During the times of yesteryear, more people and more businesses in Daviss County meant more banks — and more temptations for illegal gain, especially as hard times caused bank failures. Here are two examples, occurring nearly 25 years apart, where wrongdoing resulted in stints at the state penitentiary. In both cases those charged drew the maximum punishment provided by law.

In 1904 Lee Deford, the defaulting cashier of the Bank of Altamont, plead guilty to four counts of receiving money on deposit when the bank was known to be in failing circumstances. Deford was sentenced by circuit court Judge Alexander to 8 years in the state penitentiary.

The Bank of Altamont was closed by state bank examiners on Jan. 28, 1904, and an examination of its affairs revealed a shortage of about $8,000. Later Lee Deford, the cashier, confessed to having doctored the books to cover up part of the shortage and made a full confession, giving a memorandum of the amounts short on each deposit. This totaled up to nearly $20,000.

Immediately afterward, Deford left the country but returned Feb. 15 to surrender to R.J. Britton. He steadfastly refused to Divulge what he had done with the money. Britton claimed a $300 reward offered by the state for Deford’s arrest and conviction, but will turn the same into the assets of the defunct bank.

The failure of the bank involved Deford’s father, brother and uncle to the extent that they will lose everything they possess. The depositors will quite likely not realize more than 50 cents on the dollar. Another uncle was forced to make an assignment of his mercantile stock.

National fiscal policies favoring national banks originated in 1863 when President Abraham Lincoln signed the National Currency Act. A national bank could circulate notes with a total value that depended on the value of securities if deposited with the U.S. Treasurer. Local banks could loan 90 cents for every dollar paid. The currency was delivered in large sheets to the local bank where individual bills were cut; irregularities make these bills extremely valuable to collectors today. Not all banks, even those chartered as national banks, issued money. A charter was good for 20 years. When a bank bought out another bank or holding company, the buying bank’s name might be shown on the bill with the purchased bank’s charter number. This example was issued by the First National Bank of Gallatin, when Chas. Henry was bank president operating facilities on the south side of the Gallatin business square. (circa 1897-1901; courtesy Jim Mogg, Hamilton)

 

In 1928 a Daviess County jury found former Gallatin banker Dr. R.V. Thompson guilty of accepting deposits when the Farmers Exchange Bank was in insolvent condition. Thompson was sentenced to 5 years at the state penitentiary. The trial lasted 5 days but the jury deliberated little more than an hour to reach its unanimous decision.

Prosecuting Attorney Dean Leopard tried the case on the specific action of Thompson accepting a $350 deposit on March 4, 1926, from C.L. Hodges, guardian of the Anna Scott estate. There was a mass of evidence and some of the witnesses were on the stand for an extended period of time. The charge against Thompson came through a grand jury indictment; a previous trial in the same circuit court on the same charge ended with a hung jury.

Dr. Thompson was cashier of the closed Farmers Exchange Bank and is the second official connected with this bank to receive a penitentiary sentence; Homer Feurt, president, was given a 4-year sentence by a jury in the Caldwell County Circuit Court.

There are other newspaper accounts citing more Daviess County bankers accepting deposits when their banks are in failing condition. Grand jury investigations led to charges against John H. Gillespie, president of the Bank of Jameson when it closed. Gillespie faced three counts in deposits totaling about $1,000. C.A. Lewis, cashier of the Commercial Bank at Jamesport, was indicted by a grand jury for accepting two deposits totaling $27.85 when the bank was in a failing condition. George W. Johnson, cashier of the Farmers Bank of Jameson, was indicted for accepting three deposits totaling over $500 when that bank was in failing condition.

— rewritten by Darryl Wilkinson from clippings of the Gallatin Democrat June 7, 1928, and April 21, 1904

The First National Bank of Jamesport issued this $20 bill on Dec. 2, 1904, while R.H. Lilly served as bank president. Notice the bank’s charter number printed prominently on each bill’s front (for Jamesport, 7460). Featured on this bill is the photo of Hugh McCulloch, an American financier who played a central role in financing the American Civil War. He served two non-consecutive terms as U.S. Treasury Secretary under three presidents.

This is the back side of a $20 bill issued by the First National Bank of Jamesport on Dec. 2, 1904.

 

This $10 bill, Series of 1929, was issued by the First National Bank of Gallatin. The bank issued bills for $5, $10 and $20, signed by Bank President Chas. Hemry and Cashier F.S. Tuggle, from its facilities on the south side of the business square. Note the bank’s charter number 5827, printed prominently on the front of the bill.

This $10 bill, Series of 1929, was issued by the First National Bank of Gallatin.

F.S. Tuggle worked as cashier at the First National Bank of Gallatin. As a bank officer, he signed currency ($5, $10 and $20 bills) issued by the bank while Chas. Hemry was bank president. (1916 photo)