Albion National Bank, 1905
Failed and Closed 1912
With the expiration of the charter of the first National Bank of Albion, the Albion National Bank was organized and received charter No. 7552, on January 11, 1905. Business officially began on January 14. The bank started with a capital fo $50,000. The original stockholders were: Willoughby O’Donoughue, president; Henry Montgomery Dearing, cashier; M.D. Weeks, James C. Eslow, and A.J. Howell. Each owned 100 shares. Seven years later, because of an incredible forgery scheme instituted by the cashier Dearing, and his son, Palmer M. Dearing, the bank was ruined, countless Albion citizens lost their money.
The financial troubles for the bank already had begun during the era of the old First National Bank, when in 197, the bank was forced to reduce its capital by $50,000 because of mismanagement on the part of cashier H.M. Dearing. At the time of the bank’s organization into the Albion National Bank in 1905, Dearing secretly discovered that the finances of the old bank were still in poor shape, and that he had erroneously overpaid depositors and stockholders interest and dividends over several years.
Compounding the financial woes, shortly after the organization of the Albion National Bank, Dearing approved a loan of $21,000 to a fraudulent Jackson hay dealer, Charles Young. This same man had previously caused the Springport bank to fail by defaulting on a loan. Young soon defaulted on the loan given to him by Dearing. Fearing to tell the bank directors about the loss, Dearing committed the crime of forging bank notes on the names of bank depositors in order to cover up the $21,000 loss.
Furthermore, the bank had also loaned a substantial amount of money to the Cook Manufacturing Company, in which the Dearings had obtained a controlling interest, and which was managed by Palmer Dearing. The company ran up a huge debt. and the bank directors ordered the debt be reduced. Seeing how easy it had been to forge bank loan notes, H.M. then introduced his son Palmer to his forgery scheme, and the two men began forging loan notes of the Cook Manufacturing Company on the names of people throughout the country.
By the time the U.S. Bank Examiner Herbert E. Johnson, in a routine inspection on December 29, 1911, uncovered the scheme, forgeries had climbed to $325,000.The last day of business for the ANB was Saturday, December 30, 1911. The forgery scheme was one of the largest in U.S. banking history at the time.
The citizens of Albion did not just stand still and watch their money disappear while the news of the failure surfaced and the subsequent trials progressed. On May 17, 1912, a group of 500 depositors met in the packed Business Men’s Hall, 202 S. Superior, to form a strategy in getting their money back. Another large meeting was held on the evening of December 4, 1912, in which a fifteen page petition and resolution was signed by depositors. It was accompanied by a flash photo of the irate group.
The depositors would find little recovery from the failure of the Albion National Bank. It was a disaster for the citizens of Albion, and became known as “Albion’s darkest hour.” The eyes of the state and nation were focused upon the wrecked financial institution, marking an ugly blot on the town’s good name.
Source: Frank Passic. Albion’s Banks and Bankers. Albion, Michigan:Albion Civic Foundation. 1985.