It would seem that this formidable company and dreams of wealth as great as the fabulous price they paid for the land, for they commenced making extensive improvements to induce capitalists to invest in this new city by building a dock and warehouse, and a large hotel was framed and lumber provided for its completion and yet the plans projected were but partially developed.
The finance bubble had swollen to the fullest extent about this time all over the west and east; the wild mania for speculation had culminated in the suspension of specie payment, because of the run upon all the banks for the specie with which to purchase the United States lands. This company were unable to "stand from under" and were thus crushed in all their dreams of wealth, in the greatest crash in finances this country ever knew, and everything was as dead as a door nail. About the only one of the company that had been shrewd enough to save himself was James Fraser, who subsequently with Dr. D.H. Fitzhugh and Hon. James G. Birney purchased for a nominal sum the whole interest except that of Theodore Walker, when they divided the property and each after that managed his own interests without regard to the others. Thus the nucleus for a future city was formed by two land companies covering Portsmouth and the Riley reservation.
Soon after the grand crash, the legislature of Michigan passed the Wild Cat Bank Bill to save themselves from total ruin, but it only served to sink what little hope and energy there was left in those hardy men. Though two banks were chartered for the companies here, the Commercial Bank of Portsmouth, and the Saginaw County Bank, which was later located at Lower Saginaw, and a banking house was actually built on the lot where the Rouech block now stands. No bills were ever put in circulation, however, except those stolen while on the way from New York, fictitious names of officers having been signed to the bills. They were found in circulation and it is truly said of these bills that they were just as good as any.
For several years subsequent the main strife was to devise ways and means for simply living, and many turned their wits to farming and prospered finely along the rich alluvial bottom lands of the Saginaw.
In about 1840 Dr. D.H. Fitzhugh purchased several parcels of the Indian reserve lands opposite the present Bay City, where the thriving young city of West Bay City now stands. All these lands were only partially occupied for many years, though a much handsomer site for a town that the opposite side of the river.
The Hon. James G. Birney, who was in 1844 the Abolition candidate for President, came to Lower Saginaw with his family in 1842. Mr. Birney's house was built on the corner of Fourth and Water streets, where he lived for several years. When he sold these eight lots and house to his son David B. (Birney) and his son David B. (Birney) sold to B.F. Partridge who sold the same to James Fraser, where he lived several years, that house was moved to the corner of Saginaw and Fourth streets, and changed into a hotel known as the Moulton House.
While Mr. Birney lived here he imported some very fine Durham stock and for many years he and Mr. Fitzhugh bred fine stock.
In 1846, the lumber interest was again revived somewhat and Hopkins, Pomeroy and James Fraser built the mill where the Gates & Fay mill now stands. Their lumber went to Chicago and other mills began to spring up soon after.
Joseph F. Marsac, an old Frenchman removed to a piece of land just above the present Astor house in the Sixth ward of Bay City and still lives on a part of it, the rest being covered nearly all over with mills and other buildings.
Among those who came to this country in the early times was one, Capt. J.S. Wilson, who purchased a piece of land of J.F. Marsac and lived on it till his death in about 1872. He sailed the sloop Mary, the first trading vessel on the river.