1828: High Street Bank
Early Banking in Rhode Island Fed the Industrial Revolution and Made Providence a Center of Finance in the 19th Century
In the early 19th century, the agricultural and mercantile economy of Providence was transformed by the Industrial Revolution in America, begun in nearby Pawtucket at Slater Mill. One essential ingredient for this transformation was capital. Money. The ability to gather funds from investors who were willing to extend potentially risky loans to entrepreneurs who were developing new methods of production.
Here, in Canonicus Square, there still remains one such institution formed at the time of the early industrial expansion that was driven by cotton and woolen mills. Citizens Bank now sits at the intersection of Westminster and Cranston Streets on the site of the old Hoyle Tavern (another institution of finance and exchange from another age). Citizens Bank, however, got its start just a few dozen yards east where the High Street Bank was established in 1828. The first bank established in Rhode Island was the Providence Bank in 1791, organized by local merchants who took advantage of the young country's new banking laws to pool their capital to fund ventures in shipping and industry.
By the early 19th century, smaller mechanics and entrepreneurs were opening banks to aggregate capital for their projects. Around the time the High Street Bank was formed, Rhode Island had more than 60 commercial banks, the largest number of banks per person in the country, and the highest per capita amount of funds and notes in circulation. This capital greased the wheels of the Industrial Revolution.
By the late 19th century, New England was the most capitalized region on the planet. Local merchants and leaders of the new industries were the founding partners of the High Street Bank, like Amasa Sprague, owner of a number of cotton mills and a governor of the state. Within a few steps of the bank, original founders Duty Greene and Robert Knight had stores that were also places of exchange and deal-making. Robert Knight's two nephews, Benjamin and another Robert, later became the most significant cotton mill owners in the country. Having an uncle on the board of a bank would have been a valuable connection for these early entrepreneurs.
Around 1800, Rhode Island banks reported capital stock from investors of a few hundred thousand dollars. By about 1860, the Rhode Island banking system had capital stock of $18.7 million; over half a billion dollars in today's money. As the city's economic fortunes declined in the mid-twentieth century, so did its financial sector, leaving only a few traces of this crucial component of Providence's once spectacular economic growth.
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