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General and special stores

     The fur traders often turned merchants and started stores. They bought from and sold to both Indians and whites. As the settlements grew the stores expanded and became general stores, which sold groceries, cloth and clothing, shoes, and hardware. All through the nineteenth century the general store was the most common kind of retail establishment. Soon, however, in the larger towns there were special stores each handling only one branch of merchandise such....

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as groceries, dry goods, men's clothing, shoes, or drugs. There were also dealers in lumber, fuel, and farm implements.

    Near the close of the century the largest stores were department stores. These were really a group of special stores in one large building under one general management.

Retailers and wholesalers

     The early merchants, though mostly retailers, also did some wholesale business. Retailing is selling to consumers while wholesaling is selling to retailers. Wholesalers import much of their merchandise from other states or even from foreign countries. Most larger towns in Iowa now have one or more wholesale establishments.

    In the present century retailing has undergone many changes. Retailers now advertise more and use displays more. Changes have been very noticeable in the grocery line. Many grocery stores are now self serve, and the tendency in both small and larger towns had been towards expanding into self-serve supermarkets.

Pay up

     Credit rules have changed. Now, much retail business is on a strictly cash basis. If credit it given, it is usually only for 30 days, unless it is installment credit according to which payments are made monthly or quarterly.

Need for money

     In primitive society there is but little need for money. Primitive man exchanges services for service and goods for goods; or services for goods and goods for service.

    In civilized society money is an absolute necessity. Governments and banks under government regulation issue money. Banks accept money on deposit or for safe-keeping and lend money for interest. They pay interest on time deposits or saving.

Banks illegal in early Iowa

     People in early Iowa knew very little about banks. Some believed that banks could not be honestly managed. And before 1857 banks could not be legally operated in Iowa.

    The money circulating in Iowa up to that time consisted of copper, silver, and gold coins, some of which were foreign coins; and paper currency from banks in other states. This was very confusing. There was too little coined money, and the paper money was of uncertain value.

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Iowa State Bank

     The new constitution of 1857 permitted privately owned banks to operate in the State. And it also provided for the establishment of a State Bank of Iowa. This was not just one bank, but a system of banks. The system consisted of branch banks, which were located in the larger Iowa cities. Each branch had its own board of directors and its own stockholders. But the branches operated under the State organization.

    The state Bank of Iowa was in successful operation from 1857to 1865. The bank issued paper currency which always circulated at par. In other words, it was always good and reliable money.

     During the Civil War, a new Federal bank system was launched. This was the National bank system, which, acting through local National banks, issued currency guaranteed by the United States. The First National Bank of Davenport was the first bank in the United States to apply for a charter under this system.

Many kinds of banks

     In a few years there were National banks in most of the larger Iowa cities. There was no need for the State bank of Iowa then, and it was discontinued in 1865.

    But banks privately owned, which were incorporated under State law, could operate. Before long there were many of them. They were known as State banks if they did an ordinary banking business. Those stressing savings were known as savings banks. Other banking institutions were investment banks and trust companies. A recent kind of bank is the credit union.

    In 1922 Iowa had more banks than any other state in the Union. There was scarcely a town with a few hundred inhabitants, which did not have at least one.

         During the depression in the twenties and early thirties, many Iowa banks were in trouble. Some saved themselves by merging with others, but a large number had to close. Today (1956) there are less than 700 banks in Iowa, about one-third of the number in the early twenties.

Questions and Exercises: Compare retailing and wholesaling. Compare general stores and department stores. What is installment buying? Why is money needed in civilized society? What did some early Iowans believe about banking? Why was the Iowa State Bank currency always good money? Compare National bank and State bank. Which issues currency? Name different kinds of banks under State supervision. What is a credit union?