6
EARLY DAYTON: AN ECONOMY DEVELOPING
FROM BARTER TO NATIONAL BANKING LEADERSHIP
1787-1890
Judith Richards
Nearby History:
A Summer Institute for Educators
September 2002
The first thing you have to realize about Dayton is that it did not materialize into a city merely by chance. It was all about great fertile land that the Indians had and the white men wanted simply because it represented money and power. During the campaign to rout Indians from the Northwest Territory in the late 18th Century, the Miami Purchase, the land framed by the Greater and Little Miami Rivers became part of an area bought by John Cleve Symmes, (see page 13) a self-taught teacher, surveyor, lawyer, and Judge of the New Jersey Supreme Court. In 1788 he purchased 311,682 acres from the United States Congress after having explored the area earlier that year. He originally stated it was two million acres but that was a fabrication on his part. His exploration came about because his good friend, Benjamin Stites, had seen it the previous year as he was chasing the Indians who had stolen his horses in Cincinnati. He could not stop talking about its financial potential. Stites originally planned to develop this location and call it “Venice” but it never came about because of rising Indian hostility.
After the Treaty of Greeneville was signed in the spring of 1795, the Indians began leaving the territory and settlement became safe. Within a week of the signing, the news made it to New Jersey. Ranges VII and VIII of the Symmes land were purchased by the following group: Governor Arthur St. Clair, the unlovable leader of the worst defeat the United Stated ever suffered by Indians and the first Governor of the Northwest Territory; Brigadier General James Wilkinson, a drunken villian who later became the American Army Commander-in-Chief; General Jonathon Dayton, youngest signer of the US Constitution and a money-driven New Jersey Senator and Colonel Isreal Ludlow, a surveyor who at the time owned one-third of what is now downtown Cincinnati and most of Hamilton County. All were friends or acquaintances from New Jersey. (page 13)
The first settlement planned was on the Greater Miami River at the mouth of the Mad River. General Dayton’s name was chosen for the settlement as it was the most pleasing of any of the four purchasers. They bought this area sight unseen for 84 cents an acre and hired Benjamin Van Cleve (page 13) to accompany Daniel Cooper and Ludlow to survey and set the boundaries. “ In November Ludlow come up from Cincinnati and laid out the streets, naming one after himself, the others after his colleagues, adding Jefferson Street, to the east, because they were all good Federalists,…” [i] One of the provisions of the purchase from Congress was that it must be settled within two years. So this group of four offered land free to those who would settle. Van Cleve was one of those surveyors who obtained land by the lottery which was held in Cincinnati and he also became one of the 36 men, women and children to make the journey.
On April Fool’s Day in the spring of 1796 the first settlers, led by Samuel Thompson, set foot on the spot that was know as Dayton. (page 14) They made their way up the Miami River on a ten-day journey from Cincinnati in a pirogue. It was not the easy navigation they had experienced on the Ohio River where they moved west with the current from Pennsylvania. In this case they were moving north against the current of the Miami and they had to throw ropes over tree limbs along the river to pull themselves up the river from one tree to the next. Where they could they also used long poles to push the boat upriver. The twelve men, women and children included Van Cleve, the stepson of Thompson, his mother, sisters and brother.
They reached the spot …
“where they had been told they would find the town of Dayton. They
could not be wrong for the contract said (it was) at the mouth of the Mad
River and here it was before them, its full and rapid current swelling the
volume of the Miami. Yet where was the town? Just several blazed trees
along the bank, one marked St. Clair another Jefferson and another Ludlow.”[ii]
(page 14)
Upon landing at the head of St. Clair Street, the pirogue was dismantled and the wood was used to make a three-sided shelter (page 14) that eventually became the first house in Dayton. At the same time making the journey overland to the same spot were two groups of settlers traveling by wagon.
One of these groups was led by George Newcom (page 16) who traveled along what is now called the Cincinnati-Dayton Road. The first homes in Dayton were located along Water Street and he built his log home at the southwest corner of Main and Water Street (Monument). It was called Newcom Tavern (page 15) and functioned as the city building and civic center for Dayton. It was a courthouse, jail, tavern, post office, store and church.
Tax returns for 1798 show that there were 22 taxpayers in the village of Dayton. “ They paid a total of $29.74 in taxes. D.C. Cooper’s tax bill was the highest in the county, $6.25. Newcom paid $2.69.”[iii]
The first big financial problem occurred the same year when it became know that Symmes did not pay his obligation to Congress for the land and, therefore, held no title. The group of four could not come up with the money either. As a consequence, none of the settlers had any title to the land that they had settled and worked. Some moved away and, even more disastrously, no new settlers moved in as property rights were invalid and no clear title could be filed.
Although crops had been good for the first two years of settlement, by 1799 because of scarce food, Indian problems, bears stealing the pigs and everybody ill with the ague (malaria or at the very least, recurring chills and fever), Congress stepped in and agreed to give clear title to the land for $2 per acre. Since Symmes had agreed to pay the United States government 63 cents and the group of four had paid Symmes 83 cents, this was more than double the original price and no one was happy. In April of that year the town now had nine cabins – six on Monument including Newcom Tavern, two on First Street and one at Fifth and Main. (page 16)
In 1802 Daniel Cooper from south of town purchased the rights to most of the town. Cooper Park located next to the Dayton and Montgomery County Library carries his name. He was influential enough to get Congress to open a land office in Cincinnati and each homesteader was given a registered certificate of ownership. People then began settling in Dayton in the vacated homes or they built on Main Street lots.
“Cooper built 2 mills on his town land and 2 (page 17) on his farm south of town.” [iv] Robert Patterson (page 17) bought most of Cooper’s southern acreage in 1804 including the largest distillery in the area. Farmers came from as far away as Springfield to use the mills. They would trade their surplus corn meal that had just been ground for an equal amount of corn whiskey.
“At fifteen cents a gallon, corn liquor became the money of choice until
the first bank was opened in 1813, because it was cheaper to make the corn
into liquor to ship than to ship the corn itself. When one also reads that corn liquor was the drink of choice for breakfast, its popularity seems logical.”[v]
Robert Patterson, a war hero, founder of Lexington, Kentucky and Transylvania College
and one of three land shareholders of Cincinnati could not pay a $6,000 debt to the United States Government. It was owed because he had pledged security for someone who subsequently defaulted. In 1800 he sold his holdings in Kentucky and his share of Cincinnati to pay the debt. With the money that remained, he purchased from D.C. Cooper and Peyton Short (son-in-law of John Cleve Symmes) …
“the land from what is now the Soldier’s Home to the Fairgrounds to St. Elizabeth Hospital grounds, then to the Woodland Cemetery, the University of Dayton, all of Oakwood and land east to Belmont High School, plus land in Beavercreek (the 200 acre Cook farm) and the entire area of the town of Clifton.”[vi]
(page 18)
If any economy does not have money, it must rely on barter or trade and that is slow and awkward. This was also true for Dayton. The money of the day was “skin money”. This currency was based upon a muskrat skin that was worth 25 cents. A buck’s skin was worth four muskrat skins in trade. It is easy to see how the dollar became known as a buck.
Nobody had any currency – everything was barter or trade. Everybody had the same things – crops, hides, etc. but no cash. Anything purchased outside of Dayton was unbelievably costly. Most times, transportation and distribution costs exceeded the cost of the purchase itself. Dayton’s great advantage was its location – rivers for movement to and contact with the north and south. The rivers were the basis for commerce from the initial settlement onward.
David Lowry built a flatboat in 1799 and carried 12 tons of corn, potatoes, furs and skins, hams, etc. down the waterway system to New Orleans. In two months he returned on a horse with $1200. Thus began commerce for Dayton. And for the next 25 years the main items shipped from the warehouse at the foot of Wilkinson were flour, whisky and bacon.
In 1806, the year after Dayton was incorporated as a town, there were about 40 houses. The previous year, Dayton had its first big flood with water 8 feet deep on Main Street. Instead of moving the town to higher ground as Cooper suggested, a levee was built. This was not the best solution but it was the least expensive because a couple of the townspeople insisted on being reimbursed by the town if they were required to move.
Dayton played a pivotal part in the War of 1812 even though it was smaller than Lebanon. Due to its location, Dayton became the designated area for 1200 militia to meet and march to Detroit. Because there was no housing, they camped at what we now call Cooper Park. As the war progressed, Dayton became the supply center and jumping off point for the western army. Needless to say, Dayton’s economy began to take off. Skins and whiskey were no longer sufficient to enable the economy to thrive.
“Shortly (there)after 16 Dayton businessmen gathered to discuss the need for a bank in town.”[vii] The decision was that a bank was needed and quickly. In 1813, the Dayton Manufacturing Company (page 19) was incorporated by the state. It was located on Main Street south of Water Street. The bank’s first loan, $11,000, was to the US government for the War of 1812. The president received a salary of $150 a year while the cashier received $400 a year.
The hours of operation were from 10 am to 1 pm daily and it printed its own money(notes). This was a common practice for any private bank. Coins were also in short supply and if any change remained from a purchase, merchants gave shin plasters instead of coins. A shin plaster (page 19) was a piece of paper money of small face value (50 cents or less) issued by a private bank or the US government prior to 1878.
“In June 1815 its total resources were $123,000.”[viii] In 1831 the bank became known as the Dayton Bank under a new state charter. The bank remained open until 1843 and withstood serious depressions in the US.
President Andrew Jackson became very hostile to the United States Bank and vetoed its charter. He also ordered the transfer of all government money to the treasury. The scrapbook kept by J.O. Oliver contains an entry concerning a Mr. Johnson in Piqua who was quoted in the newspaper as stating…
“During the days of 1837, it was very difficult to travel, owing to
the wild cat money, and only gold and silver could be relied upon excepting one bank which issued bills (notes) that were current and
taken at par throughout the United States, and that bank was the State
bank of Ohio, Dayton Branch and this branch bank was the only one
that would pass equal with gold and silver wherever you might travel.”[ix]
“So great had become its fame in this respect that its notes were hoarded, and thus again proved that well-known law, that a depreciated currency always drives the sound money out of circulation.”[x]
The bank closed at the beginning of 1843 due to President Jackson’s policy and the refusal of the State of Ohio to grant a new charter. The city of Dayton went without a bank from 1843-1845 so an independent broker named Edwards, on the north side of Third Street took care of all banking business.
In June 1845 an independent bank, the Dayton Bank, was formed with J. Harshman as President and Valentine Winters, cashier. Winters was probably the most outstanding person in early Dayton’s financial history. As a young man, he started in a Germantown brickyard for 10 cents a day. He moved to Dayton and was employed as a clerk in the dry goods store of Andrew Irwin. He then held the same position at Harshman and Rench and was eventually made a partner.
When the bank closed in 1843, $45,000 in silver was paid to J. Harshman representing his bank stock and deposits. The silver had to be moved quickly from the bank. In the dead of night, Valentine Winters and Abraham Overlease took the silver from the bank vault, put it on a cart and moved it into a small building on Third Street next to Winters and Schaeffler’s store. It remained hidden under the city for two years until Harshman and Winters opened the independent Dayton Bank in June 1845. The silver was used as part of the capital stock of the new bank. Banking was conducted for some time in this little building which eventually was turned into a cigar store.
A Charter branch of the Ohio Bank opened in June 1845 and was located in the Shoup’s building at the southeast corner of Second and Jefferson Streets. Shoup was one of the Directors of the bank. “Thus were established two banks in Dayton, both of which felt to be in the hands of safe, conservative business men.”[xi]