The building and rebuilding of Chicago
The Merchants Savings Loan and Trust Company—Bank of America's oldest heritage bank in Chicago—was instrumental in both the development of Chicago during its population boom and in the rebuilding of the city after the Great Fire.
In the ten years following 1850, Chicago's population boomed from 30,000 to 109,000. Even with the explosive rate of development that decade, the city couldn't grow fast enough to keep up with the expanding population. But it was growing faster than any U.S. city and Chicago was becoming a transportation and commercial powerhouse almost overnight. By 1857, the city needed a reliable bank to support its continued growth.
At that time, the city was home to 12 banks, 18 railroad lines, more than 1,500 businesses and a Board of Trade. In these early days, banking regulations were minimal and the industry was largely unreliable. Banks were printing their own currency, often without the adequate gold and silver reserves to back them. Because of this, banks were failing and customers were paying the price.
A group of leaders saw this problem and decided to establish a trustworthy and reliable bank, the Merchants Savings Loan and Trust Company—Bank of America's oldest heritage bank in Chicago. Among its principal founders were William B. Ogden, the first mayor of Chicago; Isaac Arnold, the close friend and biographer of Abraham Lincoln; Cyrus Hall McCormick, the agricultural industrialist and inventor of the mechanical reaper; and Grant Goodrich, a founder of Northwestern University.
All went well for a time. Chicago continued to expand, passing St. Louis and Cincinnati as the major city for industry in the West. In 1860, the Illinois candidate Abraham Lincoln was nominated at the Republican National Convention in Chicago. The city became the most important hub in the American railroad system, which reached the Pacific in 1869. During the 1860s, industries prospered, especially those involving the transformation of raw materials from the West into products destined for the East.
In 1871, the Great Fire razed Chicago. Wooden houses, commercial and industrial buildings, and private mansions were all consumed in the blaze. The Merchants Savings Loan and Trust Company building was destroyed. But not before its president, Solomon Smith, and two clerks rushed in, opened the vault and rescued $4 million in cash, checks, securities and bonds. With the assets hidden in their clothing, they made their way back to Smith’s home.
Before they could return for the bank’s books, the building was gone. In the aftermath of the fire, the bank opened for business in the basement of Solomon’s home. In keeping with its reputation for reliability, the bank took the word of its customers for verification of their accounts. To deepen the confidence of the community and its customers, the Merchants Savings Loan and Trust Company alone decided to pay in full on all accounts. Other banks only offered to pay 25 cents on the dollar for lost accounts.
The years following the Great Fire are known as the Great Rebuilding—thousands of buildings had to be rebuilt, including those in Chicago's central business district. With new fire laws in place, buildings had to be constructed using fireproof materials like brick, stone, marble, terra cotta and, later, steel. Because businesses preferred plain-looking buildings, given that fancy ornaments cost more money, a new, streamlined style emerged in Chicago architecture that became known as the Chicago School of architecture. As a result, Chicago became the nation’s architectural capital and was home to the first metal-framed skyscraper. These building materials were more expensive than wood, and with most of Chicago's banks failing after the fire, the Merchants Savings Loan and Trust Company played an important role in the Great Rebuilding.
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