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Encyclopedia of Cleveland History

CANAL BANK OF CLEVELAND

CANAL BANK OF CLEVELAND

The CANAL BANK OF CLEVELAND was one of several banks organized after Ohio increased its oversight of the state banking system in 1845. Founded by Erastus F. Gaylord, S. H. Mann, and John L. Severance, the Canal Bank, which primarily served canal shippers, opened in July 1846 at the Merchants' Exchange Bldg. at Superior and Bank (W. 6th) Sts., with capital of $200,000. Mismanaged from the start, the firm quickly experienced financial problems; however, cashier Theodoric C. Severance kept the bank in business for several years by falsifying bank records to deceive state bank investigators. The bank's unstable finances, combined with the fluctuating value of paper money and the growing threat of railroad competition, brought about its failure in Nov. 1854 and resulted in a "run" on the bank by its depositors. The Northern Ohio Lunatic Asylum at NEWBURGH had $9,000 on deposit there, and when trustee Dr. HORACE ACKLEY demanded it, the bank refused. At the doctor's request, sheriff's deputies attempted to break open the bank's vault with sledgehammers until bank officials agreed to turn over its remaining assets to the asylum.