Citizens Bank of Louisiana

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New Orleans. Appraisal by the Citizens Bank of Louisiana of three slaves, property of the widow Reggio. In French.

Photo Credit: John Minor Wisdom Collection. Box 11. Folder 13: Document 470. 1849 February 10. Date accessed: October 23rd, 2013.

Contributors

The Citizens Bank of Louisiana represents more than just another banking institution in southern Louisiana. The Citizens Bank of Louisiana embodies all of the things that make this state, along with the city of New Orleans, unique. It was responsible for the creation of a large majority of the infrastructure in Louisiana in the 19th century. Many of these projects can still be seen today. From its initial inception throughout several tumultuous periods, this bank has remained one of Louisiana’s most widely known banks.

History

The Citizens Bank of Louisiana was established amid the “banking-boom” of New Orleans, which occurred between 1831 and 1835. The bank officially received its charter on April 1st, 1833, in response to the city of New Orleans’ need for public improvements. The Citizens Bank was one of six banks established during this period: City Bank of New Orleans, New Orleans Canal and Banking Company, Union Bank, Commercial Bank of New Orleans, and the Mechanics and Traders Bank. [1] The bank was Louisiana’s largest “property bank” whose defining feature was its immense capital. At $12,000,000, the capital of Citizens Bank represented one of the largest amounts in the nation, second only to the Second Bank of the United States. [2] From the outset, the bank was a front runner, outselling other local banks in bonds at alarming rates. The bank was mainly utilized as a resource for the improvement of houses and plantations. However, it was also contracted by entities such as the Lake Borgne Navigation and Canal Company for the building of a road from the Mississippi River to Gentilly ridge. [3] Although the bank did good business for several years, the Citizens Bank of Louisiana went into liquidation under court order on October 25, 1842. [4] This was due, in large part, to the great panic of 1837 along with the ludicrous levels of inflation experienced among Southern banks at this time. The Citizens Bank of Louisiana, however, did not stay closed for long. It reopened the same year, under a new charter granting it seven branches throughout the state. Citizens Bank still exists today, with branches all throughout the state of Louisiana.

Monetary Policy

Throughout the first several years of its existence, Citizens Bank was dominated by its president, Edmund J. Forstall, and his “sound money” policies. [5] Many banking historians consider Forstall’s policies concerning the liquidity and elasticity of the Citizens Bank money supply to be far ahead of their time. His contemporary approach to the merging of investment and commercial banking into one entity are still hailed today. Citizens Bank was unique in the fact that it operated simultaneously as two separate, distinct entities. The bank functioned as a “commercial bank” and as a “loan office.” [6] Essentially, Forstall transformed the bank’s balance sheet into two separate businesses. The commercial bank would include cash liabilities (notes and deposits) along with all cash assets, or rather “real business paper.” [7] The loan office side was tasked to handle all of the long-term mortgage credits and other “accommodation loans” that are typically associated with a property bank, as was the bank’s intended purpose.

Financial Crisis

The Citizens Bank of Louisiana thrived in its first several years under its “easy credit” system, wherein almost anyone could receive a loan. [8] However, beginning in 1837, the banking climate in New Orleans, as well as throughout the world, began a downward spiral.

Slave Policy

According to Archival Records, the Citizens Bank of Louisiana conducted many of its business dealings in and around the slave trade in New Orleans. This was most common in dealings regarding the collection of collateral for unpaid debts and the settling of estates. Once in the possession of the bank, the slaves would then be sold to the highest bidder at auction in New Orleans. [9]

Works Cited

  • Rightor, Henry. Standard history of New Orleans, Louisiana, giving a description of the natural advantages, natural history … settlement, Indians, Creoles, municipal and military history, mercantile and commercial interests, banking, transportation, struggles against high water, the press, educational … etc. 586-593. Chicago: The Lewis Publishing Company. 1900.
  • Green, George D. ““Banking and Finance in Ante-bellum Louisiana (1804-1861): Their Influence on the Course of Economic Development.” PhD diss., 579-581. Stanford University. 1968.
  • Rightor, Henry. Standard history of New Orleans, Louisiana, giving a description of the natural advantages, natural history … settlement, Indians, Creoles, municipal and military history, mercantile and commercial interests, banking, transportation, struggles against high water, the press, educational … etc. 586-593 Chicago: The Lewis Publishing Company. 1900.
  • Green, George D. ““Banking and Finance in Ante-bellum Louisiana (1804-1861): Their Influence on the Course of Economic Development.” PhD diss. 579-581. Stanford University. 1968.
  • Green, George D. ““Banking and Finance in Ante-bellum Louisiana (1804-1861): Their Influence on the Course of Economic Development.” PhD diss. 579-581. Stanford University. 1968.
  • Green, George D. ““Banking and Finance in Ante-bellum Louisiana (1804-1861): Their Influence on the Course of Economic Development.” PhD diss. 579-581. Stanford University. 1968.
  • Green, George D. ““Banking and Finance in Ante-bellum Louisiana (1804-1861): Their Influence on the Course of Economic Development.” PhD diss. 579-581. Stanford University. 1968.
  • Green, George D. ““Banking and Finance in Ante-bellum Louisiana (1804-1861): Their Influence on the Course of Economic Development.” PhD diss. 579-581. Stanford University. 1968.
  • Rightor, Henry. Standard history of New Orleans, Louisiana, giving a description of the natural advantages, natural history … settlement, Indians, Creoles, municipal and military history, mercantile and commercial interests, banking, transportation, struggles against high water, the press, educational … etc. 586-593. Chicago: The Lewis Publishing Company. 1900.

This page was last modified on 12 November 2013, at 02:03

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Citizens Bank of Louisiana

Toulouse St. between Royal St. and Chartres St.