The Collapse of the Merchants' National
Tacoma bank officials indicted on charges of false entry and 'straw paper' schemes amid a brutal city-wide financial rivalry.
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A Federal grand jury in Tacoma has indicted several officers of the suspended Merchants' National bank on seven counts, including false entry and the use of 'straw paper' to deceive bank examiners. The indicted men—Ex-President W. J. Thompson, Vice President Henry Drum, Cashier Samuel Collyer, and Assistant Cashier R. J. Davis—were quickly released on $2,500 bail each. The charges allege that bank officers used fictitious notes to misrepresent the bank's condition to examiner Charles Clary. The bank, once a pillar of Tacoma's boom years, suffered from an intense, decades-long rivalry with the 'Tacoma National bank crowd,' which ultimately hindered its ability to secure help during its final days. When liquidity dried up in late December, the bank was unable to meet the demands of its creditors, leading to its collapse.
“Many of the biggest and most promising schemes this city ever dreamed of were planned and fostered in the old directors' room.”
The collapse of the Merchants' National Bank serves as a quintessential tale of Gilded Age corporate malfeasance. It mirrors modern debates over the lack of transparency in financial institutions and the dangerous consequences of 'rivalry-driven' banking practices that prioritised growth over actual security.
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