Stashing cash in a mattress or burying it in the backyard were two ways Rabun County’s people could “save” money during the 1800s. It was not until the early twentieth century that a third option became available.
In January 1904, a group of citizens invited W. S. Witham, president of Georgia’s Witham Banking, to discuss the organization of a bank in Clayton. Witham, who owned a bank in Cornelia, agreed to invest half of the $15,000 that was needed to fund the bank. To raise the remaining $7,500 of capital, shares of bank stock valued at $100 were sold to about 25 investors, many of whom purchased multiple shares. By becoming the bank’s largest shareholder, Witham appointed the bank’s board of directors, hired an experienced cashier to run the bank, and provided deposit, burglary and fire insurance. At Witham’s request, Clayton donated a suitable lot for the bank building. Finally, with an eye toward protecting the bank from fire, he wanted the town only to permit the construction of brick, not wooden, buildings going forward. Eager for a bank, Clayton also granted this request.
Bank of Clayton Opened in 1904
Having gained state regulatory approvals, the Bank of Clayton opened later in 1904. The new bank building, Clayton’s first brick structure, was located on South Main Street in what is now called the Reeves Block.
Due to the county’s isolation from the national economy, the Bank of Clayton survived the nationwide Panic of 1907, a six-week stretch of runs on banks in New York and other urban areas in October and early November. The panic was triggered by a failed stock market speculation that caused the bankruptcy of many banks and two large Wall Street brokerage houses. Without a central bank to inject cash into failing financial institutions, banking titan J.P. Morgan led a group of financiers that put their own money on the line to bail out Wall Street and restore confidence in the banking system. Their effort worked. This action led to the establishment of the Federal Reserve System in 1913.
Bank Emerges Relatively Unscathed from 1926 Panic
The Bank of Clayton experienced another unsettling situation in 1926 when Florida experienced a bank panic caused by the collapse of rampant real estate speculation. The contagion quickly spread to Georgia. During a ten-day period in July, 117 banks closed in the two states due to runs on banks by panicked depositors demanding their money. Since federal deposit insurance had to await New Deal legislation, depositors lost millions of dollars.
The July 22 edition of the Clayton Tribune reported, “During the panicky financial conditions that prevailed last week, all over the state and into Florida, The Bank of Clayton came out of the flurry none the less able to care for its customers. Some few, in a moment of uneasiness drew out their deposits, some few called for a part of their deposits, while those who knew best as to the bank’s condition sat steady and lost no sleep over the conditions…During the most critical period of the situation, the officials of the bank went quietly about their business and handed out money to every one who asked for it…and together with the confidence which the officials are held, contributed toward averting anything that was even embarrassing to the bank.” However, it also is true that the bank continued to benefit by serving a geographically remote county, insulated from outside economic forces.
Directors and Customers Fared Well
In recounting the Bank of Clayton’s history in 1930, the Clayton Tribune proclaimed, “The bank has been greatly instrumental in the growth and progress of the town and county…Since the organization of the bank, stockholders have received in dividends the sum of $52,177.50 or an average of more than two thousand dollars per year.” That was an astonishing return on investment for shareholders residing in an impoverished county. However, customers also fared well, with the newspaper reporting, “Interest to the amount of $136,298 has been paid to time depositors.”
The Tribune continued, “The bank has passed through several panics and financial depressions since its organization and has been able to weather the storms with little the loss of a penny to its depositors…The Bank of Clayton has withstood all the onslaught to the banks and came out stronger than ever and with the confidence of the people unshaken in their local institution.” This soaring encomium was penned just as the full fury of the Great Depression was about to bear down on northeast Georgia.
Great Depression and a Bank Run
The Bank of Clayton had total assets of nearly $407,000 in January 1928, the year preceding the stock market crash that ushered in the Great Depression. By January 1931, assets had declined by about 25%. This was a huge hit for a small rural bank, but matters were going to get much worse. By early 1933, depositors, suffering from unemployment and the resulting economic hardships, started a run on the town’s bank. The Bank of Clayton was left on the verge of bankruptcy.
Franklin D. Roosevelt was sworn into office as president on March 4, 1933. Two days later, he proclaimed a “bank holiday” to stop the bank runs occurring across the nation. From March 6 to March 10, all banking transactions in the country were suspended. During this period, Roosevelt presented Congress with the Emergency Banking Act that empowered the president through the Treasury Department to reopen banks that were deemed solvent or capable of becoming solvent. Both houses of Congress passed this legislation with less than one hour of debate.
Bank Permitted to Reopen
With passage of this legislation, 4,000 banks were found to be totally insolvent and permanently closed. Banks deemed solvent or needing some assistance were permitted to open on March 15. Federal bank examiners concluded the Bank of Clayton could regain full solvency. The Clayton Tribune reported in its March 16, 1933 issue, “The Bank of Clayton received a permit from R.E. Gormley, the State Superintendent of Banks, Wednesday morning to open and start business on its way again.” The bank opened its doors with deposits totaling $9,149.30, compared to $260,000 in 1931. Apparently, the bank just squeaked through the Treasury Department’s solvency review.
It was thought the bank would institute a policy of limited deposit withdrawals. However, this was not implemented, since no large withdrawals were made following the bank’s reopening. In fact, depositors who had withdrawn their money a week earlier, now started to return with their cash. The newspaper wrote, “The opening of the bank has put a new life into business, which has been slumped considerably for the time of the holiday, but it is the opinion that everyone will see a new day in business during the coming year.” This optimistic forecast could not have been more completely wrong, since the Depression dragged on for the rest of the decade. However, the Bank of Clayton managed to survive.
Bank Heist of 1934
About 18 months after the bank reopened in 1933, it was robbed by what the Clayton Tribune dubbed “machine gun bandits.” Five men armed with the “Tommy Guns” of Prohibition lore entered the bank on a mid-August 1934 afternoon. Unable to open the bank vault, the robbers stole $1,830 from the cash drawer. The newspaper reported, “They hastily crammed the bills in a sack and ran out of the bank. A large crowd was on the street and those near the bank were ordered to keep still and quiet.”
The bank robbers sped south in their getaway car toward Tiger, scattering nails on the road to stop the pursuing car of Sheriff Luther Rickman. Avoiding the nails by driving on the wrong side of the road, Rickman chased the fleeing men all the way to Greenville, South Carolina, where he lost track of them. The leader of the group, Zade Sprinkles, was arrested later in Marion, North Carolina for stealing a car during the group’s flight. He was sentenced to five years in the state penitentiary. Upon his release in 1939, Rickman took Sprinkles back to Clayton where he was tried and convicted for bank robbery. None of the money taken from the bank was ever recovered. However, the New Deal’s Federal Deposit Insurance Corporation covered the loss.
The bank’s business continued to grow in coming decades, and by the early 1960s, the bank had outgrown its 1904-vintage building. The Bank of Clayton opened a larger, modern facility on the Reeves block in the mid 1960s. Then in 1977, the bank opened a still larger building on the corner of East Savannah Street and Highway 441. Regions Financial Corporation acquired the Bank of Clayton in 1996 and continues to operate a branch bank in that corner building.
This article by Society member Richard Cinquina was originally published in the Laurel of Northeast Georgia in February 2024.
