Crises have tested resolve of GJ banks; not all have survived
If the nearly 100-year-old bank building at the corner of Fifth and Main streets could talk, now might be a time it would remember the national financial crisis that led to the Franklin D. Roosevelt Bank Holiday of 1933.
What was then Grand Valley National Bank in Grand Junction was one of the most remarkable local banking institutions of its time, serving as the largest in Grand Junction’s skyline and flattering the streets of downtown with “ornate for its time” architecture, local history buff Dave Fishell said.
Egg-and-dart architecture adorns the outside pillars of the building, erected in 1910 and now owned by accounting firm Dalby, Wendland & Co. The structure at 464 Main St. houses three prominent vaults, including the “dungeon vault” that predates the current building to 1902 when the bank’s first structure was built on the site.
On March 3, 1933, citizens of the United States, Grand Junction included, found themselves the featured players in a game of shaken faith. About 30 states closed their bank doors as the runs became more rampant across the nation. Grand Valley National in Grand Junction was one of them.
“Hordes of people were running to the bank that day to get their money out,” said Zebulon Miracle, curator of anthropology for the Museum of Western Colorado. “There were fights breaking out. There was an emergency meeting. They told customers they were closing at noon. If they were in the building by noon, they got cash. If not, they were closing.”
With no Federal Deposit Insurance Corp. in existence, that day ingrained in Depression survivors a distrust of banks.
Fishell said that some of the Depression survivors he has talked to “so mistrusted banks that they never put their money back in a bank again. It’s because they either lost some or were scared of losing money.”
The financial site was vindicated nine months later, reopening as the new First National Bank of Grand Junction.
Bank leaders say crises and difficult times have tried and tested their institutions.
“One thing it teaches us is that people that run financial institutions are people,” said Bob Hoffman, president at Palisades National Bank, which closed briefly during the 1933 moratorium and reopened thereafter. “In our society we obviously have this desire to have everything. We’re not satisfied with whatever our incomes are in our portfolios. We want more. There’s all these temptations out there to figure out ways to get more. Until we decide as a society we have what we need and that’s good enough, we’re probably going to see people tempted to continue to do things we did in the past, in which case these cycles will continue.”
Although financial crises are cyclical, historical knowledge gets lost in successive generations.
“Every 25 years, you graduate a patch of older bankers,” said Pat Gormley, a long-time local businessman who owned Mesa Federal Savings and Loan during the 1980s savings and loan crisis.
“A lot of times you don’t have any institutional memory of what has happened before. Nobody likes to have a bunch of old guys telling them, ‘You shouldn’t have done that.’
“I’d like to think that after Grand Valley National Bank and the other events, essentially everybody learns that you don’t live with inflated valuation,” Gormley said. “The other one is: Don’t take on more debt than you can handle. The Great Depression was based on money being too tight. That’s not the situation now. Money is plentiful, but it isn’t moving between banks. I think that’s what the bailout is supposed to do.”
While the current financial crisis has not closed large commercial banks, it is still about people’s money.
“We certainly aren’t seeing a panic, but I think people are concerned and have every right to be concerned about their stock portfolios,” Hoffman said. “In the 1980s and early ’90s, 401(k) investment portfolios were cut in half and in some cases by three-quarters, and they came back. I think with the proper oversight, which I’m not sure we have yet, hopefully we’ll come back just like we did.”
History has been telling of how leadership solved or didn’t solve financial crises in the past, Fishell said.
“The Depression started under (President) Hoover,” Fishell said. “He was very in favor of hands-off.
People lost a lot. Even today, most historians say he should have done something. Franklin D.
Roosevelt gave thousands of people jobs when he started the Civilian Conservation Corps, putting in things like the Rimrock Drive, which was one of his projects.”
It’s difficult to measure what effects the current national financial crisis ultimately will have on Main Street.
“We’ve been through a lot of storms in the history of the economy in the United States,” Miracle said.
“I’m more interested in how we’re going to look back at it in 15 or 20 years. It takes awhile to see all the ripple effects. It’s still a murky story, and we don’t have enough context to tell how big this is ... or how small it is.”