How Carson City survived the panic of 1907
November 23, 2008
It wasn’t until Oct. 22, 1907, that the Carson City Daily Appeal printed the news from New York about the Knickerbocker Trust Company and the greatest run on banks in history of that city ” nor did the town folks know how it was going to impact them.
“New York City, October 22 ” New York today is in the throes of the greatest financial panic in its history. Banks have closed their doors, fortunes have been lost…”
The President in 1907 was Teddy Roosevelt who had visited Carson City four years earlier.
It wasn’t until a day later that the headlines read, “Banks in This City are Closed,” and it created a panic here.
“Carson City, Nevada, October 23rd. The State Bank and Trust Company has to announce its suspension. It is able to pay all Depositors as soon as conditions can be made. All mining and other stocks belonging to customers are intact, and subject to delivery. By the Board of Directors. James T. Davis, Cashier.”
Of course, news like this spreads like wildfire and lines were forming at banks.
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“Some of the scenes enacted beggar description when it was known that the doors of one bank would remain closed, and for sometime, it could not be learned whether it was a definite order or not.”
On Oct. 24 the headlines read, “General Outlook is Brighter Today” (that is in New York), but in Carson City and throughout Nevada banks were in trouble. It is interesting to note that instead of the “government bailout” of today, John Pierpont Morgan of New York stepped in to save the day.
“Under the guidance of John Pierpont Morgan, backed by the money men of the east, and with his own immense fortune, the banks have been placed in a condition to pay all calls … The American Trust Company which was forced to close it doors opened for business… Shortly after the opening hour J. P. Morgan entered the institutions and deposited $25,000,000 … During the morning Morgan deposited $10,000,000 in a number of smaller banking institutions.” And, the stock market showed, “… a marked improvement.” J. P. Morgan wasn’t the only one to save the day. Up steps John D. Rockefeller who deposited $25,000,000 in different institutions … and stated that they could call on him for any reasonable amount. The actions of Morgan and Rockefeller in the free distribution of their immense fortunes have saved the day for the banking institutions of this city (New York).”
But it wasn’t over for Carson City. The papers indicate a search was on for T. B. Rickey of Carson City. “Rickey Still Absent” says the column headline.
“Owing to the failure of T. B. Rickey to arrive in this city as scheduled today, nothing further regarding the State Bank and Trust company could be obtained.”
Gov. John Sparks then issued the following proclamation, “Declared Holidays ” Governor’s Proclamation Closes Banks Until Monday ” The State of Nevada to the People, greetings: Whereas, it has been made to appear to me, John Sparks, Governor of Nevada, that a financial crisis and depression exist, which have effected and threatened to materially affect the Banks and Bankers of this Commonwealth, and jeopardize the business relations between the people thereof, and to otherwise injure the People of the State of Nevada …, it has been further made to appear to me, that it is expedient, that I do proclaim Thursday, the 24th day of October, A.D. 1907, and Saturday, the 26th, day of October, A. D. 1907, LEGAL HOLIDAYS FOR ALL INTENTS AND PURPOSES … During which said days, the payment of all debts and obligations shall be suspended.”
At this time T. B. Rickey still is among the missing, “…supposed to be in California.” Fortunately though, Major H. Miller, Bank Examiner, has arrived in Carson City and immediately met with the board regarding the suspension of the State Bank & Trust Company. Carsonites are assured that a full report regarding the financial situation will be made on the solvency of the banks.
Key Pittman, a Tonopah attorney (later a Governor of Nevada), formulates a plan to handle the financial difficulties: “Have the State Bank Examiner make a careful examination of each of the branches of the bank … and prepare a tabulated statement…” Not far from Carson, in Goldfield a notice was posted by the Goldfield Consolidated Mining Company that dividends to be paid the first of the month, would be postponed because of the condition of the money market.
At last T. B. Rickey of the State Bank & Trust Company arrived in Carson City and says, “At the present time I have very little to say regarding the future, in fact, I can make no announcement until the reports of the different branches of the bank have reached me … During the financial crisis of the East the bankers of California were anything but pleased with the outlook in Nevada, but since the monied men and the government came to the rescue and the stocks are again on the upward trend, a feeling of confidence is beginning to manifest itself…” Rickey does not make a commitment to Carsonites but goes on to say, ‘If we are given the desired time we will be in a position to settle all claims. But we must have the backing of our depositors.'”
Banks in Reno were closing too. The Nye and Ormsby County bank failed to open its doors for business. A statement issued by the cashier stating that the funds of the bank were in a condition to pay all depositors and that the bank was solvent. The reason for the closing of the bank was given that depositors of branches of the bank in other cities have flocked to Reno to cash their checks.
If no one else can help, maybe the post office can, and it is the busiest place in town. “…Money orders are being written and sent to other parts. There is one consolation in this and that is the government is strictly solvent and you can cash a post office order at any time without fear of it being returned and the doors closed.” Postmaster Hofer said business was holding up. He has made a proposition for free mail delivery for Carson City believing it would be a great boost to the city ” and “… one more spoke in the wheel of progress.”
The Carson City Daily Appeal on Oct. 31 asked that T. B. Rickey be granted time. “One of the financial giants of Nevada is in trouble … Tom Rickey is one of Nevada’s biggest, strongest men. For years now he has helped make history for this state. Forty years ago he threw the lariat and rode the trackless valleys with other young and venturesome spirits, until one day he started out ‘with a bull and branding iron’ to win something worthwhile.”
A day later The Appeal said, “People Have Confidence in Rickey’s Banks,” but on the other hand, the repercussions have been felt in Goldfield. “The closing of the banks have caused an awful falling of the business of the camp. Many men have been laid off in the mines owing to the trouble in settling with the smelters…”
On Nov. 8, Superintendent T. F. McCormick closes the Con Virginia and Ward Shaft Association because of advice from San Francisco. All work is stopped. The reason continues to be that money is tight and there is continued declaration of legal holidays. The Savage Mine is closed.
As Thanksgiving approaches, Gov. Sparks issued a proclamation making Thursday, Nov. 28 a day of universal Thanksgiving.
In the text of his message he says, “The people of the State as in the case of many others, are financially distressed, but this is not attributable to god. The avaricious tendency of man is responsible for the misery and distress now prevailing. It is, however, to be hoped that the clouds will soon be dispersed…”
It was not long after this message that the calling of a special session was made to pass banking laws and relieve the financial tensions. Gov. Sparks asked for the “Sentiment of People” in attempt to avert a meeting of the legislature. On Nov. 25, after diligent inquiry, it was decided to wait for the regular session of legislature.
“The people are alarmed over the existing financial crisis, but are hopeful for the future, and it is generally believed that the present depression will be but temporary…”
On Nov. 26, Bank Examiner Miller declared that, “he had carefully gone over the books of the banks and has paid special attention to the grades and values of the securities on which the depositors money had been loaned.” The news was good. The bank would be able to pay their depositors “dollar for dollar,” but only “… if they were given the time they asked for.”
In the following weeks, life in Carson City seemed to become calmer, but for Gov. Sparks the battle was not over. In Goldfield, financial problems continued. The mining companies wanted to pay their workers in script, and a battle with the unions was ensuing. But for Carson City, Christmas in 1907 was observed in a befitting manner. “
Christmas trees were enjoyed in the majority of the homes and the little folks were given a time that will be long remembered. Saint Nick forgot none of the little ones here, and all were recipients of presents of a varied character.” Even at the Orphans’ Home Santa Claus showed up with lots of gifts ” seventy eight orphans were at the home in 1907 and none of them were forgotten.
By the Spring of 1908 the financial panic was over, and the people of Carson City had survived the Panic of 1907.
– Sue Ballew is the daughter of Bill Dolan, who wrote the Past Pages column for the Nevada Appeal from 1947 until his death in 2006. She is past president of the Carson City Historical Society.