J.V. Thompson’s legacy called into question
Did you know Uniontown once had a bank the feds considered too big fail?
History is a matter of second- and even third-looks. Earlier this year we marked the centennial of the bankruptcy of J.V. Thompson, the coal land mogul and banker whose financial collapse in 1915 scuttled a number of Uniontown fortunes, crippled the lives of many other more ordinary people, and foreshadowed the county’s long-term decline.
Hats off to Frank Kurtik, a member in good standing of the Fayette County Historical Society, who pointed the way to a different understanding of the Thompson bankruptcy — one that paints a darker picture of J.V., customarily portrayed as a victim of the greed of the special-interests of the day, specifically the mighty steel-coal cartel.
In this telling, Thompson’s First National Bank, housed in the tall yellow brick building at the corner of Main and Pittsburgh streets in Uniontown, was treated gingerly by federal regulators despite indications of out-and-out fraud.
The government dumped nearly a half-million dollars in a useless attempt to halt the bank’s steady slide into insolvency. The insolvency was a direct result of Thompson’s own greed and arrogance.
Hearings by the U.S. Senate Banking Committee in 1919 pretty well established the fact that Thompson took advantage of the bank’s many depositors who were foreign-born coal and coke workers. These depositors barely understood English. Some, it is almost certain, didn’t speak a word of English.
John H. Strawn, appointed by the Comptroller of the Currency to oversee the bank’s liquidation, told senators that foreign-born workers were duped into signing over their deposits to Thompson with a promise that their money would be available to them anytime they wanted it.
This turned out not to be true.
J.V.’s “overdrafts at times ran to an enormous amount for continuous periods,” said one federal official.
By early 1915, an estimated $400,000 in depositors’ money was missing from the bank’s vault. The government believed J.V.’s total liabilities exceeded $23 million, but they weren’t sure. Thompson was not exactly forthcoming with them.
Comptroller of the Currency John Skelton Williams (a position, by the way, that is still with us) was so alarmed by the situation that he implored Thompson to take the train to Washington to talk things over with him.
Why did the comptroller not close the bank immediately? Technically, he explained, the bank was not out of compliance as long as it provided requested documents and reports. Besides, as he said, “we were hoping the bank might be saved by checking and stopping” the practices his auditors had uncovered.
In addition to bamboozling the foreign-born, Thompson was guilty of some other really questionable practices, including using intermediaries to borrow funds from other banks for his coal property purchases.
In exchange, these go-betweens were paid commissions, similar to a finder’s fee.
At one point, Thompson induced the county treasurer to part with $76,000 of taxpayers’ dollars. In the words of John Strawn, “the funds … we’re turned over to Mr. Thompson in consideration of which Mr. Thompson permitted (the treasurer) to overdraw his account at the bank to that extent.”
Meanwhile, the sell of coal lands in the Thompson portfolio ground pretty much to a halt, due to a general slowdown in the business cycle and the decline, already evident, of the coal and coke trade in Fayette County.
The result was that money “borrowed” for the purchase of additional coal lands never was replaced. The bank’s cash reserves continued to dwindle. At the end, the bank had barely $2,000 in cash on hand.
The infusion of federal dollars bought the bank hardly any time at all. The money was soon exhausted by withdrawals, which occurred not in a stampede but in drips and drabs over months. It was as if the bank went belly up in slow motion.
The most generous case that could be made on Thompson’s behalf was stated by creditors’ attorney Alfred Jones of Uniontown. It was not true, Jones told senators, that J.V. had “looted” the bank. “Mr. Thompson overinvested in coal lands, had his friends do the same, and they, in turn, borrowed too much from the bank.”
Frank Kurtik, for one, still isn’t buying it.
Thompson, a proud, vainglorious, resilient man, endured years of humiliation, though incredibly he lived out his days at his Oak Hill estate, today’s Mount St. Macrina, just west of town opposite the Uniontown Mall.
Blind and incapacitated, Thompson, even as he was dying, struggled to regain his standing, his fortune and his reputation. In that sense, he was heroic.
He died in 1933, in the wake of New Deal reforms that made banking far less hazardous to the financial health of small depositors.
Several months later, in the midst of the Great Depression, the Sisters of St. Basil purchased Oak Hill for pennies on the dollar.
Richard Robbins lives in Uniontown and is the author of two books — “Grand Salute: Stories of the World War II Generation” and “Our People.” He can be reached at grandsalutebook@gmail.com.