One of the enduring images of movies and television about the frontier west in America is the bank robbery. In a typical Hollywood scene, several riders, clad (in recent movies) in long coats—despite summertime frontier temperatures of up to 125 degrees!—slowly enter town, conspicuously scanning the cityscape for lawmen. The riders tie up their horses and enter the bank in broad daylight. Then they move with lightning speed to draw their guns, force the cashier or president to open the safe, throw the money in saddlebags, and hightail it for their horses outside. In a cloud of dust, they scramble out of town, with an occasional gunshot from one of the befuddled sheriffs trailing behind. The townspeople may mount a posse, but this belated action proves ineffective, as the crooks gleefully reach their hideout, the next town, or Mexico, whichever comes first.

There is one thing wrong with this scenario: it almost never happened. In 1991, Lynne Doti and I published Banking in the American West from the Gold Rush to Deregulation, in which we surveyed primary and secondary sources from all the states of the “frontier west.”[1] This included every state west of the Missouri/Minnesota/Texas line, specifically, Arizona, California, Colorado, the Dakotas, Kansas, Idaho, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, Utah, Washington, and Wyoming.[2] The time frame was 1859-1900, or what most historians would include in the “frontier period.” Based on some previous research I did on Arizona and Doti did on California, we expected that we would not find a great number of bank robberies, but when we looked at the total picture for the West, the data surprised us.

Put generally, we found the western bank-robbery scene to be a myth. Yes, a handful of robberies occurred. In the roughly 40 years, spread across these 15 states, we identified three or four definite ones; and in subsequent correspondence with academics anxious to help us “clarify the record,” perhaps two or three others were pointed out. We missed two “biggies,” both by Butch Cassidy and the Sundance Kid (including the famous Telluride robbery in the late 1890s). Still, the record is shockingly clear: there are more bank robberies in modern-day Dayton, Ohio, in a year than there were in the entire Old West in a decade, perhaps in the entire frontier period!

What is more relevant to those interested in liberty and free markets is why there were so few robberies. Certainly people in the Wild West were no less greedy than later generations of criminals. In the 1920s, for example, a spate of western bank robberies plagued the Great Plains states: rewards soared, bank insurance was offered for the first time, and western bankers discussed bank robberies with increasing frequency at their meetings. Career criminals such as Bonnie and Clyde became infamous for their ability to strike quickly and escape. So if the crooks didn’t change, what did?

Equally interesting is the simultaneous rise of government regulation aimed at bank failures—but not robberies. After the 1890s almost every western state began to regulate other types of bank behavior to “protect” the consumer. Why were there so few bank robberies before the government got involved? Do technological factors explain the dramatic change?

In our study of how banks started in the early West, Doti and I were struck by the fact that virtually all bankers began as “something else.” Few bankers from the east moved past the Mississippi to establish a bank, at least, not before laying the groundwork in other businesses first.

Several prominent bankers had ties to eastern financial firms, such as the Koutze brothers of Nebraska and the Speigelbergs of New Mexico. Yet the first thing these men (there were no female western bank founders before 1900) did when they settled in a frontier town was to open a mercantile establishment—a “general store.” Was there no demand for banks when they arrived? Of course. That wasn’t the point: the future bankers knew that banking in the 1850s, 1860s, and 1870s demanded trust and public confidence, which had to be earned. Only by setting up a business that townspeople could rely on could the entrepreneurs later open a bank.

Creating a record of good business sense and reliability in another area of enterprise constituted only one of several requirements for a frontier banker. Another involved personal appearance. Many, if not most, western bankers looked the part. Their dress—and even their girth—was viewed by locals as testimony to their personal prosperity. Bankers had to demonstrate that they, personally, had the wherewithal to support a bank in times of trouble. Expensive dress played as critical a part in the life of a western banker, as do the feather boas on a showgirl, the gold chains on a rapper, or the Armani suits on a Wall Street broker.

Symbolic Building

Besides demonstrating an affinity for business and personal wealth, the banker had to show the community that he meant business by constructing a building that would symbolically reflect stability, permanence, and safety. The bank buildings were designed by some of the leading architects in the country (although many of the great names in American architecture constructed bank buildings only after 1900).

The buildings were in the dead center of town, with other stores on each side. This left only two walls “open” to blasting without disturbing residents, who tended to sleep above their establishments. The bank front faced into the town, and smashing through it would be obvious. That left the rear wall the most vulnerable. Even then, however, blasting through a wall was no easy (or quiet) chore. Bankers double-reinforced rear walls, and should the robbers get inside, they still had to deal with an iron safe. Safe storage of money was a key to successful banking: one Oklahoma banker kept his cash in a small grated box with rattlesnakes inside; an Arizona banker had a safe, but put his money in a wastebasket covered by a cloth, hoping thieves would take the safe and ignore the rest. Still others slept, literally, with the bank’s assets under their bed.

Eventually, though, early iron safes appeared. Constructed in the “ball-on-a-box” design, they featured a large metal box on legs that held important documents. Actual gold and silver, plus paper money, was stored on top of the box in a large “ball safe,” which proved daunting to separate from the bottom, or, more important, to haul off. Dynamite could break it off from its base, but what does one do with a huge round iron ball? The absence of plastic explosives made surgical entrance difficult, though certainly not impossible. These safes were later abandoned in favor of more conventional Diebold safes, named after the Cincinnati company that supplied many of them. The rectangular safes sported metal doors several inches thick. Again, one could penetrate them given enough time, but that was a luxury most thieves lacked. In short, penetrating a vault or safe constituted a major, difficult undertaking that most robbers avoided. But for our purposes here, the key is that the vault and safe, along with the building itself, made up the “symbols of safety” that reassured depositors their money was safe.

Indeed, many western banks commonly left the vault open during the day to allow customers a full view of the safe. Customers also saw fine wooden counters, excellent brass finishings (sometimes gold), and in banks in larger cities, beautiful chandeliers and marble floors. Ornate and ostentatious materials and furnishings contributed to the overall message of the owner’s wealth, the bank’s permanence, and the institution’s stability and safety. Once regarded as irrelevant or odd, it turns out that the fine interiors had a definite purpose in maintaining the solvency of frontier banks.

Direct Approach

Given the difficulty of liberating cash from such buildings, it is not surprising that robbers usually chose the more direct approach. Several gunslingers marching headlong into a bank may have seemed like a good idea to some, and certainly Butch Cassidy’s gang pulled off the successful Telluride robbery in such a mode. His gang had the advantage of Cassidy’s brilliant planning: a shrewd evaluator of horse flesh, Cassidy had stationed (Pony Express-style) horses at exactly the points where he knew his own horses would be wearing out, ensuring that his gang had fresh mounts all the way to their hideout. Even so, one has to search extensively to find bank robberies of even this type. There was one in Nogales, one in California, and perhaps a couple in other locations. But like the rear-wall blasting, the front-door robbery is notoriously absent in western records.

So where did the myth of the western bank robbery arise? Some of it can be traced to Missouri, where the James and Quantrill gangs plundered at will during the Civil War era. Their expeditions ranged as far north as Northfield, Minnesota. But Hollywood is certainly guilty of misrepresentation.

The fact is, under the best circumstances, few gangs could ride into a town where almost every adult male was armed, walk inconspicuously to the building in the middle of town, and escape with everyone shooting at them. Moreover, railroads and stagecoaches made easier targets. Stagecoaches only had a driver and an armed guard, but train schedules were easier to predict. Even then, after a few trains were hit—especially by the Butch Cassidy gang—the railroads hired the Pinkerton detectives to put together a special operations force of crack shots and expert riders who rode in separate cars with their horses, or even separate trains that trailed behind the “target.” The Pinkertons could react rapidly to a robbery, ultimately making it too difficult to consistently hit trains.

Interestingly, at the same time that banks were relatively free from robberies, they became gradually more vulnerable to instability of other types. Following the demise of the Second Bank of United States in 1836, the nation’s banking system was comprised of a network of privately owned banks chartered by the state governments. (A few states themselves created their own monopoly banks, but those collapsed in the Panic of 1837.[3]) All the state-chartered banks could print their own notes, which circulated as money. Beginning in the late 1830s, several states also passed “general incorporation laws,” which, when applied to banks, were known as “free banking laws.” While these had weaknesses, especially in the volatile bonds that some states allowed to be deposited as collateral with the state treasurer, overall the combination of state charters and free banks led to one of the most stable and prosperous periods known in American financial history. During the Panic of 1857, for example, the South—which had branch banking, as opposed to the single-unit banks in the North—had virtually no failures or suspensions.[4] Meanwhile, surprisingly to advocates of government monopoly control of money, competitive bank notes proved remarkably easy to assess: Dillistin’s Bank Note Reporter and other reporters gave fairly current values of notes. Contrary to the predictions of some, when money was taken out of the hands of the government and subjected to a private market, it produced a stable free-market money supply.

The Civil War changed the structure of banking laws, mainly to ensure bond sales to support the war effort. In the National Bank and Currency Acts of 1863-64, the government created a system of federal charters (that were more restrictive than the state charters), and allowed the national banks to issue money. Quickly realizing that privately issued notes would outperform government money, Congress passed a 10 percent tax on all private notes. Without actually banning private money, the government had eliminated all competition in cash.

At the same time, a national financial market gradually took shape, in which local banks, through “correspondent accounts,” deposited some of their money in larger urban institutions that could pay interest. A bank in Colorado suddenly could be affected not only by a local robbery but also by a downturn in the railroad bond market in Chicago. Suddenly, to many people the stability and solvency of the individual local banker no longer provided the reassurance it once had. Bankers themselves were the first to notice that robberies posed less of a threat than a panic or than an unscrupulous banker. Within 20 years most western states, with bankers in the lead, passed new banking laws focused on revealing to the public a bank’s position.

Sunshine Laws

Known as “sunshine laws,” these state regulations required an annual examination of every chartered state and federal bank and the posting of the condition of the bank (as the examiners found it) in the local papers. Despite this regulatory creep, the system still relied on individual consumers to a large extent. The assumption was that if informed, the people could decide on their own if banks were safe. Bank examiners admitted they could do little more than a cursory investigation, and then only (usually) once a year. But the significant facts were that the industry itself took the lead and that the government’s role was restricted to publishing information. Of course, the caveat remains that since banks first were formed in America, going back to the Bank of North America in 1781, state legislatures had regulatory power over them.

Still, even in the age of national banks, banks emphasized physical material symbols of safety as a means to reassure depositors. Ads run in local papers in the late 1800s constantly reaffirmed the soundness of banks, especially their capital. The ads almost universally carried a mention of the size and strength of the bank vault and the ornate beauty of the bank building. Again, these references told depositors that their money was really guaranteed, not by the bank examiner who validated the numbers, but by the actual cash that the bank protected in its vault. And even in the age of national banks, bank robberies remained few and far between.

Ultimately, technological change and regulatory fervor changed banking forever. With the introduction of the automobile, and a network of passable roads, all robbers could gain the edge once enjoyed only by insightful planners such as Butch Cassidy, namely the ability to outrun their pursuers on a regular basis. In Oklahoma it was called “running the cat roads.” One could rob a bank near a state border, then escape by car to a neighboring state, safe from the lawmen who would have had a personal stake in their capture. States could not generically recognize sheriffs from neighboring states without opening up law-enforcement issues across the board.

By the mid-1920s, there was a rash of robberies in Iowa, Oklahoma, the Dakotas, and other parts of the West unheard of in the glory days of Butch Cassidy or the Daltons. Banks turned to insurance companies to post large rewards and instituted new bank security measures, some of which proved humorous. In Arizona, for example, one bank installed teller-controlled tear-gas guns over the teller cages, but removed them after a nervous employee gassed hapless customers. George Wingfield, who owned a large chain of Nevada banks, purchased a shotgun and shells for every cashier in the chain, personally handing out the firearms.[5] But for many banks in the open spaces, the mobility brought by the automobile—before the widespread use of police radios and the federalization of some robberies when a state line was crossed—gave the crooks decided advantages.

While bankers expressed some anxiety about robberies, clearly their main concern remained large-scale financial instability brought about by the interconnected national markets. In the late 1800s several state bankers conventions proposed reform measures directed at ending the instability through the introduction of a “lender of last resort.” Again, it is worth noting that regulatory reform came from the industry concerned about its own health and was not pushed on it by disgruntled consumers. The new reforms coincided with the rise of the Progressive movement and involved abandoning the old sunshine laws in favor of more state-directed regulation. After all, some reasoned, panics had occurred in 1873, 1893, and 1907 despite the sunshine laws. The final nail in the coffin of self-policing by the banks probably occurred when, after the Panic of 1907, America’s premier banker, J. P. Morgan, who had almost single-handedly bailed the government out of two financial disasters, announced that the nation’s financial system had grown beyond the ability of any individual, or even any syndicate, to support.

Not long thereafter, Congress passed a variant of the reform plans submitted by the state bankers associations, which comprised the bulk of the Federal Reserve System.[6]

The largest number of bank robberies ever seen in the West did not occur until after the Federal Reserve System was in place, by which time a more subtle change had taken place. Once the state and federal governments started to assume responsibility for the banking system—in the eyes of the public—the individual bank owner, the bank building, and the physical manifestations of safety became less important. Instead, customers gradually came to rely on the word of the government, through the official sanctions of the examinations, that a bank was solvent. Worse, at the national level, the entire structure supposedly was under the supervision of a benign Federal Reserve Board of Governors. Both assumptions proved illusory in the 1920s, when a steady rockslide of bank closures struck the nation, turning into an avalanche after 1930. We shall leave for a later debate the role played by the creation of federal deposit insurance in “stabilizing” the system, but it is significant that in both the matter of robberies and financial instability, banks became less solid in the 50 years after regulations were introduced.[7]

The simultaneous demise of competitive note issue and the physical “symbols of safety” made banks more vulnerable than at any time in the “Wild West.”

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Notes