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Table of Contents
VOL. XXV No. 4
WHOLE No. 124
JULY/AUGUST
1986
THEY MAKE IT POSSIBLE
1.111111111111111i1111111111111111111111111111111111111111111111111111 11111111111111111111111111111111111111111111111111111111111111111111111
TWENTY-FIFTH I ANNIVERSARY
1111111111111111111111111111111111111111111111111111111111111111111 1 ' I 1 111111111111111111111111111111 1 1 1 1 1111111 111111 1 1 1 1 1 1 11111
P.O. Box 4290
cda
Charter Mentbr
Pre/...tonal Currency Deat.r. Alisottation
"Pronto Service" Omaha, Nebraska 68104
SCARCE, OBSOLETE UNCUT SHEETS
LOUISIANA. $500.00 ( $1,000.00 New Orleans Canal & Banking Co. Superb Crisp New Uncut Sheet (2).
Attractive display sheet for your collection or desk
$79.50
NEBRASKA. 1857 Bank of Florence Superb Crisp New Uncut Sheet (4): $1 - $1 - $3 - $5. Beautiful Scarce
Sheet
$114.50
NEBRASKA. Western Exchange Fire & Marine Insurance Co. Superb Crisp New Uncut Sheet (4): $1 - $2
-$3 - $5. Specially Priced $69.50
SPECIAL. BUY ALL THREE SHEETS WHILE OUR SUPPLY LASTS
$219.50
WANTED - BUYING - WANTED
BEBEE's is Paying from $550.00 to as high as $2,000.00 for the following 1882 $5.00 BROWN
BACK National Bank Notes in Choice AU to Choice Uncirculated:
ALABAMA-ARIZONA-ARKANS AS -CALIFORNIA-COLORADO-FLORI DA-HAWAII-I DAHO-
MARYLAND-MISSISSIPPI-MONTANA-NEVADA-NEW HAMPSHIRE-NEW MEXICO-NORTH
DAKOTA-RHODE ISLAND-SOUTH DAKOTA-WYOMING
BEBEE'S is also Paying TOP Immediate-Cash prices for Double-Denomination Notes, also All
Territorials (Especially Need Arizona-Idaho-Wyoming); Rare Large-Size 1st & 2nd Charter Na-
tionals, No. 1 & Star Notes. Please give us a Try — BEBEE'S has been Leading Specialist in U.S.
Paper Money ever since January 1941.
Please send any of the following Notes with your Asking Price or for our TOP CASH Offer:
DEMAND NOTE
NATIONAL GOLD BANK NOTES
1861 $20 NEW YORK. Fr. - 11 VF to Unc.
SILVER CERTIFICATES
1870/75 $10 Fr. - 1143/1151 VF to Unc.
GOLD CERTIFICATES
1880 $1,000 Fr.-346B/D ExF/AU to Unc. 1882 $50 Lg. Red Seal. Fr. 1191 ExF/AU to Unc.
1891 $1,000 Fr.-346E. Any Grade OK 1882 $100 Brown Seal. Fr.-1203 ExF/AU to Unc.
1882 $100 Lg. Red Seal Fr.-1204
ExF/AU to Unc.
COMPOUND INTEREST NOTES 1882 $100 Lg.Brown Seal. Fr.-1205 . .. ExF/AU to Unc.
1864 $100 Fr.-193
VF to Unc. 1928 $500 Fr.-12404 Unc. only
1928 $1000 Fr.-240 Unc. only
AVAILABLE NOW: U.S. SALES LISTS = (A) Large Size Notes; (B) Large Size Nationals; (C)
Colonial & Continental Currency; (D) Fractional Currency; (E) Confederate Currency. Please
specify your collecting interest when requesting any of these FREE lists.
WHY NOT GIVE US A TRY—WE WOULD GREATLY APPRECIATE YOUR ORDERS—AND
YOU'RE SURE TO LIKE DOING BUSINESS WITH BEBEE'S. SINCE 1941, TENS OF THOUSANDS
OF "BEBEE BOOSTERS" HAVE. Y'ALL HURRY NOW—WE'LL BE LOOKING FOR YOU!
AUBREY & ADELINE BEBEE
ANA Life #110, ANS, IAPN, PNG, SPMC, Others
socIrry
OF
RAPER MONEY
COLLECTORS
I Nc.
aim cte.
socIrry
OF
PAPER MONEY
COLLECTORS
Paper Money Whole No. 124 Page 149
PAPER MONEY is published every
other month beginning in January by The
Society of Paper Money Collectors, 1211
N. DuPont Hwy., Dover, DE. Second
class postage paid at Dover, DE 19901.
Postmaster; send address changes to:
Paper Money, 1211 N. DuPont Hwy.
Dover, DE 19901.
© Society of Paper Money Collectors,
Inc., 1984. All rights reserved. Re-
pro-duction of any article, in whole or in
part, without express written permission,
is prohibited.
Annual Membership dues in SPMC are
$15. Individual copies of current issues,
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SPMC assumes no financial responsibility for
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All advertising copy and correspondence
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Official Bimonthly Publication of
The Society of Paper Money Collectors, Inc.
Vol. XXV No. 4 Whole No. 124 JULY/AUGUST 1986
ISSN 0031-1162
GENE HESSLER, Editor
Mercantile Money Museum Box 524, St. Louis, MO 63166
Manuscripts and publications for review should be addressed to the
Editor. Opinions expressed by the authors are their own and do not
necessarily reflect those of SPMC or its staff. PAPER MONEY
reserves the right to reject any copy. Deadline for editorial copy in
the 1st of the month preceding the month of publication (e.g., Feb.
1 for March/April issue, etc.).
IN THIS ISSUE
ORGANIZED LABOR AND THEIR BANKS
Bob Cochran 153
CLIFTON MANUFACTURING COMPANY,
Pioneer in Southern Textiles
Brent H. Hughes 159
THE PAPER COLUMN
19-YEAR BANKS and the
NATIONAL BANK ACT OF FEBRUARY 25, 1863
Peter Huntoon 163
"SHAKE RAG STREET" ON NEW POST CARD
Barbara R. Mueller 165
RAILROAD NOTES & SCRIP OF THE UNITED STATES
THE CONFEDERATE STATES AND CANADA
Richard T. Hoober 166
SOCIETY FEATURES
INTEREST BEARING NOTES 167
AWARD WINNERS AND FACES IN MEMPHIS 168
LETTER TO THE EDITOR
169
IPMS '86 BUREAU CARD 169
NEW LITERATURE 169
NEW MEMBERS 170
MONEY MART 171
Society of Paper Money Collectors
OFFICERS
PRESIDENT
Larry Adams, P.O. Box 1, Boone, Iowa 50036
VICE-PRESIDENT
Roger H. Durand, P.O. Box 186, Rehoboth, MA 02769
SECRETARY
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TREASURER
James F. Stone, P.O. Box 89, Milford, N.H. 03055
APPOINTEES
EDITOR Gene Hessler, Mercantile Money Museum,
Box 524, St. Louis, MO 63166
NEW MEMBERSHIP COORDINATOR
Ron Horstman, P.O. Box 6011, St. Louis, MO 63139
BOOK SALES COORDINATOR
Richard Balbaton, 116 Fisher Street, North Attleboro, MA
02760.
WISMER BOOK PROJECT
Richard T. Hoober, P.O. Box 196, Newfoundland, PA 18445
LEGAL COUNSEL
Robert J. Galiette, 10 Wilcox Lane, Avon, CT 06001
PAST PRESIDENT AND LIBRARIAN
Wendell Wolka, P.O. Box 366, Hinsdale, IL 60521
BOARD OF GOVERNORS
Charles Colver, Michael Crabb, C. John Ferreri, William Horton,
Jr., Peter Huntoon, Charles V. Kemp, Jr., Roman L. Latimer,
Donald Mark, Douglas Murray, Dean Oakes, Bernard Schaaf, MD,
Stephen Taylor, Steven Whitfield, John Wilson.
The Society of Paper Money Collectors was organ-
ized in 1961 and incorporated in 1964 as a non-
profit organization under the laws of the District of
Columbia. It is affiliated with the American Numis-
matic Association and holds its annual meeting at
the ANA Convention in August of each year.
MEMBERSHIP - REGULAR. Applicants must be
at least 18 years of age and of good moral character.
JUNIOR. Applicants must be from 12 to 18 years of
age and of good moral character. Their application
must be signed by a parent or a guardian. They will
be preceded by the letter "j". This letter will be
removed upon notification to the secretary that the
member has reached 18 years of age. Junior mem-
bers are not eligible to hold office or to vote.
Members of the A.N.A. or other recognized
numismatic organizations are eligible for member-
ship. Other applicants should be sponsored by an
S.P.M.C. member, or the secretary will sponsor per-
sons if they provide suitable references such as well
known numismatic firms with whom they have done
business, or bank references, etc.
DUES - The Society dues are on a calendar year
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paid through December of the following year. They
will also receive, as a bonus, a copy of the magazine
issued in November of the year in which they joined.
PUBLICATIONS FOR SALE TO MEMBERS
BOOKS FOR SALE : All cloth bound books are 8 1/2 x 11"
INDIANA OBSOLETE NOTES & SCRIP $12.00
Non-Member $15.00
MINNESOTA OBSOLETE NOTES & SCRIP.
Rockholt $12.00
Non-Member $15.00
MAINE OBSOLETE NOTES & SCRIP. Wait $12.00
Non-Member $15.00
OBSOLETE NOTES & SCRIP OF RHODE ISLAND
AND THE PROVIDENCE PLANTATIONS,
Durand $20.00
Non-Member $25.00
NEW JERSEY'S MONEY, Wait $12.00
Non-Member $25.00
TERRITORIALS-A GUIDE TO U.S. TERRITORIALS
BANK NOTES, Huntoon $12.00
Non-Member $15.00
Write for Quantity Prices
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INDIAN TERRITORY / OKLAHOMA / KANSAS OBSO-
LETE NOTES & SCRIP, Burgett & Whitfield $12.00
Non-Member $15.00
IOWA OBSOLETE NOTES & SCRIP, Oakes $12.00
Non-Member $15.00
ALABAMA OBSOLETE NOTES AND SCRIP
Rosene $12.00
Non-Member $15.00
PENNSYLVANIA OBSOLETE NOTES AND SCRIP
(396 pages), Hoober $28.00
Non-member
$35.00
ARKANSAS OBSOLETE NOTES AND SCRIP,
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Non-member $22.00
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Non-member
$15.00
on the above books.
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Library Services
The Society maintains a lending library for the use of Librarian - Wendell Wolka, P.O. Box 366, Hinsdale, Ill.
the members only. For further information, write the 60521.
Page 150
Paper Money Whole No. 124
First millionaire farmer behind Missouri banks
Michigan bank couldn't fool the examiners
BEP details currency changes
Paper Money Whole No. 124
Page 151
Paper Money Collectors —
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Page 152 Paper Money Whole No. 124
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WRITE, CALL OR SHIP:
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LEN and JEAN GLAZER
(718) 268-3221
POST OFFICE BOX 111
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Paper Money Whole No. 124 Page 153
ORGANIZED LABOR
AND THEIR BANKS
BY BOB COCHRAN
The year 1986 marks the 100th anniversary of the found-
ing of the American Federation of Labor, commonly
known as the A F of L. In 1955 the A F of L merged with
the Congress of Industrial Organizations, creating the cur-
rent organization referred to as the A F of L-CIO. Organ-
ized labor, since its inception, has touched the lives of vir-
tually every living American, in one way or another. In
1919, the A F of L, through one of its member unions,
entered the banking field—somewhat by accident.
THE COMMERCIAL NATIONAL BANK
OF WASHINGTON
T HE International Association of Machinists was head-quartered in Washington, D.C. As an investment for apart of their trade union funds, they bought a small block
of stock in The Commercial National Bank of Washington. In
the spring of 1919 proxies for the union's stock were solicited by
two factions among The Commercial National Bank's stock-
holders. These factions were engaged in a close contest for con-
trol of the bank.
Without giving an answer to the leaders of either faction, offi-
cials of the union quietly added to its holdings through pur-
chases of Commercial National stock on the open market. Just
before the annual meeting at which the issue of control was to be
decided, the union took over a large number of shares from a
stockholder pressed for ready cash. On the day of the meeting
the union held the largest single block of stock outstanding.
Neither faction could secure control of the bank without the
assistance of the union.
An agreement was speedily reached with the leaders of that
faction whose members had been friendly to the union in the
past, and at the annual meeting, control of the bank was taken
by this group in cooperation with the union's officials. William
H. Johnston, president of the union, and E.C. Davison, secre-
tary-treasurer, were elected to the board of directors of The
Commercial National Bank. For a year they studied banking
from their vantage point in the director's room. The experience
they gained led them to the decision to open their own bank.
THE MOUNT VERNON SAVINGS BANK
OF WASHINGTON
The first trade union bank in the United States was the Mount
Vernon Savings Bank of Washington, D.C. It opened on May
15, 1920 with a capital of $160,000 and a paid-in surplus of
$40,000. The subscriptions came from the International Asso-
ciation of Machinists, its members and their friends. The re-
sources of the bank exceeded $1 million by 1922, and reached
nearly $3 million by May of 1923.
In the summer of 1920, the Mount Vernon Savings Bank
became involved in a situation that justified its existence to union
members and helped speed the organization of other union-
operated banks. The situation came about in Norfolk, Virginia.
Before World War I, Norfolk was an open shop town. This
meant that workers were not required to be members of a trade
union in order to secure employment. Efforts to unionize marine
repair works — the city's principal industry — had met with little
success. There were boom and slack periods in each year. Dur-
ing the boom periods the workers could earn substantial
amounts due to overtime work; during the slack periods almost
all of the workers were unemployed. Most of the workers were
unwilling to risk disfavor from the plant owners. The war
brought steady employment, and with it unionization of the
workers.
The foundry workers formed a group called the Iron Masters'
Association. Its aim was to return the plants to an open shop ar-
rangement at the war's end. As the existing union contract was
to expire in the summer of 1920, the Iron Masters' Association
announced that they would have no further dealings with the
union; that the plants would be run as open shops; and that the
basic wage for machinists would be reduced by 8 cents per hour
from the existing contract wages. The workers struck im-
mediately.
Most of the companies were in good shape financially,
because of war profits. One, the Crescent Machine Company,
was not. It had been formed shortly before the strike by the
Bankers' Trust Company of Norfolk, to take over the plant and
work off the debts of its predecessor, the Southern Iron Works.
Crescent's management, some of whom were former union
members, realized that the company could not survive the
strike. They signed a new agreement with the union on the pro-
posed terms and resumed operations.
The Iron Masters' Association brought pressure against
Bankers' Trust Company to stop furnishing operating capital to
Crescent and to call in its notes of $40,000; the bank complied.
The Iron Masters' then contacted Crescent and offered to pay
off its debts, but only if the company cancelled its union con-
tract, offered the lower wages, and became an open shop.
The marine repair workers had affiliated with the International
Association of Machinists. They contacted the union headquar-
ters in Washington and explained the situation. The union of-
ficials studied the problem and came up with an idea: could the
union lend assistance, through its bank? The cashier of the
Mount Vernon Savings Bank went to Norfolk. After evaluating
the plant and its books, the union decided to take over the obli-
gations of Crescent. During this time the marine repair workers
cancelled their accounts at the Bankers' Trust Company and
transferred them to the Mount Vernon Savings Bank of Wash-
ington. Bankers' Trust Company readily accepted the offer of
the cashier of the Mount Vernon Savings Bank, made on behalf
of "one of its customers" — the fact that the "customer" was the
International Association of Machinists was not disclosed. This
was the first time a private industrial enterprise was to be fi-
nanced by a labor organization and its bank.
Page 154
A severe depression in the shipping industry later that year
forced Crescent Machine Company to close, idling it along with
the other strike-bound plants. Eventually the company was de-
clared bankrupt, and was purchased at the receiver's sale by the
International Association of Machinists. The purchase money
was later returned to the union as holder of the deed of trust.
While not a complete victory for the union, it did save an esti-
mated $200,000 in strike benefits by keeping the plant open as
long as it did.
BROTHERHOOD OF LOCOMOTIVE ENGINEERS
COOPERATIVE NATIONAL BANK
The Brotherhood of Locomotive Engineers, headquartered
in Cleveland, organized this first labor-owned and labor-
operated national bank. It became the largest (in terms of re-
sources) and the most active of organized labor's cooperative
national banks. Because of its importance, this bank and some
of its activities are to be discussed in detail.
As noted earlier in the discussion about the Crescent Machine
Company and the Iron Masters' Association in Norfolk, there
was tremendous strife between Capital and Organized Labor in
the period immediately following World War I. To get a feel for
the feelings of Capital (or "organized banking") toward the es-
tablishment of the Brotherhood of Locomotive Engineers Co-
operative National Bank, we can look through the pages of The
Bankers Magazine, a monthly publication directed at the bank-
ing field. The first account of the new bank appeared in the July,
1920 issue, under the title "Railroad Bank Chartered":
A charter for the Brotherhood of Locomotive Engineers
Co-operative National Bank, Cleveland, Ohio, has been
approved by the Comptroller of the Currency. The bank
is capitalized at $1,000,000. Warren S. Stone, grand
chief of the brotherhood, made the application for the
charter.
Not an earth-shaking announcement, but then the magazine
received more information about the bank. Here's what The
Bankers Magazine had to say in the August, 1920 issue, in an
editorial titled "Organization of a Co-operative National Bank":
According to a Washington dispatch, approval has been
given by the Comptroller of the Currency for the organi-
zation of "the Brotherhood of Locomotive Engineers Co-
operative National Bank of Cleveland, Ohio". In the dis-
patch announcing this fact it is said the policy of the bank
would be to lend money "to workers and farmers instead
of to speculators and manipulators."
Paper Money Whole No. 124
Perhaps, if a thorough survey of the character of bank loans
were made, it would be found that comparatively few of them
represent advances to the two classes last named. No one
denies, of course, that "speculators" do obtain loans from the
banks, but these loans probably constitute a trifling percentage
of all bank loans.
If workers and farmers are actually denied loans, while
"speculators and manipulators" are not, this might justify the
organization of a special type of bank designed to redress this in-
equality of treatment. It is very doubtful, however, whether any
injustice exists. The great number of banks existing in agricul-
tural communities, receiving their deposits largely from farmers
and often owned principally by them, would seem to indicate
quite clearly, even in the absence of statistics, that the banks of
the country are now making large loans to those who own or
cultivate the farms. It is also clear enough that banks doing a
savings business are lending extensively to workers for the con-
struction of homes. IF THE ORDINARY WORKER IN IN-
DUSTRY IS SELDOM A BORROWER AT A COMMERCIAL
BANK IT IS BECAUSE HE HAS NO OCCASION FOR SUCH
SERVICE. THE SERVICES OF COMMERCIAL BANKS ARE
FOR THOSE WHOSE OPERATIONS ARE SO LARGE AND
OF SUCH CHARACTER THAT CREDIT MUST BE
EMPLOYED AND ITS USE PAID FOR. THE WORKER FOR
WAGES IS IN A MORE FORTUNATE POSITION. RECEIV-
ING CASH FOR HIS LABOR, HE CAN IN TURN PAY CASH
FOR WHAT HE BUYS (author's emphasis).
If there is room in the United States for the creation of
banks to serve a distinct class, the fact seems heretofore to
have escaped the attention of a number of enterprising
gentlemen who are always anxious to take advantage of
opportunities for starting new banks where there is a
chance of making a profit.
Well, there were some enterprising gentlemen anxious to take
advantage of the opportunities, but they weren't necessarily out
to make a profit. Edward J. Manion, President of the Order of
Railroad Telegraphers, was also president of The Telegraphers
National Bank of St. Louis (this bank is discussed later in the ar-
ticle). In his capacity as a labor leader and national bank presi-
dent, he spells out the reason for the co-operative banks in an
article in the Official Year Book of Organized Labor — 1926.
The article is titled "Labor Banks—An Economic Weapon":
A large part of the workers' billions of dollars on deposit
with the banks are loaned by them to big business. It is
your money and my money, the workers' money, that is
The longest title to appear on a large-size national bank note; it
has the engraved signature of Wm. B. Prenter, President.
Paper Money Whole No. 124
being utilized to finance the borrowing corporations and
employers of Labor. You may only have a few hundred
dollars on deposit with your bank; but there are millions
of workers like you, that have only a few hundred dollars
on deposit with their bank; and in the aggregate these few
hundred dollars amount to enormous sums, and repre-
sent tremendous financial strength.
The power of the employer hinges largely on his ability
to obtain the necessary money and credit to operate his
business. In the case of a strike, the need of the employer
for current bank loans is even greater than in normal
times. Yet the worker, until very recently, has never taken
into consideration that it is largely his funds that supply
the credit for his employer. The worker has contented
himself in his battle with Capital, to employ the strike,
very often a two-edged weapon, inflicting untold misery
upon himself and his family, and not impressing his
employer so much, as his employer was well fortified by
the money and credit he needed to carry him over the
period of non-production.
The union man should not knowingly buy goods
manufactured by the mill he is striking against. Yet, by
maintaining his funds in the non-union bank, he is just as
surely lending aid and comfort to the enemy of the labor
movement, as if he purchased the product of the mill.
While The Banker's Magazine had its earlier comments about
the organization of the co-operative national bank, it was also an
informative publication. In the same August 1920 issue, it
printed the following information about the bank, under the title
"Plans for Brotherhood Bank":
The Brotherhood of Locomotive Engineers Co-operative Na-
tional Bank will open for business soon in Cleveland, the charter
having been granted in Washington.
The bank will be a national bank, capitalized at $1,000,000,
divided into 10,000 shares of $100 each, with 10 percent
surplus to be paid in. STOCKHOLDERS WILL BE CONFINED
TO THE BROTHERHOOD MEMBERSHIP, AS A PROTEC-
TIVE PROVISION (author's emphasis). (A statement on the
face of each certificate indicated that the Brotherhood had the
right of first refusal in the event that the shares were to be sold,
and advised non-members against buying them.
The article indicated that the bank would have experienced
banking experts, already hired, in charge of commercial, sav-
ings, and trust departments. There would be a fiduciary depart-
ment to prepare wills for those who wished to do so. The bank
had published a circular indicating that its purpose was to AID
THE 85,000 MEMBERS, WATCH OVER THEIR WELFARE,
FURNISH INFORMATION AND ADVICE, AND ASSIST IN
BUILDING HOMES AND PROVIDE INVESTMENT FUNDS
FOR OLD AGE OR EDUCATION OF CHILDREN (author's
emphasis). The circular was signed by Warren S. Stone, Grand
Chief of the Brotherhood, and W.B. Prenter, First Grand
Engineer.
The charter mentioned earlier as being granted by The Comp-
troller of the Currency was number 11862. Warren S. Stone,
Grand Chief of the Brotherhood, was the president. The
general manager of the bank was Dr. Walter F. McCaleb. He
had formerly been vice-president of the Federal Reserve Bank in
Dallas.
The bank opened on November 1, 1920 with $653,000 of its
authorized capital of $1 million paid in. By June of 1923 its
Page 155
resources exceeded $22 million. But the bank received little at-
tention from the established Cleveland banks until it offered 4%
interest on deposits of public money; deposits of public money
had been receiving 3 1/2% interest in the established banks.
When the Brotherhood bank offered 4% on such funds, several
million dollars of state and county funds were transferred to it.
The Cleveland Clearing House Association was comprised of
all the city's larger banks—all except the Brotherhood bank. The
association began an advertising and publicity campaign de-
signed to convince the public that any bank not a member of the
clearing house, and offering unusually high interest rates (as was
the Brotherhood bank), was unsafe. The association devised a
"sign of safety" that was prominently displayed at its member in-
stitutions. The officials of the Brotherhood bank sent an open
letter to the Clearing House Association, inviting it to explain the
continued existence of the organization. The previously legiti-
mate functions of clearing houses had been taken over by the
Federal Reserve Banks, one of which was located in Cleveland.
The letter suggested that the real reason was to perpetuate a
banking monopoly, by regulating the rate of interest paid to
depositors, and to fix the fees and interest charges levied on bor-
rowers. When this letter was published, the clearing house cam-
paign was suspended.
Warren S. Stone
The Brotherhood bank took over the Peoples' State Bank of
Hammond, Indiana in October of 1921. This was done in co-
operation with local lodges of engineers, firemen, trainmen and
conductors. The bank was reorganized as the Peoples' Co-
operative State Bank, and opened for business on October 25,
1921. The bank's deposits doubled within four months, and its
resources exceeded half a million dollars.
The Brotherhood of Locomotive Engineers formed the first
labor investment company in the United States—the Brother-
hood Holding Company. It opened for business in Cleveland on
March 10, 1922. Warren S. Stone, also president of the holding
company, announced that it was being formed because of the
limitations placed on the national bank. In April 1922 the
holding company purchased the outstanding shares of the Not-
tingham Savings and Banking Company of Cleveland, and con-
verted it to a branch of the Brotherhood of Locomotive Engi-
neers Cooperative National Bank.
The Brotherhood of Locomotive Engineers also financed the
Coal River Collieries Company. At the beginning of the United
Mineworkers' strike in 1922, the Brotherhood Holding Com-
pany took over 6,000 acres of coal lands along the Coal River,
in Boone County, West Virginia, and Floyd County, Kentucky.
Page 156
A wage scale was set giving miners one dollar a day in excess of
the highest wage ever demanded by the United Mineworkers
from neighboring mines. The mines were improved and safety
devices installed. The company built bungalows, a school,
church, theatre, club house, sewage disposal system, and a
power plant. Strikers from neighboring mines were given
employment, saving substantial amounts of strike benefits from
the United Mineworkers' treasury. The coal mined was pur-
chased by cooperative associations of consumers in nearby cities
and sold by them to their members, at prices well below the
market.
In 1925, the Brotherhood of Locomotive Engineers organ-
ized the Northwest Corporation, to aid distressed farmers in the
northwestern United States. The corporation was to invest its
funds in the capital stock of national and state banks and trust
companies and purchase an established farm mortgage com-
pany. Northwest bought control of five banks in North Dakota,
including the First National Bank of Oakes, Dakota National
Bank of Aberdeen, and the First National Bank of Fullerton.
Failure of the Bank
The Brotherhood of Locomotive Engineers Co-operative Na-
tional Bank became, in a way, a victim of its own success. The
Brotherhood Holding Company was the vehicle that doomed
the bank. The Holding Company had been the idea of Dr.
McCaleb, an experienced banker. Its original purpose had been
to finance homes, buy and own securities and to act as invest-
ment broker for members who felt the urge to make some more
money. Before it had been established, Stone saw its possi-
bilities, and made himself president; McCaleb resigned to
become involved with a labor bank in New York, leaving an in-
experienced Stone in charge of millions of Brotherhood (and its
members') money. Stone (who died on June 12, 1925) and his
successor Prenter invested it badly. By 1927 the Brotherhood
was staggering under tremendous debts. Its ventures into real
estate, securities, insurance, trust, mortgage, and thrift agencies
were hopelessly insolvent. Prenter and his associates were
ousted that year, and Alvanley Johnston took control of the
union.
Paper Money Whole No. 124
Alvanley Johnston
OTHER COOPERATIVE NATIONAL BANKS
The success of the Brotherhood of Locomotive Engineers
Cooperative National Bank of Cleveland led other unions to or-
ganize cooperative national banks. The Cleveland bank offered
support to these banks and in several cases assisted with their
capitalization; when it became troubled some of them were re-
organized or taken over as well. A brief description of them
follows.
The Telegraphers National Bank of St. Louis
The Order of Railroad Telegraphers adopted a resolution at
its 1921 convention authorizing the organization of a national
bank "similar in scope to the one now operated by the Brother-
hood of Locomotive Engineers in Cleveland." Charter 12389
was issued to the Telegraphers National Bank of St. Louis. The
bank opened on June 9, 1923 with a combined capital and sur-
plus of $600,000. The Telegraphers National Bank added sev-
eral by-laws to those required by national banks:
The second title (after reorganization) for charter 11862 wi th engraved signature of A(luanley) Johnston, President.
Charter 11862 was reorganized as the Engineers National Bank
1. The bank allowed no loans to its directors or officers,
of Cleveland on February 15, 1928, but the reorganization and did not permit their endorsements on the obliga-
could not stop its fall. The membership had been assessed
tions of others to the bank.
repeatedly and the brotherhood had lost millions of dollars, 2. The bank voluntarily limited the dividend possibilities
much of it bad paper cleared through the bank. The drain on the of its stock to 10 percent, to eliminate "the induce-
bank's remaining resources during the early days of the depres- ment to take undue risks. . . .
sion forced it into voluntary liquidation on September 12, 1930
3. The by-laws provided for paying dividends to the DE-
and it was absorbed by the Citizens Bank and Trust Company of
POSITORS, as opposed to paying dividends to the
Cleveland. bank's SHAREHOLDERS (author's emphasis).
PAINICOMIKE32131A=INISM
cl.E6WNE115
0710SAL UNA OF
Si, !OITS
13 0
ArestaSair
Paper Money Whole No, 125 Page 157
Note from the bank owned and operated by the Railway Tele-
graphers—Series of 1929 with engraved signature of J. Manion,
President.
The bank operated successfully until 1942, when it was ab-
sorbed by the United Bank of St. Louis. (For more detailed in-
formation about this bank, see Ron Horstman's excellent article
in the January/February 1979 issue of PAPER MONEY, pages
24 - 25) .
The Brotherhood of Railway Clerks NB of Cincinnati
At their convention in Dallas in 1922, the Brotherhood of
Railway and Steamship Clerks, Freight Handlers, Express and
Station Employees voted unanimously to organize a coopera-
tive national bank. They also voted to construct a $300,000
building to house the bank and the union offices in Cincinnati.
Charter 12446 was granted to the Brotherhood of Railway
Clerks National Bank of Cincinnati on July 16, 1923. The
bank's capital was $200,000 and there was a paid-in surplus of
$50,000. The bank was placed in receivership on June 26,
1930. It was restored to solvency on July 2, 1930, and placed
in voluntary liquidation on August 22, 1930. It was absorbed by
the Central Trust Company of Cincinnati.
The B.L.E. Cooperative NB of Boston
Charter 12540 was issued to the Brotherhood of Locomotive
Engineers Cooperative National Bank of Boston in May, 1924.
The bank was reorganized as the Engineers National Bank on
January 20, 1927 and again to the Continental National Bank
of Boston on August 15, 1930. The bank closed and consoli-
dated with the Boston National Bank on December 26, 1930.
Labor Cooperative NB of Paterson, New Jersey
Charter 12560 was issued to this bank on May 23, 1924. Its
authorized capital was $200,000, much of it furnished by the
Brotherhood bank in Cleveland. The bank was reorganized as
the Labor National Bank of Paterson on August 20, 1928.
The Brotherhood Cooperative NB of Portland
Charter 12613 was issued to this bank in Portland, Oregon in
December, 1924. The title was changed to the Brotherhood Na-
tional Bank on June 4, 1929 and later changed to the Columbia
National Bank on November 22, 1929. It was placed in volun-
tary liquidation on July 1, 1931 and was absorbed by the
American National Bank of Portland.
The Brotherhood Cooperative NB of Tacoma
Charter 12667 was issued to this bank on December 27,
1924. The bank's title was changed to the Washington National
Bank in the City of Tacoma on May 12, 1930. The bank was
placed in receivership on February 2, 1932.
The Labor Cooperative NB of Newark
This bank was issued Charter 12771 in 1925. The title was
changed to the Labor National Bank on January 20, 1927. It
was reorganized as the Union National Bank in Newark on
August 2, 1929.
This note represents the third "labor" national bank.
The Transportation Brotherhoods NB of Minneapolis
Charter 12282 opened for business on December 18, 1922.
It was absorbed on February 4, 1930 by the Marquette National
Bank of Minneapolis.
The Brotherhoods Cooperative NB of Spokane
This bank, with Charter 12418, opened on July 23, 1923.
The title was reorganized as the City National Bank of Spokane
on December 1, 1928. The bank was placed in receivership on
November 20, 1930 because of a deficiency in assets.
The Labor National Bank of Jersey City
This other New Jersey bank was issued Charter 12939 in
June, 1926. It was placed in voluntary liquidation on Septem-
ber 18, 1931 and was absorbed by the New Jersey Title
Guarantee and Trust Company of Jersey City.
The Brotherhood NB of San Francisco
Charter 13016 opened in December, 1926. The bank was re-
organized as the City National Bank on May 15, 1929. The
bank was placed in voluntary liquidation on August 11, 1932
and was absorbed by the Pacific National Bank of San Francisco.
Page 158
EPILOGUE
Peter J. Brady, President of the Federation Bank of New
York, a labor bank, stated in 1925 that labor had gone into the
banking business in self defense, after many banks had used
funds deposited with them by trade unions to back industrial
combinations that were fighting the union movement. "We
operate a legitimate business and we grant loans upon a
business basis to every one who has good collateral. We are not
in the banking business simply to finance strikes, as some may
think, and we do not loan to a union except on sufficient col-
lateral to protect our investors. We find that in our position we
can be of great assistance in bringing capital and labor together,
because we are in a position to see both sides of a dispute. I pre-
dict that within a few years there will be a string of labor banks
across the country." Brady was wrong about the "string of labor
banks," as December 1926 marked the last national bank char-
tered by organized labor. At one time organized labor owned or
controlled some 38 banks in the United States, but the move-
ment waned in the late 1920s.
As noted above, most of the cooperative national banks
organized and operated by trade unions closed or were taken
over during the Great Depression of the 1930s. With so many
union workers unemployed, the drain on the banks' assets was
overwhelming. But the progress made by these banks in chang-
ing the operational methods of modern banks cannot be meas-
ured. Before the Commercial National Bank of Washington
"experiment", the trade unions and their financial activities were
taken for granted by the established banks. Organized labor and
their banks showed the nation's financial community that they
were a force to be reckoned with, and that holds true today.
NATIONAL BANK NOTE ISSUES
Assembling a representative collection of the national bank
notes issued by the eleven national banks discussed in this article
would be quite a task. Several of the banks issued large-size
notes only, although some issued small-size notes under a differ-
ent title. The following chart indicates the types of notes issued
by each bank, and the rarity of their surviving notes as defined
by the Standard Catalog of National Bank Notes by John
Hickman and Dean Oakes.
The Brotherhood of Locomotive Engineers Cooperative Na-
tional Bank of Cleveland, Ohio, with Charter 11862, has the
distinction of having the longest bank title to appear on large-size
national currency. But remember the union that organized
Charter 12446, The Railway Clerks National Bank of Cincin-
nati? Can you imagine the headaches at the Bureau of Engrav-
ing and Printing if the union had chosen to use its full name on
their notes — "The Brotherhood of Railway and Steamship
Clerks, Freight Handlers, Express and Station Employees Na-
tional Bank of Cincinnati, Ohio"?
CHARTER 1902 PLAIN BACK 1929-1 1929-2 RARITY
11862
5
B.L.E. Cooperative NB of Cleveland
11862 5 5
Engineers NB of Cleveland
12282 5
Transportation Brotherhoods NB of Minneapolis
12389
5-10-20 5-10-20 5-10-20
Telegraphers NB of St. Louis
Paper Money Whole No. 124
CHARTER 1902 PLAIN BACK 1929-1 1929-2 RARITY
12418 5
5
Brotherhoods Cooperative NB of Spokane
12446 5 5 3L 5S
Railway Clerks NB of Cincinnati
12540 5 5
B.L.E. Cooperative NB of Boston
12540 5 5 6L 5S
Engineers NB of Boston
12540
5 6
Continental NB of Boston
12560 5-10-20
5
Labor Cooperative NB of Paterson
12613 5
4
Brotherhood Cooperative NB of Portland
12613
5 6
Brotherhood NB of Portland
12613 5 6
Columbia NB of Portland
12667 5
5 5L 5S
Brotherhood Cooperative NB of Tacoma
12267 5
6
Washington NB in the City of Tacoma
12771 NO NOTES ISSUED WITH THIS TITLE
Labor Cooperative NB of Newark
12771 5 6
Labor NB of Newark
12771 5 5 4
Union NB of Newark
12939
5-10-20 5-10-20 5L 6S
Labor NB of Jersey City
13016 5 4
Brotherhood NB of San Francisco
13016 10-20 3
City NB of San Francisco
REFERENCES
Labor's Money, by Richard Boeckel. Copyright 1922, Harcourt, Brace,
and Company, New York.
Standard Catalog of National Bank Notes, by John Hickman and Dean
Oakes. Copyright 1982, Krause Publications, Iola, Wisconsin.
Additional Safeguards, Additional Interest. Copyright 1923, The Tele-
graphers National Bank of St. Louis.
The Bankers Magazine. Various issues 1920-1925. Copyright, The
Bankers Publishing Company, New York.
Official Year Book of Organized Labor — 1926. Page 29. Copyright
1926, The American Federation of Labor, Washington, D.C.
The Cleveland Press. Series of Articles by Ira Wellborn, May-June
1933.
ACKNOWLEDGEMENTS
Thanks to the following who provided assistance and additional infor-
mation for this article: Charlie Cashion, Dennis Simmerman of the
Brotherhood of Locomotive Engineers, Mercantile Library in St. Louis,
and Ron Horstman.
2
3L 2S
5
4L 2S
Paper Money Whole No. 124 Page 159
Clifton Manufacturing Co.
Pioneer in Southern Textiles
by BRENT H. HUGHES, SPMC 7
A SERIES of inventions beginning in 1773 took textilesfrom an English cottage industry to a factory enterprise.The flying shuttle, the spinning jenny, the roller spin-
ning frame and the power-loom were gradually developed, as
was the technique of the division of labor. In this system differ-
ent groups of workers performed the separate steps of carding,
roving, spinning and weaving as raw cotton was turned into fab-
ric. Many factories were built, exports increased, and a lot of
money began to flow back to England. The government then
began to jealously guard the devices used in the cotton mills and
banned the export of machinery or even blueprints and draw-
ings.
Affluent colonists in America preferred English textiles to our
crude products, but after the Revolution the various states began
to encourage industrialization. English mechanics were urged to
emigrate to America with the promise of financial rewards far
beyond anything they might make in England. One example
was Samuel Slater who smuggled out drawings of English ma-
chinery when he left for America. He landed in Philadelphia in
1789 and soon thereafter became manager of a textile mill at
Providence, R.I. owned by Moses Brown, a prominent Quaker
merchant. Slater designed new machinery based on memory
and his few sketches. In ten years Brown and Slater opened a
second plant, followed by others in New Hampshire and Massa-
chusetts. Incredibly the mills were staffed by children four to ten
years old. This was not considered unusual at that time. Ameri-
can farm children had always been put to work in the fields
while very young.
In 1814 Francis Cabot Lowell, a Boston importer, organized
the Boston Manufacturing Company. He erected, at Waltham,
Massachusetts, the first factory in the world to convert raw cot-
ton into finished cloth with power machinery inside the walls of
a single building. He, too, had smuggled sketches out of Eng-
land after a visit there. A machinist named Paul Moody took the
sketches, added his own ideas and produced machines driven
by water power.
The company's cotton products became popular and by 1820
the company had expanded to the point that the local river
could not provide enough power. The owners went looking for
another stream and found a thirty-foot waterfall on the Merri-
mack that could be harnessed. They quietly bought up the sur-
rounding area and in 1822 set up the Merrimack Manufacturing
Company, capitalized at $600,000. The town that grew up
around the mill was named Lowell in honor of the deceased
Francis Cabot Lowell.
By 1826 the company was producing two million yards of
cotton goods per year. The waterfall created only about sixty
horsepower of energy but this was enough to operate all 3,600
spindles in the factory. The American textile industry was on its
way.
The New England mills depended upon a supply of cotton
grown in the American South. Logic would have moved the
plants closer to the cotton fields but there was resistance from
the mill owners who wanted to stay in the North and Southern
plantation owners who felt that factories would siphon off their
cheap labor. Thus the seeds of the American Civil War were
sown.
As early as 1845 a South Carolina industrialist, William
Gregg, had railed against the evils of one-crop agriculture. He
wanted to change things, he said, by building textile mills on
fast-moving Carolina rivers to process Carolina cotton using
Carolina farm hands who would live in company-owned houses
near the plants. Gregg built his first textile mill at Graniteville,
S.C. in 1846 and did fairly well with it. But there was still a gen-
eral resistance to industry in any form.
The Civil War, of course, changed everything and after Re-
construction a gradual change of attitude took place. Poverty-
stricken Southerners realized that industry had to be brought in if
the people were to survive. Alabama, with its rich iron deposits,
was to see a "Pittsburgh of the South" develop at Birmingham;
North Carolina turned tobacco processing into big business and
other areas encouraged the infant textile industry to expand.
Since water power was essential, the mills were drawn to the
Piedmont area of the Carolinas and Georgia where swift rivers
tumbled down the eastern slopes of the Appalachians on their
way to the sea. Many local people bought stock in the new com-
panies. One newspaper, whose editor probably had a financial
interest in the local mill, glowingly described it as "a fine exem-
plification of what Southern brains and energy, devoted to busi-
ness and consecrated to God" could do. A mill owner, in re-
sponse, stated that he had built his mill and village so that "hap-
py, God-fearing, working people could enjoy the conveniences
and comforts of improved social conditions. We make Ameri-
can citizens and run cotton mills to pay the expenses". But the
profits, for the most part, still flowed North where New York and
Boston banks reaped the dividends.
For the farm hand turned factory hand it turned out to be less
than the Paradise he thought it would be. The hours were long,
the pay was low, and most people ended up owing practically
all of their wages to the company store for essentials already
consumed. It was still the hand-to-mouth existence he had
known on the farm—only the circumstances were different. But
there was some small measure of security in a steady job and
there were three meals a day. So the era of the Southern cotton
mill began.
Typical of the textile villages was that of the Clifton Manufac-
turing Company near Spartanburg, South Carolina. The Paco-
let River flows through the area, at one point becoming quite
swift at a place known as Hurricane Shoals. An iron works was
there first, the site of a British-American skirmish on August 7,
1780. After independence the area lay dormant for about 50
years. In the early 1830s, Dr. James Bivings came from nearby
Lincolnton, North Carolina to build one of South Carolina's
SMARR'S
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1
..7/,,,,d.6x,,-4),,,/;//;,74 , -0 LA-1-4,,,,,k)Zi
'6,/,..44-///*fi.;//?X/' CLIFTON MANUFACTURING CO. .hrtiz; cra/V; es. or/
44.- ;A,' , 4:',, , ,,,/,/, , 6,/,//' OW /, /////f'iJe'W i/ 4,. V (i,vr,/,, .,..,,./,;. Kra/X■wiir/ew
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Page 160
largest textile mills. His town was called Bivingsville at the time;
the name was later changed to Glendale.
The author made this sketch of Dexter Edgar Converse, founder of the
Clifton textile mills, from a photograph in Spartanburg County, A
Pictorial History by Philip N. Racine.
Paper Money Whole No. 124
Dr. Bivings sold out 20 years later to a group that included
Dexter Edgar Converse, a native of Vermont. Converse was
very successful and in 1880 founded the Clifton Manufacturing
Company. The village was called Clifton because it is located on
steep hills and cliffs on both sides of the river. The first plant,
known as Clifton Number One, started production of fabric in
1881. Plant Number Two was built about 1889 and Number
Three, named Converse, in 1896. The three villages, tied to-
gether by company-owned houses for workers, formed a town
with almost everything the people needed within walking dis-
tance. The company's general store, a pharmacy, post office,
farmers' market and active railroad depots contributed to the
general prosperity.
June 6, 1903 brought a devastating flood of heavy rains to
the area and the normally placid Pacolet River became a raging
torrent. Dams above Converse gave way and walls of water all
but washed away the mill. The tall brick smokestack atop the
boiler room came down, sending a huge spray of water high in-
to the air. Swept away were 60 mill houses, the company store
at Number Two and other smaller buildings. At least 50 people
lost their lives. Total damage amounted to over $3.5 million.
Dexter Converse had died in 1899 and operations of the
company had been turned over to A.H. Twichell, his brother-in-
law. After the flood, Twichell moved quickly to rebuild the dam-
aged buildings and get back into operation. By 1907 the com-
pany had 1,482 employees with an annual payroll of
$348,000. The total population of the village was 3,085. The
mills made drills and print cloth, including the red bandanas
used by railroad workers. In contrast to today, the company had
huge exports to China.
This certificate for 20 shares of common stock in the Clifton Manufacturing Co. was issued on January 13, 1899. It was personal-
ly signed by Dexter Edgar Converse, President, and A. H. Twichell, Treasurer. Mr. Converse died shortly after signing this certifi-
cate and operations of the company were taken over by Mr. Twichell, his brother-in-law, who brought the company back after the
devastating flood of 1903.
The sunburst and fluffy
clouds behind the com-
pany name seemed ap-
propriate when combined
with the open cotton boll
and foliage shown at left.
"King Cotton" was the
popular symbol of the
American South.
To Converse Savings Bank,
Converse, S.
Check designers and
printers had their favorite
symbols, one of which
was the magnificent
American eagle. This de-
sign could be pre-printed
and the specific company
name added as orders for
checks were received at
the print shop.
Paper Money Whole No. 124 Page 161
This check has the im-
printed tax stamp for two
cents, a so-called tempor-
ary tax imposed in 1862
to help finance the Civil
War. It was finally re-
pealed in 1882, only to
be reinstated in 1898 to
support the Spanish-
American War expenses.
This check was written in
1883 and the tax stamp
was rubber-stamped ver-
tically with the words
"Stamp Redeemed". Ap-
parently the government
rebated the two cents to
the Clifton Manufacturing
Co. and allowed them to
use up their supply of
checks.
By 1915, when this
check was written, print-
ers were gradually getting
away from the very or-
nate designs that were
popular around the turn
of the century and be-
ginning to use "clean"
type faces.
i
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o
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ILTNEEIXT or g* ,/ e—a--4,
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_____
Page 162 Paper Money Whole No. 124
.L
$1.00 1404 A •
Clifton and Commas, S C 192
Received of CLIFTON MANUFACTURING CO,
Coupon Book to the amount of
One Dollar
, THE COUPONS IN THIS BOON ARE
SSiued L
issuealV
Date
The following members of my family are entitled to use this
book in purchasing goods for my account:
593
•••• FTON/,
MANU FACT URI NG CO.
c......rorr.oaa...
'1404A
MANU FACT URI NG CO.
If presented by any person other than above named I hereby
authorize the
CLIFTON MANUFACTURING COMPANY';
to take up and creditql*account with the outstanding coupons.
' The receipt of this coupon book shall be considered a full assent
to this regulation.
1.7i119,
MANUFACTURING CO.
LIM. .
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