Truth is – America’s economy runs on good banking. And if the economy is doing well – the banks do well. And the opposite is also true. If banks are struggling – the economy is usually having a tough go as well.
So it was in the 1850’s. For most of the decade, all across the United States, commerce was prospering, and many banks, merchants, and farmers were seizing the opportunity to take risks with their investments. Here in Iowa, thousands were flooding into our state. Existing river cities such as Dubuque, Davenport, Muscatine and Burlington were growing rapidly, but even more people were using those communities as jumping off points into the untamed West.
Read more about the very earliest era in Iowa banking (1838-1850) – when privatized banks were actually illegal!
As Iowa’s capital city, Iowa City had become the focal point where not only the state government met, but our city also hosted the U.S. Land Office – where everyone who was buying or investing in Iowa land had to come to make those financial transactions. As we discuss in another post, Iowa City’s first lawyer, H.D. Downey – who arrived here in 1840 – was appointed by President Millard Fillmore to oversee the Iowa City-based Land Office. It’s here, Downey most likely came in contact with three highly-successful Davenport bankers, John P. Cook, his brother – Ebenezer Cook, and George B. Sargent. And in the early 1850’s, the four men teamed up to expand their existing Davenport bank to include Iowa City with Downey as the local agent.
According to historical records, Iowa City’s first bank – Cook, Sargent & Downey – Bankers & Real Estate Brokers – opened in a small building located on the southeast corner of Clinton and Washington Streets – across from Capitol Square (see pic above). By 1854, plans were in place for a new three-story building – a Banking House – that would house both the bank and other vital city businesses. Below is a sample land transaction – Iowa City’s first physician – Dr. Henry Murray – selling land in Cedar County using Cook, Sargent & Downey in September 1857. Read more here.
(JP-043) This rare postal cover, mailed by Dr. Henry Murray, is postmarked in Iowa City on September 19, 1857 and is headed to Henry Leamer in Hollidaysburgh, Pennsylvania. Leamer was a well-to-do businessman who never left Blair County, PA, and was obviously looking to invest in cheap land in Iowa.
That same year, Cook, Sargent & Downey invested in a beautiful promotional piece – a city map drawn up by map-maker J.H. Millar, including twelve illustrations by the budding Iowa City artist – George H. Yewell. Read more here. On that map (bottom right corner), Yewell placed the new Banking House on Clinton Street – though we know the facility wasn’t completed until 1856.
Designed by architect Willett L. Carroll, this three-story building replaced the smaller framed structure and opened in 1856. According to The Daily Evening Reporter – Aug. 12, 1856…
The foundations of the Banking House are laying deep and broad, worthy to support what is destined to be the finest edifice in the interior of Iowa.
With the 1856 opening of the new building, the southeast corner of Clinton & Washington Streets became known around Iowa City as Bank Corner – a name that remained in place over the next century. Standing across from the center of state government with its domed capitol, the new Banking House symbolized the city’s prosperity and permanence.
(JP-029) Here are two rare postal covers (above) and one business letter (below) from 1857 – both coming from the final months of the financial boom of the 1850’s. Cook, Sargent & Downey Bank and the Iowa City firm owned by James H. & Jas. Otis Gower were heavily involved with land transactions around the State of Iowa, and both had offices in the new Banking House on Banking Corner.
If you look closely at the business letter dated February 17, 1857, we see that H.D. Downey is contacting Asa C. Call in Algona, Iowa – discussing the possibility of buying land in and around Kossuth County in north central Iowa, working though a Land Office in Ft. Dodge. Again, in the mid-to-late 1850’s, land speculation – particularly in Iowa – was an exploding opportunity.
Two major events occurred in the fall/winter of 1857 – one was a state-wide event, and the other was an international one. Let’s start with the big one…
As we mentioned earlier, throughout the 1850’s, the economy – not only in America, but across the world, was booming. With transportation becoming easier, money was flowing rapidly and commerce was exploding – especially in the new West where the railroad was bringing people in by the thousands. In New York City, the big banks that worked with banks in Europe were regularly receiving large shipments of gold from Central America. Keep in mind that the world economies – at this time – were all based on the gold standard – so whatever gold a bank had on hand determined its net worth.
On September 11, 1857, the SS Central America – known as the Ship of Gold – was on its way to New York, when a category 2 hurricane sank the ship – causing the tragic loss of 425 lives, the crew, and 30,000 pounds of gold! The news of this disaster spread quickly due to the use of the recently-developed telegraph – which then, almost instantly sparked our nation’s first coast-to-coast financial disaster – The Panic of 1857.
The first big company to fail during the Panic was the Ohio Life Insurance and Trust Company, which then led to more financial woes for other business. This eventually pushed the railroad industry to lay off hundreds of workers, and soon, almost every bank and financial institution across the country was facing serious cash problems. From the records we have, it appears that Cook, Sargent & Downey, along with many other Iowa-based companies, were being stretched to the limit.
In October and November of 1857, the State of Iowa physically removed all of its vast influence from Iowa City, relocating the capital to Des Moines. This move, while approved back in March of 1857, didn’t really affect Iowa Citians until it actually occurred. But as you might imagine – with the loss of the state capital, and with the State University still under-developed – the Iowa City economy took a huge hit going into 1858. And quite honestly, that financial stress really didn’t let up until after the Civil War ended in 1865.
Between 1854 and 1857, CS&D had expanded into ten different markets, but with the 1857 economic panic, most of it came crashing down, leaving Iowa City with one big hole in the banking market – and one big empty space on Banking Corner. Local investors found other options to carry the city through, and fortunately by 1860, the State University started to pick up some speed.
The community basically limped through the 1860’s, until former Governor Samuel J. Kirkwood and other leading citizens organized the Johnson County Savings Bank, opening on Banking Corner in 1872. In 1912, the Banking House was replaced with the new six-story office building – which is, today, occupied by Midwest One Bank.
While CS&D and other banking institutions failed during the Panic of 1857, many of the individuals went on to be successful in other investments. H.D. Downey bought large areas of farmland around Iowa City – including the southeast section of today’s Plum Grove Neighborhood and the land where Big Grove Brewery is today. J.H. Gower remained active in Iowa City as well, investing in our city until 1877, when he relocated to Lawrence, Kansas.
Here’s a tip of the old hat to Iowa City’s Banking House on Banking Corner.
Kudos to the amazing resources below for the many quotes, photographs, etc. used on this page.
A Rare Glimpse at Early Iowa City, Mary Bennett, State Historical Society of Iowa, April 21, 2020
Representative Hugh Denwiddie Downey, Legislators, The State of Iowa Legislature
Gowers’ Land Agency, 1855, State Historical Society of Iowa
Cook, Sargent & Downey ad, The Daily Evening Reporter, September 27, 1856, p 3
J.A. Gower ad, The Daily Crescent, August 24, 1857, p 3
Johnson County Savings Bank, Leading Events in Johnson County, Iowa – Volume 1, Clarence Ray (C.R.) Aurner, 1912, p 453
Asa Cyrus Call, John R. Call, Kossuth County, IAGenWeb
Asa C. Call, Early Algona, earlyalgona.weebly.com
Ambrose A. Call, Early Algona, earlyalgona.weebly.com
Judge Asa Cyrus Call, Find-A-Grave
The History of the S.S. Central America “Ship of Gold”, pcgs.com
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