Bank Crisis Fuels Suicides in Atlanta and Woodstock

 Driving south along a deserted stretch of road near Woodstock around midnight on October 11, 1926, John N. King and his wife ran out of gas. John shot his wife, Charlotte , and then himself in what was apparently the result of a suicide pact.  The bodies were discovered by the Cherokee County sheriff in the first light of morning. Their car was parked beside a road near the village of Woodstock. In John’s pocket was a poem written to him by his wife, known by friends as “Lottie.”

John was a respected former banker and state legislator from Rochelle, a farming town in south Georgia near Cordele. Before and during the inquest, John’s son, John Jr, and Lottie’s brother, Judge Johns of Social Circle, shed some light on the senior King’s predicament. He left banking to start a loan business. This may have been because he had grown wealthy enough (or disillusioned enough) to leave the operation of the Bank of Rochelle in the hands of its real controllers-the corrupt Bankers Trust Company of Atlanta owned by W.D. Manley.  Papers on John’s body made it clear that the collapse of the Manley banking empire in July had ruined him financially. It is worth considering whether John’s course of action was informed by a sense of honor and regret or by the specter of destitution facing the couple. Perhaps both .

John King was not the first person -or last- to commit suicide to escape the legal and financial disaster that was unfolding in the summer and fall of 1926. W. D. Manley also owned the Farmers and Merchants Bank in Atlanta that had gone under in July. James R. Smith, president of the Atlanta Realtors Association, was an officer of Manley’s bank as well a director of the Bankers Trust Company.   Smith is remembered today as the man who created the exclusive Morningside neighborhood in northwest Atlanta. Smith locked himself in the study of his Morningside home, put a shotgun to his abdomen and pulled the trigger. 

 The Bankers Trust Company was in the business of acting as fiscal agent for member banks and insuring their deposits. As fiscal agent for the banks, it actually controlled the affairs of member banks. This despite the fact that Bankers Trust was not itself a bank, nor was it subject to the banking laws of the state. Establishing an invisible and controlling hand in the member banks, Bankers Trust employed the ruse of leaving respected local men in place as bank officers.

Manley’s deposit insurance system was developed over a forty year career by highly respected W.S. Witham. Witham and his system enjoyed a fine reputation as it spread across the state -and beyond. Witham was hailed as a financial genius. A leader in the Methodist Church, he had served as head of the effort to create Sunday schools at churches throughout the state. This effort opened many doors and resulted in many new banks and many old ones joining his deposit insurance plan. Witham was described by one newspaper as the “president of a hundred banks.”

Wesley Manley was secretary to Witham and was evidently a diligent, skilled young man to whom Witham delegated most of his business affairs so he and his wife could enjoy their passion for gardening at their Peachtree Road retreat. Manley had been a penniless boy penniless boy who worked his way through the University of the South. When Witham retired, he left Manley in charge of his bank chain.

Manley weaponized the system. It was a meteoric rise for Manley and a Horatio Alger story as retold in local newspapers. In an era when business success was next to godliness, Manley and his partner Smith stepped to the top rung of Atlanta’s social and business ladder. Until….it all came down overnight.

The lure that brought banks into the Bankers Trust system was money of course. Insured deposits inspired and permitted them to loan out more money than was prudent, given their deposits. In the sometimes ironic terminology of banks, loans are “assets” while deposits are “liabilities.” Each member bank paid a fee of a over two thousand dollars to join the system. Manley and his co-conspirators ignored the trust place in them and used the money to invest in increasingly risky real-estate deals, especially in Florida’s booming economy. By July of 1926, that real estate “bubble” was about to burst.

It was the bankruptcy of Bankers Trust and the Farmers and Merchants Bank that resulted in a Fulton County (Atlanta) Grand Jury being convened. Manley’s indictment and that of his fellow officers in Bankers Trust seemed to erupt overnight. The jury recommended criminal charges be brought against Manley and his partners. Smith would almost certainly have been indicted had he not taken his own life.

The Fulton County grand jury also urged the recall of the state’s chief banking officer, T.R. Bennett. Bennett, the grand jury reported, failed to adequately do his job of seeing that the state banks complied with the laws governing them.  And, Bennett, a banker himself, seems to have accepted a “loan” from one of the Manley banks. Such loans were a way of putting money in public officials’ pockets. Such loans were often renewed by banks. Records showed that these banks often made no effort. to collect repayment. The loans were in effect a bribe. A bonus for recipients of such loans was that the money was not taxable as income. So, there was no federal income tax to be paid under the newly created income tax laws. State bank examiners apparently chose to look the other way. Bennett refused to resign. The Atlanta banking community and the state banking association rallied behind him. They acted quickly to assure depositors across the state that their money was safe. It was not.

Atlanta bankers were quick to dismiss the crisis as limited to mostly small rural banks and flatly argued that the many small-town banks were of little importance in the larger scheme of things. Contributors to the American Bankers Association Journal took the same stance. In the case of Georgia banks, the Federal Reserve and the US Secretary of the Treasury adopted the same position, though both would act quickly to try to shore up larger failing Florida banks to the tune of millions of dollars.   Wesley Manley operated a Bankers Trust Company in Florida as well and was a major stockholder in several large Florida banks. All this was a fire bell in the night. The Great Depression would arrive three short years latter.

Hope you will catch my soon-to-come post “Why the 1926 Banking Crisis in Georgia is Important Today.”

N.B. Vanishing Georgia is an ever-expanding and searchable data base created by Brian Brown containing his photos of more than 14,000 homes, commercial buildings, churches. cemeteries and miscellaneous natural sites that provide visual historical evidence illuminating the lives of those who have lived, worked and played along Georgia’s rural byways and in its smaller cities and towns. My compliments to Brian for his decision to include much more than antebellum and Victorian mansions.”