Members of the Crescent City Historical Society hosted its annual ice cream social Sunday, Aug. 4, at the Crescent City Community Center. The 50 or so guests enjoyed homemade ice cream of vanilla, peppermint or butter pecan.
CCHS was formed in 2010 by several who have an interest in preserving Crescent City history. The group is based in the upstairs of city hall, 400 E. Main, and they have additional mementos and memorabilia at the community center, 301 Main.
The ice cream social is an annual event and there is always a special program or speaker. This year, Joe Martin, a Crescent City resident who enjoys history, put together a program on “Bannking and Money in the United States.” His presentation included several facts related to Crescent City and a few monetary notes and certificates.
The first money used in North America was colonial notes in 1690. In 1775, Continental Congress approved printing $240 million in currency to be used to fund the Revolutionary War – this currency was nicknamed “Continentals” due to be authorized by the Continental Congress. In 1780, “Continentals” were to be backed by gold and silver but independent banks printed their own and England counterfeited the notes and flooded the colonies with them, making them practically useless. Because of that, no paper money was printed by the government for 80 years.
In 1782, the first bank chartered by the US government was called the “Bank of North America.” The purpose of this bank was to provide further support in the war against England. This institution served as the public bank of the US until 1785. At that time it became a private bank which operated until 1792. Through a series of acquisitions it is now part of Wells Fargo.
In 1785, Continental Congress adopted the Spanish dollar (known as a peso) as official currency. It was significant by an “S” with a “P” superimposed over it and was later simplified with the “$” used today. Pesos were called “Pieces of 8” because they could be broken down as needed – each piece was called a “bit,” thus a quarter of a dollar is two bits, and a half-dollar is four bits.
The Constitution was written in 1787, ratified in 1788 and enacted in 1789. Martin found Article 1, Section 10, Claus 1 notes: “No states shall coin money, emit bills of credit, or make anything but gold and silver tender in payment of debts.” Even though it was authorized to print paper money backed by gold or silver, the founding fathers felt this would be too wreckless. Fiat money (according to the dictionary, fiat money is all kinds of money that are made legal tender by a government decree or fiat. The term is, however, usually reserved for legal-tender paper money or coins that have face values far exceeding their commodity values and are not redeemable in gold or silver) was so abhorrent to them it was not considered or discussed. It was left up to individual banks to print money backed by their gold and silver reserves. Many people believe the Federal Reserve is unconstitutional because central banks controlled by the government are not documented in the Constitution.
In 1791, “First Bank of the United States” was charted as the first central national bank with the purpose of loaning money to the government and business. The bank remained chartered for 20 years but Congress chose not to renew the charter when it expired in 1811.
A mint was created in Philadelphia in 1792 with gold and silver coins being released. Gold coins were the $10 Gold Eagle, $5 Half-Eagle, and $2.50 Quarter Eagles; silver coins were dollars, half-dollars, quarters, dimes and “half-dimes.” Copper pennies and half-pennies came later. All citizens could have their gold and silver minted into coins for free.
“Bank of Manhattan Company” was founded in 1799 to compete with “First Bank of the United States.” This bank is known as “JP Morgan Chase” today. Savings banks were created in 1816 to serve as savings outlets for people of “modest means.”
A second effort to create a national central bank was made in 1817 and known as “Second Bank of the United States.” There were 18 branches across the country to support the western expansion of the US through bank notes backed by the gold and silver in its vaults. In 1819, the ability to redeem currency for gold or silver was suspended because of a financial panic caused by the bank’s efforts to curb inflation and by the collapse of ag prices.
In 1831, home loans were made available through charters for the first building and loan banks. The Central Bank was abolished in 1833 – only state-chartered banks remain. Forty percent of all banks fail in 1837 during a panic and recession which lasts seven years – no redemption of currency for gold or silver is allowed during this time.
Beginning in 1838, a new bank boom begins due to a new law not requiring legislative approval for a bank charter – anyone who meets established criteria can be given a bank charter. In 1852, Wells Fargo is formed when Henry Wells and William Fargo create a partnership – they opened banks, shipped gold and silver, and transported overland mail.
With the start of the Civil War in 1861, gold and silver redemptions are suspended until 1879. Congress approved the printing of $150 million in paper currency in 1861 but it’s not backed by silver or gold. This was the first “fiat currency,” which were called “greenbacks” due to their color.
The first central banking “system” is created in 1863 and this was the beginning of a dual state and national system which continues today. For the first time, a single currency is recognized by all banks. Although the paper money was printed at the reserve bank, each local national bank issued its own currency which was signed by the president of the local bank and the head cashier. The sheets of money would then be cut and circulated as currency.
The gold standard resumes in 1876 and “greenbacks” are now redeemable in gold and are no longer a fiat currency. In 1878, legislation is enacted to increase the use of silver coinage and authorizes the printing of silver certificates. These silver certificates were legal tender redeemable for silver until 1971.
Crescent City is incorporated on Jan. 9, 1885. In 1890 the Bank of Crescent City opens for business. It is a private, unchartered bank owned and operated by WW Parkman and his brother CC. This bank was operated in conjunction with the Parkman’s lumber, coal and hardware business.
First National Bank of Crescent City was chartered in 1903 and continued until its closure in 1933. This bank, built in 1902, was located at the corner of Main and Maple streets (where the current AT&T building is now located). The bank’s number (6598) was printed on all its currency. This bank printed a total of $369,730 in money. Martin passed around a $10 and a $20 bill issued by the bank.
In 1907, JP Morgan came to the rescue when a complete collapse of the US financial system was at risk. He used his own money to put an end to the crisis. It is recognized there is a need for a Federal Reserve in order to buffer this type of crisis, so in 1908, the National Monetary Commission, the forerunner of the Federal Reserve, is created.
The Stock Market collapsed on Monday, Oct. 28, 1929, causing 80% devaluation within three years. During the Depression, over 10,000 banks failed. Franklin D. Roosevelt invoked the “Trading with the Enemy Act” which caused the closure of 2,000 banks. Congress passed the “Emergency Banking Act” which allowed the issuance of currency without gold backing. Dollars issued were now redeemable in silver (silver certificate). On April 5, 1933, FDR signed Executive Order 6102 which made owning gold illegal. All Americans were required to give up all gold bullion, coins and certificates by May 1, 1933, for $20.57 per troy ounce paid in paper money. Failure to surrender all gold was punishable by 10 years in prison and/or fined two times the value of the confiscated gold. Ownership of gold was against the law until 1974.
In 1941, war bonds are issued to support World War II following the bombing of Pearl Harbor. Banks began distributing ration coupons in 1943, and in 1968 President Lyndon Johnson proclaims silver certificates can no longer be redeemed for silver. President Gerald Ford legalized gold ownership in 1974.
In Crescent City, Watseka First National Bank opened a branch in 1982 (its name change to Capstone Bank took place in 1997) and closed in 2003. Watseka First Trust and Savings Bank opened a branch in 1982 and it remained operational until 2004. In 2004, Citizens State Bank of Milford opened a branch – Crescent City Bank – which closed in 2016.
Following Martin’s program he fielded questions from attendees.
Two pies – one cherry and one peach – were donated by Bob and Sharon Leibig and sold at auction with all proceeds benefitting CCHS.
To find out more about CCHS, or to loan or donate items for the museum, contact any of the following: Jean Herron, 815-383-8309; Carolyn Rapp, 815-683-2658; Pat Peterson, 815-383-2695; Yvonne Doggett, 815-683-2187; or Cindy Pufahl, 815-6683-2666. You can also visit the group’s Facebook page: Crescent City Historical Society; send an inquire to PO Box 410, Crescent City 60928, or an email to crescentcityhistoricalsociety@yahoo.com, or visit the group’s website at: www.crescentcityhistoricalsociety.co.nf.
