Any photos not otherwise credited are from the personal collection of Frank Passic, Albion Historian.
Albion Recorder, January 3, 2002, pg. 6, 7
It was exactly 90 years ago this coming New Years Day that Albion experienced the biggest financial scandal in its history. The Albion National Bank was closed by the U.S. Bank Examiner on January 1, 1912 after the discovery during the final week of December 1911 that over $325,000 in bank funds had been embezzled by the cashier of the bank. At the time it was one of the biggest banking scandals in U.S. history, in the days before FDIC insurance. Depositors eventually received about 30% of their money back, but many lost their life savings and were financially ruined. The bank was located in downtown Albion in what today is the north half of the recently-closed Federal Discount Company (Fedco).
The story of the history of the bank and the scandal is covered in my book “Albion’s Banks and Bankers,” (1985) and also in my article “The Albion Bank Scandal,” published in the January, 1998 issue of the national publication, “The Numismatist.”
National banks were established across the country during the Civil War as a way to soundly finance a national currency system to replace worthless money issued by private banks. Local National banks would deposit bonds and other securities into the U.S. Treasury, and the Treasury in turn would issue banknotes on the name of the local National bank. These were good anywhere and were backed by the U.S. government. This system was in use until it was discontinued during the Great Depression. Other money systems were used concurrently here in the U.S. such as United States Notes, Gold Certificates, Silver Certificates, and Federal Reserve Notes.
Albion was no exception. National banknotes in denominations of $10 and $20 were released into circulation by our local national bank from 1866 to 1912. It went under three successive charter names: The National Exchange Bank of Albion (1865-1885); The First National Bank of Albion (1885-1905); and The Albion National Bank (1905-1912). The bank had originally been founded in 1865 by Samuel V. Irwin (1823-1890), after whom Irwin Avenue is named.
The banknotes were the large size notes that were issued here in the U.S. before 1928. Records show that over $400,000 worth of $10 and $20 bills were circulated by the bank during its existence. They were gradually turned back into the Treasury as they became worn through the years, and the bank received credit for notes returned. Records show just a few thousand dollars worth unaccounted for, although it is likely most of that amount was turned in also due to murky redemption record keeping methods.
Banknotes were printed by the Bureau of Engraving and Printing in Washington, D.C. for the U.S. Treasury in sheets of four. The first three notes were of the $10 denomination, and the last one the $20. The Treasury Department would add a national serial number and seal, and national signatures. A local bank serial number would also be added at the bottom. The local bank would then receive these uncut sheets. The cashier of the bank, Henry Montgomery Dearing, and the bank president, Dr. Willoughby O’Donoughue, would hand sign these at the bottom in the appropriate designated places. They would then take a pair of scissors and cut the notes as needed for public circulation. In all my years of researching Albion history I have never seen a real Albion National Bank bill. Does anyone have one?
In the National Numismatic Collection at the Smithsonian Institution in Washington, D. C. however, is a certified printers proof sheet for the Albion notes dated January 20, 1905, as well as proof sheets from thousands of other National banks from across the country. From the Archives this week we picture the Albion National Bank $10 and $20 bills, courtesy of the Smithsonian Institution which supplied the photograph of the original in their collection. As proofs, these are missing the U.S. national serial numbers and signatures which would have been added later before being placed into circulation. But this “master plate” printing clearly bears the name of “The Albion National Bank, Michigan” in the center. This is a “Series of 1902” note which would have been issued by the bank during its existence from 1905 to 1912. The $10 note features President William McKinley, while the $20 denomination pictures Hugh McCulloch, a former Comptroller of the Currency and Secretary of the Treasury.
A very Happy New Year to all the readers of this column.
Albion Bank notes $10 & $20
All text copyright, 2020 © all rights reserved Frank Passic