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Financial panic of 1893 was fierce

By on March 28, 2017 in Columnist with 0 Comments

Rod MolzahnTowns of the Wenatchee Valley and north central Washington were on the rise by the beginning of 1892.

More than 20 individuals and families settled in the Wenatchee Valley in that year alone, over twice the number in any preceding year. Chelan was growing along with the Entiat, Methow and Okanogan valleys. The best wheat land in the Waterville/Badger Mountain area was all taken and the price of wheat was climbing.

Anticipation and high hopes for the coming of the Great Northern Railroad made north central Washington and especially the Wenatchee Valley highly desirable places. In April of 1892 the Columbia Valley Bank in Wenatchee, the first bank in today’s Chelan County, opened its doors in “Old Town” on Miller Street.

During its first year in operation, according to bank manager, H.R. Schildnecht, “This bank carried on a heavy business… the transactions growing out of construction work, such as taking care of pay checks, the purchase and handling of supplies and the astonishing building activity in the new town.” But, back on the East Coast a financial storm was simmering.

In January of 1893 a devastating recession began sweeping across the country and across the Atlantic to Europe. It continued until June of 1897 with a short respite in 1895.

By the end of 1893 business failures in the United States topped 15,000 and 500 banks, many in the West, had closed. National unemployment was pushing 15 percent with a handful of states in the 30 to 40 percent range.

The financial panic of 1893 was bringing the country’s economy to a stop. Railroads were overextended and could not pay their obligations and, following the lead of the Northern Pacific, Union Pacific and Atchison, Topeka and Santa Fe railroads, began filing for bankruptcy.

The Northwest was not immune.

Between Yakima and the Canadian border the only banks that survived were the Columbia Valley Bank in Wenatchee and the Douglas County Bank in Waterville. The Wenatchee bank was hard pressed to meet withdrawal requests. Mr. Schildnecht, the manager, stated that, “a draft for $1,000, or even $500 was a startling sum to face.” At times the bank officers had to “play for time” when faced with a large customer request.

Banks across the country closed in the face of crippling bank runs. Supplies, nationally, of gold and silver were dwindling. The recession caused mining to slow and Congress was still fighting over which metal should back the U.S. dollar.

Faith in paper money was falling along with the gold and silver reserves. The ensuing panic drove people to banks to exchange their paper for gold.

A run on Northwest cattle king, Ben Snipes’ bank in Roslyn, forced him to move gold to Roslyn from his Ellensburg branch. It wasn’t enough. Ben Snipes had significant assets in cattle and ranch land as well as prime Seattle real estate but could not sell them or borrow on them — no one had money to buy or loan.

On June 9, 1893 both banks closed their doors and drew their shades, leaving customers unpaid.

Victor Ruffenach worked at a sawmill in Montana. The mill owner sold the mill with the intent of moving to booming Okanogan County to buy another mill. Mr. Ruffenach moved with him. The financial panic reached Okanogan County before them and the mill venture was given up.

In May of 1892 the Chelan Falls Water Power Company began constructing a ditch to deliver water to a proposed power plant at the foot of Chelan Falls. The ditch was nearly completed in early 1893 when the panic struck. With banks unable to lend, the project stopped.

Money was in short supply everywhere. W.H. Emerson, writing about the history of the Chelan Valley said, “In 1893 hard times began in earnest and money was unknown except in small driblets here and there.”

Benedict Gubser lived near Conconully in Okanogan County. For years he kept a journal recording his activities as well as his neighbors’. On Jan. 16, 1893 he wrote, “Moore, Ish and Company bank and store closed.” In December of 1893 Gubser left the Okanogan to visit friends in Oregon. On the way he stopped in Wenatchee to purchase something but the store could not make change for $5. “I had quite a time to change five dollars. Went to the fifth establishment before I got it changed.”

Up on the Waterville Plateau things were no easier. In 1893 the price paid for steers dropped to 2 cents a pound and wheat got only 18 cents a bushel. Neither price paid even the cost of raising cattle or wheat.

A year later things were a bit better but not enough to satisfy early settler, Ole Ruud. In the spring of 1894 he wrote a letter to a newspaper editor. The letter is reprinted in Esther Ruud Stradling’s book, American Fever.

“Times are so hard here in this good wheat country that property can hardly be sold for money. A band of horses was sold the other day at sheriff’s sale for one dollar a head and if times don’t change more sheriff’s sales will be made at the same rate. Our local wheat buyers advertise that they give 30 cents a bushel for No. 1 wheat delivered at the steamboat landing. When we subtract from this the sacking; five cents, threshing; six cents, we farmers will only have 13 cents left for seed, plowing, harrowing, sowing, hauling to market and all the heavy lifting. Interest on money, which everyone must pay as all are in debt, is two to three percent a month.

“It takes two bushel of wheat to pay the interest on $1.00; 20 bushels or two-thirds of a ton to buy a pair of poor shoes, two bushels for a meal at a hotel… Farms and other real estate are passing over to the money loaners. I expect to hear of many foreclosures before the year of 1894 is out.”

Stradling adds that during the panic years Ole made shoes for his wife, children and himself. Scraping, tanning and shaping the leather took weeks. “During these hard times he went barefoot when plowing the fields, saving his dilapidated work boots for other times when shoes were a necessity.”

Historian, actor and teacher Rod Molzahn can be reached at shake.speak@verizon.net. His third history CD, Legends & Legacies Vol. III – Stories of Wenatchee and North Central Washington, is now available at the Wenatchee Valley Museum and Cultural Center and at other locations throughout the area.

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