Celebrating More than 150 Years of Community Banking in Maine

Founded in 1870, Kennebec Savings Bank is proud of its long history supporting the people of Maine. On this page, read an extended history of the origins of Augusta, early banking in Maine, and the formation and history of Kennebec Savings Bank, which was originally written in commemoration of the Bank's 150th anniversary in 2020.

Section 1: Early Augusta

Years prior to the Bank's incorporation in 1870, Augusta was already on the move, known as a great publishing center and manufacturing center for cotton, wool and paper. Notable events included the Kennebec Bridge, built in 1797, which defined Augusta as a city occupying both sides of the Kennebec River. Maine gained statehood in 1820 when it separated from Massachusetts. The Kennebec Journal was established in 1825 by Luther Severance and Russell Eaton. In 1830, the population of Augusta was 3,980. In 1832, Augusta became the capital city of Maine. The ability to harness the Kennebec for drinking water and power created a great boom for manufacturing in Augusta. In 1834, the Kennebec Dam Company was chartered, and in 1846 a 10,000-spindle cotton mill was established at the dam site, the fourth oldest mill in the country (later becoming Bates Manufacturing, famous for World War II field jackets and shoe linings). The hub of activity in early Augusta was Water Street. Along it were drug stores, clothing stores, banks, publishing houses, an opera house (one of Kennebec Savings Bank's early locations), hotels, the post office, doctors and dentists, saw mills, and horse stables. The surrounding countryside was still mostly farmland. The area prospered but not without its hard times.

Dominating influences of the time were railroad transportation, the Civil War, fires and floods. In the early 1800s, the Kennebec River was the preferred mode of freight transportation via steamers to Portland and Boston. The river was an important resource but it was also the source of very damaging floods along Water Street. Notable flood years were 1832, 1870 (160 feet of the Kennebec dam was swept away), 1896, 1923, and 1936.

Transportation began to evolve in the mid-1800s. The first locomotive reached Augusta in 1852 from Brunswick, via the Kennebec & Portland Railroad, headed by John S. Cushing. An "elegant" depot was built in Augusta that was later destroyed by fire in 1864 along with 12 freight cars. By 1855, a railroad line had been built from Augusta to Fairfield, and the following year track was laid to Skowhegan, then Bangor. The line was known as the Somerset & Kennebec and was headed by Joseph Morill of Augusta. Augusta became the connecting point of the two railroads, providing service between Bangor and Boston. Rail was initially viewed primarily as passenger transportation and steamboats were still considered the source for freight transport. In the late 1860s, "scoot" steam trains operated between Augusta to Gardiner to accommodate heavy passenger travel between the two cities. Railroads, however, soon became the primary mode of freight transport.

Maine soldiers served proudly in the Civil War, most notably remembered by the leadership of General Joshua L. Chamberlain (later to become Governor of Maine). He and his Maine troops were instrumental in ending the Civil War. It was General Chamberlain who led the honor guard the day of the surrender of General Robert E. Lee to General Ulysses S. Grant in Virginia. Augusta played an important role during the war. In 1861, Augusta was the mobilization point for Kennebec Valley troops en route to war areas. Three thousand sick and wounded soldiers were treated between 1864 and 1865. By 1866, a home for Civil War Veterans was established at Togus.

Fires occurred on a regular basis in Augusta. Historical accounts describe the 1865 fire as the worst. The fire started at approximately 5:00 AM on Sunday, September 17, 1865. Quickly spread by the wind, it destroyed all but four buildings between Bridge and Winthrop Streets. Most of the buildings at that time were still constructed of wood, although the first brick buildings were built in the area in 1806 by Robinson & Crosby. The fire destroyed all of the banks in town. The cause of the fire was said to be arson, set by a China lobsterman, George W. Jones, who was upset about the police response to the theft of his lobsters by soldiers. He sought revenge. Jones escaped to Portland and was later caught setting a house on fire. Four and a half months after the fire, buildings along Water Street were well underway to reconstruction. One of the banks destroyed by the fire, and the first bank to rebuild following the fire, was Freeman's National Bank, which later became the first home of Kennebec Savings Bank.

Section 2: A History of Banking in Maine

Until its separation in 1820, Maine was a district of Massachusetts, and Boston was the financial, political and social center of the whole territory. There was, however, considerable resistance to control by Massachusetts. Maine businessmen increasingly saw the advantages of bank notes, especially for real estate speculation.

In the early days of banking, loans were often made to stockholders before capital had been paid in. Banking was investor-driven vs. depositor-driven, and was based on large commercial ventures such as real estate (primarily large land holdings and railroads). Problems of unredeemable notes were common. Regulations were almost non-existent and hard to enforce.

It was not unusual for early Maine banks to be established by a single family in their home or by small associations, further complicating regulation.

Section 3: Mutual Savings Banks

James Savage is one of those credited with introducing this movement to the United States. He obtained this idea from plans for a London institution that hung over a fireplace in Gardiner, Maine. The time was right in Maine for mutual (“mutually beneficial”) savings banks that began primarily for wage-earners and seamen. They also created a savings outlet for people outside of mainstream business, such as women. The first savings bank was established in Maine in 1819: "The Institution for Savings for the Town of Portland and Vicinity", which lasted until 1843. A total of 25 savings banks were incorporated in Maine between 1820 and 1860. In 1859, Maine savings banks reached $1 million in deposits.

Until 1860, federal law prohibited commercial banks from accepting savings deposits. Then the establishment of the state banking system made the affiliation of savings banks and commercial banks possible, thereby expanding customer services. Later, the national banking system (1863-1930) replaced the state banking system. A prime reason for establishing national banks was to encourage investors to purchase federal and municipal bonds to help pay for the Civil War.

Historical accounts of early banking consider this era the “experimental period" – lawmakers and bankers alike were pioneers with few precedents to guide them. During the period from 1860 to 1873, a rapid growth in banking occurred, creating both new possibilities as well as many problems. As a result, from 1873 to 1875, many banks failed because of a business panic, due (for the most part) to failed investments in American and European railroads, and failed oil and mining speculation in the western states. These failures subsequently caused a depression.

Despite its share of ups and downs, Maine grew and prospered. By the mid-1800s, the general population began earning wages that enabled them to save money. The check became a common medium of payment for business affairs by 1865. Deposits exploded in the years from 1866 to 1870. By 1870, savings bank deposits totaled $15,829,000. This increase in deposits is attributable to three major factors: confirmation that savings banks were established entities; the capacity for people to save; and the incentive to save, given high interest rates (the average being 5% in 1866). This is further highlighted by the number of banks in Maine increasing from 14 to 43 during the 1860s. Since the early 1800s, mutual savings banks have gained the confidence of Maine customers, and evolved into one of the oldest and most important depositories for peoples' savings. While there were a few unfortunate failings, savings banks headed into the 20th century firmly established.

Section 4: Early Banking in Augusta, and Freeman's Bank

Among them was the Kennebec Bank (unrelated to Kennebec Savings Bank), incorporated June 23, 1812; it had a banking room in the basement of what was the courthouse.

On March 2, 1833, the Freeman's Bank was chartered with a capital stock of $50,000. The first chairman (then known as president) was Benjamin Davis, who served as its president for 25 years, and who owned the Benjamin Davis Store located on Water Street. The bank reorganized on April 6, 1864 as Freeman's National Bank. As Freeman's National Bank, it later affiliated with Kennebec Savings Bank. Freeman's bank officers were Watson F. Hallett, who later became the first chairman of Kennebec Savings Bank, serving until his death in 1884; John Mulliken, Charles F. Potter, Russell Eaton, Thomas Lambard, and O. C. Whitehouse as directors; and Mr. Pike as cashier, until his death, then succeeded by Ai Brooks, Jr., J. L. Adams and Frank H. Adams. Another notable bank in the area was the Granite Bank, incorporated in April 1836. The Granite Bank (later known as Granite National Bank) occupied a grand building on Water Street. The State Bank was organized in Augusta June 7, 1854; its successor was the First National Bank.

Section 5: The Formation of Kennebec Savings Bank

Governor Joshua Chamberlain approved and signed into law an act to incorporate Kennebec Savings Bank on March 7, 1870.

"Section 1. Be it enacted by the Senate and House of Representatives in Legislature assembled, as follows: Corporators: Russell Eaton, W. F. Hallett, O. C. Whitehouse, J. W. Patterson, Joseph Baker, A. B. Farwell, L. W. Lithgow, John Dorr, Orrin Williamson, William H. Libby, Oliver Gould, Deane Pray, Thomas Little, J. L. Adams, G. C. Vose, Henry Boynton, Edward F. Wyman, Samuel W. Lane, W. P. Whitehouse, George E. Weeks and Henry S. Osgood, their associates, successors and assigns are hereby constituted a body politic and corporate by the name of the Kennebec Savings Bank, and by the name may prosecute and defend suits at law and in equity, may have and use a common seal, and establish such by-laws, rules and regulations as are necessary for the convenient management of their concerns and not repugnant to the laws of the state. Said corporation shall have its place of business in Augusta, in the county of Kennebec, and shall be subject to all the duties and liabilities and enjoy all the rights and privileges conferred upon similar institutions by the laws of this state.

Section 2. Said corporation is hereby authorized to receive deposits of money and issue certification therefor, and such deposits of money shall be used as they shall deem for the best interest and benefit of said corporation, and may be withdrawn at such reasonable times and in such manner as said corporation shall appoint.

Section 3. Russell Eaton, named herein, is authorized to call the first meeting of said corporation by giving notice of the time and place therefor in any newspaper published in Augusta seven days before the time appointed for said meeting.

Section 4. The annual meeting shall be held in the month of May, and at that meeting and all other meetings it shall require seven persons at least to constitute a quorum for the transaction of business, and meetings may be called at any other times and in such manner as the corporation may provide.

Section 5. This act shall take effect when approved."

Section 6: Excerpts from Governor Chamberlain's 1870 Address to the Maine Legislature

“There are now thirty-seven Savings Banks in Maine, several having been recently chartered in what we might call our country towns; the chief apprehension regard to which is, that they may not be able to afford suitable security against robbery. The deposits for the past year amount to $10,839,955, by about 40,000 depositors; making an average of something over $250 each. An interesting comparison is shown by the fact that the amount thus laid in store from honest and hard-earned gains is already more than a million and a quarter larger than the whole of our bonded public debt.

“It is urged by some that a direct tax should be laid on savings banks. It is a sound principle that property should share as equally as possible the public burden; and it seems, at first sight, that savings banks should no more be exceptions to the rule than any other banks. But it will be seen upon reflection that the spirit and intent of deposits in savings banks differ entirely from the object and operation of deposits in other banks; and it is a grave question whether this difference is not of such a nature and result as to make the savings banks a positive benefit to the State, which might even entitle them to special grace, practically amounting to a bounty, or premium, if you please. These banks are the special depositories of the poor; treasuries of pittances which could in no other way be so well guarded and made profitable. If not kept here many of them would not be kept at all. Besides the actual saving of earnings, and the positive addition to wealth thence accruing - itself an object worthy of your thoughtful care - there are incidental and even more valuable advantages. The moment he has money in the bank, the humblest feels a bracing up of his self-respect and whole moral force. From that moment springs an incentive to industry, frugality, temperance, enterprise; to all, in fact, which constitutes good citizenship, and advances the character and condition of men. Anything, therefore, which tends to discourage deposits in savings banks should be scrupulously avoided.

"Indeed the mere fact itself of publishing Savings Banks deposits would intimidate and dishearten many whose very struggle and merit it is to keep this pittance from the willful and wasteful hands which would at the same time destroy it and themselves. By the very confidential relations of these banks many a poor woman is helped in her heroic struggle to bear her unequal burden. Therefore it seems to me better even to suffer such evils as we do, than to the attempt to correct them to subvert a far greater good...

“What this state needs is capital - money in motion, whether gold or currency. Our material is stagnant, our industry crippled, our enterprise staggered for want of money, which is power. What makes the sinews of war, makes also the sinews of peace. Maine strikes me as quite different in her circumstances from the other New England States, with her denser population, developed arts and industries, their centralization of forces and accumulation of capital. She reminds me more of the Western States in her condition and needs - a virgin soil, undeveloped powers, vast forests, and vigorous men, but no money. Like them she is trying to build railroads, invite immigration and develop her resources, and perhaps is not so much in love with a high tariff as some of her more cultivated sisters. The elements and powers of nature, and the energy and enterprise of men in order to be turned to account for the great uses of civilization, must wait on capital. Unfortunately we cannot hold our own; we can keep neither our men nor our money at home. Higher rates of interest for the one, and quicker and larger returns for the other, win the game. The result is a double drain which keeps all our channels low. This evil must be remedied or Maine will have to wait a great while for her coronation. What can be done it is not easy to say specifically. We must look to the National Government to strike off some of our fetters and lighten some of our burdens. To me it seems unwise to cramp our energies with duties and taxes in trying to do everything in one day. I have no great pride against letting somebody else help pay the cost of the war...

“If we can do anything that will make labor, skill, talent and capital remunerative, that let us do. People will come and will stay; money will be kept and brought, if we can manage to make it pay. What we can do for money does not readily appear. But we can look over the situation. As I have said, higher rates of interest abroad lure our money away. Money will seek the highest level as sure as water. Argument and entreaty will not change the course of this inexorable law. Capitalists are reluctant. Some scruple to receive an illegal rate and so refuse. Some stipulating for these rates, knowing that they can only trust the honor of the borrower for the continuance, want a better security. But mortgages of real estate, which is about all we have, carry a long right of redemption, and the lender is liable to be kept three years out of the money at merely the low legal rate. The result is he will not accept even the mortgage, but demands an outright deed, and then the borrower must trust the honor of the lender, which in turn may not be very valuable security.

"Two things would undoubtedly tend to make money more plenty. 1. To perfect and make practicable our free banking law. 2. To legalize higher rates of interest. Of course the suggestion of evils growing out of the latter proposal at once arises. But it may be that the example of the General Government which compelled us to suspend specie payments, may also compel us for a time to recognize a rate of interest corresponding with this general practice and sanction."

Section 8: The 20th Century: A Period of Growth

Historic events during the ensuing 30 years included the revival of shipbuilding in Maine for World War I, the restoration of Fort Western in 1921 by Guy Gannett and his father William H. Gannett, and construction of a new 10,000-gallon reservoir in 1930. The City voted to spend $50,000 to complete Cony High School - it was dedicated that November. Motorbuses replaced electric cars in 1932, and in 1934 construction began on the Augusta Airport. The Augusta Players were organized in 1937. The population in 1940 was 19,339, and the years 1942-45 brought a boom in shipbuilding during World War II.

In 1945, Kennebec Savings Bank changed its address to 288 Water Street when a new entrance was added to the Capitol Theater. There were still only three employees until 1954 when a new employee, Cecile Bouffard, was hired. In 1958, a fifth employee was hired. The bank remained at the 288 Water Street location until 1959 when, at this point in Augusta's history, the center of business activity was expanding in all directions from Water Street.

The Bank purchased property at 150 State Street in 1958, formerly the site of the residence of George W. Macomber, banker, insurance agent, and Augusta’s Mayor from 1886 to 1888 (In 1929, the Macombers presented a memorial to Augusta dedicated to World War I soldiers and sailors, located at Monument Park in the rotary circle across the street from 150 State Street). Kennebec Savings Bank turned the site into a "modern" banking facility which included a relatively new phenomenon: a drive-up window. We believe that Kennebec Savings Bank was the first in the area to have one. Bank assets at the end of 1959 were $6,587,584. The only type of deposit accounts being offered remained savings accounts until certificates of deposits (CDs) began being offered in November 1969. In November 1975, the Bank began offering checking accounts.

Section 9: The Modern Era

The home was built in 1816 for Doctor Reverend Benjamin Tappan, a Harvard graduate, who served as the Pastor of the South Parish Congregational Church. After his death, Mrs. Tappan sold the property (in 1862) to Colonel Alanson Farwell, a lawyer and member of Governor Hubbard's staff. Upon Farwell's death, the property was acquired by Doctor W. Scott Hill who contracted the services of John Calvin Stevens to re-style the home in Colonial Revival style in 1915. In 1923, Blaine S. Viles acquired the property. Viles was a graduate of Bowdoin and Yale Forestry School and was a lumber merchant who served as State Forest Commissioner and as Mayor of Augusta from 1915 to 1916. The Viles family was the last to use the home as a residence. As the Park Circle Office Building, some of the occupants over the years included Viles Timberlands, Senator William Cohen, Senator George Mitchell, the United Way of Kennebec Valley, and Big Brothers-Big Sisters of Kennebec Valley.

The year 1985 marked Kennebec Savings Bank's first year of profits exceeding $1 million. In 1988, the Bank began a two-year construction and restoration project to connect the Tappan-Viles House to the existing bank building, creating the modern banking facility that exists today. In June 1990, Kennebec Savings Bank went on-line with its own in-house computer system, enabling the Bank to create its own statements rather than having the work done by an outside service bureau. In September 1992, the Bank installed its first Automated Teller Machine (ATM), providing customers with access to their funds 24 hours a day, 7 days a week.

As Augusta grew and the population in the surrounding towns grew, so too did Kennebec Savings Bank. In 1992, the Bank established its first branch office, which is located at 84 Main Street in Winthrop. The Winthrop branch has enjoyed steady growth since its opening.

Throughout its 145+ year history, Kennebec Savings Bank has maintained a commitment to the local community by offering fair and flexible banking services and by being a good neighbor. The staff and board members are involved in community projects, fundraisers, and educational advancement. On September 8, 1994, the Bank demonstrated its commitment once again by purchasing the property at 156 and 158 State Street, at the corner of Western Avenue, turning the property into a park and garden.

Growth in 1995 also brought about the merger of Kennebec Savings Bank and Waterville Savings and Loan Association, located at 226 Main Street in Waterville, on June 16, 1995. Waterville Savings and Loan Association had served northern Kennebec County since 1887. Their President and CEO at the time of the merger was Dennis W. Matthews who became an Executive Vice President of Kennebec Savings Bank following the merger. At the time, Kennebec Savings Bank assets were over $190 million, and Waterville Savings and Loan Association assets were $35 million.

Kennebec Savings Bank has withstood the test of time, and is in a strong position to continue to be a thriving banking institution for the next 150 years. We proudly remain your community bank since 1870.