The Federal Reserve purchased the original Foidel Undertaking Company Building at the corner of Park and Edwards streets for $15,000 in 1920. Constructed in 1909, the one-story building was remodeled with the addition of a second story prior to housing the Branch.
A second story was added to the building prior
to the opening of the Branch in 1921.
Of the $162,474.14 spent on remodeling and adding a second story, $65,580 went for vault construction—concrete poured over steel rods—and for the purchase of the 27-ton vault door. The building had been constructed over old mining tunnels and sluice boxes—remnants of Helena's placer mining days along Last Chance Gulch.1 As a result, contractors had to fill in the tunnels and sluice boxes with concrete to ensure that the basement could support the weight of the vault and to ensure that no one could gain access from underneath the building. The construction of the vault was so sound that when the building was demolished in 1974, it took the contractor an extra three weeks to tear out the vault walls in the basement.
The Helena Branch opened on February 1, 1921, with a staff of 35 employees and three officers: O.A. Carlson, manager; R.E. Towle, cashier; and L.W. Long, assistant Federal Reserve agent and auditor. Mr. Carlson resigned February 1, 1922, and was succeeded by Mr. Towle, who served as manager in charge of the Helena Branch until his retirement in December 1950. Mr. Towle also held the titles of managing director and vice president during his tenure at the Branch. (See Appendices C and D for a comprehensive listing of Branch managers and Minneapolis Fed leaders.)
The original directors of the Helena Branch were Chairman of the Board T.A. Marlow, president of the National Bank of Montana, Helena; C.J. Kelly, chairman of the Metals Bank and Trust Company, Butte; H.W. Rowley, president of the Northern Hotel Company, Billings; R.O. Kaufman, vice president of the Union Bank and Trust Company, Helena; and L.M. Ford, president of the Great Falls National Bank, Great Falls. (See Appendix E for a complete list of Helena Branch Directors from 1921 through 2006.)
During 1921, the vault at the Helena Branch held $113,420 in gold bullion and coin, $190,300 in gold certificates, and $114,736 in silver coin. At that time, Federal Reserve Banks were required to provide gold or silver on demand in exchange for paper money. During the early twentieth century, paper money was still not regarded by some banks as secure.
Also in 1921, an office of the War Finance Corporation was established to make loans to Montana banks during the post-World War I era, and the Branch was made the corporation's custodian. An additional 31 employees were hired, and the Branch leased an extra 3,000 square feet on the second floor of the Holter Building.2 The rent for this space was approximately $1,500 a year. This space was rented until 1925 when almost half of the commercial banks in Montana closed, and the War Finance Corporation moved its office to Minneapolis.3 The volume of work declined, resulting in a reduction of Branch staff to 36 employees the following year.
The Helena Branch was very successful in expediting the flow of monetary transactions for Montana's commercial banks during these early years. Security, however, always remained a concern for the Branch, as illustrated by two incidents that occurred during its first decade of operation. In 1921, approximately a dozen mailbags containing over $2 million in currency were left unattended overnight on a railroad platform in Logan, Montana, awaiting the next train to Helena. Although the currency arrived safely at the Branch the next day, managers immediately implemented new security controls for mailed currency following this event. In 1930, two additional security guards were added to the regular staff of five to protect the Branch against a potential holdup by the infamous outlaw John Dillinger. Dillinger was purportedly in town to case the Branch for a heist. During the Branch's early years of operation, it was not uncommon for miners to bring in coffee cans full of gold for collection, which would have made the institution an attractive target for Dillinger. The holdup, however, never materialized.
In 1932 another federal agency settled in Helena, and the Branch again was responsible for its management and custodianship. The Reconstruction Finance Corporation was organized for the purpose of taking over loans from commercial banks where deposits were shrinking and low commodity prices made liquidation of those loans inadvisable, and the Branch, as it had with the War Finance Corporation in 1921, again became a manager and custodian for the corporation.
Many banks throughout the state borrowed from the Reconstruction Finance Corporation by pledging assets as collateral. Lending expanded to other Montana businesses and corporations. For example, in the mid-1930s, a large cattle company applied to the Reconstruction Finance Corporation for a direct loan of $850,000. To promote the loan, a cattle company representative and the Branch Manager appeared before the Reconstruction Finance Corporation Board in Washington, D.C. While the loan was denied by the Reconstruction Finance Corporation, the testimony led to the establishment of the Regional Agricultural Credit Corporation, which was considered one of the biggest accomplishments of the Branch during this time. The cattle company subsequently obtained the loan through that corporation and later repaid the full amount.
As lending increased, the Reconstruction Finance Corporation quickly outgrew its space at the Branch, and the corporation and custodianship soon transferred to Minneapolis.
As a result of the financial crises arising from the Great Depression, President Roosevelt called in all of the gold housed in the Federal Reserve Banks in 1934. The Helena Branch inventoried and shipped more than $1 million worth of gold coin and from $4 million to $5 million worth of gold-backed currency from its vault. The money made "quite a sight" when it was spread out on a table to be counted, according to Steve Surman, a Branch employee from 1922 through 1969. This shipment of gold was sent to Minneapolis by Railway Express.
In order to prevent bank runs by anxious depositors during the Great Depression, President Roosevelt declared a "bank holiday" in 1933, a 10-day hiatus from all banking and securities trading activities. Mr. Surman said, "We kept a radio down in that Currency and Coin department all day and all night during when the banks were closed."
Mr. Surman also recalled another story about gold certificates from approximately 1932: When famous aviator Charles Lindbergh's child was kidnapped, the ransom was paid in gold certificates, the numbers of which were recorded by the Treasury Department and sent to all Federal Reserve Banks and Branches in the country. The Helena Branch carefully reviewed the numbers on all of the gold certificates it received during that time. "We found one gold certificate that was paid off to the Lindbergh kidnappers," Mr. Surman said.
By 1935, the Helena Branch began to outgrow its quarters at the corner of Park and Edwards streets. However, before Branch management could even begin to address the need for more space, Mother Nature took matters into her own hands. On October 18 and again on October 31, 1935, major earthquakes rocked the Helena valley, causing significant damage. The Branch building sustained substantial damage, including the collapse of a brick wall in the Manager's office. More than 2,000 tremors shook Helena that fall and winter and caused some $4 million in damage to buildings all around the city.
As Helena began to recover from these earthquakes, operations continued in the building, despite the cramped conditions. Cracked walls were propped up by timbers, both inside and out. The securities held in the vault were transferred to Minneapolis because the main vault door was jolted off balance and was almost impossible to open and close. Tremors continued sporadically for almost a year after the major earthquakes in October 1935, causing considerable concern to employees. At one time some blasting was done down the street from the Bank, and everyone ran out the door thinking it was another earthquake. Former employee Steve Surman reported that when aftershocks occurred, the metal cage of the building elevator would rattle, and all of the employees would jump up from whatever they were doing to run outside. According to the 1935 annual report,
there was a constant barrage of earthquake tremors, which had a very noticeable effect upon all members of the staff. It is difficult for one to realize the seriousness of that situation unless it has been experienced. Much credit is due the staff for the manner in which it carried on during that period. It may be some time before everyone is back to normal.
In 1936, the Board of Governors in Washington, D.C., recommended that the Branch either repair the damage to its building and add a third floor or lease additional space. Branch management determined that repairing the earthquake damage and adding a third floor would cost approximately $44,000. The Branch Board of Directors felt that this amount was not feasible and that it would make more sense to build an entirely new facility than to lease. Thus, the Board recommended that a new Branch building be constructed in Helena.
The Board of Governors approved this recommendation in late 1936 and directed Branch management to find and purchase a suitable location for a new building. Two sites were considered: (1) a site on the corner of North Park Avenue and Placer Street (presently the Qwest Building) for $3,500, and (2) a lot on the corner of North Park Avenue and Lawrence Street (currently the site of the Reserve Financial Center) for $20,000. The latter was preferred, because of its location across the street from the Post Office, and was eventually purchased at a negotiated price of $15,000.4
According to Mr. Surman, at this time, the property on the corner of North Park Avenue and Lawrence Street contained an apartment building that had to be moved before construction could begin. When negotiating the price, Branch Manager Towle had Mr. Surman put $15,000 in a little red wagon to show the owner how big of a pile this amount of currency made. Mr. Surman said that the owner was not impressed and would not reduce his asking price. According to Jay McLeod, another employee who worked at the Branch from 1936 to 1939, this apartment building, which was called the Sanford House, was left by the movers in the middle of Park Avenue for 10 days before it was taken to its new location.
The Board of Governors approved the construction of a new Helena Branch building in 1937, and Great Falls architect George H. Stanley was hired to design it. He originally estimated the cost at $100,000, a very close estimate since the actual cost of the building was $100,062.01. This one-story building was similar in design to the Masonic Library located across the street on the east side of North Park Avenue. Except for the vault and the security garage, the two buildings were alike. The height of the ceilings and roofs were identical until a second story was added to the Branch building in 1945.
The new building was completed in 1938, and the staff moved during May of that year. Moving an entire bank was no easy task. The move began on May 21. Transitional, currency and coin operations were conducted out of the basement of the First National Bank and Trust Company Building on the corner of Sixth and Main (now Last Chance Gulch) streets. The other operations were carried out across the street on the second floor of the Montana Club Building.
The original vault door was moved to the new building with the assistance of Caird Engineering Works. Due to the immense mass of the door, Caird was forced to carefully roll the door out of a window of the old building, place it on a flatbed truck, and drive it to the new building by placing planks down on the street to ensure that the weight of the door and the truck did not cause the brick street to cave into the many mining tunnels below.
Steve Surman recalled that hanging the vault door in its new location was quite an event.
I enjoyed watching them move [the vault door] and set it
up, how they adjusted it and got it true so they wouldn't have any trouble opening and closing it.
Mr. Surman indicated that workers would insert thin pieces of paper between the vault door and the frame, close the door, then pull all the pieces of paper back out. If any stuck, they would change the adjustment and try again until the door opened smoothly.
During the time that the vault door was moved, the bank's coin inventory was placed in the "book vault"—later called the coin vault—on the first floor of the new building. Currency was placed in two vaults: one at the First National Bank and Trust Company and the other in another vault located in the basement of the new building on Park Avenue. The guard force, which numbered six at this time, was stretched thin during this time trying to protect three different vaults in two different locations.
The new building housed a state-of-the art heating and electrical system, and a building engineer was hired not long after operations resumed in the new facility to maintain these systems.
On Friday, June 17, 1938, opening ceremonies were held at the new Branch building. Guest speakers included the Honorable Albert J. Roberts, mayor of Helena; John N. Peyton, president of the Federal Reserve Bank of Minneapolis; and Sylvan J. Pauly, secretary-treasurer of Williams and Pauly Livestock of Deer Lodge. According to Mr. McLeod, the Branch invited bankers from around the state and the Branch employees to a dinner party and dance at the Helena Civic Center to celebrate the opening of the new building.
A local businessman bid $3,500 for the old Bank building but, after several months, withdrew his offer because of the high cost of repairs. The building was eventually sold to the Greyhound Bus Company in 1940 for $5,000 and served Helena as a bus station for many years. It was used as office space for approximately 10 years prior to its demolition in 1974 during an urban renewal project, and Edwards Street, itself, was removed the same year.
In 1938, the Branch was reappointed as custodian for the Reconstruction Finance Corporation and also became custodian of all its affiliated corporations; namely, RFC Mortgage Company, Federal National Mortgage Association, Commodity Credit Corporation, Defense Homes Corporation, Defense Plan Corporation, Defense Supplies Corporation, War Damage Corporation, Rubber Reserve Corporation, Smaller War Plants Corporation, Metals Reserve Corporation, Surplus Property Disposal, and War Assets Corporation. These custodial responsibilities again boosted employment at the Branch, and 10 new people were hired.
1938 and 1939 were successful years for the Branch, and in April of 1939, Branch Directors sent a framed picture of the new building to all member banks in the state "with favorable results from all the banks," according to the annual report. Also in 1939, a new armored truck was purchased for $1,518. The Chevrolet truck had steel-lined panels and bulletproof glass, increasing security for any valuables traveling to or from the Branch. The Branch continued to upgrade its new building as well, purchasing a set of bronze doors for $1,100 in June 1941.
1 In 1864, a group of miners known as the "Four Georgians"—John Cowan, D.J. Miller, John Crab and Robert Stanley—stopped along the banks of the Prickley Pear Creek for one "last chance" at finding some gold in the Helena valley. They struck it rich, and Helena and its booming "Last Chance Gulch" were born. An estimated $3.6 billion (in today's dollars) in gold was extracted from the gulch over a 20-year period.
2 The Holter Building, located at 27 West Sixth Street, was razed in 1974 during urban renewal and replaced with a parking ramp.
3 The number of commercial banks in Montana dropped from 426 in 1921 to approximately 215 in 1927.
4 This site was originally the location of the Deer Lodge corral and was not within the Helena city limits. The street presently named North Park Avenue was first named Clore Street.