(The Patriot and Free Press; Cuba NY)

A Century Of Banking - PART 1

Editor’s note: John P. Herrick, oil historian of Olean, N.Y., founder of the Bolivar Breeze, and for more than 20 years a resident of Allegany County, has written a story of “A Century of Banking in Allegany County.” A personal acquaintance with the bankers and banks of the county during the past half century makes it possible for him to write a new chapter in the history of the county. The first of the installments appears here today.

By John P. Herrick

                The first banking offices in Allegany County were established in the early fifties- a century ago. One of them was a branch office of a Buffalo bank, another a small bank transplanted from Rochester to Cuba- both short lived. A majority of the pioneer banks were established by alert country merchants who opened a depository account with a New York bank, accepted deposits, sold drafts on New York, discounted notes and made collections. One private banker issued shinplasters and another circulated due bills.

                These first banks were privately owned, not subject to examination and made no reports to Federal or state officials. The measure of their success rested on the faith of the community in the honesty and ability of the managers. The son of one banker became governor of New York.

                The completion of the Erie Railroad across the county in 1851, uniting the Atlantic Ocean and the Great Lakes, brought in its wake an increase in population, new industries and a demand for expanded banking facilities. The first State Bank was chartered at Cuba in 1855 and the first National Bank at Friendship in 1864.

                The discovery of a commercial oil well at Petrolia in 1879 and at Richburg in 1881, led to the opening of banks in Richburg and Bolivar- and an increase of banking facilities at Wellsville, Friendship, Andover and Cuba, all of the communities profiting from the new source of wealth.

                As early as 1855 the converting of private banks into state banks began and in 1864 a private bank became a national bank. In each instance, the private banker and his associates were the first to subscribe for stock and take part in the management of the new State and Federal institutions.

                In the century that has elapsed since the first private banks were established, only three failures were recorded. The closing of a national bank at Angelica in 1886 was not harmful to depositors as there was a surplus left after all creditors had been paid.

                There are in operation today in Allegany County, seventeen banking offices – eight National banks, nine State institutions – and no private banks. The total capital, surplus and undivided profits of the 17 banks on December 31, 1953, was $3,896,209.96. Total deposits were $33,896,517.37, of which $14,690,368.48 was in government bonds.

                All of these banking institutions are under Federal or State control, subject to regular examinations, paying dividends to stock-holders, adding steadily to surplus and undivided profits, and furnishing their communities with a satisfactory banking service.   Four of the 17 banks have trust powers. They are First Trust Company and Citizens National Bank of Wellsville, The Cuba National Bank and First National Bank of Cuba. Deposits in all of the institutions are insured in the sum of $10,000.

                It is not likely that nay new banks will be established in Allegany County in the foreseeable future, but there may be consolidations of existing banking offices which might, like the changes that have taken place in Friendship and Andover, following consolidations, improve local situations and strengthen the county banking structure. The population of Allegany County in 1950, the latest census figures available, was 43,784.

                The services that a well-managed bank can offer to its patrons are of great value – insured safety of savings or checking accounts; safe keeping of insurance policies, securities, valuables and heirlooms; the cashing of checks on other banks, the collection of drafts on distant points, self-liquidating loans for short or long periods and for manifold purposes, at a reasonable rent, for the use of the funds. A bank does not loan money. It rents it for stated periods at the going rate to individuals, partnerships or corporations, whose credit standing is satisfactory. Those banks, permitted by law and equipped to render trust service, cover even a broader field of usefulness.

                There were no large fortunes made by banking in Allegany County during the first hundred years of banking, but a number of moderate size estates were created. As far as known, one bank president and at least two bank directors accumulated fortunes exceeding a million dollars in oil and gas. The salaries of bank officers during the first century were moderate, in keeping with the net earnings of the banks, but have been increasing during the past 25 years.

                6/10/1954-Continued - PART 2