On Wednesday, October 25, Dr. Terry A. Bryan presented “Delaware’s Fraudulent Bank,” the story of the Bank of Milford. Dr. Bryan, who is a dentist by trade, working in nursing homes throughout Kent and Sussex County, is an expert on historical documents and paper money.
“I have strong interests in the banking industry and its history along with the paper issued by those banks in the form of currency,” Dr. Bryan said. “I tend to collect things that were not intended to last, such as paper currency and sheet music.”
Dr. Bryan explained that Delaware, which is known throughout the country as a banking haven, has had that reputation for much longer than many people think. He explained that the majority of the banks opened in the state were ethical and above-board. In the 1800s, banks had a personal touch with bankers who knew the people of the area.
“Bankers knew who were good farmers or businessmen, who drank too much, who was always in trouble,” Dr. Bryan said. “They lent money based on what they personally knew about the people of the area. Delaware’s banks were very profitable and they were extremely ethical. The only exception was the Bank of Milford which will go down in history as the only example of a criminal bank in the state. In the 1960s, when I would bring up this bank, I found out that a lot of people in Milford were still very angry about the entire thing, even though the bank closed in 1853.”
The Bank of Milford was chartered in 1851 by the state and its first location was on Northwest Front Street in a house next to what eventually became the First National Bank of Milford. As the fortunes of the bank increased, they began building a banking house on the corner of Walnut and Northeast Second Street.
“At the time the bank was conceived, Milford was an up-and-coming town,” Dr. Bryan said. “There was discussion of the railroad, there was regular steamboat service and business interests in town felt that they needed a local bank. At the time, there was a branch of the Bank of Smyrna in town, but the people of Milford felt they needed a local bank. During this period, Milford was the third largest town in Delaware. Only Wilmington and Smyrna were larger.”
When the state issued the charter, they required that commissioners had to be local and that a certain percentage of stock in the bank had to be sold to locals. Several prominent Milfordians served as commissioners, including Peter F. Causey, William Tharp, James P. Lofland, Henry B. Fidderman, Daniel Currey, Curtis S. Watson, Truston P. McColley, Caleb Smithers and William Cannon. The amount of capital stock required by the charter was paid on August 17, 1852. The president of the bank was Adrian Olcott and the cashier, William T. Shannon. Three men from New York, Frank Bloodgood, Allen Clark and Charles Colgate were allowed to subscribe for the entire stock of the bank with an understanding that the Board of Directors would be chosen from local men.
“The New York men, however, had no intention of keeping the bank operational in Milford,” Dr. Bryan explained. “They paid to fund the stock and then immediately borrowed money from the bank using that stock as collateral. When they paid the loans, they used checks that the cashier, who was also from New York, held.”
During that era, banks printed their own currency and the Bank of Milford was no exception. The bankers travelled to Philadelphia in order to have their currency designed and printed by Danforth Bald & Company, well-known currency printers. Danforth was a talented fine artist and many of the drawings depicted on Bank of Milford currency are his own designs. The currency depicted various vignettes and symbols native to Milford, such as shipbuilding and blacksmith foundries.
“People started asking questions about the bank when they were not being given change in gold or silver but instead received paper script notes,” Dr. Bryan explained. “This was not common as banks used gold or silver to back the currency they were handing out. As fewer and fewer people received actual coin from the bank, the commissioners and other leaders in Milford grew suspicious. Milford attorney James R. Lofland finally reported those suspicions to the Attorney General and the Court of Chancery investigated the bank.”
After an investigation by Attorney General William Saulsbury, the charter for the bank was revoked in 1885. Litigation resulted in payments of ten cents on the dollar to those who were owed money by the bank. Upon settlement, it was ordered that all currency issued by the Bank of Milford be burned in the courthouse stove with officers of the court witnessing the burning. The contractor for the unfinished bank sued and ended up taking possession of the building which still stands today. However, not all of the money was burned.
“There are quite a few $1 and $2 notes still available,” Dr. Bryan said. “In fact, years ago guards at the state archives would give out the money as a souvenir because they had so much stored there.”
According to Dr. Bryan, bankers Mr. Alcott and Mr. Shannon disappeared without a trace, taking not only all the bank ledgers but also any hard money that remained. Dr. Bryan and the late Catherine Downing have tried to track down what happened to the men over the years, but without success. It is possible the men continued their criminal banking ways in other towns around the country.
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