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Jun 11

You Can Take That To The Bank

Posted on June 11, 2023 at 1:13 PM by Ken Kocher

The May 26, 1904, edition of Manufacturers’ Record reported that the First National Bank of Madison had purchased a site on which to erect a bank building. That site was adjacent to the C.B. Markham’s building on E. Jefferson Street, what is now #127. By December 1904, the bank reported its assets to the U.S. Comptroller of the Currency including a banking house, furniture, and fixtures valued at $3,308.38. The original façade of the bank had three arched openings with entrance at center. An advertisement seeking to gain customers during its first year noted the bank as having “an excellent fire-proof vault and a modern Manganese Steel burglar-proof safe in which to put your funds and papers.” This would be the home of the First National Bank of Madison for nearly sixty years.

First National Bank 1909First National Bank 1909

The stockholders elected W.P. Wallace as President of the Board of Directors and appointed Tilman M. Douglas as the cashier, the position charged with the day-to-day operations. Douglas had been clerk and “practically assistant cashier for several years at the Bank of Morgan County.” In addition to being run by trusted administrators, the bank had another thing going for it – being a National Bank. This moniker was more than branding, it was a legal designation with a precise meaning: a banking institution chartered and supervised by the Office of the Comptroller of the Currency, an agency in the U.S. Treasury Department, pursuant to the National Bank Act.
First National Bank 1904 20 dollar bill

1904 First National Bank of Madison $20 note

Additionally, National Banks could issue their own banknotes or currency. From 1863 to 1935, National Bank Notes were issued by banks throughout the country and in US territories. Banks with a federal charter would deposit bonds in the US Treasury. The banks then could issue banknotes worth up to 90 percent of the value of the bonds. The federal government would back the value of the notes—the issuance of which created a demand for the government bonds needed to back them. The program was a form of monetization of the Federal debt. In 1904, the bank issued its own denominations of Ten- and Twenty-dollar gold certificates. The money arrived from the Treasury Department in sheets of six bills and the money was cut in the Madisonian office. 

Trust in the institution led to its rapid growth. In the first year, deposits grew from $5,000 to $95,000 and a 3 percent dividend was paid to shareholders. The bank returned that trust through community support. In 1914 it deferred a loan payment from the Board of Education allowing teachers to be paid for “the fall teaching.” During WWI the institution was the local conduit for Liberty Bonds. In 1923 First National secured a train carload of calcium arsenate which they sold at cost to farmers to battle the boll weevil.

First National Bank 1920First National Bank 1920

The First National of Madison faced the specter of a loss in confidence in early 1933 as banks across the country collapsed, governors began declaring “bank holidays” shutting down the financial institutions to prevent “bank runs.” These runs consisted of depositors withdrawing their funds in fear of losing the money in a bank failure often precipitating an actual bank failure. Georgia Governor Talmage followed suit closing banks from March 3-6, though his executive secretary said he did not regard the proclamation mandatory. This was superseded by President Roosevelt’s declaration of a national bank holiday beginning at 1:00 a.m. March 6, 1933, less than 48 hours after his inauguration.

During the Bank Holiday the Emergency Banking Act was passed on March 9, 1933, whereby the administration assured the public that their deposits would be secure. The Madisonian sought to reassure its readers in the March 10, 1933, edition stating, “So if you have any money in banks there’s no use to worry. You are going to get your money, and Uncle Sam is going to treat all alike – big depositors as well as little ones.” The clincher was Roosevelt’s first Fireside Chat where he told folks, “I can assure you that it is safer to keep your money in a reopened bank than under the mattress.” When the banks reopened, depositors stood in line to return their hoarded cash. This was no different in Madison. The Madisonian reported that both the First National Bank and the Bank of Madison showed a gain in deposits of around $9,000 on March 15, 1933, reopening day.

The bank would participate in other Depression Era programs to the benefit of its customers and the community. We will pick-up that thread in a future blog.


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