas and repeated by several others, Smith and Scammon met by chance. Smith asked Scammon how many notes the Marine Bank had outstanding. Scammon proudly replied, "$175,000." Smith quietly replied that he had $125,000 of that in his vaults and he was likely to redeem the whole sum. Scammon got the point. The runs stopped.

But Scammon carried the war to the court. In December 1852, the Cook County Grand Jury indicted Smith and various others for issuing certificates of deposit. But the indictment was too specific. Only some of the "bad guys" were indicted. James quotes the Chicago Democrat, "We have inquired of the jury, and find that whilst their intentions were good they could not get the requisite information against some, whilst certain of the regular bankers were over-anxious to furnish information against others, the complainants being as prompt in withholding information against some as they were to furnish information against others. The fact speaks volumes, that the wild cats who have regular bankers for dormant partners were not indicted." The indictments brought not one conviction.

Although issuing the certificates of deposit as circulating bills was already technically illegal, Smith's opponents finally went to the legislature to forge their victory. On February 10, 1853 the legislator made it illegal "to issue, or to receive on deposit, any form of paper money other than bank notes legally issued under the statutes of Illinois or of other states." The penalty was not small, violators were subject to a fine of $50 for each illegal bill issued or received and not more than a year in the county jail.

This step worked. Later in 1853, George Smith sold his interest in the Wisconsin Marine and Fire Insurance company to his partner Alexander Mitchell, who incorporated it as a bank according to Wisconsin's laws. By the end of 1854, there were no certificates of deposit issued in Illinois.

After a few years, Smith sold his other banks and interests and returned to Scotland. But he was back again in Chicago in 1860 to continue with his real estate and railroad investments.

After all was said and done, every certificate of deposit of Smith's Wisconsin Marine and Fire Insurance Company submitted for payment was redeemed. In 1857 when Illinois banks were refusing to redeem notes in gold, some newspaper editorials were actually asking for the return of Smith and his always-redeemable money.

George Smith, who made his money in real estate, railroads, and banking, died in London in 1899 worth a reputed 100 million dollars.

The Notes

The first note (250k) is of the Bank of America of Chicago, chartered in mid-1852 and closed in 1857. Smith deposited $52,000 to secure its notes. Most were circulated from his Bank of America in Washington, D.C.. The Bank of America of Chicago was located at 41 Clark street.

The second (250k) and third (250k) notes are certificates of deposit, though not of George Smith's Wisconsin Marine and Fire Insurance Company. These are of the Mississippi Marine and Fire Insurance Company of Sinipee, Wisconsin, which also had an office in Chicago.

The physical fragility of these tracing-paper-thin bills mirrors the fragility of many of the institutions that backed them.


Herb and Martha Schingoe loaned the Chicago Coin Club two of the reproduced notes. Dennis J. Forgue provided the Chicago Coin Club with a print of the the other note.

The following items served as resources for this article.

Visit the Elgin Coin Club Home Page or our Connections page for more information about the club.

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