Any photos not otherwise credited are from the personal collection of Frank Passic, Albion Historian.
Morning Star, Saturday December 31, 2011, Pg. 11
It was exactly 100 years ago this month that Albion was shocked with the worst financial disaster in its history: the failure of the Albion National Bank at 12:15 a.m. on Monday, January 1, 1912. The last day of business for the bank was Saturday, December 30, 1911, which closed at its normal 9 pm., customary of those times. This bank was located in the north half of where Fedco is today.
Hundreds of Albion residents lost their hard-earned savings. As the U.S. Bank Examiner's Herbert E. Johnson's investigation became public, it was revealed that the cashier of the Bank, Henry Montgomery Dearing (1839-1927) in collaboration with his son Palmer M. Dearing (1865-1932), had forged loan notes and suppressed deposits and unearned interest and dividends to the tune of $325,000. The Dearings had a controlling interest in the Cook Manufacturing Company which produced gasoline engines, and were secretly pumping bank money into that firm to try and save it.
The Dearings confessed to their crimes, and were sent to Leavenworth prison in Kansas. Another son, George Vail Dearing (1868-1927) was assistant cashier at the bank. He was implicated, convicted and sent to prison after it was learned he had become suspicious because the Bank Examiner was staying too long. George withdrew the funds of his family, and the Methodist Brotherhood from the bank one hour before it was closed by the Bank Examiner. The secretary to Palmer M. Dearing, Miss Addie Hollon (1855-1925), was found guilty for her part in preparing forged loan notes using the first name of one person and the last name of another. She was subsequently pardoned by President Taft after serving only three months in prison. The bank president, Civil War surgeon Dr. Willoughby O'Donoughue (1832-1915) knew nothing about the forgeries, and remained at his desk in the closed institution where he answered depositor's questions for several weeks.
The scandal made headlines not only locally for several months, but statewide as well. Michigan banking laws were changed as a result. A series of implications with various local merchants developed, and bank stock owners were sued while the forgery scheme was being untangled. Albion Township Treasurer Fred Kinney, and Sheridan Township Treasurer Charles Krenerick had both deposited the year-end tax monies into the bank the last day it was open. They were later absolved of any personal liability. The entire funds of the city hospital were deposited in the bank and for a time it was thought the hospital might have to be closed. The Jesse Crowell monument fund monies were also here, and thus it's placement at Riverside Cemetery was delayed several years.
Former Albion postmaster Frank L. Irwin (1863-1947) was appointed receiver of the bank. Ironically, his father Samuel V. Irwin (after whom Irwin Avenue is name) had founded the bank in 1866. Depositors eventually received only about 30 percent of their deposits back. This was long before the Federal Depositors Insurance Corporation was invented. The bank building was sold to Frank Graves in November, 1912 and became the location became Grave's Shoe Store.
The complicated details about the bank scandal are covered in this author's first book (1985) "Albion's Banks and Bankers," now out-of-print.
This writer's research article entitled "The Albion Bank Scandal" was published in the January, 1998 edition of The Numismatist (American Numismatic Association) and received the 1999 Catherine Sheehan Literary Award for U.S. Paper Money Studies.
From our Historical Notebook this week we present the headlines of the Albion Evening Recorder, January 2, 1911 announcing the bank failure. Did any of your ancestors have money in the Albion National Bank? Many of the names are listed on pages 55-58 of my book "Albion's Banks and Bankers," along with a photograph of the angry group of depositors meeting in the Albion Opera House demanding their money back from the U.S. Government.
Headlines of the Albion Evening Recorder, January 2, 1911
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All text copyright, 2016 © all rights reserved Frank Passic