First National Bank, Avoca, MN (Charter 11224)

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1920 photo of First National Bank, Courtesy of Murray County Historical Society
1918 photo of interior of First National Bank, pictured are: Anna Peterson, Otto Rakness, Cashier, and Jack Haley Assistant Cashier, Courtesy of Murray County Historical Society

First National Bank, Avoca, MN (Chartered 1918 - Receivership 1928)

Town History

2018 photo of First National Bank building, Courtesy of Google Maps

Avoca is a city in the southwest part of Minnesota, it is in Murray County. In 1879 the town was named for the village of Avoca in County Wicklow, Ireland.

During the National Bank Note Era, Avoca had a population of 135 in 1880, growing to 285 in 1930. As of 2010 the population stands at 147.

First National Bank was the only National Bank in Avoca.

Bank History

First National Bank Statement of Condition May 4, 1920
  • Organized Jul 31, 1918
  • Chartered Aug 23, 1918
  • Succeeded Avoca State Bank
  • Receivership May 5, 1928

The history of the First National Bank of Avoca can be traced back to January 16, 1899, when its predecessor, the State Bank of Avoca, was incorporated under Minnesota state charter #266. A local druggist, Anton H. Drueke, was likely the president and principal owner, although contemporary documents list only one officer, the cashier Robert A. Stratton. A few years later, perhaps in 1902, the bank was sold to David E. Hallett and his wife, Alice Marie Hallett, from Sac City, IA, who became president and vice president, respectively. Their son-in-law, Eugene VanRensselaer Trout, became cashier and lived in Avoca. By the end of 1908, the assistant cashier was Otto Parelius Rakness, who would become a lasting figure in the subsequent history of the bank.

In 1914, the Halletts sold their interest in the Avoca bank to John Schritzmeier Tolversen, a banker from the nearby town of Fulda, who became president. The vice president was Maurice Lilleberg, Otto Rakness now became cashier, and G. R. Smith was the assistant cashier. On July 31, 1918, the bank was reorganized as the First National Bank of Avoca under national charter #11224. The officers remained the same as in 1914, except Gunda Westby, the daughter of director Thorvald O. Isaksen Westby, was now the assistant cashier.

The reorganized bank opened its doors in a new building across the street from its former location. The building was a smaller and somewhat less ornate version of the First National Bank building in Fulda. No doubt it was also designed and built by the Lytle Company of Sioux City, IA, perhaps shortly before the bank in Fulda. John Tolversen evidently had a passion for building. A photo of the interior of the bank as it appeared at the time of its opening in 1918 has survived.

In late 1926, John Tolversen resigned as president of the bank in the wake of the collapse of his bank in Fulda. He may have been forced to divest all his banking interests by the receiver at Fulda, Harry Hardman, which was not uncommon in those days. He was succeeded as president by Thorvald Westby. Nels Peter Lindberg became vice president, Otto Rakness remained cashier, and John Stephen (“Jack”) Haley was the assistant cashier.

On Saturday, May 5, 1928, the bank abruptly closed. A local paper, the Murray County Herald, ran an article a few days later, which began:

“AVOCA NATIONAL BANK CLOSES DOORS

Board of Directors Close Bank Saturday Morning to Save Depositors From Loss

By action of the Board of Directors the First National Bank closed its doors voluntarily last Saturday morning and is now in the hands of the receiver. The closing came as a great surprise as the institution has been considered in healthful condition. Lowness of reserve coupled with an overabundance of real estate for a national bank, however, is given as the cause.”

Perhaps not quite so healthful, however. The article went on to explain:

“Examiner W. J. Penningroth, of Minneapolis, met with the directors of the institution Friday. While he makes no statement for publication, it is known that the federal banking department required that the real estate be cleaned up. A hurried meeting was held and in a few hours $33,000.00, of the $60,000.00 required, was raised. The balance could not be raised before Saturday, however, and as the word had gone out that demands were made on the bank, the directors saw fit to close the institution rather than subject it to a run with the resultant losses to depositors.”

The closure came as a surprise, not only to the community, but also to the bank employees, one of whom apparently had been engaged in a bit of illicit activity on the side. The story can be pieced together from contemporary newpaper reports, primarily in the Murray County Herald.

Shortly after the bank was closed, someone broke the federal seal on the vault, opened it, and removed a number of books and records. It was determined that only three people knew the vault combination – the cashier, the assisant cashier, and the bookkeeper. Suspicion soon focused on Jack Haley, the assistant cashier, who was arrested. He was released a few days later, however, for lack of evidence. About a month later, some of that evidence surfaced, quite literally, when a fisherman found that some pages from the missing books had washed ashore at the lake in Fulda. The local authorities dragged the lake and recovered the books, watersoaked but still legible. It was subsequently determined that all pages covering operations of the bank between April 1 and its closure in May had been torn from the books, and were never recovered. Presumably the culprit had disposed of them in a more permanent manner, as they probably contained the evidence of peculation.

In 1929, Jack Haley was again arrested by the U.S. Marshal’s Office in Minneapolis or Saint Paul, where he had moved, and charged with misappropriating bank funds and making false entries to conceal the embezzlement. Once again, the charges were apparently dismissed.

Finally, John Tolversen decided that he wanted the final word. He wrote a letter to the Murrray County Herald, the bank receiver Harry Hardman, and the National Banking Department in Washington “severely” criticizing their performance in the Avoca bank affair. Perhaps he was still stinging from the treatment he had received from Hardman three years previously.

Efforts to re-open the bank failed, perhaps due to opposition from banks in Fulda and Slayton. The village of Avoca purchased the building for $2,000 on April 29, 1931, and used it for various purposes over the next 16 years. In early 1947, it was converted to a municipal liquor store and bar. It became (and remains) a social center of the town.

Official Bank Title(s)

1: The First National Bank of Avoca, MN

Bank Note Types Issued

1902 Plain Back $5 bank note with stamped signatures of Otto P. Rakness, Cashier and Jno. S. Tolversen, President. Courtesy of Heritage Auctions, HA.com
1902 Plain Back $5 bank note with stamped signatures of O.P. Rakness, Cashier and T.O. Westby, President

A total of $44,540 in National Bank Notes was issued by this bank between 1918 and 1928. This consisted of a total of 8,908 notes (8,908 large size and 0 small size notes).

This bank issued the following Types and Denominations of bank notes:

Series/Type Sheet/Denoms Serial#s
1902 Plain Back 4x5 1 - 2227

Bank Presidents and Cashiers

First National Bank Presidents and Cashiers during the National Bank Note Era (1918 - 1928):

Presidents:

Cashiers:

  • Otto P. Rakness, 1919-1927

Other Bank Note Signers

  • There are currently no known Vice President or Assistant Cashier bank note signers for this bank.

Wiki Links

References

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