Snohomish County, Washington - Chapter 6: Banks and Banking, 1926

For nearly thirty years, the people of Snohomish County lived and labored, bought and sold, logged and lumbered, and carried on business transactions of no mean proportions without there being a bank in the entire county. The nearest banks were at Seattle, where the drafts on San Francisco given by the mills were cashed. Gold was the medium of exchange most favored, as greenbacks were in disrepute and were held at varying rates of discount. The twenty-five-cent piece, the "'two-bits" piece, was the smallest coin in common circulation. Logging was the chief occupation and source of income. The large companies, such as the Puget Mill Company, either operated camps of their own or on shares, the company furnishing the outfit of tools, oxen, and supplies, and the logger receiving 50 per cent of the profits. Board was furnished the workmen, and they had little need for money while in the woods, and the larger camps had supply stores and often bars at which the men could trade against their time checks. The logger received no money until his logs were scaled and accepted at the mill. He was then paid in cash or sight draft, usually on a San Francisco bank. This he cashed, sometimes at a discount, and with this money paid the debts for labor and other expenses which had accrued during the time of his operations. In this way, there was either a feast or a famine so far as actual money in circulation was concerned. Sometimes, when weather conditions were adverse and up river logs could not be marketed, by reason of low water, thousands of dollars were tied up in the booms awaiting high water, and there was almost no money in the county. Merchants and saloon keepers at such points as Snohomish did not expect to handle money except at these intervals of pay days. Not only was there no bank in the county, but there was not a safe in the county for many years, and this is perhaps the most remarkable phase of the situation. In this day of the highway men when it is unsafe to carry the money for a pay roll through the streets of Chicago, and armored cars are used to protect armed guards, it seems almost unbelievable that men could carry in perfect safety the large amounts which it was sometimes necessary to carry through the almost trackless woods, among the Indians and the rough men of the logging camps, and without other protection than their own strong right arms. If one had been bold enough to have looked under the hay or straw ticks at any logging camp, he would probably have found hundreds of dollars stowed away beneath this scant concealment. Loggers left their money at camp and spent their day at work in the woods without a care, because they trusted their companions and knew that they were honest. One may accuse the loggers of many things; one may say that they were rough, and uncouth, and not too cleanly; one may charge them with gambling and brawling and drunkenness, but one must admit that they were as honest a set of men as were ever thrown together in a pioneer community. The idea that everything must be kept under lock and key came only with the advance of civilization and culture. In the early court records, there are many instances of physical violence, and crimes where revenge or hatred or passion was the motive, but there was hardly a case of robbery. Human life may have been cheap, but the rights of property were sacred. Not only this, but while a percentage of the men spent their money in riotous living in celebration of each pay day, the majority of the men were thrifty and forehanded. Many of them left their earnings on deposit, without interest, with such concerns as the Puget Mill Company until they had accumulated suffcient money to secure a ranch or to go into business for themselves. The spendthrifts created the most noise, and were therefore the most notorious. But, it remains a fact, that many of the most substantial families in Snohomish County today were founded upon the careful savings of these early woodsmen. The early ranchmen also handled money, at rare intervals. They sold hay to the logging camps and received orders for supplies, and they sent their hand made shingles down the river and received goods in return. Their trade with local merchants was almost entirely on a credit or exchange basis.

Nevertheless, as time progressed and railroads came and business became more complicated, the necessity for a banking institution arose, and these banks, when they came, showed the same proportion of honesty that had been shown by the pioneer in the pre-banking days. The history of Snohomish County 1s very exceptional in this respect. No other county in the northwest, and few in any state, can show a cleaner record than has been made by the banks of Snohomish County. Losses to depositors have been less and failures have been fewer than in almost any other county in the United States. Confidence is a matter of slow growth, and the fact that the banks of Everett and of Snohomish County have bank deposits far in excess of the amount usually found in cities of their size is not due so much to any one institution or set of men, as to the record of honest, faithful service which the banks of the county, as a whole, have made through a long course of years.

The first bank in Snohomish County was a private bank established at Snohomish City, October 13, 1887. Jacob Furth of Seattle was the prime mover and the principal owner. In the preceding June, he, with Bailey Gatzert and Governor E. P. Ferry, visited Snohomish to look over the field and at that time announced that the bank would be established. Victor Hugo Smith was the first cashier, and the local men interested were E. C. Ferguson, Isaac Cathcart, Ulmer Stinson, William Whitfield, L. H. Cyphers, and Comegys and Vestal. Offices were first opened in the Wilbur Drug Store, and late in October, the big safe for the bank arrived. At almost the same time, J. B. Ault announced that a second bank would soon be opened. The Furth bank ran under the title of J. Furth and Company, as a private bank, until July, 1888, when it was reorganized as the First National Bank of Snohomish. The directors included E. P. Ferry, Bailey Gatzert, Isaac Cathcart, J. Frauenthau, Jacob Furth, William Whitfield, and Ulmer Stinson, and the bank was located at Cathcart's office until its new brick building, the first in Snohomish County, was erected. In 1888, Wilson M. Snyder bought an interest in the bank, and became its cashier. The officers in January, 1889 were: president, Jacob Furth; vice president, H. C. Comegys; cashier, W. M. Snyder; these, with Bailey Gatzert, Ulmer Stinson, Samuel Vestal and William Whitfield, forming the directorate. eS

The bank moved into its brick building in February, 1888. This was described as "a very neat building with vault in the rear and two private offices." The bricks were the product of the E. Bast brickyards at Snohomish. V. Hugo Smith resigned as cashier in May, 1888, to become secretary of the new street car company at Seattle, Snyder coming from Galena, IIl., to take his place. The authorization to establish the First National Bank was received June 9, 1888, and the statement issued October 4, 1888, showed resources $106,245.13, loans and discounts, $64,965.48, capital $44,800, deposits $48,171.97.

The second financial institution in the county was the Snohomish Building and Loan Association, incorporated in March, 1888, the directors being C. H. Packard, J. B. Ault, E. C. Ferguson, E. K. Crosby, J. Ford, E. Blackman, O. E. Crossman, J. W. Knapp, W. G. Stevens. Six hundred ninety-nine shares were subscribed for when this institution was founded. The directors of this concern in 1890 were: W. P. Bell, R. C. Allen, E. C. Ferguson, Charles Packard, J. A. Coleman, and H. Blackman.

In February, 1889, J. B. Ault organized a private bank which was known as the Lumberman's Bank, and erected a two-story frame building with a "plate glass bay window, making it the finest building on the street." The third bank in the county was the Snohomish National Bank; this was a branch of the Seattle National Bank, and was promoted by Fred Ward and_ others of that city. It was organized February 21, 1891, with E. C. Ferguson, president, U. K. Loose, of Nebraska, cashier, and E. C. Ferguson, R. C. Allen, M. W. Packard, Snohomish, J. D. Bassett, Connecticut, and Fred Ward, Seattle, as directors. The same year saw the establishment of the Guarantee Loan and Trust Company of Snohomish, the directors of which were Isaac Cathcart, W. C. Morris, Lot Wilbur, W. P. Bell, and F. If. Davis. The Snohomish County Abstract Company was also incorporated with $5,000 capital, in May, 1891. The officers were J. F. Rhoades, president; F. O. Coe, vice president and manager; J. W. Gunn, secretary; A. W. Frater, attorney. The fourth bank to open its doors in Snohomish County was the private bank of Clark Gould and Company, established at Marysville in October, 1891, with a capital of $25,000. This bank was reorganized May 3, 1893 as the Marysville State Bank, with J. A. Gould, president, C. E. Olney, vice president, and S. T. Smith, cashier. Mr. Smith succeeded Gould as president in 1904, and remained at the head of the institution for twenty years, or until his death in 1924, when he was succeeded by his son, Logan C. Smith.

The first bank in Everett and the fifth in Snohomish County was the Bank of Everett, which started business in December, 1891. John E. McManus was president; A. C. Peters, vice president; C. B. Stackpole, cashier, and R. M. Mitchell, M. Swartout, W. F. Brown, Englebert Bast, N. B. Dolson, A. C. Peters, and John FE. McManus, directors. The year 1892 saw a perfect rush of banks to Everett. The Hewitt-Lombard was the second bank in the city, being founded in February. The First National Bank, which received its authorization February 6, 1892, began business in a small frame building on Riverside, and William C. Butler acquired an interest in it the same year. The Everett National Bank was also organized by Henry Hewitt, Jr. and this bank bought the First National in 1901, the business being continued, however, under the name of the First National Bank. By the last of November, 1892, Everett had banking institutions as follows: Bank of Everett, capital $50,000; First National Bank, $50,000; Everett National Bank, $100,000; Hewitt-Lombard Bank, $25,000; Rucker Bank, $100,000; Fidelity Trust and Savings Bank, $50,000; Puget Sound National Bank, $50,000. These seven institutions had a combined capital of $425,000, and they established a clearing house in December, 1892. Another institution founded in March, 1892, was the bank of Sultan City, which was a branch of the First National Bank of Seattle. The first sub- stantial brick bank building in Everett was erected on the southeast corner of Hewitt and Colby, work beginning April 14, 1892. This was described as an "elegant bank," with foundation of granite and upper stories of pressed brick. This was the home of the Everett National Bank.

The first savings bank system was instituted by the Snohomish National Bank in January, 1893, at the time when W.. P. Bell became a stockholder. The first run on a bank in the history of Snohomish County came in June, 1893, and was directed against the Bank of Everett. The newspaper explanation was that this came about through a school bond sale. The contract for the building was let before the purchase price of the bonds was received. The Bank of Everett agreed to hotor all drafts on the school funds, but as the money had not arrived, the bank declined to honor one of these. This brought on the report that the bank was short of funds, and occasioned the run which ended in an assignment. This bank closed its doors June 22, 1893, its liabilities being reported at $65,000 and assets $85,000. This showing proved to be altogther too favorable, and in August, the depositors employed an attorney to examine the affairs of the bank.

Partly owing to the failure of the Bank of Everett, the Puget Sound National Bank was obliged to close its doors on July 2, 1893, but it announced that money had been offered President Hayward, and it might resume business. The cashier, A. S. Taylor, journeyed to the east to secure funds and in October, the receiver, W. A. Rice, was ordered to turn the bank back to its old management, and it reopened with $30,000 cash on hand and with extension arrangements covering deposits up to $40,000. President Hayward announced that he would thereafter give the greater part of his time to the affairs of the bank. By this time, business in general throughout the county was in a greatly depressed condition, and the new town so largely dependent upon outside capital was very hard hit. On this account, the Hewitt-Lombard Bank consolidated with the Everett National in October, and in December, the Fidelity Trust and Savings Bank, of which F. A. White was president and C. E. White cashier, voluntarily went out of business, paying its depositors in full. In the meantime, there were many rumors, charges, and countercharges concerning the Bank of Everett. In October, it was stated that it would reopen if depositors would accept deferred payments. In December it was announced by an Everett newspaper that the "wrecked'' bank would not reopen, and that the directors were "wearing diamonds" in California. It was said that this failure was very hard on many poor people. In January, 1894, Senator McManus stated that it would resume within a few weeks as the bank had offered depositors a percentage in cash and the balance later, and that all but a few of the depositors had consented. In March, A. C. Peters, the former cashier, was arrested at Tacoma charged with embezzlement. He was not convicted, but this bank did not reopen and its depositors lost heavily. The Puget Sound National Bank, which was reopened, weathered the storm for about a year, but industrial conditions grew worse and prominent officers of the bank were obliged to liquidate their personal holdings, which frightened depositors so that the bank was obliged to close for a second time, in July, 1895. L. Kk. Church was appointed receiver and he managed the affairs of the defunct institution with such honesty and ability that by May, 1896, it was able to pay fifty cents on the dollar, and in July, it was reported that Receiver Church was paying claims against the bank at 100 cents on the dollar with 8 per cent interest. One complication connected with this bank failure arose from deposit of county funds by the treasurer, W. W. Mish. The amount involved was

23,783, and Receiver Church claimed that this deposit had been wrongfully secured, and thus made a deferred creditor to the injury of other depositors. He brought suit and the securities were returned to the bank by Mr. Mish. There was something of politics mixed up in this affair, and a hostile board of commissioners used it to force the county treasurer out of office, although, in the end, the county was not a loser. While this bank record 1s not perfect, it must be borne in mind that during this period banks were crashing by the hundreds throughout the length and breadth of the United States. At Whatcom (now Bellingham) there was one time when every bank was closed, and there were many failures at Seattle and other cities, which occasioned losses to the smaller banks and tended to destroy public confidence. The Island County Bank at Coupeville failed in February, 1894, on account of a shortage of $12,500. In May, 1895, it was reported that the Marysville State Bank was one of the victims of the failure of the Merchants' National of Seattle, but the Marysville institution was not forced to close. In February, 1897, the Snohomish National Bank withdrew from business giving the general depression as its reason. The only new financial institution was a Building and Loan Assocaton organized at Everett in January, 1895, with authorized capital of -$200,- 000, of which $40,000 was subscribed. The officers were: president, Jacob Hunsaker ; vice president, Dr. C. P. Thomas; treasurer, Everett National Bank; secretary, H. D. Cooley; attorney, B. L. Bevington; and C. D. Fratt, J. L. Bowen, W. W. Mish, Raymond Moore and E. M. Metzger among the directors. It is, therefore, apparent that Snohomish County went through the greatest and longest panic the county has ever known with but one bank failure which involved loss to depositors. In January, 1898, the Marysville bank was almost blown to pieces by robbers who used so much dynamite that while they wrecked the building they secured no loot. In the confusion they made their escape.

The year 1900 saw the organization of the Bank of Commerce, located on the corner of Hewitt and Pine streets with a capital of $25,000. W. R. Stockbridge was president ; Peter Leque, vice president, and other officers were W. G. Swalwell, B. J. Rucker, and W. C. Brokaw. This gave Everett four banks, the others being the First National, Everett National, and the Rucker Bank. It was in this year, also, that the Arlington State Bank was founded, beginning business December 10, in a small frame structure, with C. E. Bingham as president, a position which he has now held for more than a quarter of a century. This Arlington Bank prospered, erected a substantial two-story building in 1903, and now has deposits amounting to about $400,000. In January, 1901, the Everett National bought the First National Bank, continuing the business under the latter name. In August of the same year, Henry Hewitt, Jr., sold his stock in this bank to H. C. Henry, president of the Seattle National Bank of Commerce, and it was reported that W. C. Butler, then head of the smelting works, might succeed to the presidency of the Everett institution, as he was close to the Hill interests. This rumor proved to be true, much to the benefit of the bank and to the business interests of Everett as a whole. It was in the year 1901 also that the American National Bank was organized. T. H. Bowden, who organized the Security National Bank in 1920, was cashier. This was the successor to the Rucker Bank and continued in business until 1909 when it was absorbed by the First National Bank. In 1903, the Commercial Bank of Snohomish was established with a capital of $25,000. The first officers were: J. V. Bowen, president; B. Ransom, cashier, and A. E. Eagle, Lot Wilbur, and John Connelly, directors. Herman Friese became president of this bank in

1913, and it now occupies a modern building of its own and has deposits of about $350,000. The year 1904 saw the organization of the Bank of Stanwood, this being the first institution of the kind in that town. Henry Anderson was president; Peter Leque, vice president, and W. C. Brokaw, cashier. W.C. Brokaw became the president upon the death of Mr. Anderson in 1919. Another bank organized during this year was the Monroe State Bank, E. M. Stephens, president; C. L. Lawry, cashier; A. J. Agnew, vice president. This bank had a capital of $25,000. This became the First National Bank of Monroe, and was purchased in April, 1906, by N. B. Haneray, of St. Hilare, Minn., N. J. Molstad and John Munch, of Monroe, who bought the interest of D. H. Moss. The Bank of Edmonds, a private institution, was organized in January, 1905, with W. H. Schumacher, president, and W. H. Phelps, cashier, becoming a state bank in 1908, and now having deposits of $300,000 ; as was also the Commercial Bank at Granite Falls, of which J. B. Gibbons was the cashier. This also has been reorganized as a state bank. The Scandia Bank was established in 1906, but it proved a short lived institution and furnished the second and last disastrous failure in the history of Snohomish County banking. The Citizens State Bank of Arlington was a new institution of 1907.

No man whose memory runs back to the year 1907 will forget the swift and unexampled panic which struck the country in the fall of that year. In the morning, to the average man, business conditions appeared perfectly normal and prosperous. By night, banks all over the country were refusing to cash the ordinary commercial checks and black panic had seized upon all the people. It was not an industrial panic, and the good sense of the people soon prevailed and financial conditions were readjusted, but while it lasted, its effects were devastating. It was on November 8, 1907, after the panic had been on for several weeks and was at its height, that the Snohomish County Clearing Association gave public notice that all the banks of the county had stopped cash payments, except in small amounts for emergency purposes until the financial situation throughout the country had resumed normal, but that through the Clearing House Association, of which each bank was a member, checks for any amount would be paid through the clearing house as usual. This notice was signed by the First National, the American National, the First Scandia, Bank of Commerce, Trust and Savings Bank, all of Everett; the First National and the the Commercial Bank of Snohomish, Marysville State Bank, Granite Falls State Bank, Bank of Edmonds, Bank of Stanwood, Monroe State Bank, and the Arlington State and Citizens State of Arlington. This notice was followed by instructions to the effect that: "No coin or currency will be paid except in small amounts for emergency. Checks of depositors will be honored through the clearing house, but will not be paid over the counter of the banks; if a depositor in an Everett bank, mark check, 'Payable through Clearing House only.' In other words, business will be conducted between banks on a checking basis. Savings deposits cannot be withdrawn until the required notice has been given, and then, under clearing house rules only. Everett is the last city in the state to adopt the certificate plan, and this is now done to prevent Snohomish County cash going to other cities." The banks were in good condition and this action was taken to protect their cash reserves. Portland, Bellingham, Tacoma, and Spokane had adopted this plan several days previously, and Seattle had adopted it the day before the Everett banks took action, in fact it was the action of the Seattle banks which made it necessary for the Everett institutions to protect them- selves. While this course appeared arbitrary and drastic and caused much complaint and criticism, it was doubtless the best measure which could have been taken under the circumstances, and probably saved the business of the county from disaster. Happily the panic was of but short duration, and by the first of the year, hanking conditions were nearly normal. Prior to the panic, in April, 1906, the Bank of Commerce had increased its capital to $100,000. W. R. Stockbridge retained the presidency, and J. L. Lyen became the cashier. In 1910, Daniel Kelleher of Seattle bought the Stockbridge interest and became president of the bank. This sale included both the Bayside and Riverside banks and the branch at Coupeville. Mr. Lyen was succeeded in 1912 by E. C. Olson, who is now president of the flourishing bank, which has deposits in the neighborhood of $2,000,000. E. E. Johnston became the representative of the Kelleher interests. .

The failure of the Scandia Bank was the sensation of 1908 in banking circles. Jacob Hunsicker was president and Chris Olson, cashier. The receiver, E. G. Reep, found the affairs of the institution in such condition that while the depositors received the greater portion of their money, the stockholders were heavy losers.

By 1910, the banking situation throughout the county was excellent. The Bank of Commerce had moved into its fine new building on the corner of Hewitt and Rockefeller. The First National of Snohomish was housed in the first reinforced concrete building in Snohomish County. The new bank at East Stanwood had been established by C. J. Gunderson and his associates, and there was also a new Citizen's Bank of Sultan with a capital of $10,000. John F. Warner was the first president of this bank, being succeeded by G. G. Startup, who still occupies that position, William Campbell, being the cashier and the deposits amounting to $350,- 000. The State Bank of East Stanwood also proved a permanent and prosperous concern. A. Garberg became president in 1911 and it occupied its brick bank building in 1913. Peter Henning, who is now the president, took office in 1917, and C. R. Amundsen is the cashier. The bank, which has a capital of $15,000, now has a surplus of $16,000 as well, and deposits of $310,000. There has always been much friendly rivalry between the banking institutions of Everett and Bellingham, and the Everett Herald directed attention to the fact that Everett banks capitalized at $375,000 carried deposits of $4,199,738.90, whereas Bellingham banks capitalized at $600,000 have deposits of $3,760,813.94.

The next bank to be established in Everett was the Citizens' Bank and Trust Company, which opened its doors for business January 2, 1913, with $100,000 capital. The officers were D. P. Cadmer, president; Jacob Anthes, vice president ; J. L. Lyen, cashier. Dr. N. L. Thompson became president of this bank in 1916 and Frank L. Cooper the cashier. It now has deposits in the neighborhood of $1,- 500,000. The Rucker Bank, now the Bank of Lake Stevens, was established in 1914. A new institution in 1916 was the Cascade, Savings and Loan Association, capitalized at $205,000 and operating in Snohomish County only. C. W. Miley was the first president, being succeeded by W. P. Bell, while A. E. McKee has been its manager since it first began business. The latest addition to the banking circles of Everett is the Security National Bank, which occupies the very handsome building devoted exclusively to its use on Colby Avenue. This bank was organized in 1920 with a capital of $150,000, and its deposits already exceed $1,500,000. W. Neal Winter is president, and T. H. Bowden, who began his banking career in Everett as cashier of the American National Bank, in 1904, its vice president and manager, with O. A. Torgerson, cashier. The First National Bank, which, under the management of President W. C. Butler, has become one of the largest financial institutions of the northwest, occupied its fine new quarters on the southeast corner of Colby and Hewitt in February, 1925. The First National of Stanwood and the State Bank of Silvana date from 1919.

There are now twenty banks in Snohomish County, five in Everett and fifteen in other cities of the county. According to the official bank directory for July, 1926, their officers, capital, reserve and deposits are as follows: