History of Portland Oregon Financial Institutions

The first banking house of Portland was established in 1859 by William S. Ladd and C. E. Tilton, under the firm name of Ladd & Tilton. It was a private enterprise and was undertaken to facilitate the commercial business of the city. For several years thereafter it was the only banking institution in the city and fully met all the demands made upon it. In 1866 the First National Bank and the Bank of British Columbia entered the field. In 1868 these three banks had a working capital, including deposits, of $1,500,000, ample for the mercantile business then conducted, since the entire exports of Oregon at that time did not exceed $1,250,000. Money lending on mortgages, by corporations, was then unknown, and there was little mortgage money in the hands of individuals. So much was this the case that interest readily commanded twelve per cent with a brokerage of five per cent. and often a much higher rate was obtained.

In 1869, 1870, 1871 and 1872, the construction of that portion of the Northern Pacific railroad which connected the Columbia River with Puget Sound, and the extension of the Oregon & California railroad through the Willamette Valley for 200 miles, considerably increased the imports into Oregon, which were principally rails, rolling stock, tin and salt in British ships. These vessels for the first time carried wheat and flour to Europe. Foreign capital was thus attracted to Oregon, and in 1873 the Oregon and Washington Trust Company was formed in Scotland, with a capital of $250,000, exclusively for mortgage loans on farms. In 1875 its capital was increased to $500,000, and in 1878 it had invested over $1,000,000 in the State.

Little progress was made in commercial banking, however, from 1874 to 1877 on account of the stoppage of railroad construction and the small immigration of this period. The three banks referred to held practically control of the commercial banking of the entire State from 1868 to 1878. So carefully had the moneys of these institutions been invested that the commercial panic, which, in 1875, caused the suspension of the Bank of California, and many similar banking institutions, did not affect Portland at all.

The Oregon and Washington Savings Bank was the fourth bank organized in Portland. It came into existence in 1876. It was followed in 1878 by the Bank of British North America, and in the next two years the Portland Savings Bank, the Metropolitan Savings Bank, and the Willamette Savings Bank entered the field.

From 1879 to 1883 the construction and extension of the Villard system of railroads, which included the Oregon Railway and Navigation Company, Northern Pacific, Oregon and California, and Oregonian Railway, under one management, caused a vast increase of population. The commerce of the State took rapid strides and the money spent in the community, from the building of 1,890 miles of railway rapidly enhanced the value of the banking institutions of Portland. Fortunately the gold coin basis on which the banks first did business in Oregon, from 1860, was continued and prevented that depreciation in value of securities which was so common in the western states after the war.

When the foreign export trade of Portland advanced from $1,250,000 in 1868, to $12,936,493 in 1884, and the import trade to, $28,203,746, considerable local capital of the city sought for further extensions by the subsequent organization of the Portland National, Ainsworth National, Commercial National and latterly the Oregon National and the Merchants National Banks, with a united paid up capital of $750,000. These five National institutions, with the First National, Ladd & Tilton, Bank of British Columbia, London and San Francisco banks practically do the entire commercial banking business of the State, some of them having many subsidiary institutions all over Oregon and Washington which are tributary and feeders to the Portland banks.

It is safe to say that Portland, at the present time, has as strong banking institutions as any city in the United States of equal population. All are doing a safe business and are conducted on a conservative basis, and the people of Portland take pride in their management and reputation. As there are no State laws requiring the publication of the deposits or capital of State banks and private bankers or those of foreign banks doing business in Oregon, their present condition and aggregate strength cannot be accurately ascertained. The following is a summary of the condition of the six national banks of Portland taken from the last report of the United States Comptroller of the currency for the year ending in December, 1888: Total paid up capital, $1,250,000; surplus fund, $187,500; undivided profits, $573,359.64 ; individual deposits (excluding government deposits), $3,627,497.79; loans and discounts, $3,717,789.12; invested in United States bonds, $825, 000; total liabilities, $7,209, – 734.65; while the lawful money reserve was more than double the amount required by law. These figures reveal the remarkable healthful condition of the national banks of Portland. Indeed, there has never been a failure or suspension of any national bank in Oregon.

The following table will show the available banking capital of the city for the year ending December, 1889, compiled from reliable sources:

The average standing deposits in the ten banks named above is equal to $10,000,000, which, with the legitimate banking capital and the capital of the various loan companies of the city would make the present available banking resources of Portland fully $20,000,000, a statement based on a conservative rather than over estimate.

A Clearing House was opened in Portland, July 15, 1889, and from that date we are enabled to give the reports for the first twenty-four weeks of its existence.

Banking statistics such as the above are conceded to furnish the best possible gauge for determining the real condition of a city’s commercial standing, and Portland’s exhibit in this regard places her, according to population, as a trade center, unsurpassed in the United States.

In mortgage banking the success of the Oregon and Washington Trust Company from 1873 to 1880, when it was consolidated with the Dundee Mortgage Company at a premium of seventy per cent. profit, caused foreign mortgage companies to seek investment on the North Pacific Coast. In 1880 the Pacific Loan Company of Liverpool, and the Dundee Mortgage and Trust Investment Company, of Scotland, entered the field. Subsequently the American Freehold and Land Mortgage Company, of London, and the New England Mortgage Company, of Connecticut, followed by the American Mortgage Company, of Scotland, in 1881 and the Oregon Mortgage Company, in 1883, all of which opened offices at Portland. These companies had a combined capital of over $3,500, – 000 invested in the State of Oregon and Washington Territory, which was the means of developing, to a great extent, the lands of Eastern Oregon and Eastern Washington, supplying the new settlers, who arrived from 1879 to 1883, through the building of the Villard system of railroads, with. money to improve the vast tracts of land which was then opened up for settlement. Their aggregate strength, however, alarmed the granger portion of the State Legislature and in December, 1882, a special mortgage tax law was passed, declaring that all mortgages should be taxed at their face or par value. The effect of this law has been, in the main, harmful. The companies previously named immediately called in all matured loans and have greatly reduced their investments since the law went into effect. That the development of the resources of the country has been retarded by this legislative attempt to decrease the -profits to the mortgagor, is an acknowledged fact. Foreign capital, in a great measure, has sought other fields, while the mortgage demand being much greater than the supply, has caused a higher rate of interest to be maintained than would have been the case if competition for mortgage securities had prevailed.

In the following pages we have aimed to present more in detail the history of each banking institution in Portland.

No change occurred in the firm of Ladd & Tilton, private bankers, from the time they commenced business, in April, 1859, until 1880, when Mr. Tilton withdrew. They commenced business at 73 Front street, and so successfully were they that, in 1861, the capital was increased from $50,000 to $100,000. A few years later the earnings of the bank turned into the business brought its capital up to $1,000,000. When the partnership was dissolved, that is, in 1880, bills receivable amounted to upwards of $2,500,000. As an evidence of the sound and safe business conducted by this concern, it may be stated, that when the bank made its statement, in 1888, there was less than $1, 300 of this balance still outstanding. Business was conducted on Front street until 1869, when the present bank building, corner of First and Stark street was completed. The career of W. S. Ladd, who has been at the head of this financial house from the start, is so thoroughly given in other portions of this volume as to make further mention in this connection unnecessary. His close business calculation and powers of financiering have made possible the accumulation of the largest private fortune in the Pacific Northwest. He still personally superintends and manages his extensive interests with all the shrewd, far-seeing business sagacity which marked his younger years. Since the retirement of Mr. Tilton, Mr. Ladd’s eldest son, William M., has been a partner in the bank. He inherits many of his father’s traits, a strong will, perseverance and sterling integrity. He was prepared for college at Andover, Massachusetts, and graduated from Amherst College in 1878.

The First National Bank, as its name implies, was the first bank organized on the Pacific Coast under the national banking law, and remained for several years the only one. It was organized early in 1866 and opened its doors for business in May of the same year with a paid up capital of $100,000. L. M. Starr was president and James Steel, cashier. The opening was announced by advertisement in the Oregonian of May 9, stating that the bank was the designated depositary and financial agent of the government, and that exchange would be drawn on San Francisco and New York at favorable terms. For some time the bank occupied the upper floor of the building, No. 73 Front Street.

In August, 1869, the greater part of the stock of the concern passed into the hands of Hon. Henry W. Corbett and Hon. Henry Failing, who have since so successfully controlled its destinies and extended its business. Its capital has been increased from $100,000 to $500,000, while its foreign business has been extended until now it has correspondents in ever important city in the world and has become the principal banking house of the city. Since 1869 Henry Failing has been president of the bank and Henry W. Corbett, vice president. The other officers are: G. E. Withington, cashier and H. J. Corbett, assistant cashier. The present building occupied by the bank on the corner of First and Washington streets was erected in 1883 at a cost of $80,000, and is the finest bank building in the city.