Elliott: Bad investments led to Soddy Bank failure in 1930

Elliott: Bad investments led to Soddy Bank failure in 1930

December 10th, 2017 by Sam D. Elliott in Opinion Columns

On Dec. 24, 1920, an item in the Chattanooga News announced that the Soddy Banking Company planned to erect a new building since the existing building on Wall Street had "become inadequate to handle [the bank's] increasing business." Established in 1911, the bank had "been very prosperous" for the previous few years. A story in the Chattanooga Times five years before reflected such prosperity, reporting on the impending construction of a hosiery mill, the organization of the Soddy Telephone Company, and the local Durham Coal and Iron Company employing about 500 miners.

The leadership of the bank included its cashier, W.H. Crow, who moved to the town from Birchwood in 1915. Crow built a home in Soddy, became politically active, and was known as Squire Crow, being a member of the County Court (effectively the County Commission in today's terms) from 1918 to 1926.

By late January 1930, the prosperity of the small town of about 1,950 residents had faded. The stock market crash in October 1929 launched the financial spiral that started the Great Depression. The Durham Coal and Iron Company went out of business that fall. The only industrial concern still going in the small town was the hosiery mill, and "from this industry the business the town was said to be kept alive." Further, there were conflicting indications about the continued viability of the Soddy Banking Company. On the one hand, state bank examiners had been in the bank in late 1929 and found no issues, and at a mid-January board meeting of the bank, Crow reported that the bank was in good shape. On the other, an effort was made in the previous weeks to sell the company to Hamilton Bank in Chattanooga, which declined the transaction because of the "industrial reverses" in Soddy.

Read more Chattanooga History Columns

On Jan. 24, a Friday, Crow purchased a bottle of carbolic acid from a druggist in Soddy and departed for Kissimmee, Fla., where his parents lived. Either intentionally or accidentally (Florida authorities determined it was the latter), Crow ingested some of the poison and died early on Jan. 28, a Tuesday. But also on the 24th, the county trustee at the Hamilton Bank tried to cash a check drawn on the Soddy bank. That was refused, and when the check was presented at the Soddy bank on the following Monday, it was dishonored. Crow was notified and promised to return but died the next day. Crow had apparently concealed the true status of the bank from its employees. The directors of the bank notified the state superintendent of banks that it could no longer meet its business in due course and asked that the superintendent take over its affairs for liquidation.

Rumors ran rampant, the wildest of which was that Crow had faked his death to escape prosecution. A bank in neighboring Daisy had to be closed for a few days because of fears that it, too, was insolvent. The loss was attributed to Crow's bad investing, such as in peach orchards, or having secretly spent the missing money in "fighting a political faction." Money was supposedly lent without collateral, and the closing of the Durham Coal and Iron Company was considered to be a factor in the bank's failure.

While a number of creditors, such as the county trustee, were secured by bonds, a great number of small depositors suffered loss, some to the point of destitution. Newspaper accounts noted the losses of a disabled miner and a Presbyterian minister and stated that school teachers seem to have been particularly hit hard. Reportedly, depositors eventually got a small percentage of their monies back in the liquidation.

The elegant Soddy Bank building remained, but it never again housed a bank. It served for many years as an appliance store and later as a photography studio. Happily, in approaching its 100th birthday, the building has been put to use as a local history museum operated by the Soddy, Daisy & Montlake Historical Association. The museum opened on July 1, 2017, and will close on Dec. 23 so that new exhibits can be readied for a reopening in the spring of 2018.

Sam D. Elliott is a local attorney and a member and former chairman of the Tennessee Historical Commission. He is the author of a new book, "John C. Brown of Tennessee: Rebel, Redeemer and Railroader." For more visit Chattahistoricalassoc.org.

Getting Started/Comments Policy

Getting started

  1. 1. If you frequently comment on news websites then you may already have a Disqus account. If so, click the "Login" button at the top right of the comment widget and choose whether you'd rather log in with Facebook, Twitter, Google, or a Disqus account.
  2. 2. If you've forgotten your password, Disqus will email you a link that will allow you to create a new one. Easy!
  3. 3. If you're not a member yet, Disqus will go ahead and register you. It's seamless and takes about 10 seconds.
  4. 4. To register, either go through the login process or just click in the box that says "join the discussion," type your comment, and either choose a social media platform to log you in or create a Disqus account with your email address.
  5. 5. If you use Twitter, Facebook or Google to log in, you will need to stay logged into that platform in order to comment. If you create a Disqus account instead, you'll need to remember your Disqus password. Either way, you can change your display name if you'd rather not show off your real name.
  6. 6. Don't be a huge jerk or do anything illegal, and you'll be fine.

Chattanooga Times Free Press Comments Policy

The Chattanooga Times Free Press web sites include interactive areas in which users can express opinions and share ideas and information. We cannot and do not monitor all of the material submitted to the website. Additionally, we do not control, and are not responsible for, content submitted by users. By using the web sites, you may be exposed to content that you may find offensive, indecent, inaccurate, misleading, or otherwise objectionable. You agree that you must evaluate, and bear all risks associated with, the use of the Times Free Press web sites and any content on the Times Free Press web sites, including, but not limited to, whether you should rely on such content. Notwithstanding the foregoing, you acknowledge that we shall have the right (but not the obligation) to review any content that you have submitted to the Times Free Press, and to reject, delete, disable, or remove any content that we determine, in our sole discretion, (a) does not comply with the terms and conditions of this agreement; (b) might violate any law, infringe upon the rights of third parties, or subject us to liability for any reason; or (c) might adversely affect our public image, reputation or goodwill. Moreover, we reserve the right to reject, delete, disable, or remove any content at any time, for the reasons set forth above, for any other reason, or for no reason. If you believe that any content on any of the Times Free Press websites infringes upon any copyrights that you own, please contact us pursuant to the procedures outlined in the Digital Millennium Copyright Act (Title 17 U.S.C. § 512) at the following address:

Copyright Agent
The Chattanooga Times Free Press
400 East 11th Street
Chattanooga, TN 37403
Phone: 423-757-6315
Email: webeditor@timesfreepress.com


Loading...