Rare photo of the State Bank & Trust vault in Goldfield circa 1907
The Bullion & Exchange Bank
The Bullion and Exchange Bank originated with the demise of the Carson City Savings Bank and the Carson office was the B & E's busiest office in Nevada. The Bullion & Exchange bank acted as a clearing house for other banks in Nevada for bullion, coin, scrip, drafts, checks, bills of exchange and other valuables, with branches in Hawthorne, Tonopah, Goldfield and Manhattan, Nevada.
The Bullion & Exchange evolved as a unique Nevada financial institution under direction of the Cashier T. R. Hofer, Richard Kirman Sr, Jacob Klein and Evan Williams. All of these individuals were powerful financial figures in Nevada's early development and Kirman III eventually served as Governor of Nevada, while Hofer acted as temporary superintendent of the Carson City mint in 1885. Later Cashier Hofer server as Chief Superintendent of the mint in the 1890's and the B & E had an office inside the mint with the bank controlling the refinery operations after 1893; that is why B & E banking ledgers of the 1890's have multiple entries that represent US mint transactions.
Rare stock certificate of the B & E, issue #34
It can be argued that the unholy alliance of a largely unregulated bank and a former mint acting as a refinery led to one of the greatest scandals in mint history when $75,000 in US treasury gold found it's way out of the mint surreptitiously, at a time when the mint was still engaged in coinage, e.g. 1892. Bank President Jacob Klein was linked to Heney in the mint scandal, and the full implication of the B & E's connection to this major crime has never been fully established, however the association ultimately led to Klein's fall and the accession of accountant Gorham to the presidency of the bank. Gorham's leadership was uninspired and the bank began to flounder with difficult economic times, and the bank did not revive until it's reorganization under Kirman 3 and Harris as the State Bank & Trust.
By 1900 mining was in decline on the Comstock while Dayton mill failures and subsequent reductions in development caused the Bullion & Exchange Bank to be reorganized as the State Bank and Trust Company by 1903. Competition from the Nixon National Bank and the Cook Bank, plus a reduction in business and labor unrest coupled with the Panic of 1907 served to finally derail the State Bank & Trust in Carson and the bank closed it's doors for good just after the Bank's purchase by T B Rickey and Homer Wilson.
Many years later when the old Carson bank building was razed, a large cache of early bank documents was found by workmen. This cache of documents was later sold at public auction during the 1970's and the bulk of these documents were purchased by one major collector.
Colonel Rickey and the Panic
Three names have been inextricably linked to the history of the Bullion & Exchange Bank and it's successor bank the State Bank & Trust: Jacob Klein and Thomas B. Rickey and Richard Kirman . While Klein's fortunes waned based on his association with Heney and the Carson mint scandal, Rickey was brought down by the Sullivan Trust scandal and the mining stock panic of 1907.
In 1907 Rickey purchased the State Bank & Trust from Kirman and Harris after these two astute bankers had revived the fortunes of the bank, formerly know as the Bullion and Exchange Bank. The reorganization of the B & E took place after a disastrous period of scandal when the bank was involved with the Carson mint refinery and all of the attendant problems; Kirman and Harris successfully extricated the bank from it's problems with the mint. This made the State Bank & Trust (formerly the Bullion & Exchange) an attractive purchase for Rickey.
In addition Rickey decided to purchase the troubled Sullivan Trust Company which had been heavily involved in the Greenwater scam and Goldfield wildcatting, even though Herzig plays this down in his book. After reviewing all of the facts today it seems that by October of 1907 Herzig and Sullivan could prop up their paper paradise no more but that fact may not have been immediately obvious to a character like Rickey. It is entirely possible that Rickey had the wool pulled over his eyes by Herzig, but it is far more likely that Rickey just made a bad business decision when he became key banker to the Sullivan bail-out. It is also possible that Rickey believed that combining a sound bank with a highly speculative Trust company/ brokerage would lead to a profitable business model somewhere between conservative banking and speculative investments but the idea was faulty indeed.
By 1907 many banking practices then current would alarm even the most adventurous financial spirits of today, and allegations that Rickey used Nye & Ormsby depositor's funds to purchase the Sullivan Trust constitutes a certain illegality, even for the time, if proven. With the assumption of the assets and liabilities of the Sullivan Trust Company by the State Bank & Trust in 1907, Rickey was assuming a risk that would prove to be his ultimate undoing and this can be characterized as a compounding of error. For example, if Rickey had liquidated the assets of the Sullivan Trust immediately at daily stock market values the bank would have shown a small profit on the deal, however this fact would not vindicate the questionable ethics and business acumen of the decision to assume the Sullivan Trust obligation in itself. The error is compounded when Rickey holds the assets and refuses to sell the mostly worthless Greenwater and Goldfield wildcat mining stocks as Rickey was evidently deluded either by his own speculative nature or by Herzig that these mines did indeed possess some intrinsic value that would one day be realized. Interestingly Rickey reorganized the Sullivan Trust as the Homer Wilson Trust Company yet no record remains with regard to the legacy of Homer Wilson today - presumably Wilson was just an unlucky sucker in the deal.
Besides Rickey's involvement with the State Bank & Trust and the Sullivan Trust, it seems that Rickey is notorious for having disposed of the largest block of water rights ever sold in the Owen's Valley to the Los Angeles Water District, an act that lives on in infamy to this day, although the deed has ironically prevented the Owen's Valley from being raped by avaricious land developers - a situation that Rickey would no doubt descry.
In summary the revitalized State Bank and Trust lost business acumen with the passing of Kirman and Harris and in addition we have the poor banking judgment of Rickey, who was probably never fit to be a banker anyway. It can be shown that Rickey was certainly instrumental in the bank's undoing when he assumed the credits and debt of the Sullivan Trust Company. So the State Bank and Trust fell victim to one of the more common failings of banking, and indeed humanity, whether it be characterized as greed, mismanagement, or just plain old bad business, with the assumption of the Sullivan Trust debt. It was an error from which the bank would not recover and although Rickey was eventually absolved of wrongdoing in this event, the State Bank & Trust did not reopen it's doors.
Jacob Klein Banker
The Bullion & Exchange Bank
Founders of Carson City ca1860
I was born in Alsace in France in 1831. I learnt my trade, baker there. When 17 years old I commenced to work as a journeyman baker. Worked in different places and cities in Alsace until I was 19. Then I went to America. I worked in New York and Philadelphia. In 1853 I arrived in San Francisco. I went to mining then in Placer County, California. I made a few thousand dollars in mining and lost it. Then I went into the business of bakery, lodging house and saloon business. Started in with a capital of $10 and made some money there. This was at Newtown between Marysville and Auburn. I stayed there till 1860. I also was in Yankee Jims in Placer County. On the 18th of April 1860 I came to Nevada. I cam from Placerville right to Carson City and have lived here ever since. When I came here flour was worth $75 a hundred. We went through the snow for 7 days before we could get here from Placerville. Freight was a dollar a pound on some articles. I went into the brewery business where I am yet. The firm was Gerhauser, Klein and Wagner. I am running the business alone now. When I came here in 1860 the current rate of interest on money was about 10 per cent per month. There was nothing in Carson City only a few houses, perhaps 30 or 40 houses. Mr. Curry, Mr. Ormsby, D. Perkins, Doctor Tjader, S. T. Swift, John Musser, Spear were living here. Musser was Territorial delegate in Congress. Cradlebaugh was Judge of the district here. I was in Court when a German woman killed a Spaniard right in open Court. That was in the latter part of 1860, in December I think. The trouble grew out of jealousie on his part. He was living in her house. He slandered her. A lawsuit arose about it in which the woman was a witness. Then she shot him. The Spaniard jumped about five feet high and then fell down dead. She was indicted for the murder, tried and acquitted by the jury in the Court room where she had killed deceased. There was a pretty rough State of Society in Carson City at that time. Two or three men were killed here every six months. There were but few women here. Shooting affrays were of frequent occurrence. The town was infested with rough characters. Old Brown, the murderer, who was afterwards killed by Henry Vansickle in Genoa, was here. Another murderer McKee was killed here in 1862. Nobody knows who killed him. The quiet element among the population were at a great disadvantage. In 1862 one Carr was hung out on Phillips ranch. He killed a man and threw his body in a ditch up on Nevers ranch. He went to the man and asked him to come out and show him some cattle. The man went out with him in the field and he killed him. The body lay in the ditch about 8 days before it was found. Carr was captured in Nevada City, brought here by Sheriff Blackburn, tried and convicted and hung.
In 1860 in June there was a great excitement here on account of the uprising of the Indians. Everybody that could get away went to California, particularly those who had families. Every day dispatches were coming in from the seat of war brought in by pony riders to the effect that the Indians were rising. The inhabitants were greatly terrified. Many families were taken to California for safety. Major Ormsby formed avolunteer Company of 50 or 75 men and went down with them to Pyramid Lake, where he lost his life in battle. In those days there was plenty of money in circulation here. Women were dealing Faro in the saloons. There were 3 or 4 faro games running here when I arrived, and women were dealing in all these places.
There was a small public school here in 1860. It was held in a little Stone house situated south-east of my brewery, about one block distant. The house now belongs to John G. Fox of this place. The first church built here was the Catholic Church. It was built on the present site of the Catholic Church on King Street, in 1860. It blowed down in 1862. Father Gallagher was the pastor of it. He established the church with my help. Wm M Stewart, afterwards United States Senator from Nevada, resided here with his family and practiced law here and in Virginia City in 1860.
It cost 50 cts to get a shirt washed here in 1860; the same price for shaving. Hair cutting was a dollar. There was no bath house here then. We used to go out to Curry’s Warm Springs, the present State Prison, and take our baths. There was no house there then. It was all open. The water of the spring was running to waste. Nobody paid any attention to it. Curry located the spring in 1860, but he did not do anything on it until long afterward. Board at the hotels in 1860 cost about $10 a week, but people hardly got anything to eat. Transient customers paid a dollar a meal. Next after the Catholic Church the Presbyterian Church was erected. After that the Methodist Church and lastly the Episcopal. We sold beer in 1860 here for $3 a gallon. We paid 20cts freight per pound on barley. It was over 30 cents for a while. There was some farming in Kings Canyon when I came here.
- Jacob Klein
Panic of 1907!