Shortfall

by Alice Echols

  31. The state attorney general later said that this was not actually a legally binding requirement.

  32. I should say that Sharer was no stranger to lawsuits. For example, in 1927 a thirty-three-year-old man whom Sharer had hired to work for the association off-site sued the B&L head, claiming that he had reneged on his promise to pay him $104 a month, plus the cost of his gasoline. It’s also worth noting that some of the suits that would come to trial in 1932 concerned transactions several years old, perhaps because those with grievances against him felt that their cases might be taken seriously with Sharer now seemingly on the ropes. Sharer vs. Glenn O. Elliott, November 15, 1927, El Paso County District Court, case no. 16486, Box 37618, CSA.

  33. Here I am drawing upon articles in the press as well as Supreme Court of Colorado v. Shields, case no. 13280, October 9, 1933 (93 Colo. 480, 27 P.2d 485).

  34. In 1924 Sharer sold Forbes a forty-acre tract of land in the Black Forest, just north of Colorado Springs. The region was attracting a number of investors because it had become locally known that a California company believed it might contain oil and gas reserves. Sharer had arranged for Forbes to buy the land through a loan from the Dollar. At some point later, after having paid about half of his debt to the Dollar, Forbes reportedly approached Sharer again about buying more of the quickly appreciating land. After purchasing another thirty acres, Forbes owed the association $1,800. Soon thereafter the oil company lost interest in the region and land values in the Black Forest dropped. According to Sharer, Forbes, who had not succeeded in selling his land, grew disgruntled. Sharer reportedly claimed that he told Forbes he would allow him to pull out of the second transaction entirely. Sharer said that he wrote the Dollar a check to cover the purchase price of that now-canceled second land deal. And Forbes paid off the balance of the loan for the first land parcel. That should have been the end of story, but in March 1927 Sharer directed a clerk at the association to issue two checks to Forbes—one for $300 and the other for $700. According to the district attorney Sharer then signed Forbes’s name on the back of each check and claimed $1,000 from the Dollar company’s funds, with the intention of keeping the money for himself. Dollar employees said that Sharer explained he was due the money because of a business transaction with Forbes’s son-in-law. “Sharer to Face Forgery Charges,” CSG, August 12, 1932, 1.

  35. Many depositors believed Sharer’s story that Walter Davis, not Sharer, controlled the Dollar. It is true that from 1927 onward, Davis seems to have tried to keep the Dollar from closing, doubtless for self-interested reasons. He wanted to prevent any domino-like collapse of the B&L business in the Springs. The authorities also believed that Davis controlled the Dollar, but the evidence here is mixed. An official of the Dollar, its secretary, testified in court that Davis did not control the association. On the other hand a former employee claimed in court that it had been Davis who hired him to work as a clerk at the Dollar. It does seem that the affairs of the two associations were entangled in some complicated ways. However, Sharer’s dubiousness in business matters and his propensity to lie were established well before 1927, and they were confirmed by the whistleblowing employee and the auditor who investigated that 1927 shortfall. The speculation that Davis encouraged Sharer to leave town because he believed the industry’s collapse in the Springs was imminent seems unlikely. More than six weeks passed between Sharer’s escape from Colorado Springs and Davis’s. See “Davis Controlled Dollar Loan Association—Sharer,” CSG, June 26, 1932, 1; “Sheriff Departs to Return Sharer,” CSG, June 27, 1932, 1; “Auditor, Former Employees Tell About E.C. Sharer’s Acts,” CSG, September 28, 1932, 2.

  36. Leonard, Trials and Triumphs, 34; “Record Number of Homeless,” CSET, May 4, 1932; “Salvation Army Served 2,780 Meals in Week,” CSG, May 1, 1932.

  37. W. E. Sparling, “City’s ‘Hotel’ Guests, Here for Night Only, Constantly Kept on the Move,” CSG, December 29, 1931, 7.

  38. Ibid.; “Street Cars Are Replaced by Buses,” CSG, May 1, 1932, 1; “Little Trolley Cars,” CSG, April 30, 1932, 1; “A Roaring Tornado in the Shadow of Pikes Peak,” RMN, June 11, 1932, 1.

  39. W.A. Paulsen vs. The Home Savings Building and Loan, H.L. Armentrout and Fred N. Bentall, June 22, 1932, case no. 18906, Box 46073, CSA.

  40. “Bentall Held in County Jail for Embezzlement,” CSG, June 30, 1932, 1; “Bentall Charged with Theft,” CSG, June 31, 1932, 1; “Bentall Confesses Juggling Funds,” CSG, July 1, 1932, 1; “$100,000 Shortage Denied by Home’s Bentall,” CSG, July 8, 1932, 1.

  41. “Authorities Differ on Fingerprinting & Photographing Bentall and Sharer,” CSG, August 28, 1932, 4; “DA Meikle Prepares 8 Charges,” CSG, August 17, 1932, 1.

  42. “Bentall Tells Meikle He’s Pleading Guilty,” CSG, August 20, 1932; “51-Year-Old Bentall Gets 16–35 Years,” CSG, August 26, 1932, 1; “Bentall Denies Hiding Funds of Home,” CSG, August 23, 1932, 1; “Bentall Now in State Prison in Canon City,” CSG, August 27, 1932, 1; “Bentall Is Now in State Reformatory,” CSG, September 2, 1933, 1; “Home Savings Will Pay First Dividend,” CSG, December 12, 1934, 1; “Liquidation Soon for Home Savings,” CSG, December 11, 1936, 1; “Final Payment of Homes Savings Out,” CSG, February 2, 1937; “Fred N. Bentall Freed on Parole,” CSG, May 18, 1938, 1.

  43. The description here is drawn from “Top Hat and Limousine,” RMN, December 13, 1932.

  44. Amity Shlaes, The Forgotten Man: A New History of the Great Depression (New York: HarperCollins, 2007), 139.

  5: Sowing Grief

  1. “Million Shortage Found in Springs Loan Concern,” DP, June 23, 1932, 1; “Davis Affairs in Bad Shape After January 1,” CSG, June 28, 1932, 3.

  2. “Davis Affairs in Bad Shape.” The initial communication about the house on Millionaires’ Row was made in a telegram while Walter was traveling.

  3. Mention of the representative is mentioned in “Court to Protect Borrowers from B&Ls,” CSG, September 8, 1932, 5.

  4. “Upholds Cornforth in Woody Decision,” CSG, October 24, 1934, 10.

  5. “Can Walter Davis Avoid Extradition Like Insull Is Now Doing in Greece?” SGT, October 16, 1932.

  6. “Taxes Mount Up on B&L Properties,” CSG, November 24, 1932.

  7. “City Sued for $1,314.80 by Mrs. Edith Foersteman,” CSG, June 9, 1932, 1.

  8. Lula’s lawyer, Horace Hawkins, made this claim at the trial for the railway officials, whom he was defending. See “Railway Loan Firm Officers Kept Secret Bank Account,” CSG, January 11, 1934.

  9. “Davis Said Threats Caused Him to Leave,” CSG, June 28, 1932, 3.

  10. “Human Vultures Thrive in Colorado Springs,” CSW, May 27, 1932, 1; “Citizens Left Destitute,” CSW, June 3, 1932, 4.

  11. “Revealed That Railway Association’s Attorney, Bernard Seeman of Denver,” CSG, July 15, 1932, 1.

  12. Hoover created the RFC in January 1932 and among its intended beneficiaries, some believed, were building and loan societies. Kennedy, Freedom from Fear: The American People in Depression and War, 1929–1945 (New York: Oxford University Press, 2001), 84. Opinion differed about whether B&Ls were eligible for RFC assistance. See the Hearings on Home Loan Bank Bill, 1932, in Hearing Before Committee on Rules, House of Representatives, Seventy-First Congress, Third Session, on H.J. Res. 292 (Washington, DC: Government Printing Office, 1931).

  13. These details (and, indeed, many of the other details here) appear in Walter Davis’s Bureau of Investigation file.

  14. “City Savings Loan Assn. Placed in Receivership,” CSG, June 21, 1932; “Open Davis’s Savings Deposit Boxes in Morning,” CSG, June 22, 1932, 1.

  15. “Walter Davis and $1,000,000 Are Missing,” CSG, June 23, 1932, 1; “Warrant Charging Davis with Filing False Claims Issued,” CSG, June 24, 1932, 1.

  16. “Inspector of Colorado Springs Detectives Asks NYC Police to Arrest Davis,” DP, June 23, 1932.

  17. In the months leading up to the collapse of the City, Colorado newspapers carried a number of stories about men who killed them
selves so that their insurance money could aid their heirs or favorite charity or cause. One such story featured the suicide of a well-known Denver businessman (whose wife was a niece of abolitionist John Brown) who reportedly killed himself to aid Colorado Woman’s College. “Braukman Ends Life to Aid Woman’s College with Insurance,” DP, June 1, 1932, 1.

  18. “Walter Davis and $1,000,000 Are Missing.”

  19. This would be Richard Sobel, a lawyer in Ann Arbor, Michigan.

  20. “Legal Action to Be Filed by Meikle,” CSG, June 25, 1932, 1.

  21. Ibid.

  22. “Police Arrest Eva Terry,” CSG, June 24, 1932, 1.

  23. “Denver Girl Who Worked for Firm to Be Questioned,” DP, June 23, 1932, 1; “Terry Woman Refuses to Betray Davis,” CSG, June 24, 1932, 1.

  24. According to the Colorado Springs Evening Telegraph, Eva had undergone surgery for adhesions resulting from a recent operation for appendicitis. According to medical historian Lynn Sacco, appendicitis surgery for women was often code for a hysterectomy. The reason a code was even necessary was that sometimes a hysterectomy was required to deal with untreated gonorrhea that had resulted in pelvic inflammatory disease. Both female and male doctors discussed this practice of misnaming, which was generally viewed as the ethical option of choice, because to tell the wife she had gonorrhea was tantamount to outing her husband as a philanderer, which doctors saw as a violation of ethics. Of course, Eva may have actually suffered appendicitis. Email correspondence, Lynn Sacco, January 11, 2011.

  25. “Denver Girl, Ex-Secretary of Fugitive Banker Arrested,” DP, June 24, 1932, 1.

  26. “Release Eva Terry Today,” CSG, June 25, 1932, 1.

  27. “Woman Still Held Thru Agreement,” CSET, June 25, 1932, 2; “Police Arrest Eva Terry in Denver for Quiz,” CSG, June 24, 1932, 1.

  28. “Springs Loan Firm’s Bonds Hunted Here,” RMN, June 25, 1932, 1; “File Charges on Eva Terry & W.C. Davis,” CSG, July 1, 1932, 1.

  29. News clipping from Olathe, Colorado, May 14, 1931: “While Dems Are Grooming Lt. Governor Johnson the Republicans Should ‘Get Busy Slicking Up Roy Davis.’” Also, “Boosts Roy Davis for Governorship,” Alamosa Press, December 3, 1926. Alamosa was the hometown of Governor Billy Adams, with whom Roy Davis worked closely, despite the party difference. Roy A. Davis Collection, S2010.18, Folder 1, D, Pioneers Museum, Colorado Springs.

  30. “Mrs. W.C. Davis Promises to Aid Authorities,” CSG, June 27, 1932, 1; “Daughter Is with Mother at Home Here,” CSET, June 27, 1932, 7; “Wife of Davis Is Hysterical in Police Quiz,” DP, June 27, 1932, 1; “Davis in America, Harper Believes,” CSG, June 28, 1932, 1.

  31. “Plot to Seize Daughter of Davis Feared,” RMN, June 30, 1932, 1; “Plot to Kidnap Verner Z. Reed and His Two Sons,” CSG, June 4, 1932, 1. For a useful history, see Paula Fass, Kidnapped: Child Abduction in America (New York: Oxford University Press, 1997).

  32. “Depositors Ask Court to Offer Reward for WC Davis,” CSG, September 1, 1932, 1.

  33. Doma’s views appeared in the July 17, 1932, edition of the Denver Post. Those who knew Roy’s signature, which was very similar to his brother’s, must have chuckled over Doma’s sinister interpretation.

  34. “Did Davis Have the Million or Had He Spent It?” June 25, 1932, CSET, 2.

  35. “Can Walter Davis Avoid Extradition.”

  36. “Depositors Demand Arrest of Gross,” DP, July 2, 1932, 1.

  37. I have pieced together Eli Gross’s career from multiple sources, including Martelle, Blood Passion, census reports, newspaper articles, and mentions in the Cigar Makers Official Journal and The Miners Magazine. For the cigar maker charge, see “That’s That,” DP, July 15, 1932, 2.

  38. “Revealed That Railway Association’s Attorney Bernard Seeman,” DP, July 15, 1932, 1; “Gross Failed Civil Service Exam,” DP, August 7, 1932.

  39. “Depositors Ask Court to Offer Reward for WC Davis,” CSG, September 1, 1932, 1; “Court to Protect Borrowers from B&Ls,” CSG, September 8, 1932, 5.

  40. For one such typical attack, see “Newton to Draw $1,000 a Month Salary as Receiver of Pueblo B&L,” DP, July 27, 1932, 1.

  41. Home Loan Bank Bill, House of Representatives, Committee on Rules, May 26, 1932, and June 7, 1932, in Hearing Before the Committee on Rules, House of Representatives, Seventy-Second Congress (Washington, DC: Government Printing Office, 1932). Quotations cited can be found in this order: 22, 22, 35, 35, 40, 27.

  There was a disagreement about whether, legally, building and loan associations could accept federal money. I have found one newspaper article that shows that the RFC did loan money to B&Ls in Dayton, Ohio. However, this was a deal in which the HOLC exchanged $12 million of its bonds for mortgages in the seven associations, which would then be reorganized as federal savings and loan associations. My understanding is that this was not typical: most failing and frozen B&Ls were not revived in this fashion. “RFC Makes $20,574,832 Loans to Aid Seven Dayton Building and Loan Groups,” NYT, December 9, 1934, N7.

  42. “People’s Vote Urged on Beesemyer Bill,” LAT, May 5, 1937. The tabling of the bill in the Senate Judiciary Committee led its supporters to consider pushing for a constitutional amendment so that victims of the massive B&L meltdown in California could file claims against the state for compensation. The logic behind the bill was that state liability was reasonable given the failure of state examiners to detect shortages. The man behind it was a Democratic assemblyman from the San Fernando Valley, Elmer Lore Sr., who was supported by Democrats Culbert Olson and Ralph Swing as well as Bradford Crittenden, a Republican.

  43. Cohen, Making a New Deal, 233, 230, 276–77.

  44. Anne O’Hare McCormick quoted in Bieto, Taxpayers in Revolt, 8.

  45. El Paso County residents formed the association in 1880, and revived it as a corporation in 1917. Officers were Richard T. Clough, president, Charles N. Wheeler, secretary and E.J. Eaton, treasurer. “To the Taxpayers of El Paso County,” statement of purpose, January 5, 1917, Special Collections, Tutt Library, Colorado College.

  46. “Demand Slash Expenditure Public Cash,” CSG, January 27, 1933, 1; “Foresees Slashes in City Activities,” CSG, September 3, 1936.

  47. What I am describing here resembles in many respects what Becky M. Nicolaides uncovered in her book about the white working people of the Los Angeles suburb Southgate. See My Blue Heaven.

  48. Merrill Shoup made many of these points at a meeting of Denver’s Taxpayers’ Protective Association. See “Citizens Demand End of Officials’ Spending Spree,” DP, January 9, 1932, 1. On the efforts of the El Paso County Taxpayers Association to block the city’s plans to pave the streets with gold, see “‘Taxpayers Launch Campaign on Paving,” CSG, March 5, 1920, Sec. 2, 2.

  49. The consciousness of these working-class antitax activists may prefigure the hostility of formerly unionized private-sector workers toward unionized public-sector workers whom they regard as the beneficiaries of “special treatment.” See Noam Scheiber, “Labor’s Might Seen in Failure of Trade Deal,” NYT, June 14, 2015. This hostility has enabled anti-statist politicians such as Wisconsin governor Scott Walker to successfully go after public-sector workers. Another recent study that may be useful in understanding the consciousness of some members of the EPCTA shows that support for raising the minimum wage is popular except among those who “make just above the minimum wage” and who figure that the beneficiaries of a wage increase might “leapfrog me.” See Noam Scheiber, “Give to the Bottom? Sure, as Long as They Stay There,” NYT, June 10, 2015.

  50. “Citizens Demand.”

  51. The EPCTA brought together Republicans and Democrats, which caused conflict. The group’s positions, particularly when it came to public ownership of utilities or development, often put it at odds with many within the Republican establishment. Although Judge Little slammed the city’s decision to build an airport, claiming that it was so unused “not even a buzzard” had flown over it in months, other Republicans were for it. The airport would become
a piece of the Springs’ successful courtship of the U.S. military less than ten years later. See “Avery Offers to Battle,” CSG, March 1, 1933, 1.

  52. Here Oliver Shoup is paraphrasing the late President Harding. See “Shoup Opposes Council Plan,” CSG, March 16, 1924. Shoup’s view was not unusual among power brokers in the Springs. P.B. Stewart, president of the Colorado Springs Electric Company and the (unsuccessful) Republican nominee for governor in 1906, argued a year later that municipal ownership of public utilities was inefficient, needlessly expensive, and “socialistic.” “‘Municipal Ownership,’” CSG, March 22, 1907, 1. For more on Stewart, see his obituary in the CSG, July 22, 1957. Shoup’s characterization of city-owned utilities as “socialistic” was echoed years later by a “taxpayer” who in a letter to the editor claimed it was “Russian.” See CSG, February 28, 1933, 5. Another Springs corporation that battled with the town’s public utilities commission was the Golden Cycle, which requested a restoration of its former light and power rates. When its request was refused, the corporation announced it would build its own power plant. “Golden Cycle to Build $200,000 Power Plant,” CSG, May 4, 1918, 3.

  53. See Lewis, Babbitt, 150.

  54. Richard S. McElvaine, The Great Depression: America, 1929–41 (New York: Three Rivers Press, 1984), 254–56.

  55. “Mayor Replies to Handbill” and “Nine Mill Levy Is Up for Vote Today,” CSG, April 4, 1933.

  56. A favorable article in the Denver Post described the groups as composed of both “small homeowners, who are facing the loss of their modest properties through tax sales as well as prominent professional men and large property owners”; see “Citizens Demand.” My research into the twenty-five members whose names appeared in the press (and who appeared in the city directory or census) suggests that the newspaper was not exaggerating. Figuring out the most useful way to categorize these individuals is not easy especially because there is a good deal of variation in many of these categories. Take the category of lawyer, say. Some lawyers did quite well for themselves, judging by their addresses, but not all lawyers were prosperous North End lawyers. My breakdown of these twenty-five is as follows: three widows of prominent professionals or businessmen, one salesman/clerk, four lower-level service workers (porter at a pool hall to census clerk), two laborers, three lawyers, four merchants, two real estate salesmen, three wealthy businessmen, and three contractors/builders of modest means.