Worcester Business Journal

W o r c e s t e r 3 0 0 : C i t y o f I n n o v a t o r s 37 1822-1921 T he Worcester Safe Deposit Co., one of the first banks in the state, evolved from the counting house to an established entity in Worcester's second century. It became a bellwether in the evolu- tion of the banking system at the time, during what became described as the Suffolk Bank Episode. In late 1825, Boston-based Suffolk Bank sought to coerce the Worcester bank to maintain its Boston account at Suffolk rather than in Worcester in order to receive bond bills at face value rather than current trading value. e result of establishing the account at Suffolk, would be that interest on bonds accrued to Suffolk rather than to Worcester (and other country banks) while held there, and became, from the standpoint of the country banks, a non-inter- est-bearing deposit until such time as the country banks sought redemption. is served as a drag on the Worcester bank's stock value at a time when loan applications from the growing manufacturing sector outnumbered by four to one the bank's ability to grant them. In addition to the lack of contemporaneous reporting on the value of financial instruments, redemption was slow, cumbersome, and risky, involving messengers carrying silver specie back and forth between the banking enterprises. e Worcester bank rebuffed Suffolk Bank, keeping its deposits with e New England Bank (not to be confused with Bank of New England, established 1930). Instead. Suffolk hit back, saying if Worcester would ask New England to redeem its bills over the counter, it would consider it a favor; otherwise, the redemption would continue to require payment in silver specie. No dice, said Worcester. In July of 1826, a messenger from Suffolk presented the Worcester Bank with $38,000 in notes redeemable, more than half of what was in circulation at the time and demanded payment in specie. e bank had $39,000 in credit from the New England Bank and tendered a payment dra. e messenger said he'd accept the dra if Worcester agreed to keep deposits and redeem bills at Suffolk. e Worcester bank again refused, paying the messen- ger $28,000 in specie and sending him back to Suf- folk. at bank sent a sheriff to Worcester to attach the bank's real estate in security for the balance of payment. at story hit the newspapers. Years later, as Worcester's banking community matured, its banks sent daily messengers to Boston to record and facilitate transactions. ese essential services would eventually become the function of the Federal Reserve's overnight intrabank lending capability and clearing house. — Christina P. O'Neill Redeeming qualities How a Worcester bank stood up to Boston Redemption was slow, cumbersome, and risky, involving messengers carrying silver specie back and forth between the banking enterprises. Years later, as Worcester's banking community matured, its banks sent daily messengers to Bton. e then offices of Worcester County Institution for Savings Image | Worcester Historical Museum

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