First National Bank, Princeton, MN (Charter 4807)

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1882 $5 Brown Back banknote with pen signatures of S. S. Petterson, Cashier and Frank Hense, President

The First National Bank of Princeton, MN (1892 - 1893) was one of the shortest lived national banks in the state, having been organized on October 18, 1892 and liquidating just 14 months later on December 18, 1893. [1]

Early History

Advertisement in the Princeton Union.

Recent research in a contemporary newspaper, the Princeton Union, reveals the story of this esoteric institution. Frank Hense became president of the Mille Lacs County Bank in July 1890. It was the first and only bank in this rural and sparsely populated county, and Hense saw opportunities for growth as the local agricultural economy expanded. While Hense called the Princeton area his home, he frequently traveled west to Centralia, Washington to nurture other businesses, including another banking enterprise, The First National Bank of Centralia.

On the local scene, competition in the banking business ramped up dramatically in the summer of 1892. When Hense heard talk of another bank being organized in town, backed by many of the town’s leading citizens, he upped the stakes and opted to go national. The Citizens State Bank opened before Hense could fully convert his operations into a national bank, but only by a few weeks. The First National Bank of Princeton was capitalized at $50,000 while the competition was much smaller. It opened under the new title on Monday, October 31, 1892.

Bank History

Story in the Princeton Union.

It did not take long for the first shipment of National Currency to arrive in Princeton, and it did so with an eye catching story in the Union on December 8:

A pile of sheets of five dollar bills several inches high lying on the paper cutter in the Union office last Saturday morning excited the cupidity of the editor, and had it not been for the restraining presence of Cashier Petterson of the First National Bank the editorial “we” might have turned up missing. The “boodle” in question had just been received from Washington by the First National, and as the notes were printed in sheets of four Mr. Petterson utilized our keen-bladed paper-cutter in severing and trimming the same. The notes bear date of Oct. 18, 1892 and are signed by S. S. Petterson as cashier and T. H. Caley as vice president of the bank, and on the upper left hand corner of the note is an excellent vignette of the late President Garfield. We volunteered to take charge of the currency but Cashier Petterson declined our offer with thanks.

While Hense tended to business in Centralia, cashier Swan S. Petterson managed the operations. He brought several hundred sheets of uncut $5 Princeton nationals to the Union office for use of its paper cutter, and he received some free advertising in the process. National bank notes promoting the home town would be yet another competitive edge.

While the First National Bank had bragging rights for its financial power, its physical presence did not carry the same weight. The structure did not compare well to the newly built two-story Citizens State Bank, a vignette of which proudly appeared on its newspaper advertisements immediately adjacent to Hense’s ads.

The dry spring and summer of 1893 led to predictable events in many small towns. Old wood-framed buildings were susceptible to fire, and late in the evening on Thursday, August 3 a business block of downtown Princeton was victimized. The inferno claimed several businesses. The brick walls of the First National Bank proved to be a flimsy barrier to the progression of the fire that night. The bank building was a total loss, but the safe withstood the ravages and kept its vital records intact, and saved its remaining inventory of national bank notes.

Story in the Princeton Union.

Within days a makeshift office of the bank was established within the same building as the Citizens State Bank. The newspaper was quick to point out that the two institutions had not consolidated, but that negotiations were pending to that end. Hense came to the conclusion that continued competition in the face of this loss would not be a productive use of his capital. He sold his interest and merged the First National Bank in November, and in the reorganization, cashier Petterson was promoted to president of the new Citizens State Bank.

This began a turbulent period of time for Frank Hense. A year later he closed his national bank in Centralia. He returned to Minnesota in 1895 to open a bank in Aitkin, about 75 miles due north of Princeton. While in Aitkin he was indicted by a grand jury in Washington State on the charge of larceny in connection with his failed Washington bank, although Minnesota Governor Clough refused the demand for extradition. Hense resigned his position with the Aitkin County Bank in 1897. He continued to live in Aitkin for the remainder of his life, being a judge of probate, occasionally stopping in Princeton to see his old friends, as observed by the Union.

Advertisement in the Princeton Union.

Swan S. Petterson took a page from the Hense play book and converted his state bank into the second First National Bank of Princeton (charter 7708) in 1905. He was president of the bank until it closed in the Great Depression.

Bank Notes Issued

The First National Bank, while capitalized at $50,000, opted to maintain a minimal circulation of only $11,250. This was accomplished with an initial shipment of 562 ½ sheets (2,250 notes) of $5 Series of 1882 Brown Backs, the only denomination and type employed by the bank. Another 35 ½ sheets (142 notes) were delivered to the bank in the summer of 1893 to replace worn notes that were returned for redemption, totaling 598 sheets (2,392 notes) with bank serial numbers 1-598. A total of $11,960 in National Banknotes was issued by this bank between 1892 and 1893.

After the bank closed, its outstanding circulation continued to decline, as noted in the books of the Comptroller of the Currency. In 1910, the last year for which the circulation was tracked, it had the smallest outstanding circulation of any Minnesota bank, at only $105 or 21 notes.

Year Outstanding
1893 11,250
1894 6,740
1895 4,290
1896 2,690
1897 1,120
1898 570
1899 325
1900 240
1901 195
1902 190
1903 170
1904 170
1905 170
1906 120
1907 120
1908 115
1909 115
1910 105

Official Bank Title(s)

  • The First National Bank of

Bank Presidents and Cashiers

First National Bank Presidents and Cashiers during the National Currency Era (1889 - 1935): [2]

President:

  • Frank Hense, 1892 – 1893

Vice President:

  • T. H. Caley, 1892 – 1893

Cashiers:

  • S. S. Petterson, 1892 – 1893
  • George Newbert, 1892 – 1893

Other Banknote Signers

  • There are currently no other known signers for this bank.

References

  1. This biography is based on an article originally published in Paper Money, the journal of the Society of Paper Money Collectors. See https://www.spmc.org/journals/paper-money-vol-lvi-no-2-whole-no-308-marchapril-2017.

    Hewitt, R. Shawn. "The First National Bank of Princeton, Minnesota, Charter 4807." Paper Money, No. 308, March/April 2017, p. 88. Chattanooga, TN: Society of Paper Money Collectors (2017).

  2. Banks & Bankers Historical Database (1782-1935), https://bbdata.banknotehistory.com.