Pirates of the Truckee Meadows - Reno Savings Bank
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In January, 1877 Myron Lake, Granville W. Huffaker, Joseph Ely Jones, James H. Kinkead and L. L. Crockett opened the Reno Savings Bank at Odd Fellows' Hall, the town's newest and finest business block at Second and Virginia. There was, said its advertising, $100,000 in paid up capital to insure depositors. Three years later, on June 24, 1880, individuals waiting outside the heavy, ornate doors shortly before opening time were greeted by a crude hand-lettered sign reading "Suspended."
There was only one reason for the low cash reserve - no proof of ethical management by the bank's directors. Later, it was learned that the $100,000 put forward by these men was not only far less than "paid up" but amounted to only $30,000 for which these officers issued themselves stock with a value of $100,000 - meanwhile assuring potential depositors that the larger sum was secure in their treasury.
Adding insult to injury, the directors paid themselves dividends on their inflated stock of three percent per month from income, keeping cash reserves ridiculously low in order to continue insider profit taking. If accurate, Myron Lake's investment of $6,000 in 1877 paid him as much as $25,000 in three years! The other directors shared similar amounts.
An exact recounting of the night of June 23-24, 1880 can never be known. Yet enough is known to outline an "insider" operation fit for the record books. Bank manager Kinkead spent Thursday, June 23, in Virginia City unsuccessfully seeking cash to prop up the empty treasury. While there, he telegraphed his cashier, L. C. Batchelder, to leave the vault open after closing time and to disengage the time clock. What a hound! Back in Reno, Kinkead sent Batchelder to Carson City to alert State Treasurer Crocket that the bank would suspend the next day. Crockett hotfooted it for Reno to find that Kinkead had already stripped the vault of cash, but he did end up with a bag of silver coin amounting to slightly over $1,000 and negotiable securities equal to the state's deposit in the fast-failing institution. Crockett had allowed, for several years, the illegal practice of permitting state taxes to be paid by check to the bank, rather than the state, to avoid the 1% check payment fee.
Kinkead finally admitted to withdrawing almost $13,000 in assets to meet his own personal account during that busy night.
Fallout from the bank's "failure" continued for years. Crockett wisely decided against running for re-election as state treasurer. The others ran like Hares. William Thompson, Myron Lake's son-in-law, brought suit against Lake and the directors demanding that they pay any sum they might own on bank capital stock, in order to repay the depositors. Thompson made Lake and company sweat blood. He obtained a judgement in September, 1883 that obligated Lake meet his bank stock dues. Lake died some months later and the matter bacame part of the probate process.
Finally, late in 1885, Thompson withdrew his damage suit in a final settlement of Lake's property. Other depositors were not so fortunate; they got about eighty cents on the dollar from gradual sales of Savings Bank assets over fifteen years.
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