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HISTORY OF ANOKA COUNTY 

and the Towns of Champlin and Dayton

in Hennepin County Minnesota

By Albert M. Goodrich

Minneapolis

Hennepin Publishing Col. 1905

Transcribed by MaryAlice Schwanke

CHAPTER VII.

THE PANIC OF "FIFTY-SEVEN".

Before the settlers had begun to recover from the effects of the grasshopper raid, the financial panic of 1857 was upon them. A recent writer thus describes the beginning of the panic in the East:

“In August the suspended blow fell: on the 24th the Ohio Life Insurance and Trust Company of Cincinnati and New York failed, with reported liabilities of $7,000,000. The announcement of the failure on the New York Stock Exchange caused a panic; stocks fell; many bankers and brokers were unable to meet their engagements. Money rose to three, four and five per cent a month. * * *

“All eyes were on New York. During the first part of October the Illinois Central Railroad company made an assignment, the notes of the New York and Erie Railroad went to protest and the Michigan Central Rail road company suspended payment on its floating debt. Amid wild excitement, a heavy run began on all of the New York banks. It was impossible for them to stand the drain. October 13, at half past ten in the evening, the New York City banks resolved to suspend specie payments on the following day.”

A contributing cause of the panic lay in the unsatisfactory condition of the currency. A great part of the circulating medium of the country consisted of bank notes, secured only by the assets of the bank itself, and these were almost universally tainted with the prevailing infection of inflated values.

The panic did not reach Minnesota immediately. But the first week in October two banks in St. Paul suspended, and a meeting of the merchants of that city was held to devise means of relieving the financial difficulties. In Minneapolis and St. Anthony, where an attempt was made to keep the bank notes in circulation, “wildcat” money drove all other forms of currency nearly out of circulation.

Under the pre-emption law settlers had to pay for their claims at the rate of $1.25 per acre within a certain time or forfeit their rights. Interest rates had risen to three per cent. a month and more. An Anoka county farmer living on Cedar creek found it necessary to raise some money to make a payment to the government, and is said to have gone to a money lender in St. Paul, a certain Colonel M’_ , to borrow $100. Five per cent. a month was demanded, and the borrower decided that he must have it even at that rate. He signed the note and was handed $40.

“\Vhat is this for,” he asked.

It was explained to him that the interest amounted to $60, which was collected in advance.

“Well now," said he, scratching his head, “if I’d borrowed $200, I'd be owin’ ye somethin’, wouldn’t I?" On October 8th the St. Anthony News said:

“Financial.-There are no new failures reported in to-day’s papers. VVe judge things are more ‘quiet,’ as we met a man on the street to-day who had half a dollar in cash-all in twenty-five cent pieces. They looked very lonely. were round, and about the color of silver spoons. VVe heard of another eccentric genius yesterday who paid his note when it became due. Probably a case of mental aberration. With these exceptions the market is without any change.”

But the situation very soon became too serious to joke about. Before the month was out the News printed this comment:

“Never since Minnesota was ‘discovered’ was current money so scarce as now. Almost everybody has a pile of bills, but the banks which issued them have suspended‘ or failed, and the paper pictures no longer represent the ‘tin.’ The West was sound, Minnesota sounder, and St. Anthony and Minneapolis soundest until the great banks of the East slammed their iron doors in the long faces of creditors, but now confidence has gone down and the whole country is afloat like the deck-lumber of the Central America. Every man is overboard. struggling manfully with the waves, and though one of the wrecked may succeed in getting upon a larger plank than his fellows, yet all are straining their eyes for a light at the foretop of some rescue ship ahead. The United States of America has suspended payment. Thousands are thrown out of employment throughout the country, and many will go to bed supperless before another April. Men chase each other up and down the streets to collect ‘bills payable,’ and honest debtors who own $50,000 worth of land, cannot raise money enough to pay foot-toll at the bridge. What we are coming to we are unable to say, but one thing is evident - however unpalatable the aggrarian fact may be, ‘Tight Times,’ is mowing the financial acres East and West with a keen scythe, and the beggar and the broker will change coats before Spring without either losing his respect ability.”

“Gosport,” “Tekama,” “Omaha City,” “Platte Valley,” “Florence,” De Soto," “Lyons City Scrip,” and “Western Exchange Fire and Marine Insurance Co.," were some of the bank notes which circulated largely in the territory.

as the failures became known notes of these banks were refused. Notes of banks that were under suspicion circulated at discounts which often increased with alarming rapidity. Smiley & Woodbury, who operated the flour mill at Anoka, sent three ten-dollar bank notes one after the other to St. Anthony for the purpose of making some small purchase. The messenger was unable to pass any of them at par, and on the third trip was ordered to take what he could get. He finally succeeded in passing the last bill for $8.50.

But ‘this was mild compared with some discounts that quickly followed.

In the spring of 1858 Frank Zahler worked with a surveying party in the Sauk Valley and received for his services $84 in state bank notes. He paid his hotel bill and stage fare to Anoka out of the amount and a few days later went into a store in Anoka to make some purchases. He picked out some shoes and wearing apparel to quite an amount, and the proprietor asked about the pay.

“Oh, I have got the money.” said Zahler, pulling out his roll.

“I don’t doubt that you have the money,” said the proprietor. “but what kind is it?”

Zahler displayed one of the bills, and the storekeepe remarked:
“That money is only worth fifteen cents on a dollar this morning.”

A “bank detector” was issued frequently from New York, showing which bank notes were worth their face, which notes were at a discount and how much, and which notes were worthless. But the quotations fluctuated more and more violently, and merchants received daily reports whenever possible.

Sylvanus Stockwell bought a yoke of oxen from a man named Nicholls, paying him $110 in “Glencoe money.” Nicholls succeeded in passing the money, but very soon after the “Bank of Glencoe,” which had issued it, was reported to be wholly without assets, and its bills became worthless. Harvey F. Blodgett bought a cow of Jacob Milliman for $35 or $40, and before Milliman could get to town to spend the money the bank had failed, and he could not buy his dinner with the entire amount.

S. C. Robbins taught school in the town of Grow in the winter of 1857-8, and in the spring got his entire winter’s pay in money which was only valuable for kindling a fire. Matthew F. Taylor worked several months for Staples & Hersey at Stillwater in the spring of 1858, for fifty cents a day and board. Plenty of men out of work were eager to take the places of any who were dissatisfied with these wages. He received his pay in state bank notes. He succeded in purchasing a pair of boots from Daniel Robbins on the basis of $4 of good money, and Mr. Robbins took some of these state bank notes for the amount at about sixty per cent. discount. That was all Taylor ever got for his money, as the notes soon after became worthless.

The newspapers printed long lists of broken banks whose notes were refused by merchants. People were afraid to go to bed at night with money in their pockets, for fear it might be worthless next day. The only safety was to deposit it in a solvent bank, if one could be found, or convert it into merchandise of some sort at the earliest opportunity. Some Canadian money circulated at twenty per cent. premium.

In December, 1857, the Chicago Tribune said: "St. Anthony and Minneapolis appear to be the headquarters of the uncurrent money in Minnesota. Large quantities of the broken ‘Farmers Bank of North Carolina,’ quoted in Chicago at 75 per cent. discount, circulate at par up there. Citizens’ Bank, which is bursted; Tekama of Nebraska. which is a swindle; and Florence, which is little better; together with Fontenelle, constitute about all the currency in circulation north of St. Paul. The same villainous trash has spread over many of the western counties, and driven out every dollar of current money.”

An attempt was made on the part of certain brokers to boycott the St. Anthony Republican, which had the temerity to reprint the above paragraph. But the majority of people soon came to the conclusion that the wretched substitute for money would reach zero sooner or later, and that those who clung to it longest would be the greatest sufferers.

Having paid out the “wildcat” money as long as anybody could be found who would receive it, the people were left practically without a circulating medium. Trade took the form of barter. The merchants traded their goods for farm products, and the wholesale merchants were obliged to take their pay in these or make no sales. But wholesale grocers found it impossible to stock up except for cash, and the grocery trade came almost to a standstill. Farm products were largely traded for dry goods.

Ammi Cutter, who was operating a tub and pail factory on the east side of Rum river at Anoka, near where the railroad bridges now are, made strenuous efforts to

AMMI CUTTER.

keep his factory going. He also had a general store, and paid his men chiefly in store orders, whereat some of them grumbled. But nothing better could be done. On one occasion when the men complained that they were without meat he traded goods out of the store for a hog and having cut it up, divided the pork among them.

Business men were often driven to the greatest strait-for a little cash. A man came down from Elk River to get some lumber planed at Frank Blodgett’s planing mill at Anoka. Blodgett told him that if he would advance sixty-five cents to buy machine oil for the mill he would do the work - otherwise it would be impossible. Another man who had considerable property borrowed ten cents on one occasion from S. Stockwell to buy some crackers for a meal for himself and wife. One of the Woodbury brothers, a man with large property interests, said one day to a friend:

“We do not pretend to pay our taxes, and we don’t know where the money is coming from to buy the next sack of flour.”

When such was the condition of the well-to-do, the situation of the poor may be imagined. Happy the man who could get together cash enough to buy a pound or two of brown sugar, at little salt and a box of matches. Correspondence between relatives lingered for months for want of postage stamps. Wheat was browned as a substitute for coffee. As for tea, it might as well have stayed in China.

Ammi Cutter came to the rescue and began cautiously to give out groceries in exchange for farm products. Other grocers followed haltingly.

Ten thousand dollars in city and county scrip was issued. in St. Anthony and Minneapolis; but it disappeared like rain in the ocean. The state of Minnesota was admitted to the Union in 1858, and immediately found itself without funds and unable to pay orders on the treasury. State orders went down to twenty-eight cents on the dollar. Unpaid orders on the Anoka town treasury were quoted at thirty-two cents. The governor of Minnesota refused to call the legislature together, and the session of 1859 was accordingly missed because there was no money to pay the salaries of members and officials.

Slowly a little coined money began to appear. French five-franc pieces circulated at eighty-four or eighty-five cents. A little Mexican silver began also to be seen. Ammi Cutter finally succeeded in making some arrangements for coin, and paid approximately fifty cents a bushel in gold for wheat at Anoka during the winter of 1857-8. For wheat sown by hand and cut with a cradle, this price was very low, but there was no danger that the farmer would find his money on the list of “rejected” the next time he came to town.

GINSENG.

About 1858 the discovery was made that the Big Woods contained in considerable quantities a plant known as ginseng. Moreover, this wonderful plant could be traded for groceries and even sold for good coined money. Boys whose time had heretofore been counted nearly worthless had been known to make as much as two dollars a day digging “sang,” as it was popularly called. There was a grand exodus to the woods, and a knowledge of the appearance of the plant having been acquired, sacks were brought into service and the tall timber scoured in all directions.

The next year digging ginseng became a regular business, and in consequence gold found its way into many a home where it had long been a stranger. Boys and women became very successful diggers. Agencies for the purchase of the plant were establishd at Minnetonka in Hennepin county, Rockford in Wright county, and Watertown in Carver county. Considerable quantities of the root were also purchased in Anoka. The price sank to eight cents a pound for washed “sang” and six cents for unwashed, but even at these rates boys and women made what seemed to them excellent wages, and even men often found the work a very convenient thing to fall back on. In the spring of 1860 the “sang” hunters were once more out in force, and there was reported to be abundance of money at hand to pay for all the roots they might find. The fall of that year P. Sheitlin of Minneapolis shipped forty tons of ginseng to New York. Up to 1863 ginseng digging held its place as a valuable industry.