Junk Mail

In the spring of 1893 the Courtland Register reported on the comings and goings of members of the Everest family, noting with pride the shuffling of the well-liked young cashier Carroll Everest from the State Exchange Bank of Jamestown to the bank at Courtland, and a later visit from his uncle, Aaron S. Everest.  It seemed an honor for the little town to host the head of an important banking family with interests in Atchison and Kansas City.  Later that summer it might have struck some that Aaron Everest hadn’t just paid a courtesy call to one of his far-flung branch banks.  Something was up.

As early as 1889 Carroll Everest of the State Exchange Bank of Jamestown began making trips to nearby Courtland to get a new Everest-owned bank ready to open the following spring.  On January 9, 1892, as they had done with Jamestown in Cloud County, Kansas, the Atchison Daily Champion carried a little item about the new town in Republic County, extolling the business prospects there.

The Messrs. Everests of Atchison and Kansas City have one of their exchange banks located here, with the genial and affable Carroll Everest as cashier.  They have a fine bank building and it is furnished with costly counters, desks and upholstered furniture.  This business is sufficient to convince capital that investments in Courtland and the surrounding country are, without the least possible chance of a doubt, gilt-edged.

There were now two major financial institutions vying for local business Courtland, the Everest family’s State Exchange Bank and the Courtland Loan and Trust Company.  Each ran notices in the paper promoting their status as bulwarks of fiscal rectitude.  Both would have seemed completely respectable and equally well-funded, except for a tiny difference in phraseology that may have passed unnoticed.  While the Loan and Trust ran a stuffy little display advertisement boasting capital stock of $50,000, the State Exchange Bank assured potential customers that it had $50,000 in “cash resources,” and thus “plenty of money to loan on good security.  Farm loans a specialty.  C. Everest, Cashier.”

What went unexplained was the fundamental difference between the two $50,000 amounts being dangled in front of customers.  The Loan and Trust Company’s ad touted the amount of capital stock, seed money put up by the bank’s investors.  What the Everest Bank supplied was simply an approximation of the bank’s total cash assets, for while Aaron S. Everest may have invested in “costly counters, desks and upholstered furniture,” he capitalized each of his banks with a minimal investment of $5,000.  In case of failure, a bank was liable for a certain multiple of the operating capital.  Under the lax banking regulations of the day, that multiple was a wispy “3.”  If a bank went under, Aaron Everest was off the hook for any losses after the first $15,000.

Investors and bank depositors alike were understandably jittery at the start of 1893.  The frenzy of railroad building that now connected the country as never before, suddenly came screeching to a halt.  The ensuing economic downturn had several causes besides railroad overbuilding - crop failures, both locally and abroad, a crashing wheat futures market, a run on gold deposits, and the cessation of silver mining, among them.  As ominous financial news loomed, the Courtland Register, anxious to quell fears about bank solvency, ran comforting blurbs such as this one:  

“During the last ten years no failure of  a national bank has occurred in Kansas.  Only three failures have occurred since 1864.”

This news should have provided little comfort for Courtland bank customers, since neither of theirs banks was nationally chartered.  However, it was considered a local newspaper editor’s job to look on the bright side of things.  Joe Litsinger, who edited and published the Register until 1892, may have had his own reasons for downplaying any disquieting economic news.  First, Joe Litsinger’s wife Emma happened to be the sister of Mrs. Carroll Everest.  Leaving the Register not only allowed Joe to concentrate on his budding real estate business, but also freed him up to join the staff of the Courtland Loan and Trust.  

On a summer morning in 1893, a few weeks after the bank stopped running their usual ad schedule in the Register, customers found the State Exchange Bank locked, with a vaguely apologetic note posted on the door.  The newspaper at nearby Kackley reported on the closing with a few snide comments which the Courtland paper wouldn’t have dared to publish - at least not so soon.   

The Bank of Courtland broke on Monday last.  It is stated that one old gentleman had $19,00 in the bank.  It used to be quite refreshing to hear Carl Everest expantiate on the beauties of our monetary system and tell what a great system it was for the people.  Now Carl is gone the other fellows can tell what a great system it was for Carl.

I recently plunged into the Courtland bank failure one more time, going through pages of the Register on the chance that some clue would explain why so many Jewell County ranchers and businessmen opened accounts at the State Exchange Bank of Courtland in Republic County.  Whatever the incentive was, it was not being advertised in the pages of the Courtland Register, or any other local paper I’ve searched thus far.  The story of a single loss of $19,000 may be apocryphal, but Thomas Lovewell did lose about $1,000 of his own money, along with a few hundred dollars belonging to two of his sons.  A number of his neighbors at the village of Lovewell had savings tied up in the failure, as did the local Methodist Episcopal Church.

Savings banks, institutions offering interest-bearing accounts to a developing middle class, were still a novelty on the local banking scene.  The customary rate paid to depositors was 4 to 4½ percent.  What had Aaron Everest been promising prospective account-holders, and how did he get the word out?  Everest may have used another recent innovation, penny-postcard advertising, an inexpensive means of reaching customers directly, and one that was being featured just then at the World’s Columbian Exposition at Chicago.  If so, we may never know exact details about the bait Aaron Everest used to lure depositors into what soon began to look like a scheme designed to turn their money into his money.  

Thanks to Norm Stofer’s box of keepsakes, opened recently by his descendants and shared on these pages over the past several weeks, we’ve seen examples of early-day picture postcards that were carefully preserved and passed down through the family.  That said, it would be too much to hope that his grandparents or anyone else’s, hung on to their junk mail for sixty years.

© Dale Switzer 2016  dale@lovewellhistory.com