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Merchants State Bank

When researching your family, have you ever encountered a newspaper article that lead to an event the family likely wanted to forget? I would think that being a director of a bank that failed might fall into that ‘want to forget’ category. But, that is where my research in the Dodge City papers has led.

In February of 1886, the Merchants State Bank was formed and J. H. Crawford was one of the directors.

The Merchants’ State Bank

The Merchants State Bank is a new banking institution of Dodge City, and is composed of some of our most influential and wealthy citizens. Geo. B. Cox is President, F. C. Zimemrmann, Vice-President; James Langton, Treasurer, and the following directors: Goe S. Emerson, W. C. Shinn, O. Marsh, W. G. Sherlock, T. L. McCarty and J. H. Crawford. The office of the bank for the present will be located in the postoffice block. As soon as one of the new building is completed ample room will be obtained. This bank will be one of the best in the country, and will meet with confidence and support.

Dodge City Times (Dodge City, Kansas) 25 Feb 1886
Dodge City Times (Dodge City, Kansas) 25 Feb 1886

In 1887, the Dodge City Times was singing the praises of the bank as one of the “most prosperous institutions in the west.” (Dodge City Times 4 Aug 1887) However, by March of 1891, The Dodge City Daily Globe reported the bank had failed.

Gone Under

The Merchants’ State Bank Ceases Operations Friday at Noon

A Full and Complete List of Assets and Liabilities – C. W. Averill Appointed Assignee

Notwithstanding the many rumors concerning the shaky condition of the Merchants’ State Bank it was a matter of great surprise when the doors were locked Friday last. Deposits to the amount of several thousand dollars had been recently withdrawn by parties who knew of the insufficient security that had been taken by the bank upon loses made during the last 18 months. This with the stringent times and depreciated real estate values made it impossible to much longer hold out, and upon the presentation of a check for nearly $4,000 they refused to pay it, for lack of funds. A number of attachments immediately followed. The first being in favor of H. M. Beverley.

The bank was the repository for many school districts, as well as the county and city resources.

The real estate assets of the institution are heavily encumbered and their cash value is difficult to estimate. Although the county may sustain some loss, it will not affect the price of county scrip as there is much more money on deposit in the First National Bank than the total amount of scrip outstanding. Also the amount deposited in the defunct bank was the sinking fund, and should it not all be recovered the loss will be lightly felt by the county.

The complicated affairs of the bank will require some time for a full examination and much litigation will undoubtedly result. A majority of the creditors seem willing to give the bank officials ample time to make settlement. Some, however, seem to think that at least criminal carelessness ahs been shown in the management of the bank and it is not improbable that some prosecutions will follow. A. E. Grier, representing the Rollins Investment Company, of Denver was in the city Monday to investigate the company’s business, they having $4,00 in Ford county scrip which had been forwarded to Merchants State Bank for collection. The county’s check had been given for the amount of the scrip, there being a large amount to the county’s credit, but the check was not accepted by the bank. In some way the scrip has fallen into the possession of the county treasurer and the Rollins Investment Company will bring suit to recover the scrip or its cash value. They have retained Sutton & McGarry to protect their interests.

Shortly after the first attachment issued the county attorney asked that a receiver be appointed, and L. G. Grobety was made receiver. Soon after the receiver had qualified and demanded possession an assignment was made to C. W. Averill. The commissioners and county attorney are awake to the interests of the county, but with the several attachments in the hands of the sheriff, the assignee and receiver each attempting to obtain possession, the assets will be used up in the payment of fees.

The liabilities, with names of creditors, are given below:

Liabilities

H. M. Beverley, Dodge City, treas. $3,495.00
H. B. Bell 11.22
Thos. Brainbridge 100.00
Mrs Brainbridge 3.00
J. R. Bricker 20.00
S. H. Connoway 78.32
Geo B. Cox Co. Treas $20,765.47
Geo B. Cox mortg ac’t 1.00
Geo B. Cox seed com 139.72
Geo B. Cox Flax com 16.67
Geo B. Cox fair ass’n 1.55
J. H. Crawford 12.98
F. W. Coxon 9.92
A. L. Crawford 10.90
J. H. Churchill .35
D. H> Connoway 562.00
G. Davis 138.75
J. M. Doble 9.40
S.W. Furgison 10.00
W.J. Fitzgerald 2.14
Albert Fasig 52.43
P.R. Hobble 144.07
A. Hanna tres dist 16 118.13
E. A. Hickerson Lodge ac’t 176.05
C. L. Kearful 100.00
W.T. Keady 1.20
E. Kirkpatrick .02
Geo. Gray 5.30
Geo H. Karch .78
Thos. Lahey 125.54
L. E. McGarry 165.67
Otto Mueller 2.35
E. W. Marvin 181.42
McCarty & Hoover 34.78
T. L. McCarty 100.06
D. W. Moffit 20.25
W. F. Petillion .17
J. E. Rarden schl tres 100.00
J. H. Ripple .01
J. S. Rush 3.00
A. W. Reudy .01
John Riney schl tres 434.07
T. L. Smith .98
C. E. Smiley schl tres 229.36
Strange & Summersby 45.37
L.K. Soper 19.80
Sam Stubbs 9.11
H. L. Sitler 3.56
E. E. Smith 12.58
Joseph Sizelove schl Tres 118.61
E. T. Thome 12.03
Samuel Wollman 10.56
B.W. Williams .69
G. H. Wilcoxson schl tres 63.25
D. T. Weagly 464.83
Jas. Youngblood .25
Zimmerman hd. Co 12.05
D. H Drake .36
E L. M. Hoare .66
Adam Schmidt 98.30
O. Elswick 800.00
J.F. Dean 50.00
J. M. Kilburn 50.00
J. Beyers 90.00
John Reed 50.00
A. Miller 500.00
J. Collar 1.00
S. S. Griggs 7.00

Dodge City Globe (Dodge City, Kansas) 4 Mar 1891

Then in September of 1891, The Dodge City Daily Globe carried a story describing the cause of the bank failure.

The Recorded Facts

How the Taxes Were Absorbed by the Cox Dynasty

Through the courtesy of the receiver of the Merchant’s State Bank the Globe-Republican scribe has been permitted to make a thorough examination of that defunct institution, and the memoranda therein made by Mr. Cox himself and his employes, most emphatically verify the very worst that has been even suspected by the writer. Space will not permit us this week to give the data in detail, but we have the dates and items carefully preserved for future reference. We will this week briefly summerise the situation, giving fuller details later on in the campaign.

In November, 1887, Geo. B. Cox was elected county treasurer for the first time, over C. N. Van Vilet, who was deputy treasurer under R. M. Wright. In October, 1888, Mr. Wright turned over to Mr. Cox, his successor, every dollar of public funds entrusted to his care as such treasurer, with the books in perfect order. Otto Mueller was installed as deputy by the new treasurer, and has remained in personal supervision of the office until recently, in communication by letter between himself and Mr. Cox, he suggested that the latter return and take charge, while he, Otto, shall make the campaign for election this fall. This suggestion was acted upon and is now in operation.

After taking control of the office, Mr. Cox, who was president and principal stockholder of the Merchants State Bank, made an arrangement, which is permitted by the statutes of this state, whereby his bank was designated by the board of county commissioners as the depository of count funds, on a security bond filed with the county clerk and approved by the board. Mr. Cox gave as such bond his own name and that of one other stockholder and director of the bank, whose stock together with that of Mr. Cox, soon constituted a good working majority of bank shares. — After this, when Mr. Cox had occasion to use money in his private business, or desired to favor a friend or political striker, he could drop into the bank in his official capacity as county treasurer, deposit the cash collections of taxes with Geo. B. Cox, banker. Then Geo. B. Cox, the business man, could write his check or promissory note, leave it with Geo B. Cox, the banker, and take the money to use as pleased him best. The state of affairs continued till the fall of 1889, when the bank had cashed about as much paper bearing the Cox autograph as that gentleman was apparently worth. Then, by herculean effort, and the lavish expenditure of money, he was re-elected against L. Sims, the regular republican nominee. With a new lease of power, Mr. Cox now delved deeper than ever into the treasury vaults In the spring of 1890 the bank held much more paper against him than his entire visible assets could be made to sell for in cash. But as county taxes came in he continued to deposit them in the bank and borrow the money for his own use, and although hopelessly insolvent, took no less than thirteen thousand dollars in addition to what he already owed. The other stock holder who was on the bond to secure the county, was ere this hopelessly involved, notwithstanding which fact he must be provided for, as he had worked tooth and nail for the election of Mr. Cox. Hence he was permitted to take eight thousand dollars of good money. These two hauls left the bank utterly unable to meet the demands of the county, city and school district depositors, and the bond on file with the county clerk having become worthless by the insolvency of the sureties, (who in reality constituted the principal on whose behalf the security was given,) the taxpayers of Ford county have nothing to show for about thirty thousand dollars paid into the treasury as municipal taxes, except the possibility of a slender dividend which the closing out of odds and ends of the collapsed institution may realize. All this money will have to be collected over again in addition to that needed for future current expenses of the county. Old Ford is one of the best counties in the state and by prudent administration of her affairs hereafter, will soon recuperate her wasted resources, but woe be unto us if we again renew the power of the vampire which has to greedily absorbed our revenues in the past.

The Dodge City Globe (Dodge City, Kansas) 2 Sep 1891

The September 10, 1891 issue of the Dodge City Globe contains a letter from Geo. B. Cox outlining where the money went. Later papers have several notices for the sale of property owned by Geo. B. Cox and his wife, Amy. Even though the papers covered the scandal and hinted at criminal charges, a search of the papers thru 1892 did not uncover a criminal trial.

Thus, the Merchants State Bank where J. H. Crawford served as a director in 1886 was a failure five years later.

2 thoughts on “Merchants State Bank

  1. My great-great-grandfather and his brother bought a bank and caused it to fail. They used the funds to buy leveraged real estate. I don’t think it was illegal at that time, but certainly not prudent! Many lawsuits followed. I haven’t had the time to look them up. George Cox sounds like quite the slick embezzler!

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