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The banking operations of Lionel and Barron Jacobs in Tucson, Arizona, 1867-1913

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The banking operations of Lionel and Barron Jacobs in Tucson, Arizona, 1867-1913

Santiago, Dawn Teresa, M.A.

The University of Arizona, 1988

300 N. Zeeb Rd. Ann Arbor, MI 48106

THE BRNKING OPERATIONS OF LIOSiEL AND BARRON JACOBS

IN TUCSON, ARIZONA, 1867-1913

Dawn Teresa Santiago

A Thesis Submitted to the Faculty of the

DEPARTMENT OF HISTORY

In Partial Fulfillment of the Requirements For the Degree of

MASTER OF ARTS

In the Graduate College

THE UNIVERSITY OF ARIZONA

19 8 8 STATEMENT BY AUTHOR

This thesis has been submitted in partial fulfillment of requirements for an advanced degree at The University of Arizona and is deposited in the University Library to be made available to borrowers under rules of the Library.

Brief quotations from this thesis are allowable without special permission, provided that accurate acknowledgment of source is made. Requests for permission for extended quotation from or reproduction of this manuscript in whole or in part may be granted by the copyright holder.

SIGNED: Qenim

APPROVAL BY THESIS DIRECTOR

This thesis has been approved on the date shown below:

Harwood P. Hinton Date Professor of History 3

PREFACE

When beginning my graduate studies, I discovered the extensive manuscript collections of Lionel and Barron Jacobs who had been pioneer merchants and bankers in Tucson, Arizona, from 1867 to 1913. As I had a background in accounting and economic history, I became curious as to the role the brothers had played in the financial affairs and growth of southern Arizona. In doing background reading, I discovered that few studies had been done on the history of banking in Arizona, and that most of these had focused on the period after 1900. Of the few studies of the pre-1900 years, none had discussed the impact of capital and credit scarcity on the economic scene, or the ways that pioneer bankers gathered monies to fuel territorial development. This thesis discusses the operations and evolvement of the Jacobs money exchange business and banks, and stresses how their skills and perceptions earned than the reputation of being preeminent financiers and businessmen in Arizona Territory.

I would like to thank several people who made the completion of this thesis possible. For his patience, skill, and determination to see this work finished, I would like to thank my advisor Dr. Harwood P.

Hinton. For serving on my committee, special consideration goes to

Dr. Leonard Dinnerstein and Dr. Michael F. Weber. I give special thanks to my parents, my husband Mark, and my son Edward for their patience and support in seeing this dream come true. 4

TABLE OF CONTENTS

ABSTRACT 5

1. THE JACOBS BROTHERS REACH TUCSON 6

2. THE PIMA COUNTY BANK, 1879-1882 54

3. THE FIRST NATIOSIAL BANK AND THE BANK OF TUCSON 105

4. THE JACOBS BROTHERS RETIRE 146

REFERENCES 196 5

ABSTRACT

Ihis thesis focuses on the financial careers of Lionel and Barron

Jacobs in Tucson, Arizona, from 1867 to 1913. As early merchants, the

Jacobs brothers discovered that cash and credit were both scarce in the region, and in 1870 opened a money exchange and lending business.

During the decade they expanded their services as the economy of the region changed. Then in 1879, the Jacobs brothers opened the Pima

County Bank to serve the increased economic activity caused by the

Tombstone silver discoveries. Mastering the details of banking, they developed management skills and insights and expanded their horizons.

They organized and operated the First National Bank of Tucson (1882-

1885), the Bank of Tucson (1885-1887), the Consolidated Bank of Tucson

(1887-1990), and the Arizona National Bank (1890-1913). At retirement the Jacobs brothers were among the preeminent financiers of Arizona.

A study of Lionel and Barron Jacobs's banking experience not only provides a valuable perspective on the economic growth of southern

Arizona during the late nineteenth century, but also mirrors the problems that bankers faced on remote frontiers. 6

CHAPTER I

THE JACOBS BROTHERS REACH TUCSON

In the fall of 1867, Lionel and Barron arrived in Tucson, Arizona

Territory from California in search of business opportunities. The territorial capital recently had been moved to Tucson from Prescott and there was great potential for trade and commerce. The Jacobs brothers established a mercantile store and in time developed a flourishing money exchange operation. In 1879 they opened the Pima

County Bank and expanded into various other economic enterprises in southern Arizona. Throughout their long tenure in southern Arizona, the

Jacobs brothers made a lasting contribution to the growth of the region as businessmen, bankers, and public-spirited citzens."'"

The brothers were two of twelve children of Mark Israel and

Hannah (Solomon) Jacobs. Lionel had been born in England in 1840.

Barron was born in 1846 in Baltimore, Maryland, where the family had moved two years earlier. During the gold rush the Jacobs family traveled to California, and in 1851 settled in San Diego. For the next six years, Mark Jacobs operated a general merchandise store and a newspaper and periodical depot. In 1857 the family moved to

San Bernardino, where a married daughter resided. There, Mark Jacobs 7 and his wife managed a store and hotel. After finishing their 2 education, Lionel and Barron joined the family business.

Lionel and Barron in the fall of 1867 opened M. I. Jacobs &

Company, a retail mercantile store in Tucson. Tucson at this time was an isolated settlement of scattered adobe buildings described by visitors as filthy, forlorn, dreary,and desolate. The town boasted

2,000 inhabitants, but connections with the outside world was tenuous.

Marauding Indians and Mexican outlaws made travel on Arizona's roads hazardous, and regular stage and mail service did not exist. Local businessmen freighted goods from Santa Fe, New Mexico; from El Paso,

Texas, and Mesilla, New Mexico; or from California. To import a stock of goods, merchants required a substantial long-term investment.

Despite the formidable obstacles, there were seven Tucson merchants who consistently made a profit: Edward Nye Fish, John Gaffield Capron,

Leopoldo Carrillo, Solomon Warner, partners Dr. Charles Lord and

Wheeler Washington Williams, Charles Hayden, and Estevan Ochoa. By

1867, business prospects appeared promising. Tucson was growing in size and importance as a center of trade and transportation, and merchants found ready markets in the mines, ranches, military, and

Indian agencies in southern Arizona.^

Amid these circumstances, Lionel and Barron Jacobs, on their father's advice, brought a wagonload of merchandise, mostly canned goods, to Tucson from California. Mark Jacobs believed that the relocation of the territorial capital and military headquarters from

Prescott to Tucson that year would stimulate the local economy, creating new markets. Hie elder Jacobs remained in California to purchase and ship goods to his sons in Tucson. Upon their arrival, the brothers rented a small adobe building in the central business district from

Leopoldo Carrillo. They quickly sold their first stock of goods for a dollar a can.^

The brothers learned that businessmen consistently wrestled with the problem of scarce currency and credit. As in most frontier areas,

Tucsonans dealt primarily in U.S. federal notes, known as "greenbacks, and gold and silver coins, both of which constantly were in short supply. Banks on the East and West coasts were reluctant to ship money to Arizona because of the danger of robbery enroutG. Arizona's unfavorable balance of trade—more money flowed out of the territory than flowed in—created a continuous drain on available cash. Few national banknotes, an alternate medium of exchange, circulated in

Arizona. Hie national banking system concentrated the notes in the

East.5

In the absence of cash, the Jacobs brothers—like other Tucson merchants—began transacting business without currency. Some customers paid for goods with checks drawn on banks outside the territory. Others used bills of exchange—drafts on San Francisco or New York banks—which directed payment to a specific party. These bills were payable on sight or at a certain time after presentation.

Merchants used the exchange to pay their creditors, or sold them to customers for a percentage based on the amount of the paper. Vouchers or promissory drafts, also circulated as currency. Contractors who 9 sold raw materials to firms outside Arizona, or to government agencies within the territory, commonly received vouchers obligating the purchaser to pay the seller. Some vouchers stated whether payment was to be made at a certain date or upon presentation, or a few days thereafter. Government vouchers, however, had no specific date, and payment could take months, or even years. Therefore, merchants either endorsed the drafts for remittance to distant creditors or sold them locally for cash.**

Limited credit imposed further hardships on Tucson merchants.

Irregular communication between Arizona and commercial centers in

California and on the East Coast, and an image that the region held few economic opportunities, made it difficult for local businessmen to purchase goods on credit or to secure loans. For example, in the late

1870s, the Jacobs opened an office in New York City to purchase goods in the East, and tried to borrow money by overdrawing the firm's account with its New York bank, the Importers & Traders National Bank, offering as collateral Arizona commercial paper (bonds and warrants).

The bank officer rejected their request, explaining "that tho' the firm has plenty of [securities] in Arizona, it is in Arizona," and could not be used in New York. With credit tight and wishing to avoid the risk, expense, and time involved in cash transactions, the Jacobs brothers, like other frontier merchants, resorted to bills of exchange and bank 7 drafts in dealing with suppliers.

Frcm the first the Jacobs had difficulty acquiring and transmitting funds. In the summer of 1868, M. I. Jacobs & Company declared 10 bankruptcy, the firm having lost a shipment of goods sent from

San Bernardino to Tucson, via La Paz, Mexico. Creditors demanded the payment of $20,035, and Mark asked his sons to ship funds from Tucson.

Which would be the safest way to send money—by mail, stage, or a trusted individual? Their father suggested that they remit small quantities by mail. He knew who carried the mail between Fort Yuma and San Bernardino, and his sons were acquainted with the arrangements between Tucson and Yuma. Slowly, the Jacobs gathered money, mostly by collecting from customers who had bought goods on credit. Despite their efforts, creditors pushed for immediate payment. In late June, the M. I. Jacobs & Company closed its doors in Tucson, and Mark Jacobs and Marcus Katz, a son-in-law, negotiated a settlement of the debt. g By September the brothers reopened the Tucson store.

To continue buying goods on the San Francisco market, the Jacobs had to pay cash, as wholesalers denied .them credit. Mark Jacobs moved to San Francisco in late 1868, and started building a cash reserve to pay bills. Lionel and Barron sent weekly remittances to help in the endeavor. With the scarcity of monetary exchange, they sought bank drafts, government vouchers, and bills of exchange, which were safer to remit. Some of their customers who had bank accounts outside

Arizona paid for merchandise by check. The brothers sent these drafts on to their father, who deposited them with the firm's account in the 9 London and San Francisco, Limited, in San Francisco.

The young merchants acquired government vouchers from several sources. A prime source was soldiers who received their pay in 11 greenbacks and gold coin. Whenever the store accumulated a large amount of currency, the Jacobs traded it to the army for a government draft. They also acquired vouchers in supplying the forts with grain, lumber, and other goods. Local farmers, ranchers, and laborers turned in vouchers they had received in providing goods and services. The

Jacobs accepted the vouchers in exchange for cash and goods. They either endorsed the drafts and sent them on to California, or held them until the army paymaster arrived. He would exchange the papers for currency or a check on the Assistant United States Treasurer in

San Francisco. When Mark Jacobs received these drafts, he asked their bank to collect on than and credit their account.^

If they ran short on checks and vouchers, Lionel and Barron purchased bills of exchange on San Francisco, made out in their favor.

Or they could turn to local businessmen who provided financial services. For example, they could buy bills of exchange from the mercantile firm of Lord and Williams, which from 1866 to 1879 the public considered Tucson's "official bank." Lord and Williams had a large capital foundation, a fine reputation, and excellent facilities.

Consequently, the federal government in 1869 designated the firm to be the U.S. Depository for government agencies in Arizona. In its dealings with the government, Lord and Williams obtained drafts and sold them to local merchants. Hie firm also employed accounts with banks in San Francisco and New York and bought and sold gold bullion.^

With their store once again operating smoothly, the Jacobs brothers sought to "make money" in outside ventures. Mark encouraged 12

his sons to follow "the really correct business principle 'to do everything that has some money in it.1" Lionel and Barron applied to

be the local agent for Wells, Fargo & Company, Express, and asked the

cashier of the London and San Francisco, Limited for a recommendation.

However, they did not receive the appointment. In 1870, George W. Dent, an Arizona businessman, invited than to submit a bid to carry the mail on the route between Tucson and Mesilla, New Mexico, or between Tucson and Ft. Yuma, California, for which he held the contract. The

brothers petitioned, but the contract went to another party. In 1872, the Jacobs invested $5,500 in a freight train and stage station in

Tucson managed by Charles A. Shibell. But this enterprise proved to be a bad investment, and Mark advised them to sell the train and station. That summer Lionel and Barron sold the station to Shibell, but were unable to dispose of the train until the spring of 1874. They had more success in supplying the military. In 1872, the Jacobs won a contract to transport flour to the army posts, using the influence of

Henry C. Hooker, a prominent rancher in southeastern Arizona who regularly dealt with the government. Two years later, they contracted with George Maish, a local businessman, to provide beef to several

Arizona forts. Maish bought the required cattle from ranchers in

New Mexico and Arizona.^"2

Lionel and Barron also saw the need for additional financial services in Tucson. In their business, they occasionally redeemed government vouchers held by laborers who had worked at the military forts. But the army paymaster came to the territory only twice a year, 13 which meant the holders of these papers had to wait for their money.

As the laborers needed goods and cash, the Jacobs brothers offered to accept the vouchers at any time at a discount (less than face value) for cash or merchandise.

Hie need for specie in southern Arizona presented another opportunity. Customers preferred gold coin when conducting business transactions, but the scarcity limited its vise. Greenbacks were more plentiful, but were less trusted. Hie federal government had begun issuing paper money in 1.862 to help finance the Civil War. Though authorized as legal tender, the government did not support the greenbacks with specie—the currency could not be redeemed for gold.

Hie resulting distrust, combined with the large volume of bills circulating, caused the money to be worth less than its face value on the market where gold continued to be the standard. Bankers and sane private businessmen provided a "money exchange service," where dealers 14 offered gold for greenbacks at a discount.

In February of 1870 Lionel and Barron started a money exchange.

First, they had to build a stock of coin. Hiey asked their merchandise forwarding agent in Yuma, David Neahr, to send $300 in gold coin to help them get started. They then contacted the few businessmen in

Arizona who possessed a supply. For example, they purchased specie from C. E. Eaton of Maricopa Wells, another money exchanger. Most of their coin came from California. Mark Jacobs in San Francisco drew on the firm's capital, purchased hard money, and shipped it to Tucson by registered mail or Wells, Fargo & Company, Express. 14

Once their supply was ample, the brothers began to exchange gold

coin for greenbacks. When their stock ran low, they sent their paper

to Mark who sold it on the San Francisco market, using the proceeds to

purchase more specie. The rate of exchange between California and

Arizona differed. In Tucson, paper money fluctuated between eighty

and eighty-five cents on the dollar, lower than in California where

it varied between eight-two and eighty-nine cents. Specie, on the

other hand, was relatively stable in Tucson, where demand exceeded

supply. In California, where hard money was plentiful, coin circulated

at rates lower than in Arizona. Thus, the Jacobs family received more

greenbacks for coin in Tucson than in San Francisco, and more coin for

paper money in San Francisco than in Tucson.^

The money exchange provided immediate profits. Mark Jacobs

praised his sons on their business enterprise and sent an iron safe to Tucson for them to use. He became increasingly enthusiastic as revenue came in, predicting that the capital "employed therein will be more productive than if it was employed in merchandise."^

The brothers could not meet the demand in Tucson for gold.

Transporting coin from San Francisco caused problems. The danger of robbery was high. Wells, Fargo & Company used armed guards on their stages in California, but their operations only came to Yuma. Mark

Jacobs suggested registered mail as a safe mode to ship the coin, and dispatched gold in small packages over several days, each package containing from $100 to $150. The Jacobs tried to insure the shipments, but insurance companies would only cover a loss of "treasure" by 15

accident, not by theft. Still another problem was bad roads. At

various times of the year, the roads in Arizona became impassable from

bad weather.*®

In the first six months of their exchange operations, the Jacobs

brothers handled only $1,500 in hard money, though they could have sold

much more. Most of their capital had been tied up in other business,

mainly the Tucson store. Lionel and Barron urged their father to

borrow money to buy specie, but he refused. "For the purpose of enabling me to send you coin, I will not borrow," he wrote. "I must not go too fast and will only send coin from our own funds." To make more funds available, the brothers reduced merchandise purchases, 19 bought goods on credit, and worked to create a cash reserve.

The market in gold dust and bullion also promised profits.

Earlier, they had accepted both in payment for merchandise, but in the spring of 1870, they started buying the metal regularly. When a person brought in ore, the brothers calculated its value and offered a price that left roan for a profit. They either mailed the gold directly to their bank in San Francisco or entrusted a friend to carry it to Mark

Jacobs, who in turn deposited it. Upon receiving the bullion or dust, the bank had the metal assayed and credited the Jacobs account with the 20 net proceeds (the value minus assay charges).

Hie Jacobs brothers made money from their money exchange and bullion dealings. Mark praised his sons: "The extent which your dealings in Bullion have assumed is truly gratifying and what with that and selling coin (which you will sell to the full extent of the 16 coin on hand, even if Lord [and Williams] is depository) you will get along with the Blessings of God, first rate." Despite his encouragement, Lionel and Barron experienced doubts about using cash to buy currency. "An undertaking of so advantageous a character, as described correctly by yourself," Mark reassured than, "is hardly possible to be excelled by any other. I only wish that instead of being able to turn over Fifteen hundred dollars, we could turn over as many thousands . . . .

In the fall of 1870, the brothers retitled their Tucson business the M. I. Jacobs & Company, Money, Bullion, and Exchange Brokers. The term "exchange brokers" alluded to the fact that they sold bills of exchange on their bank account at London and San Francisco, Limited.

However, this service comprised a small part of their financial 22 operations.

As their "money business" flourished, Lionel and Barron decided to venture into making cash loans. Fanners, ranchers, freighters, and other businessmen in the region often required large cash outlays to obtain equipment, goods, or supplies. Eastern and California financial centers were reluctant to invest money in what seemed risky ventures in a remote and unknown territory. Some of the more affluent businessmen traveled to San Francisco and personally applied for loans, but most people had to rely on local capital. A few larger mercantile stores, such as Lord and Williams, made cash loans; nevertheless, the 23 demand for capital remained great. 17

In December, the Jacobs brothers commenced granting loans,

usually for thirty to forty-five days at 3% per month interest rate.

Hie short term kept the loans "turning around" and made funds

available. The brothers ran into difficulties caused by their lack

of experience in money lending. When one customer repaid his loan

before the due date, they asked their father whether they still collected the full amount of interest as stated on the note. Mark

investigated the matter, and reported that they were entitled to full

interest. With the California banks, he replied, "the option is given to the borrower to pay at any time and interest charged for more or

less time, but among money lenders the full interest for the full amount has to be paid." Hie brothers also mentioned their difficulty in evaluating collateral. Mark advised that "as you progress in the business of money lending, you will know precisely the value of the 24 different Collaterals which are offered to you."

The Jacobs brothers also discounted commercial paper. They bought notes issued by individuals, business firms, or governments which matured at a future date, paying an amount lower than the face value so as to make a profit. The current interest rate, time until maturity, and risk of nonpayment determined the purchase price.

Lionel and Barron preferred Pima County scrip, believing it was the 25 most secure.

In 1871 the brothers evaluated the direction of their multifaceted business. Their father had advised that they could not operate both a money and a merchandise business with equal success. 18

Lionel and Barron wanted to expand their coin exchange and loan business. This would ease the lack of capital in the region and at the same time provide them a profit. "Requirement of money is a necessity and necessity knows no law," they told their father. When the brothers sold the gold coin they had on hand, Mark hesitated to supply funds for more coin. He believed the most advisable (and profitable) course was to adopt the slogan: "To deal less in Calico and more in money." Consequently, the brothers limited merchandise buying to $2,000 or $3,000 every two months, with bills being due at 26 intervals. This freed capital for the money exchange.

As Tucson showed signs of growth, the merchants gave thought to improving their operations. Stage and mail lines were established in

1868. Social amenities also appeared. In 1870 John Wasson stared the Citizen newspaper as a rival to Pierton W. Dooner's Arizonian. A school for boys opened for one term in 1870, to reopen permanently in

1872. For relaxation, the townspeople strolled down to Carrillo1s

Gardens on South Main. The officer corps at Camp Lowell also contributed to the town's social life by sponsoring dinner parties 27 and dances.

Tucsonans believed better times would come if more people settled in the region. They hoped that outside investors would develop Arizona's farming and mining industries, and if roads and railroads could be built, isolation from the world would end. In the early 1870s, Tucson grew as a center of trade and transportation and a way station for freighters and travelers en route to California or 19 to Mexico. The leading merchants promoted the town as the major point for supply in southern Arizona. To realize their objectives required 28 vision and money. The Jacobs brothers believed their varied financial services would help build the region. They carefully boosted their capital pool from $1,500 to $2,000 in 1872, and extended the money exchange business to other mediums. They were aware that large amounts of

Mexican specie circulated north of the border, and decided to tap this business. In February of 1872 Mark Jacobs in San Francisco began purchasing Mexican $20 gold pieces and silver dollars (called ounces) and shipping them to Tucson. He sent five or six ounces per package along with gold pieces ordered by his sons. However, by summer, the sons needed more coin. Mark increased the silver to ten to sixteen 29 ounces per shipment and by fall included more $20 gold pieces.

The Jacobs enlarged their sale of bills of exchange. M. I.

Jacobs & Company in early 1872 arranged with a private banker in

New York to issue drafts on the firm and accept funds from

San Francisco to cover the drafts. At first Lionel and Barron used the account to buy mercantile goods in the East, but they soon began to sell drafts to customers. They sold bills of exchange on a variety of mediums. Some customers needed a gold draft. For example, one man presented a bundle of paper currency in small denominations and requested a bill of exchange for $1,000. The brothers gave him a gold draft for the specified amount and $20 federal notes for the rest of« U-his money. 30 20

In January of 1872 Mark Jacobs opened his own brokerage in

San Francisco, passing along information to his sons in Tucson. He

soon learned who sold specie at the best prices. After five months,

Lionel, who had gone to San Francisco to help his father, wrote

Barron: "We have not yet discovered who the large sellers of Mex.

Ozs. are and . . . are compelled to confine our purchases for the

present to the Brokers on Montgomery St. [the financial center of 31 San Francisco]."

The Jacobs brothers also had to deal with frequent price

fluctuations. Selling and buying specie and greenbacks profitably

meant keeping current on market rates. Sometimes San Francisco

prices affected the Jacobs operations in Tucson. As greenbacks were

valued three to five cents higher in California, the brothers shipped

currency to their father for sale there. When greenbacks fell to a

difference of one to two cents, they ceased remittances, and

exchanged currency in Arizona for gold coin. When San Francisco 32 prices rose to a profitable level, their shipments resumed.

Lionel and Barron often felt frustrations over price shifts. They

soon learned that price levels reacted to doonands in San Francisco,

the price of gold in New York, and national, political, and economic

events. Gold prices in New York, the financial center of the

United States, influenced the value of greenbacks. As gold rose, the

price of greenbacks declined. For the Jacobs, these fluctuations could be affected by demands in San Francisco. Economic prosperity,

political events, international relations, and other factors also 21

influenced the the market rates of both mediums, but especially gold.

For example, in the fall of 1873 a threat of the United States going

to war with Spain over Cuban independence affected the gold market.

"Gold to day [sic] is up again," Mark wrote his sons in November:

One day it is war with Spain and gold goes up, the next day there is to be no War and gold goes down. I think President Grant will be in favor of taking Cuba, in which case there will have to be a large issue of Greenbacks and their value [will] be much depreciated.33

The Jacobs kept an eye on the regional demand for coin. In the

fall when the wheat crop reached the market, owners of flour mills stepped up production, hired more workers, and needed specie for

payrolls. Local ranchers, such as Henry C. Hooker and his partner

George Tyng, seasonally demanded coin to buy cattle in Sonora, Mexico.

Hie annual Fiesta del San Agustin held in Tucson in August attracted crowds, creating a brisk demand among local merchants for specie. 34 Hie Jacobs tried to anticipate these increases in demands.

Territorial affairs also could affect the money market. In the summer of 1872, the Jacobs brothers heard that Brevet Major General

George Crook, commander of the military Department of Arizona, was considering abandoning Camps Crittenden and Grant, and possibly

Camp Lowell in Tucson. The decision could "cause a great reduction of

Governmental requirements south of the Gila and will operate disastrously on Tucson," Lionel wrote his brother. Leading citizens must urge Crook to change his plans. Despite local pressure, the general relocated Camp Grant in March of 1873 in eastern Arizona to a point near the town of Safford and abandoned Crittendon the 22

following June. He moved Lowell to a site on the Rillito Creek,

seven miles northeast of Tucson. The new location provided better

living quarters, and helped ease tensions between the soldiers and

local citizenry, but the camp remained near enough to support regular

trade activities.^5

Hie Jacobs occasionally faced local competition. Lord and

Williams and a few Tucson merchants operated a money exchange, and

other brokers appeared in the region. In July of 1872, a Mr. Araisa

of Altar, Sonora, Mexico, offered to purchase currency for

eighty-seven cents on the dollar, two cents more than the Jacobs.

Barron worried that Araisa would hurt their market but Lionel 36 predicted correctly that Araisa's operation would soon fade.

The brothers were employing all their available funds by the

end of the summer. The loans generally involved only a few hundred

dollars for a short term at 3% per month. For a few trusted

customers, they granted six months terms if the borrower could

provide a mortgage on real estate. The brothers continued to invest

a portion of their funds in discounting drafts and other papers. They

purchased "forage receipts" (vouchers given by government agencies to

suppliers of livestock feed), county warrants and scrip, and Eastern 37 and Western checks and drafts.

The brothers soon built a reputation as financial dealers.

Businessmen in Arizona turned to than whenever they needed help or advice in banking matters. For example, W. Brichard & Company held a check written by a customer on the U.S. Depository at Lord and 23

Williams and wished to collect its money. The firm asked an A. Collar

to do so, but he was ill and could not handle the task. Brichard

contacted M. I. Jacobs & Company, who for a fee made the collection.

Lionel and Barron obtained information on banks in California for

friends and acquaintances. In one instance, Charles A. Paige wondered

why he had received only a 6% per annum interest rate on a six-month

deposit of $1,200 at the German Savings and Loan Society in

San Francisco. Lionel discovered that the institution awarded 6% 38 interest if a customer withdrew his deposit between "dividend days."

As their brokerage business grew, the brothers broadened the

operations of their mercantile store. By 1872, its assets stood at

$100,000. As Tucson's future looked bright, Mark urged his sons to

"stick to the business at Tucson, there is nothing like it." That

year, Lionel and Barron opened a branch store near Camp Lowell to

profit from the soldier trade. Downtown, they moved to a larger

building and offered a greater variety of goods. In an attempt to draw trade from the Gila and Salt River district to Tucson, they reduced prices on groceries, but only on an individual basis to keep 39 other merchants from following suit.

The family debated which avenues to pursue. Should they continue to use their funds in Tucson, or open a brokerage in

San Francisco? Profits in Arizona had been "gratifying and remarkable." Should they concentrate on the money business or on the mercantile operations? Lionel proposed that "we should draw in, and gradually mass our funds so as to get into something besides 24 merchandizing, altho [sic] the latter has been far from unprofitable to us in Tucson." Later, they considered the store business. Mark

Jacobs warned against abandoning the exchange. The operation was

"exceedingly lucrative" and he prefered "a business in which you have „40 your money in your possession.11

Hie Jacobs decided to keep both operations going. To introduce more capital and ease their workload, Lionel and Barron in February of

1872 negotiated with Leopold Wolf, an employee, to invest in the firm and serve as full partner. • Wolf managed a branch store located to capture the trade of miners working placers in the northern spurs of the Santa Rita Mountains. During Lionel's absences in San Francisco,

Wolf also helped Barron oversee the total operations. That fall Wolf made a successful buying trip to New York City, convincing the firm that they should buy goods in New York regularly to obtain a better 41 variety.

The Jacobs occasionally borrowed money from outside sources to meet obligations. In San Francisco, they secured loans from London and San Francisco, Limited, and the private bank of Dusenberry to pay bills. Occasionally, when short of funds, they negotiated loans with other merchants in Arizona. In February of 1872, for example, they borrowed $1,800 from a man in Tempe for six months at 1% per month interest rate. On one occasion they tried to get $3,000 at 2% per month from William Zeckendorf, a prosperous Tucson merchant, but he withdrew from the deal at the last minute. Mark Jacobs branded Zeckendorf as despicable for his act and advised his sons to have no 42 further dealings with him.

Family matters briefly caused problems for the brothers. In

February of 1872 their mother Hannah passed away, and several weeks

later their sister Julia died in childbirth. Both losses severely

affected Mark, and he asked Lionel to take over the family's

business in San Francisco for a time. During the next few months,

Mark broke down completely when he discovered that his younger son

Albert had embezzled several hundred dollars from the company,

spending most of it at houses of ill repute, on buggy rides, and for

loans and lunches for friends. By the spring of 1873, Mark returned to his duties, and implemented new record keeping procedures

introduced by Lionel, including a separate ledger entry for the 43 "Tucson Coin" account.

In the summer of 1874 Lionel's relations with his father deteriorated rapidly. He objected strongly to his father's upcoming marriage to a seventeen-year-old girl and to his plans to sell his first wife's belongings. Hie two men argued on various matters, ranging from Lionel's desire to have his mother's diamond earrings to his supposed presumptuous acts over family affairs. By

November, Lionel confessed to Barron, who was trying to act as peacemaker, that his relations with their father were "a mockery and that of the hollowest kind." The brothers decided that Mark should sever his connections with the firm and become an independent businessman. They negotiated an agreement which denied their father 26

an interest in future profits as he had withdrawn his share of the

capital in the Tucson store in September. Instead they gave him the

SUIT of $8,000 to use as he desired. This arrangement removed their 44 indirect support of Mark's new wife.

On January 1, 1875, the Tucson firm changed its name to

L. M. Jacobs & Company and sought to establish itself with both creditors and customers. To make new arrangements with their

San Francisco bank, Mark accompanied Lionel to see the cashier. The bank continued the account, but the firm could obtain accommodation, or overdraw, privileges only if Mark endorsed it. The sons could get their own credit line, but it would take about six months. In

Tucson, the brothers publicized the change of the company's name and 45 reassured their customers that their business was solid and safe.

The reorganization caused financial pressures, and the brothers took a cautious stance regarding investments. The cashier of their

San Francisco bank retired, and the new administration restricted credit. However, the Jacobs' trade remained brisk, providing ample funds, when combined with the bank accommodation, to pay the bills.

With the withdrawal of Mark's funds, the Jacobs had $45,000 capital in the store, down from the original $100,000. The amount was 46 insufficient to support a larger stock of goods.

To generate more capital, Lionel and Barron made changes in their business. They concentrated first on updating and expanding their money exchange. As Mexican silver coin became the predominant medium, they ceased importing gold coin from San Francisco and made 27 a special effort to collect silver in Arizona. The demand was high,

particularly in smaller communities where it was the preferred coin.

In California the Mexican dollars were worth less than their face value, but in Arizona merchants accepted them at par for goods.

Businessmen in the small towns made regular demands on the Jacobs for silver, offering gold or bullion in exchange. The brothers extended their exchange operations to western Arizona, with David Neahr in

Yuma acting as their agent. He sold Mexican coin at par or at rates competitive with the San Francisco market. If Neahr could not meet the latter condition, the brothers whipped the silver into California for sale.t 47

The Jacobs continued to deal in paper currency and gold bullion.

They sought to exchange currency for silver. Hie rate fluctuated, but they tried to trade at par with the specie. They also sold currency to businessmen in outlying communities. In July of 1878, for example, J. Goldwater & Brother of Ehrenberg requested a shipment of currency. The Jacobs firm also mailed packages of surplus greenbacks to their San Francisco office to pay bills or for sale on the local market. Handling gold bullion was another matter. They acquired the metal by purchase or through exchange, and shipped it to the San Francisco mint to be assayed and coined. Lionel traveled often to California and oversaw its arrival. Otherwise, the brothers asked their father (they had reconciled in the spring of 1875) to 48 handle the business. 28

In the late 1870s the financial scene in Arizona grew complicated.

Gold coin or bullion, U.S. or Mexican silver coin, and U.S. paper

currency were in circulation. Businessmen maintained their credit

in various ways. L. M. Jacobs & Company kept a gold account to cover

its obligations to the Colorado Steam Navigation Company, which

shipped their goods from San Francisco to Yuma. Lionel and Barron

asked customers to specify the medium for their accounts. Bills of

exchange and checks passing through the store had to stipulate the

form of money represented. In their dealings the brothers constantly checked San Francisco market rates and tied the retail prices in the 49 store to the market value of gold and currency.

The demands for credit increased. To satisfy this need, the

Jacobs brothers granted more short-term loans, charging 2 1/2% to

3% per month interest rate. Their customers included prominent citizens of the area, such as Henry C. Hooker, owner of the Sierra

Bonita Ranch in southeastern Arizona; John A. Spring, Tucson's early schoolteacher; Leopoldo Carrillo, merchant owner of the town's major recreational park, Carrillo's Garden; and Charles H. Meyers and

Samuel Hughes, two of the town's first Anglo storekeepers. The Jacobs brothers also extended larger sums for longer periods of time, usually demanding mortgages as collateral. By 1878, long-term loans made up a major part of their lending business. In February of that year, they granted Alexander Levin a $2,000 loan at 2% per month interest rate for a first mortgage on his house and the Pioneer

Brewery. Soon after, the brothers loaned Solomon Warner $2,000 at 29

1 1/2% per month interest for a second mortgage on his flour mill.

These loans proved profitable, with some producing up to 36% per annum 4. 50 interest.

In certain instances the Jacobs brothers had trouble collecting

on loans. In one case, a Mr. Bosquez misrepresented the condition of

his project and eventually defaulted on his loan. Mark Jacobs

consoled his sons: "Bosquez is a very slippery customer from whom

even a mortgage might turn out to have a previous mortgage on the

property in question." Some borrowers claimed financial reverses and

requested more time to repay the loan or to make payment-in-kind. A

few clients were consistently late with interest installments. The

firm could threaten to keep the collateral to insure payment. For

example, in the fall of 1876, Barron had to dun Leopoldo Carrillo for

the interest due on his loan. "Have rung the 'first bill' on

Dr. Leopoldo," he wrote Lionel. ". . . he is chronically 'malo'—

but I shall make him either secure the interest due or shall make him

turn over the property to our charge untill [sic] such time as

accumulated interest shall have been paid up.

Once the Jacobs had to go to court to collect on a loan. In

June of 1877 the note on I.C. Loss and Brother, Mexican merchants in

Florence, came due. As early as April, Lionel and Barron had

questioned Marcus Calisher, their brother-in-law, who was also a

merchant in Florence, about the financial status of the Loss brothers.

Calisher warned that the Losses were "very hard up," and predicted the

Jacobs brothers would have "to pressure them" for payment. During the 30

summer, they threatened to attach the Loss brothers' goods, and

finally, in October, the firm brought suit. Calisher warned that a

jury trial might cause problems because of perceived "prejudices"

between Mexicans and Jews. Hie Jacobs won a judgment in December and 52 received their money.

Lionel and Barron gradually initiated services that banks

performed. For example, they acquired a strong safe and offered customers a place to deposit valuables. Customers brought in a wide

range of personal items, varying from a "Smith and Western [sic]

large six shooting pistol & belt" to important papers. In June of

1875, William S. Oury, Tucson's first mayor, deposited the baptismal records of his grandchildren, Marcos and Louisa Smith in the firm's safe. L. M. Jacobs & Company also accepted deposits of money, issued certificates of deposit, and by 1878 offered a type of checking account based on deposits for the use of a stated party. For example, in May of 1878, the Arivaca Company deposited in the Bank of Commerce in

St. Louis $1,000 in the account of L. M. Jacobs & Company and designated E. B. Gage, their representative in Arizona, to draw on this amount. To enhance their quasi-banking business, the brothers had formal bank-style checks printed with their conpany's name at the 53 top for customers to use.

Lionel and Barron also collected on delinquent checks, certificates of deposit, and maturing notes for creditors. Businesses and individuals in and out of Arizona territory, including merchants in

Mexico, asked than to redeem checks and drafts on the U.S. Depository 31 at Lord and Williams and on local stores that offered checking services.

The firm also collected on papers nearing maturity, handled bills of exchange in favor of a local person but held by another party, and bills against the territorial government in Tucson. Creditors received proceeds by registered mail, either as currency, coin, postal money orders, and infrequently by San Francisco or New York exchange.

Hie few creditors with accounts with L. M. Jacobs & Company often requested that collections be placed to their credit. For all these 54 services, the brothers charged small commissions.

In the meantime, the Jacobs brothers did not ignore their mercantile store. They increased sales to Mexico, especially after rich ore discoveries on the San Miguel River near Ures. Although they continued to buy goods in New York, Barron established connections with the financial community and wholesalers in Baltimore. The brothers also began shipping hides obtained in Arizona to the

California market, and they bought out a rival Tucson merchant, a

Mr. Lazarus. As early as 1875, the firm joined nine other mercantile companies to organize the Tucson Mercantile Association, with one of the brothers (probably Lionel) serving as secretary. The members discussed such matters as routes for shipping goods from California

(via Yuma or via Guaymas, Mexico), and prices to charge for candles, 55 sugar, coffee, and cigarette paper and other goods.

The firm suffered a few temporary setbacks. In 1876, Leopoldo

Wolf ended his partnership with the Jacobs and returned to

New York City permanently. He had mishandled the purchasing of goods, $

32 and after the brothers expressed their displeasure, Wolf resigned and withdrew his capital from the firm. Then in 1877 Tucson lost the territorial capital to Prescott. The brothers feared the event would impair their trade, but business held up and Tucson remained the 56 largest and most important town in Arizona,

With other public-spirited businessmen, the Jacobs brothers worked for Tucson's welfare and prosperity. They willingly contributed money to town projects, like the $100 they donated to the public school. Lionel once stated their philosophy: "My tendencies have always been to subscribe liberally where our actions would be appreciated and reciprocated and if you attain these points 57 you do a benefit to others and secure an advantage to us."

The brothers also took an interest in political and cultural affairs. In 1871, Lionel vron election to the Pima County Board of

Supervisors, and shortly thereafter served as chairman. Two years later, he represented Tucson in the Seventh Territorial Legislature.

When their friend Charles Shibell ran for sheriff in 1876, the brothers actively campaigned on his behalf. Barron, in turn, served a term on the Tucson city council from 1878 to 1879. To encourage cultural development, the Jacobs joined others in forming the Tucson Literary

Society. They were also charter members of the Arizona Social Club, serving on the committee of invitation for local events. The brothers opened their home to major gatherings, with Barron's wife Yetta, whom 58 he married in 1875, acting as hostess. 33

During the 1870s, the Jacobs had established themselves as major businessmen in Tucson. In operating their money exchange and mercantile enterprises they had gauged and expanded their services to meet changing need. Hie brothers also helped link Tucson with the outside world through their dealings with businessmen and financiers in various parts of the nation and Mexico. They were optimistic men who envisioned a prosperous future for the region with the opening of mines, population growth, and economic expansion. In time they would move from the quasi-banking operations and give serious thought to organizing a formal bank. 34

ENDNOTES TO CHAPTER I

"'"Richard L. and Arlene A. Golden, "The Mark I. Jacobs Family: A

Discursive View," Western States Jewish Quarterly, XIII (January 1981),

105-110; Gerald Stanley, "Merchandising in the Southwest: The Mark I.

Jacobs Company of Tucson, 1867 to 1875," American Jewish Archives,

XXIII (April 1971), 86-87. Personal and business papers of the Jacobs enterprises are housed in the Lionel and Barron Jacobs Papers [JP] at

Arizona Historical Society [AHS], Tucson, and in the Jacobs Family

Papers [JFP] in the Special Collections at the University of Arizona

Library [SC, UAL], Tucson. Hie AHS collection includes 10 boxes of materials, and SC, UAL has 22 boxes and 175 volumes of correspondence and records. For a general history of the development of banking in

Arizona see Larry Schweikart, A History of Banking in Arizona (Tucson:

The University of Arizona Press, 1982).

2 Golden and Golden, "Jacobs Family," 99-100, 103; Stanley,

"Merchandising in the Southwest," 86-87.

^John Bret Harte, Tucson: Portrait of a Desert Pueblo

(Woodland Hills, California: Windsor Publications, Inc., 1980),

44-46; Howard Lamar, The Far Southwest, 1846-1912: A Territorial

History (New York: W. W. Norton & Company, Inc., 1970), 451-55;

Schweikart, Banking in Arizona, 9-10; Federal Census—Territory of 35

New Mexico and Territory of Arizona; Excerpts from the Decennial

Federal census 1860 . . . The Special Territorial Census of 1864 . . . and the Decennial Federal Census, 1870 . . . (Washington, [D.C.]: U.S.

Government Printing Office, 1965), 62-80. For a general overview of

Tucson and its biasiness scene in the 1860s and 1870s, see C. L.

Sonnichsen, Tucson; The Life and Times of an American City (Norman:

University of Oklahoma Press, 1982), 75-96.

4 Receipt for $65 in rent from Leopoldo Carrillo to M. I. Jacobs &

Company, March 8, 1870, Folder 1, Box 1, JFP, SC, UAL. Golden and

Golden, "Jacobs Family," 106; Stanley, "Merchandising in the

Southwest," 87; Sonnichsen, Tucson, 75-78, 93? Bret Harte, Tucson,

44-45.

^Fifty Years of Growth in Tucson, 1903-1953 (Tucson; Southern

Arizona Bank and Trust Company, 1953), 5; Chuck Hemann, "When Bankers

Wore Boots," Arizona Highways, LIII (September 1971), 7; Wesley Clair

Mitchell, A History of the Greenbacks; With Special Reference to the

Economic Consequences of Their Issue: 1862-65 (Chicago: The

University of Chicago Press, 1903), 148; Schweikart, Banking in Arizona,

6; Floyd S. Fierman, "The Spiegelbergs: Pioneer Merchants and

Bankers in the Southwest," American Jewish Historical Quarterly, LVI

(June 1967), 398.

^M. I. Jacobs to Lionel and Barron Jacobs, November 10, 1868,

Folder 6; James Calhoun to M. I. Jacobs & Company, January 4, 1870; 36

Ganido Martin to M. I. Jacobs & Company, January 27, 1870, ooth in

Folder 1, all in Box 1, JFP, SC, UAL. George L. Anderson, "Banks,

Mails, and Rails, 1880-1915," in John G. Clark (ed.), The Frontier

Challenge; Responses to the Trans-Mississippi Wast (Lawrence:

Kansas University Press, 1971), 276; Eugene E. Agger, Organized

Banking (New York: Henry Holt and Company, 1918), 20; Stanley,

"Merchandising in the Southwest," 96; William J. Parish, The Charles

Ilfeld Company; A Study of the Rise and Decline of Mercantile

Capitalism in New Mexico (Cambridge, Massachusetts; Harvard

University Press, 1961), 37-38; Dwight L. Clarke, William Tecumseh

Sherman; Gold Rush Banker (San Francisco: California Historical

Society, 1968), 417; Bret Harte, Tucson, 46.

7 Lionel Jacobs to Barron Jacobs, January 16, 1878, Folder 13,

Series 1, Box 2, JP, AHS. Hemann, "When Bankers Wore Boots," 7;

Sonnichsen, Tucson, 97-98; Stanley, "Merchandising in the Southwest,"

96.

Q M. I. Jacobs to Barron Jacobs, June 8 and 22, 1868; Lionel M.

Jacobs to Barron Jacobs, September 7, 1868; Marcus Katz to M. I.

Jacobs, August 4 and September2, 1868, all in Folder 1, Series 1,

Box 1, JP, AHS. M. I. Jacobs to Lionel and Barron Jacobs, May 20,

1868, Folder 6, Box 1, JFP, SC, UAL. Golden and Golden, "Jacobs

Family," 102. 9 Lionel M. Jacobs to Barron M. Jacobs, September 7, 1868;

Martin to M. I. Jacobs & Company, January 18, 1870, both in Folder 1,

Series 1, Box 1, JP, AHS. Stanley, "Merchandising in the Southwest,"

89, 96, 100; Parish, Charles Ilfeld Company, 35; Fierman, "Hie

Spiegelbergs," 398.

^Calhoun to M. I. Jacobs & Company, January 4, 1870; Martin to

M. I. Jacobs & Company, January 27, 1870, both in Polder 1, Box 1,

JFP, SC, UAL. Stanley, "Merchandising in the Southwest," 96-97;

Parish, Charles Ilfeld Company, 35-37.

^Lionel Jacobs to Barron Jacobs, July 14, 1875, Folder 8, Box 1

JFP, SC, UAL. Bill from Lord & Williams to L. M. Jacobs & Company,

September 13, 1875, in Tucson: Business—Banks—General, Ephemera

Files, AHS. "Hie Man, the Idea, the Bank," in Tucson Citizen

(Arizona), October 27, 1929. Stanley, "Merchandising in the

Southwest," 96; Malcolm Rohrbough, The Trans-Appalachian Frontier:

People, Societies, and Institutions, 1755-1850 (New York: Oxford

University Press, 1978), 43-44; Fifty Years, 6.

12 M. I. Jacobs to Barron Jacobs, September 7, 1868, Folder 1;

July 1, 1872, Folder 3; M. I. Jacobs to Lionel and Barron Jacobs,

February 14, March 11, and April 5, 1872, all in Folder 3; and

November 19, 1873, Folder 5; George W. Dent to M. I. Jacobs & Company

July 26, 1870, Folder 2; Charles A. Shibell to M. I. Jacobs & Company

March 1, July 20, October 18, and December 15, 1872, all in Folder 3; 38

Lionel Jacobs to Barron Jacobs, May 10, June 10, 21, and 23, July 1 and

18, and August 7, 1872, all in Polder 3; Shibell to Lionel Jacobs,

February 20, 1874, Folder 6; John V. Furey to M. I. Jacobs & Company,

November 23, 1872, Folder 3; J. J. Dolan to [George] Maish and [Barron]

Jacobs, February 5, 1874, Folder 6; all in Series 1, Box 1, JP, AHS.

Martin to M. I. Jacobs & Company, April' 21, 1870, Folder 1, Box 1,

JFP, SC, UAL.

13 M. I. Jacobs to Lionel and Barron Jacobs, November 30, 1868,

Folder 6, Box 1; Calhoun to M. I. Jacobs & Company, January 4, 1870,

Folder 1, Box 1, JFP, SC, UAL. Clarke, William Tecumseh Sherman, 5;

Stanley, "Merchandising in the Southwest," 97; Parish, Charles Ilfeld

Company, 35-36.

14 Stanley, "Merchandising in the Southwest," 100-102; Norman

Angell, The Story of Money (Garden City, New York: Garden City

Publishing Company, 1929), 293-98; Mitchell, History of the Greenbacks,

144, 182-83; Peter Huntoon, Arizona Money [pamphlet] ([Phoenix]:

The Valley National Bank, 1983), [2].

^David Neahr to M. I. Jacobs & Company, January 22, 1870,

Folder 1, Box 1; C. E. Eaton to M. I. Jacobs & Company, April 4, 1870,

Folder 1, Box 1, JFP, SC, UAL. M. I. Jacobs to Lionel and Barron

Jacobs, February 5 and 28, 1870, Folder 2, Series 1, Box 1, JP, AHS.

^Eaton to M. I. Jacobs & Company, April 4, 1870, Folder 1,

Box 1, JFP, SC, UAL. M. I. Jacobs to Lionel and Barron Jacobs, February 5 and 28, June 16, 1870, Folder 2, Series 1, Box 1, JP, AHS.

Golden and Golden, "Jacobs Family," 106; Stanley, "Merchandising in the Southwest," 100-101.

17 M. I. Jacobs to Lionel and Barron Jacobs, February 5 and 28,

1870, Folder 2, Series 1, Box 1, JP, AHS.

18 M. I. Jacobs to Lionel and Barron Jacobs, February 21 and 28,

1870, Folder 2; January 13 and 20, and February 19, 1872, all in

Polder 3; all in Series 1, Box 1, JP, AHS. Neahr to M. I. Jacobs &

Company, January 22 and March 4, 1870, Folder, Box 1, JFP, SC, UAL.

John and Lillian Theobald, Wells Fargo in Arizona Territory (Tempe:

The Arizona Historical Foundation, 1978), 17-19, 22.

19 M. I. Jacobs to Lionel and Barron Jacobs, July 28, 1870,

Folder 2, Series 1, Box 1, JP, AHS. M. I. Jacobs to Lionel and

Barron Jacobs, January 5, 1871, Folder 6, Box 1, JFP, SC, UAL.

20 M. I. Jacobs to Lionel Jacobs, June 2, 1870, Folder 1,

Series 1, Box 1, JP, AHS. Martin to M. I. Jacobs & Company, March 15 and May 5 and 17, 1870, Folder 1; M. I. Jacobs to Lionel and Barron

Jacobs, January 9, 1871, Folder 6, all in Box 1, JFP, SC, UAL.

21 M. I. Jacobs to Lionel Jacobs, June 1, 1870; M. I. Jacobs to

Lionel and Barron Jacobs, July 28, 1870, both in Folder 2, Series 1,

Box 1, JP, AHS. 22 M. I. Jacobs & Company, Money, Bullion & Exchange Brokers,

bank draft, December 28, 1870, Polder 1, Box 1, JFP, SC, UAL.

23 M. I. Jacobs to Lionel and Barron Jacobs, January 5, 1871,

Polder 6, Box 1, JFP, SC, UAL. M. I. Jacobs to Barron Jacobs,

May 27, 1872, Polder 3, Series 1, Box 1, JP, AHS. Parish, Charles

Ilfeld Company, 59-60; Don C. Bridenstine, "Commercial Banking in

Arizona—Past and Present," (unpublished Ph.D. dissertation,

University of Southern California, 1958), 18; Schweikart, Banking in

Arizona, 7; Fifty Years, 6; Sonnichsen, Tucson, 55; Stanley,

"Merchandising in the Southwest," 100.

24 M. I. Jacobs to Lionel and Barron Jacobs, January 5 and 16,

1871, Polder 6, Box 1, JFP, SC, UAL. M. I. Jacobs to Barron Jacobs,

May 27, 1872, Folder 3, Series 1, Box 1, JP, AHS.

25 M. I. Jacobs to Lionel and Barron Jacobs, January 9, 1871,

Polder 6, Box 1, JFP, SC, UAL. Agger, Organized Banking, 26.

26 M. I. Jacobs to Lionel and Barron Jacobs, January 9 and 16,

1871, Polder 6, Box 1, JFP, SC, UAL.

27 Sonnichsen, Tucson, 75, 79, 84-85, 91.

OQ Ibid., 75, 91, 97.

29 M. I. Jacobs to Lionel and Barron Jacobs, February 9, 12, and

28, March 13, 16, and 18, September 23, and October 9, 1872; M. I. 41

Jacobs to Barron Jacobs, May 27 and July 10, 1872; Lionel Jacobs to

Barron Jacobs, June 21, July 5, August 7, 1872, all in Folder 3;

M. I. Jacobs to Lionel and Barron Jacobs, May 12, 1872, Folder 5,

all in Series 1, Box 1, JP, AHS. Lionel Jacobs to Barron Jacobs,

July 17, 1872, Folder 7, Box 1, JFP, SC, UAL. "California" gold

dollars and fifty cent and twenty-five cent pieces also became

popular. Companies in California minted their own gold money.

Although not legal tender, these "private" coins were acceptable

in areas of scarce money. The gold pieces did not sell well in

Tucson. J. Earl Massey, America's Money; The Story of Our Coins

and Currency (New York: Thomas Y. Crowell Company, 1968), 147-148.

"^M. I. Jacobs to Lionel and Barron Jacobs, February 2 and 12, and March 5, 1872; M. I. Jacobs to Barron Jacobs, July 12, 1872, all in Folder 3; D. C. Thompson to M. I. Jacobs & Company, May 29, 1873,

Folder 5, all in Series 1, Box 1, JP, AHS. Cash statements of

M. I. Jacobs & Company for the month periods ending February 9, and

April 5, 1872, Folder 2, Box 1, JFP, SC, UAL.

^M. I. Jacobs to Barron Jacobs, January 13, May 31, and July 3,

1872; M. I. Jacobs to Lionel and Barron Jacobs, January 20,

February 5 and 14, 1872; Lionel Jacobs to Barron Jacobs, June 21, 1872, all in Folder 3; M. I. Jacobs to Lionel and Barron Jacobs, June 18,

1873, Folder 5, all in Series 1, Box 1, JP, AHS. 42 32 Lionel Jacobs to Barron Jacobs, July 3, 1872, Polder 3,

Series 1, Box 1, JP, AHS. M. I. Jacobs to Barron Jacobs, July 15,

1872, Polder 7, Box 1, JFP, SC, UAL.

33 M. I. Jacobs to Lionel and Barron Jacobs, February 14, 1872,

Polder 3; M. I. Jacobs to Lionel and Barron Jacobs, February 19,

September 15, and November 21, 1873, Polder 5, all in Series 1,

Box 1, JP, AHS. Richard N. Current, et. al., American History: A

Survey (New York: alfred A. Knopf, 1963), 545-546.

34 Lionel Jacobs to Barron Jacobs, June 30 and July 8, 1872;

M. I. Jacobs to Barron Jacobs, July 8 and September 2, 1872, all in Folder 3; M. I. Jacobs to Lionel and Barron Jacobs, February 28 and July 28, 1870, both in Folder 2? M. I. Jacobs to Barron Jacobs,

July 25, 1873, Folder 5, all in Series 1, Box 1, JP, AHS. Parish,

Charles Ilfeld Company, 38. Biographical Files—Hencry C. Hooker, AHS.

35 Lionel Jacobs to Barron Jacobs, June 28 and 30, 1872, Folder 3,

Series 1, Box 1, JP, AHS. Constance Wynn Altshuler, Starting with

Defiance: Nineteenth Century Arizona Military Posts (Tucson: The

Arizona Historical Society, 1983), 3, 24-25, 29-30, 35; Howard Roberts

Lamar, The Far Southwest, 1846-1912: A Territorial History (New York:

W. W. Norton & Company, Inc., 1970), 449; Sonnichsen, Tucson, 79.

Bored and unhappy soldiers created trouble when out for a good time.

For example, in March of 1870 twenty men, drunk and belligerant, wounded two people when randomly shooting their guns. 43 36 Lionel Jacobs to Barron Jacobs, July 8, 1872; M. I. Jacobs to

Lionel and Barron Jacobs, September 23, 1872, both in Folder 3,

Series 1, Box 1, JP, AHS.

37 M. I. Jacobs to Lionel and Barron Jacobs, February 26 and

November 6, 1872; Lionel Jacobs to Barron Jacobs, July 3 and

August 3, 1872; M. I. Jacobs to Barron Jacobs, May 27 and July 10,

1872, all in Folder 3; M. I. Jacobs to Lionel and Barron Jacobs,

June 2 and September 15, 1873, Folder 5, all in Series 1, Box 1,

JP, AHS. Copy of Assessment Lists of M. I. Jacobs & Company, 1872,

Folder 2, Box 1, JFP, SC, UAL.

38 W. Brichard and Company to M. I. Jacobs & Company, April 26 and

[illegible date], 1872, Folder 3; Charles A. Paige to Jacobs &

Company, June 13, 1872, Folder 4; Lionel and Barron Jacobs, July 3,

1872, Folder 3, all in Series 1, Box 1, JP, AHS.

39 M. I. Jacobs to Lionel and Barron Jacobs, January 20,

February 26, March 16 and 27, April 8, 1872; M. I. Jacobs to

Barron Jacobs, April 19, July 8, and September 2, 1872, all in

Folder 3, Series 1, Box 1, JP, AHS.

40 M. I. Jacobs to Lionel and Barron Jacobs, March 13, 16, and

29, 1872; Lionel Jacobs to Barron Jacobs, May 5 and 12, 1872; M. I.

Jacobs to Barron Jacobs, May 31 and June 10, 1872, all in Folder 3,

Series 1, Box 1, JP, AHS. 41 M. I. Jacobs to Barron Jacobs, September 2, 1872; M. I. Jacobs to Lionel and Barron Jacobs, February 26, March 5, and September 11,

1872; Lionel Jacobs to Barron Jacobs, July 1 and 5, 1872, all in

Polder 3; M. I. Jacobs to Lionel and Barron Jacobs, January 13,

April 30, May 21, and 26, 1873, Folder 5, all in Series 1, Box 1,

JP, AHS.

42 M. I. Jacobs to Lionel and Barron Jacobs, February 19 and

March 5, 1872; Lionel Jacobs to Barron Jacobs, May 5 and 12, 1872, both in Folder 3, Series 1, Box 1, JP, AHS. Sonnichsen, Tucson, 92.

43 Lionel Jacobs to Barron Jacobs, August 8 and 9, 1872; M. I.

Jacobs to Lionel and Barron Jacobs, September 11 and October 9, 1872, both in Folder 3? Albert E. Jacobs to Lionel Jacobs, May 15, 1873;

M. I. Jacobs to Lionel and Barron Jacobs, January 13 and April 30,

1873, all in Folder 5, all in Series 1, Box 1, JP, AHS.

44 M. I. Jacobs to Barron Jacobs, August 7 and 27, 1873, Folder 6

Lionel Jacobs to Barron Jacobs, September 4 and 18, November 23, and

December 27, 1874, all in Folder 6; and March 15, 1875, Folder 7, all in Series 1, Box 1, JP, AHS.

45 Lionel Jacobs to Barron Jacobs, December 27, 1874, Folder 6; and January 1, February 8 and 15, 1875, Folder 7, all in Series 1,

Box 1, JP, AHS. R. B. Kelly to L. M. Jacobs & Company, February 15,

1875, Folder 4, Box 1, JFP, SC, UAL. 45 46 Lionel Jacobs to Barron Jacobs, September 18, 1874, Folder 6;

and March 15 and 17, 1875, both in Folder 7, all in Series 1, Box 1,

JP, AHS. Advertisement for L. M. Jacobs & Company, Tucson Arizona

Star, January 31, 1875.

47 M. I. Jacobs to Lionel Jacobs, April 5, 1876, Folder 8;

Neahr to L. M. Jacobs & Company, September 18, 1875, Folder 7; and

September 8, October 16, 1876, Folder 9, all in Series 1, Box 1;

and October 8 and 29, 1877, Folder 11, Series 1, Box 2; Jacobs,

Secretary of Tucson Mercantile Association, to members, April 29,

1876, Folder 8, Series 1, Box 1; H. B. Strauss to L. M. Jacobs &

Company, March 11, 1878, Folder 14, Lionel Jacobs to Barron Jacobs,

April 8 and 15, 1878, Folder 13, both in Series 1, Box 2; Barron

Jacobs to Lionel Jacobs, November 5, 1876, Folder 8, Series 1,

Box 1, JP, AHS. M. I. Jacobs to Barron Jacobs, August 17 and 20,

1877, Folder 6, Box 2, JFP, SC, UAL. Fifty Years, 5.

48 Jacobs, Secretary to Tucson Mercantile Association, to

members, April 29, 1876, Folder 8, Series 1, Box 1; Lionel Jacobs

to Barron Jacobs, January 1 and March 24, 1875, Folder 7, Series 1,

Box 1; and April 8, 1878, Folder 13; and December 7, 1877, Folder 10,

both in Series 1, Box 2; Neahr to L. M. Jacobs & Company, November 8,

1876, Folder 9, Series 1, Box 1; and October 29, 1877, Folder 11,

Series 1, Box 2; J. Goldwater & Bro. to L. M. Jacobs & Company,

July 22, 1878, Folder 12, Series 1, Box 2; M. I. Jacobs to Lionel and

Barron Jacobs, May 14 and 27, and June 4, 7, 11, and 17, 1875, Folder 7, Series 1, Box 1, JP, AHS. Memorandum of Gold Deposit from

U.S. Mint to L. M. Jacobs & Company, July 6, 1875, Folder 4, Box 1,

JFP, SC, UAL.

49 Lionel Jacobs to Barron Jacobs, March 15 and 22, 1875; M. I.

Jacobs to Lionel and Barron Jacobs, May 14 and June 7, 1875, both in

Folder 7; Neahr to L. M. Jacobs & Company, October 16, 1876, Folder 9, all in Series 1, Box 1, JP, AHS; Receipts of deposit to James Blade,

June 17, 1875; and to Thomas L. Lewis, March 29, 1875, Folder 4, Box 1,

JFP, SC, UAL. Stanley, "Merchandising in the Southwest," 91.

50 Lionel Jacobs to Barron Jacobs, January 1, November 17, and

December 20, 1875, all in Folder 7, Series 1, Box 1; and January 28,

February 18, March 19, April 8 and 15, 1878, Folder 13, Series 1,

Box 2; M. I. Jacobs to Lionel and Barron Jacobs, April 18, 1875,

Folder 7, Series 1, Box 1; M. Calisher to Barron Jacobs, October 20 and

30, 1877, Polder 10, Series 1, Box 2; Sam Bostick to Mr. Jacobs, May 12,

1875, Folder 7, Series 1, Box 1; Barron Jacobs to Lionel Jacobs,

October 17 and 27, November 16, 1878, all in Folder 13, Series 1, Box 2,

JP, AHS; L. M. Jacobs & Company Loans & Bills Receivable statement,

November 30, 1878, Folder 6, Box 3, JFP, SC, UAL. Sonnichsen,

Tucson, 50-51, 55, 84, 88.

5"Sl. I. Jacobs to Lionel and Barron Jacobs, February 26 and

May 27, 1872, all in Folder 3, Series 1, Box 1; Lionel Jacobs to 47

Barron Jacobs, December 10, 1877, Folder 10, Series 1, Box 2;

Warner Buck to L.M. Jacobs & Company, September 26, 1877, Folder 10,

Series 1, Box 2; Barron Jacobs to Lionel Jacobs, November 26, 1878,

Folder 13, Series 1, Box 2; W. B. Willings to Lionel Jacobs,

November 21, 1875, Folder 7, Series 1, Box 1; Barron Jacobs to

Lionel Jacobs, November 9, 1876, Folder 8, Series 1, Box 1, JP, AHS.

52 Mtarcus] Calisher to Barron Jacobs, April 12, May 26, June 7

and 9, October 30, 1877; Lionel Jacobs to Barron Jacobs, December 10,

1877, all in Folder 10, Series 1, Box 2, JP, AHS.

~^M. I. Jacobs to Lionel and Barron Jacobs, May 20, 1868,

Polder 6; W. S. Oury deposit envelope, June 9, 1875, Folder 1;

Receipt of deposit from Blade, June 17, 1875; and L. C. Kendell,

June 7, 1875; Kelly to L. M. Jacobs & Company, February 15, 1875;

M. I. Jacobs & Company check from Hugo Martens to John H. Archibald,

May 5, 1875, all in Folder 4; all in Box 1; L. M. Jacobs & Company check from E. B. Gage to J. Brandon, July 9, 1878, Folder 7, Box 3,

JFP, SC, UAL. G. King to Messrs. Jacobs & Company, March 11, 1877,

Folder 11, Series 1, Box 2; J. C. Van Blarcom to L. M. Jacobs &

Company, May 28, 1878, Folder 12, Series 1, Box 1, JP, AHS.

Ben[jamin] Wright, Banking in California 1849-1910 (San Francisco:

H. S. Crocker, Co., 1910; reprinted New York: Arno Press, 1980), 15;

Clarke, William Tecumseh Sherman, 5. 48 54 Receipt of L. M. [Jacobs & Company] to Thomas L. Lewis,

March 29, 1875; Lewis to L. M. Jacobs & Company, June 28, 1875;

Sr. Jose Ortiz y Irteur to L. M. Jacobs & Company, July 31, 1875,

all in Folder 4; Neahr to L. M. Jacobs & Company, October 5, 1875,

Folder 5, all in Box 1, JFP, SC, UAL. Lionel Jacobs to Barron Jacobs,

April 7, 1875; Sandoval y Bulle to L. M. Jacobs & Company, June 11,

1875, all in Folder 7, Series 1, Box 1; Neahr to L. M. Jacobs &

Company, December 23, 1875, Folder 7, Series 1, Box 1; September 8,

1876, Folder 9, Series 1, Box 1; and January 5, May 15, June 22,

September 8, October 2, and November 5, 1877, Folder 11, Series 1,

Box 2; M[arcus] Calisher to Barron Jacobs, May 9, 1877, January 10

and August 3, 1878, Folder 12; 0. M. [?] Reynolds, Chief Quartermaster,

to L. M. Jacobs & Company, January 14, 1878, Folder 14; David

Calisher to Barron Jacobs, May 8,1878, Folder 12; M. McDowell to

L. M. Jacobs & Company, March 5, 1877, Folder 11, all in Series 1,

Box 2, JP, AHS.

55 Lionel Jacobs to Barron Jacobs, September 18, 1876, Folder 8; and January 1, March 15, 17, 24, and 26, November 27, and December 8,

1875, Folder 7, Series 1, Box 1; Barron Jacobs to Lionel Jacobs,

September 27 and 30, October 9, 1878, Folder 13, Series 1, Box 2;

M. I. Jacobs to Lionel and Barron Jacobs, April 21, 1875, Folder 7;

Jacobs, Secretary of Tucson Mercantile Association, to members,

April 29, 1876, Folder 8, all in Series 1, Box 1, JP, AHS. c/r M. I. Jacobs to Lionel Jacobs, March 29, 1876, Folder 8; and

February 8 and December 22, 1875, Folder 7; Lteopoldo] Wolf to

L. M. Jacobs & Company, October 4, 1876, Folder 9, all in Series 1,

Box 1, JP, AHS. Sonnichsen, Tucson, 99.

57 Lionel Jacobs to Barron Jacobs,November 30, 1875, Folder 7,

Series 1, Box 1, JP, AHS. Sonnichsen, Tucson, 97.

CO McDowell to L. M. Jacobs, October 24, 1876, Folder 8; M. I.

Jacobs to Barron Jacobs, February 9, 1875, Folder 7; Barron Jacobs to Lionel Jacobs, November 9, 1876, Folder 8, all in Series 1, Box 1,

JP, AHS. Golden and Golden, "Jacobs Family," 106; Jay J. Wagoner,

Arizona Territory, 1863-1912: A Political History (Tucson:

University of Arizona Press, 1975), 511; G. W. Barter, camp.

Directory of the City of Tucson for the Year 1881 (San Francisco:

H. S. Crocker & Co., Printers, 1881), 20. "Tucson Items," Florence

Arizona Citizen, January 4, 1878, 2. 50

CHAPTER II

THE PIMA COUNTY BANK, 1879-1882

In the late 1870s Lionel and Barron Jacobs through their money exchange business and mercantile operations became acutely aware of the demand in southern Arizona for increased financial services.

They knew that they faced risk in starting a formal bank separate from the store, and that individuals would invest in such an institution only if there were regular trade channels and business activity. But the time seemed right. Arizona's population had increased, communication with California and the East Coast had improved and the territory had reached a certain maturity. On

January 1, 1879, after months of discussion and planning, the Jacobs brothers opened the Pima County Bank, the first formal bank in

Tucson.^"

Lionel and Barron had considered opening a bank as early as 1875 when Mark Jacobs suggested the idea. He wrote that if they continued with the money exchange his sons needed to call themselves "bankers" and their business a "bank." These words inspired confidence. "Banks have lots of money," he added, "or are supposed to have, [and] the effect on the public's mind is the same they [sic] will deposit with a

Bank kept by John Smith, when they will not trust John Smith." He did 51

not know the resources of Tucson, but felt there probably was "a

good deal of money lying round loose," which a bank could

concentrate.^

Lionel and Barron pondered their situation. Business transactions

in Tucson had increased, many for large amounts. As merchants they

operated on a limited basis, with most of their traffic being in the

mercantile field. But as bankers they would be in contact with

individuals in various businesses. People would deposit money in a

bank and use its services. A bank would inspire confidence by

publicizing its holdings and keeping its surplus invested in

securities as a guarantee for creditors. To establish a bank the

Jacobs brothers needed a capital of $100,000. Lionel and Barron could provide $20,000, and hopefully they could obtain $40,000 from

parties in California and elsewhere and $40,000 from Tucson

businessmen.^

Several problems loaned. If the bank was independent of the store—which would be the most profitable? There also was the problem of capital. The brothers had limited resources, for they had invested most of their funds in the mercantile business—and it continually demanded more. And what about competition? No other formal banking institution existed in the territory in 1875, but several merchants offered financial services. In issuing bills of exchange on New York or San Francisco, a major service, the Jacobs would compete with Lord and Williams, whose rates were "the cheapest in the Union." They also anticipated that if they started gathering 52 capital, Dr. Charles Lord, of Lord and Williams, and other businessmen might initiate their own banking project. The region lacked the population to support two financial institutions. 4

The unstable economy in California posed problems. In the summer of 1875, California suffered a general business depression, tied to falling bullion production at the Cornstock lode in Nevada.

Hie Bank of California, the largest institution, suspended transactions from August to October, and in November the London and San Francisco,

Limited, the bank the Jacobs used, suddenly stopped their overdrawing of their account—a practice known as bank accommodation or margin. All loans had to be secured by collateral. With a reduced cash flow, the brothers restricted purchases of goods on credit. The depression in

California adversely affected Tucson's economy. The store sales declined. The next year, Lionel and Barron depleted their assets in buying Leopoldo Wolf's share in the firm. Plans for a bank faded.^

Tucson's economy soon improved. In September of 1877, the

Southern Pacific Railroad, building east, reached Ft. Yuma,

California,and soon crossed the Colorado River to the town of Yuma,

Arizona. In Tucson speculation ran high in anticipation of the railroad's arrival and the flood of new settlers and reduced shipping costs it promised. In the eastern part of Pima County, Ed Schiefflin discovered a rich silver mine at the site that became known as

Tombstone, and Tucson developed into the supply center for the new mining district. To the north, at Prescott, in August of 1877

Martin Kales, a merchant from Nevada, and Solomon Lewis, a tobacco dealer with financial ties in San Francisco, opened the Bank of

Arizona, the territory's first formal financial institution. Three

months later, John G. Capron, a former Tucson merchant and wealthy

San Diego entrepreneur, visited the city to feel "the pulse of [the] g business men on the matter of starting a bank."

Hie Jacobs brothers soon turned again to the bank idea. It

would be difficult to collect the needed capital. Their lawsuit

against I. C. Loss and Brother of Florence continued to tie up the

firm's capital. Also, despite Lionel's objections, Barron withdrew

several thousand dollars from the firm for his personal use. Lionel

felt the funds should be kept in the store so it could "recuperate"

from the large withdrawals to pay Leopoldo Wolf and creditors. Barron

had also taken $4,000 out of the firm the previous year. Lionel

himself had suffered reverses. He had invested personal capital in

a relative's mercantile store in Nevada, which soon failed. As 7 co-owner he had to pay off the obligations.

In 1878 the Jacobs brothers saw their financial status begin to mend. In the spring Lionel drew up a long range plan for his

personal investments and designated monies for a bank. Momentarily, the brothers had to wait until other projects matured. They had placed surplus funds in government grain contracts and had started a fund to handle discounted promissory notes. In the meantime,

Lionel used his New York office to establish ties and study the

Eastern financial world. He also considered seeking capital among friends in San Francisco, and asked Barron to check discreetly the 54

Tucson scene for possibilities. Lionel also read books on banking,

especially on "the system and science of Exchanges" and "the theory

and practice of reserve." He studied the National Banking Act of g 1863 to see whether there were advantages in organizing under it.

Barron remained skeptical of the bank project. He continually

suggested other investment opportunities, stressing their profitability.

For example, he advised Lionel to "put some money into Cattle to be

reared by Man[uel] Zepeda," and pushed for the firm to open a branch

store at Pueblo Viejo (Safford), a community in eastern Arizona where 9 Barron had an interest in a flour mill.

In the fall of 1878, Barron changed his mind about a bank and

urged Lionel to "prepare now, to go into that business." The future

of their mercantile stores seemed uncertain. The expansion of the

Tomstone mines, the arrival of the railroad, and the resulting

population growth would bring competing merchants to Tucson. To make

a profit, the Jacobs store would have to take more risks to sell

goods at a profit. A financial institution, on the other hand, could

return a reasonable profit on its capital. Barron felt their

mercantile business should continue, but the store's line of credit

should be curtailed and the surplus money shifted to the bank.^

Lionel agreed with Barron. The previous summer the brothers had

been away and their brother-in-law, Marcus Katz, who supervised their

stores in Tucson, reported declining sales. However, Lionel

predicted their mercantile trade would prosper for at least two more years "or until it is demonstrated the mines are not as good as it is 55

thought." The Jacobs decided to start the bank with a $50,000 paid-in

capital, down from the $100,000 discussed in 1875. They would put in

$5,000 of Lionel's personal funds, $10,000 from the trustee account

of L. M. Jacobs & Company, $5,000 in the name of the firm, and $5,000

from Barron's personal funds. Lionel drew his $5,000 from the

payment on mortgages held on Solomon Warner, owner of the local flour

mill; on George Cottreal, owner of a mill at Safford; and on other

local businessmen.^"

The Jacobs required $25,000 to fill out the capital. They

needed someone with influence "who could control or attract

capitalists." Lionel approached E. B. Gage, originally of New York,

about investing in the proposed bank. Gage was the Tombstone

representative of the Arivaca Mining and Milling Company of New York.

Gage agreed to conduct company business in Arizona through the new

bank, as he had through L. M. Jacobs & Company. The brothers

inserted a clause in the agreement guaranteeing that the mining

company would receive no special privileges, nor an accommodation

greater than the amount of their collateral. Gage promised to advise

Lionel and Barron on business matters and help them establish Eastern connections and credit. Two Tucson businessmen played an important

role in founding the bank. Phillip William Smith, former owner of

the Vulture Mine and Smith Mills in central Arizona and current owner

of a stamp mill near Tucson, was an old friend of Mark Jacobs, the 56

brothers' father. Smith invested in the bank and agreed to be an

officer. Alphonse Lazard, a Tucson entrepreneur, also joined the 12 project and purchased stock.

Lionel decided to organize the institution under the laws of the

territory of Arizona. The region could not support a national bank.

Actually, the territory had no banking regulations. Territorial law

treated banks as nonfinancial corporations and specified limited

liability for the stockholders. In case of failure, each stockholder

was liable only for the stock he held. By the end of November, the

firm had ordered "banking" supplies from New York. These items

included stationery, certificates of deposit forms, blank notes, checks, deposit "tickets," and ledgers for accounts and daily transactions. They decided to start the bank in the store's "dry

goods warerocm" by partitioning off the west end. Hie firm spent over $115 in remodelling the area. They built a counter, put up a ceiling, erected a bannister, and laid carpet. On December 24, 1878,

Lionel Jacobs, Phillip W. Smith, E. B. Gage, and Alphonse Lazard filed the articles of incorporation for the Pima County Bank. The 13 first bank in Tucson opened its doors on January 1, 1879.

The Jacobs brothers proceeded cautiously with the new institution.

Lionel and L. M. Jacobs & Company held the majority of the stock, and

Lionel assumed the position of cashier or manager. Senior officers, such as the president and vice-president, pursued their own interests, appearing at the bank occasionally to help with large transactions and to advise on policy matters. The "stockholders"—Lionel and Barron— 57

elected Phillip W. Smith president. Smith was a well known and

reputable citizen of the region and his name would attract business.

The articles of incorporation provided that banking transactions

would be conducted at the principal office in Tucson and at any branch

office that the directors might establish. The capitalization was set at $50,000 and consisted of 5,000 shares at $100 each. The articles

authorized an increase in capitalization to $100,000 if deemed necessary for future expansion."^

Ihere had been anxious moments in the preceding months. While

Lionel and Barron were organizing their bank, four local businessmen announced plans for a similar project. On November 30, 1878, the

Tucson Arizona Weekly Citizen editor stated that former Arizona

Governor Anson P. K. Safford, Tucson Mayor James H. Toole, Surveyor

General John Wasson, and Charles Hudson, a local businessman and former cashier and bookkeeper at Lord and Williams, had completed arrangements to open a bank. All they needed was a building, a safe, and proper equipment. These men decided to form a partnership rather than incorporate. Under Arizona law, if a corporation failed, the creditors could confiscate business property to cover liabilities.

With a partnership, the personal property of the partners as well as the business holdings, was subject to seizure. By organizing as a partnership, the men apparently believed the public would have more confidence in their bank. They also had implicit confidence in 15 Charles Hudson, who would be the manager. 58

The possibilities of another bank in Tucson alarmed the Jacobs

brothers. Lionel moved swiftly to finalize arrangements and begin

operations first. Barron was consistently pessimistic. He and his

brother would have to divide their time between the store and bank,

while the Hudson group could devote their full energies to their bank.

Barron even suggested to Lionel that they abandon their plans and

invest in the safford, Toole, Wasson, and Hudson venture. He knew they might not be welcome, for the partners could be "purely a

white concern," excluding Jews and Mexicans. Lionel rejected the idea. He had found sufficient capital, and he did not want to work with the group. After all the worry, the Jacobs opened the Pima

County Bank three months before its rival, Safford, Hudson & Company,

Bankers.

Lionel and Barron made a special effort to publicize their bank.

In mid-December on the eve of opening, Barron had advised Lionel to

"get up a nice circular informing your patrons & the public generally" about the bank and solicit deposits. Circulars should also be sent to "friends" in New York. Once the bank opened the Jacobs advertised in the local newspapers, the Arizona Citizen and the Arizona Star.

Both papers took special note of the new bank. A Star reporter commented on the neatness of the office, the capable bank officers, and that business appeared brisk. Office hours were 10 a.m. to 3 p.m. daily. To attract business from outside Arizona, the brothers placed advertisements in the San Francisco Alta Califomian and in several financial publications with national circulation. These journals 59 included G. T. June and Company's Reporter, The Banker's Almanac and

Register/ and The Banker's Magazine. The publicity succeeded. For example, on January 27, 1879, C. D. Putnam of River Side, Arizona, saw the advertisement in a Tucson newspaper and wrote for information on loans and the kind of security required.^

To help insure their success, Lionel and Barron affiliated the

Pima County Bank with banks in major cities around the country. They opened accounts with the Pacific Bank of San Francisco, the Bank of

Commerce of St. Louis, the Second National Bank of Baltimore, and the

Ninth National Bank of New York. As L. M. Jacobs & Company had accounts with the first three institutions, the brothers transferred some of its funds to the account of the Pima County bank. In New York,

Barron moved money in the store's account from the Importers &

Traders National Bank to the Ninth National Bank, believing it would serve better as a correspondent. After a few months of operation, the

Pima County Bank added two more correspondents: The Commercial Bank 18 of Los Angeles and the First National Bank of Chicago.

Much of the Pima County Bank's daily business involved correspondent banks. These institutions received items chargeable to others, and made ledger transfers instead of transmitting funds.

The correspondents also acted as intermediaries between towns which did not conduct enough business to warrant direct banking connections.

In this case, the banks made a remittance by draft and thus shifted balances on the correspondent's books. For the Pima County Bank customers, correspondents also aided in transferring funds. If a 60

patron desired to pay a party in San Francisco, the Pima County

Bank requested the Pacific Bank to give a specified party the stated

amount. If someone outside Arizona wanted to deposit money in a

customer's account, he placed it with a correspondent into the

Pima County Bank's account, stipulating which party in Arizona

received credit. When a correspondent made a payment or received

a deposit, he advised the cashier of the Tucson bank by telegraph or 19 mail.

The Pima County Bank conducted most of its business by telegraph

and mail. To speed transactions, the brothers wired instructions to

a correspondent, and confirmed them by mail the same day. By telegraph they could order payment to a particular person—or order currency shipments to Tucson from the San Francisco affiliate, to be covered by a check or draft remitted in the mail. In return, the

brothers drew information from their correspondents. They reported 20 nonpayment on collections and acknowledged deposits to their account.

To keep transactions confidential, bankers used ciphers to convey bank records and instructions by telegraph. The cipher used by the Jacobs brothers employed different words or phrases for various types of transactions, amounts, and names of persons or companies. To secure the operation, the Jacobs brothers and other bankers employed a different code each day of the week. Periodically, the cashier changed the cipher when he believed that telegraph 21 operators had become familiar with it by adding new names and terms. 61

The code did not always work smoothly. When the Pima County Bank

acquired a correspondent, they exchanged cipher books. In the first

few months of operations, the code worked with all but the Pacific

Bank. Its cashier, S. G. Murphy, either could not understand or would

not use the Tucson bank's code. When Murphy lacked the code for a

word in a telegram, he wired Lionel for an explanation, stating that

the "cipher is too prolix." By April of 1879, Lionel complained that

Murphy's actions were annoying and increasing bank expenses. Problems

could occur in transmitting telegrams. Hie operator occasionally

incorrectly sent or received key words. One time, Mark Jacobs,

acting as an agent for the bank in San Francisco, received a telegram

with the words "wet adpole." After he asked for a clarification, an

assistant wrote that the original telegram read "we tadpole," meaning

"we telegraph exchange on."22

From the first the Pima County Bank considered that its basic

function was to provide for the financial needs of Tucson and

southern Arizona. Hie most urgent problem at hand was the shortage of cash and credit. When they entered the money exchange business in

1870, the Jacobs had tried to relieve the scarcity of gold coin by importing it from San Francisco to sell for greenbacks. By 1879 times had changed. With the national panic of 1873, Congress in January of

1875 started the recall of greenbacks equal to 80 percent of the national bank notes, and announced plans to resume specie payment on

January 1, 1879. In curbing the greenback supply, the legislators 23 upset the paper-coin exchange business and created a money scarcity. 62

To relieve the prevailing cash shortage in southern Arizona, the Pima County Bank secured money in various ways. Lionel periodically ordered two to five thousand dollars in greenbacks from the Pacific

Bank in San Francisco, the closest correspondent. The money arrived in separate shipments over several days by registered mail. By the end of 1879, the demand for money increased. The Tombstone mines required large amounts of coin and paper to meet payrolls. Bank customers also preferred gold coin over greenbacks. Therefore, the Jacobs began ordering up to $10,000 in gold coin and $5,000 in currency from various financial institutions. The Pima County Bank also dealt in Mexican silver dollars which were popular in outlying communities. Lionel bought lots in San Francisco (through his father or through a bank correspondent) but soon found that prices could fluctuate because of advances of silver bullion in Londoan and decreased shipments from Mexico. To keep a reserve, the Pima Bank purchased most of its coin in Arizona and New Mexico. Lionel hired agents—usually David Neahr of Yuma and Hall Porter of Silver City,

New Mexico—to buy 2,000 or 3,000 Mexican dollars as available. The business with Porter reached such a point that Lionel created a cipher 24 code for than to use when telegraphing.

Mexican silver prices rose in the spring of 1879. Lionel sold

Mexican silver dollars at 91 cents each, if he could buy a supply for just under 90 cents. To maintain his upply, Lionel imported most of his silver. Besides his arrangement with Porter and Neahr, he placed orders up to $5,000 with his San Francisco correspondent, and asked 63

Mark Jacobs to purchase lots on the California market if the price was right. He also lined up new agents. He arranged with Louis Rosenbaum of Las Cruces and Sandoval & Bulle, a major mercantile firm in

Guaymas, Mexico, to have their "frontier correspondents" ship in

Mexican silver dollars. Hie Pima County Bank paid 1/2 cent above the 25 San Francisco market price.

Hie Tucson money market fluctuated unexpectedly. In mid May,

Tucson lenders reported a surplus of silver dollars and the prices dropped to 88 cents buying/89 cents selling. No one was buying.

In outlying communities businessmen took silver only at a 10% discount.

Lionel adjusted to the situation by shipping surplus silver coin to

San Francisco to sell. He also checked on the value of silver on the international market and its affect on the price of Mexican coin.

Upon receiving a coin shipment from Tucson, Mark Jacobs warned that coins had "to be bright & new to get full value." Lionel also sold

Mexican dollars to the Pacific Bank. Within a few months, the surplus vanished and the Pima County Bank resumed its silver sales.

The Pima County Bank also dealt in gold and silver bullion and dust. Hie cashier advertised that he gave "special attention" to consignments and shipped than to the "most reliable reduction and refining works, at any point desired." The bank also made advances on the consignments, paying "the full net amount realized after deducting expenses." A majority of the bullion and dust went by

Wells, Fargo & Company, Express to the Pacific Bank in San Francisco, 27 for assayed sale and credit. 64

Despite the bank's efforts, cash remained scarce in southern

Arizona. As an alternative to cash transactions, the institution offered two types of deposits. First, a customer could open an account "subject to checks at sight," or a regular checking account.

The bank kept these accounts in U. S. currency or Mexican dollars, depending on which was deposited. Individuals also could place money into a savings account. The bank issued a certificate of deposit which indicated the depositor, the form of currency requested, and if payable on demand or after a fixed date. If the certificate was redeemable upon sight, the bank paid no interest; if the paper contained a maturity date for redemption, the institution awarded interest. These certificates, once endorsed, circulated as money.

Every time the holder passed it on, he signed his name on the back.

If payable at sight, the possessor could present it at any time for cash; otherwise, he had to wait until the maturity date before redeeming it. Within a month after opening, the Pima County Bank had received $22,150 in "Certificate Deposits" and $10,146.73 in checking deposits. After six months the total stood at $12,537.05 28 and about $13,000 respectively.

The Pima County Bank also offered bills of exchange. Businessmen used the exchange to meet obligations outside the region. Upon request the cashier drew a draft in any sum on any major city where the bank had a correspondent. If applicable, he remitted paper, drawn oh any party in the desired city, that the bank had purchased or received in its transactions. In the fall of 1879 the Pima County 65

Bank began to offer bills of exchange on the principal cities of 29 Europe, drawn through its New York correspondent.

Bills of exchange, as with greenbacks and Mexican silver dollars, carried a market value. When demand exceeded supply, they traded at a "premium," or at a rate above par. When demand declined, they sold at a "discount," or at a value below par. The New York market exchange created the largest demand, and commanded the most attention, with day to day rate quotes. In Tucson, however, bills of exchange carried a premium of 1/2% above the face value. This amount covered the bank's expense of transmission and its commission. Tucson customers resisted charges above par. Lionel commiserated with his brother about "the difficulty of persuading the average operator in 30 Tucson that exchange should be paid for."

Besides supplying cash and its alternatives, the Pima County

Bank attempted to stimulate Tucson's economy by providing credit through overdrafts, discounts of notes, and loans. The cashier gave prefered custcxners credit through the. privilege of overdrawing their accounts, considering this a loan for 30 or 60 days. The margin of credit (amount of overdraft) depended on the customer's collateral. "Sound depositors" offered as security "commercial paper"

(promissory notes on major business firms), or federal, territorial, county, and city warrants or bonds. Hie bank also discounted promissory notes, paying the holder a below par price, then contacting 31 the paper's originator for full payment upon maturity. 66

Most of the bank's credit operations involved loans. Initially, the directors followed a conservative policy, granting short-term

(thirty, sixty, and ninety day) loans at 2 or 3 percent per month.

To obtain a loan, a customer either signed a promissory note (endorsed by two other parties) or presented collateral, usually "good

Commercial paper" or a property mortgage. In time, Lionel Jacobs, as cashier, granted a few long-term loans with mortgages on real and 32 personal property as security.

Some of the bank loans became complicated. In early March of

1879, James Brash of Florence applied for a loan of $3,000 for twelve months to build a flour mill and divert water to power it.

Hie bank directors approved the loan at 2 1/4% per month interest, requiring a mortgage on Brash's real and personal property. The bank would pay the tax on the mortgage, and Brash would cover the expense of drawing up deeds and acknowledgements and making recordings. Lionel specified clearly what the mortgage papers should include, but Brash's attorney, Granville Oury, failed to complete them correctly. In July, Brash requested another $3,000, which the directors approved, ignoring Barron Jacobs' objection that the mortgaged property was not worth $6,000. In late July Oury finally sent the correct papers and Brash's promissory note for $6,000.

After all the problems, Brash fell behind in his interest payments by 33 November, and in May of 1880 he defaulted on his loans.

The Jacobs brothers carefully regulated their credit operations.

They limited overdrafts when money was in short supply, and denied 67 loan renewals if they saw more profitable investments elsewhere.

Approval of loans at times depended on the payment of another loan.

After approval, the cashier paid the loan in the medium of money which the bank had the greatest reserves. Lionel, for example, made the

Brash loan in Mexican silver and bills of exchange because currency supplies were running low. Also, he transferred the money in three 34 installments to ease the strain on the bank's cash reserves.

In the spring of 1879, the southern Arizona economy brightened.

Booming mining districts attracted miners and Eastern capital and the

Southern Pacific Railroad began creeping toward Tucson from the west.

The grain season also created an "active call" for money. To obtain more funds, Lionel requested information from S. G. Murphy, cashier of the Pacific Bank, on "how much of a margin [of overdrafts] he will allow us on what terms and for what time," and if he would make a loan with Pima and Yuma County Warrants as collateral.35

Lionel was unable to obtain a loan. San Francisco was suffering a severe business decline, with many banking houses and money brokers short of money. Moreover, there was a fear that the new California constitution would radically change the banking practice. The constitution called for increased taxation on capital, new rules on mortgaged property, and a requirement that banks must be formed under general laws rather than by a special charter by the legislature.

Mark Jacobs reported "all the Banks of the city have resolved not to make any loans nor discount any paper after the 7th prox. [May 7th] at which time, if the new Constitution is adopted, the Banks will call 68 in their loans, and make no new ones." The California electorate approved the new constitution on May 7 to become effective on

January 1, 1880, but Jacobs was still unable to obtain a loan from the Pacific Bank.^

A tight money situation now developed in Tucson. At one point cash reserves at the Pima County Bank fell so low, it lacked sufficient funds to conduct its daily business. In desperate need of money, Lionel twice called in some of his "primest 2% loans" to raise $5,000. In July, when government contractors who supplied grain, food, and forage to the military posts requested loans offering government vouchers as security, the bank could not meet 37 the demand.

in the fall the situation improved. The Pacific Bank had continued covering overdrafts, but would only grant loans on U.S.

Bonds and "such like Securities." However, hope existed that the election of officers under the new constitution would ease the tight policies. In early October the Jacobs tested the waters by opening negotiations with Murphy for a loan of several thousand dollars on

Tucson city bonds for a period of six months with the privilege of renewal. These were liberal terms under the circumstances. This time 38 Murphy approved their loan.

Besides providing cash and credit, the Pima County Bank offered other services. For example, the bank advertised that it collected

"Drafts, Notes, Dividends and other Commercial paper." The brothers had performed these operations through their mercantile store, but in 69 the bank they handled a much larger volume. Merchants, freighters,

banks, and individuals within Arizona and outside sent checks, drafts,

notes, and certificates of deposit to the bank for collection. For checks drawn on Wells, Fargo, & Company, the U.S. Depository at Lord and Williams, or Safford, Hudson & Company, Lionel asked these firms to arrange payment. For those checks or drafts drawn on banks outside the territory, he sent than to the nearest correspondent for collection, and the correspondent deposited the proceeds in the account of the 39 Pima County Bank.

In collecting notes on individuals, the bank had several options.

For debtors within the region, Lionel could contact the party in questions and request that payment be made upon maturity of the note.

Upon collection he remitted the payment in coin, paper money, or bills of exchange. For other notes, Lionel sent the paper to an intermediary that handled collections in the same town as the debtor. This usually meant a business concern, probably a mercantile company. In

Prescott and Phoenix, however, the Pima County Bank asked the Bank of

Arizona to handle collections. If the debtor was outside Arizona,

Lionel sent the note to a correspondent or another financial institution near the party's location. When paid, the intermediary mailed the proceeds to Tucson or deposited the money with a correspondent. Once the collection had been made, Lionel forwarded the proceeds, minus the bank commission, to the customer. He sent the funds in the form requested, usually San Francisco or New York 70

bills of exchange or postal money orders. If businesses and

individuals within Arizona had an account with the Pima County Bank, 40 the proceeds were credited to their account.

Collections could be complicated. If the cashier was not

acquainted with the debtor, he would inquire, usually through a

correspondent, about the party's ability to pay. If the person was out of town, the bank pressed payment on the note at his return.

Occasionally, the bank did not have the requested medium of exchange, and the cashier offered an alternative. For example, M. W. Kales, cashier for the Bank of Arizona branch in Phoenix, wanted the proceeds in San Francisco bills of exchange in silver denomination. The Pima

County Bank had no bills of exchange, but it did have silver coin.

Lionel offered to express the coin to San Francisco to obtain such a 41 draft, but had to charge 3 1/2% of the amount to cover shipping costs.

Creditors often sent detailed instructions regarding collections.

Some inserted letters with shipments of goods, instructing the bank to obtain payment before making delivery. In other cases, they asked the cashier to check on the situation before trying to collect. For example, E. Germain & Company of Casa Grande claimed that Sam Drachman, a Tucson merchant, owed than money for goods he lost in transit, and that the freighting company was to reimburse him. Was Drachman indeed to receive payment? If not, E. Germain & Company would settle with him. On the other hand, if Drachman's freighters received payment 42 for losses, he owed E. Germain & Company. 71

Bank customers often requested government warrants and, on a smaller scale, private business stock. To fulfill these needs the

Jacobs actively searched the market in Arizona and San Francisco for the desired securities. They purchased warrants from employees of the Yuma Territorial Prison and from jurors in Pima County. For customers desiring stocks, they reported to customers on newly available shares. For example, in May of 1879, Lionel informed

Abraham M. Franklin of Safford that three shares of the Montezuma 43 Canal were available and requested a response.

Successful banking required more than accepting deposits and cashing checks. Foremost, the Jacobs brothers had to keep current with the financial scene in the territory in order to anticipate changes in the economy. They regularly collected all available information, including copies of the Territorial Auditor's and

Territorial Treasurer's official reports. With this knowledge, they made decisions as to whether to increase or decrease the cash reserve and tried to project needs. The brothers also shared this information 44 with their customers.

There were other matters, often mundane and time consuming, but important. As careful businessmen, they purchased two insurance policies from Hamburg, Bremen & Imperial of London to protect themselves and the bank. They also upgraded their security. The store safe was not suitable, so Mark Jacobs purchased another safe in San Francisco and shipped it to Tucson. Uiey checked on stationery required for transactions and bookkeeping. This included procurement 72

checks, pocket checks, counter checks, certificates of deposit,

account ledgers, statement forms, deposit tags, notes, and

correspondence copy books. Lionel sought the lowest prices and

placed an initial order for forty check books with A. L. Bancroft &

Company. Ihe company urged Lionel to consider a complete set of books similar to those prepared for Safford, Hudson & Company. Soon after,

Lionel shifted his business to A. Hock & Company, Practical

Lithographers, Engravers, and Power Press Printers, and to Stork, 45 Phipps & Company, who charged much lower prices.

Lionel and Barron maintained a reliable staff in their stores and bank. During 1879 only one of the brothers resided in Tucson, the other being in New York or San Francisco, watching over business affairs there. Their employees included Maurice Katz, a nephew, who managed the branch store. Albert Jacobs, their brother, acted as assistant in the bank and the main mercantile store. However, in the fall, Albert went to Safford to join the Jacobses' nephew Abraham

Franklin in a business venture, and Lionel and Barron sought applicants in San Francisco to replace him. They prefered someone with experience in banking. After a long search they hired

William A. Scott, Jr., who had worked for the Wells, Fargo &

Company Bank and the First National Gold Bank of San Francisco. Scott 46 supplied a $10,000 bond.

Lionel and Barron felt that their institution should perfom a civic duty for Tucson and for the Territory of Arizona. To than a banker was a "philanthropist," existing for the benefit of the public, 73

a man who must exercise skill, moral courage, sound judgment, and keen

perception in dealing with others. Businessmen expected than to "know

every man who has been in the county for . . . any numbers of years."

Customers turned to them for help outside usual bank functions. In special cases, the Jacobs brothers forwarded papers to appropriate offices for clients. For example, they filed certificates supporting the appointment of J. P. Solomon of New York as Commissioner of Lands for the Territory of Arizona, and made applications for liquor licenses for merchants outside of Tucson. Lionel and Barron also delivered letters and papers, hired people to assess mines for absentee owners, made inquiries concerning the whereabouts of certain parties and their financial status, and forwarded copies of papers 47 from the county recorders office to customers.

In their daily business, the brothers occasionally had to seek advice on unfamiliar banking problems. They asked their

San Francisco correspondent for instructions on how to properly endorse United States Treasury drafts, and how to fill out blank forms from the Treasury Department. Should they attach the bank's seal or the testament of a notary public? Another problem involved keeping funds in reserve accounts in correspondent banks to cover withdrawals. Lionel and Barron quickly learned to remit money early, knowing that overdraws could easily occur when telegraphic orders to move funds from one correspondent to another were not transmitted promptly. At times, circumstances required intricate transactions.

In July of 1879, Barron advised Lionel that a patron had been short 74 changed because of a telegraphic error, and he had paid the difference with a L. M. Jacobs & Company draft. He asked Lionel to honor the draft and reimburse the firm by drawing on the bank's account with

Pacific Bank in San Francisco, or on the Ninth National Bank in

8 New York.^ •

The Pima County Bank prospered during its first year of operation.

Lionel and Barron worked hard to build and stabilize the business.

Within three months, the bank's paid-in capital was fully employed, and more could be profitably used. By the end of the year, the institution was in a sound financial position. "The showing of the

Bank," Lionel remarked, "is certainly excellent and exceeds my calculations about 10%. It may virtually be said that the first year

[of] business has been probationary, [and] the real start may be counted as from now on." Competition with Safford, Hudson & Company

Bankers still worried the Jacobs brothers. The other institution had obtained a large volume of business on only $20,000 paid-in capital, compared to Pima County Bank's $50,000. With their bank on a solid footing, the brothers gave thought to expanding its activities to 49 better fit the region's financial needs.

Anticipating a surge in business when the railroad arrived in

Tucson the spring of 1880, Lionel and Barron planned several physical improvements. At first, they briefly considered moving the bank to accommodate a possible shift in the business district when the railroad reached Tucson. Believing that appearance secured business, they decided to remodel the existing structure. They took 75

over the entire dry goods room for the bank. Carpenters divided the

room in two sections, installing a new counter, wallpaper, and vault.

The work was completed in early February of 1880.^

At the start of their second year of operations, Lionel and

Barron sought to standardize bookkeeping procedures. In closing

the books for 1879, they calculated the bank's profits under the

heading "Debt, Interest, and Expense," and they closed the net

proceeds, about $12,000, into the Surplus account. Later, some of

this amount would be divided among the stockholders. Hie brothers

issued stock certificates and established a formal Capital Stock

entry. Though $50,000 capital had been paid in, they had employed

only $25,000 to $30,000—placing the remainder in long-term

investments. Their books reflected this so that the federal 51 government would tax only the smaller amount.

The brothers reshuffled the bank officers when Phillip W. Smith

retired as president. In November of 1879, Smith became angered

over the handling of a transaction in the mercantile store. Smith

then abused his position by overdrawing his account without

.providing security, and by insisting that he had been promised 1 1/2%

per month interest on his certificates of deposit, a much higher

percentage than normally allowed. To appease him, the brothers

offered Smith certain business privileges that expedited his

retirement. Hie Jacobs considered placing Lionel in that position,

with Barron as cashier, then approached E. B. Gage, the vice-president.

Gage declined, saying "being a recent arrival it would be better to 76

take an older citizen." In early January, Pinckney R. Tully, co-owner

of the prosperous mercantile-freighting firm of Tully & Ochoa,

accepted the position. At a formal meeting in late January of 1880, the stockholders (Lionel and Barron) elected Tully as president,

L. M. Jacobs as vice-president, B. M. Jacobs as cashier, and W. A.

Scott, Jr., as assistant cashier. Lionel, suffering ill health, relinquished the cashier position to Barron, who had been acting as 52 assistant cashier since the previous summer.

As the Pima County Bank entered its second year, the economy of southern Arizona was booming. Hie Tombstone mines seemed to be permanent, and its population continued to grow. Mail service expanded from two or three times a week to daily. Tombstone promised opportunities for the Jacobs bank. Entrepreneurs required large amounts of capital to develop and operate mines. Investors from the

East had moved in and obtained many of the mines. lhese firms needed the services of a local bank to handle financial transactions and outgoing bullion. Mine workers also required bank services.

Lionel and Barron decided to open a branch bank in Tombstone.

Precedence for branch banks had been set by the Bank of Arizona when it opened its Phoenix office in 1879. Lionel and Barron decided to work with P. W. Smith, their former employee who had started a store in Tombstone. Smith approached than in late January of 1880 requesting help in establishing banking services in his store. Lionel and Barron proposed an arrangement. They agreed to provide Smith with blank checks on the Pima County Bank and its correspondents if Smith sent than the signatures of persons authorized to sign drafts,

and regularly notified the Jacobs of drafts written. Lionel also 54 promised to give personal attention to Smith's business.

In early March, Lionel presented Smith with a formal agreement

for establishing an "Agency of the Pima County Bank." The contract stated that the Tucson bank and its agency would share equally in profits and losses. Smith would provide a room and furnishings, and the branch would pay for employees, supplies, and licenses. The Pima

County Bank would extend up to $10,000 capital. The Jacobs required weekly reports and Smith had to submit to policy decisions and supervision by the parent bank. The agreement would run one year.

If Smith decided to resign, the Tucson bank would continue the agency at its own expense. Smith located the branch in one corner of his mercantile store on Tombstone's main street. On March 6, 1880 the Tucson Arizona Citizen announced the Pima County Bank had established a branch in Tombstone with P. W. Smith as manager and

Heyman Solomon as assistant manager. The agency opened on May 10,

1880.55

The Tombstone branch provided the same services that the main office did. It granted loans, offered checking accounts, issued certificates of deposit, and gave financial advice. Unlike the

Tucson institution, it had to maintain a large cash reserve to cover checks on payday. In one instance, Smith asked for $10,000 in currency to meet an expected demand from workers constructing

"hoisting works, etc." Also, many of the miners were immigrants from 78

Wales, England, Ireland, and Germany and wanted to send money home.

The agency accommodated these demands by transfering funds to Europe through the New York correspondent. Collections were also a major part of business. The merchants in Tombstone needed items collected, usually within Arizona; however, most of the branch's business consisted of serving creditors outside the territory."^

The Tombstone branch was an immediate success, but problems arose with Smith. The Jacobs brothers knew that fortunes in the mining world could be fleeting, and cautioned Smith about his dealings. Smith lacked attention to detail and soon revealed that he knew little about the intricacies of banking. The collector's office of the

U.S. Internal Revenue Service warned him that checks to pay government duties lacked internal revenue stamps. The issuance of such checks was unlawful and for each one issued Smith was liable "to a fine of

$50." In December of 1880 Smith had more trouble when he failed to file a report of the annual returns of the bank. He was now subject to tax due, a penalty equal to 50% of the tax, and a $200 fine. The

Jacobs brothers also cautioned Smith and Solomon to limit overdrafts to customers, especially large advances to mining companies. They also warned Smith that he had drawn more than the agreed $10,000 which inconvenienced the operations of the parent bank. In October of

1881, the agency obtained the account of the Contention Minning 57 Company, a major coup.

As the bank business increased, Barron Jacobs looked for ways to improve his services. He knew that more correspondents could 79

ease his transactions around the country, and sought contacts with

banks in Philadelphia, Boston, Los Angeles, and New York. Los Angeles

and New York responded. One requirement was that the new correspondent

must be able to dispose of gold and silver bullion profitably. To

speed accommodations for his customers Barron requested the Pacific

Bank in San Francisco and the Ninth National Bank in New York to

grant his bank the privilege of overdrawing its account to a

maximum of $10,000 for short periods of time. To expedite business, 58 the brothers added several new employees.

Lionel and Barron Jacobs devoted less and less time to

merchandising. With Lionel in San Francisco recovering his health,

Barron found he could not provide attention to the store, bank, and other investments. Initially, the brothers thought that running the bank would not interfere with the stores. After a few months with the bank, they changed their minds. Lionel suggested that Barron manage the store and put the bank secondary. He urged his brother to find ways to keep L. M. Jacobs & Company running. For example,

Barron could reduce the credit accounts and lower the working capital from $80,000 to $50,000. He also recommended that he close down the general merchandise and confine his attention to "Groceries, 59 Hardware & Miners supplies."

Hie brothers argued about their business interests. As Lionel owned a majority of the shares in the Pima County Bank, Barron proposed withdrawing his part ($30,000) of the capital in the store and going into private investments. Lionel had no objection to 80

Barron's plan, but advised him to leave his part of the capital in the

store and try to save it. He calculated that the store would have

a capital of $60,000. Tensions rose when Barron suggested that

Lionel transfer $11,000 of his money from the bank to buoy store

operations. Lionel refused. Barron then asked Lionel to sell scxne

of his bank shares to him. Lionel reluctantly transfered 5,000

shares at $50 per share, a price below market value. Barron wanted

another 1,000 shares. Mark Jacobs intervened and advised Barron to

accept Lionel's initial offer. The brothers also discussed the

bank's paid-in capital, and decided to require an additional $10

per share, to bring the total paid-in capital up to $75,000. Lionel

prodded Barron to invest the capital he had withdrawn from the store

in additional bank capital. Barron complied with the request.^

Running the mercantile store on decreased capital did not work.

Lionel now decided to follow Barron's earlier inclination to close it.

On February 24, 1880, L. M. Jacobs & Company announced its retirement

from the merchandizing business. In May the brothers sold the last

items at auction.

During 1880-81 the Jacobs concentrated on their banking business.

Competition from Safford, Hudson & Company and from Lord and Williams continued, but did not seriously affect the Pima County Bank. The former was the stronger rival, even opening a branch office in

Tombstone in May of 1880, about the same time as the Jacobs did.

Safford, Hudson & Company handled accounts for large mining companies, regularly acting as assay and sales agent for the silver bullion

produced by the Tombstone Mill and Mining Company, of which 62 Anson P. K. Safford was a major partner.

In February of 1881 rumors that Lord and Williams in Tucson

faced bankruptcy caused an uneasiness in banking circles in southern

Arizona. In Tombstone patrons made a "run" on Safford, Hudson &

Company's Tombstone branch. However, the Pima County Bank branch suffered no trouble, and the Jacobs granted Safford, Hudson &

Company a temporary loan of $10,000. Lord and Williams remained in business until the fall, then declared bankruptcy. Lionel and Barron had anticipated this and limited their holding of their rival's paper.

Lord and Williams had been one of the largest "bankers" in Tucson since 1869, and the brothers feared that customers would make a large cash demand on it—and perhaps on the Pima County Bank. Barron advised Heyman Solomon at Tombstone that no order for cash by a mining company could be met until the funds had been deposited with the San Francisco correspondent. The closing passed without incident.*^

The Jacobs brothers occasionally toyed with other financial ventures. They considered purchasing an interest in a mine, and

Barron invested money in the Star Flouring Mills in Safford. The brothers also looked into establishing a bank in Hermosillo and

Guaymas, Mexico. G. Bulle, of the trading company Sandoval y Bulle, proposed starting a bank there, but he could raise only $30,000 of the needed minimum of $50,000. He asked the Jacobs brothers to join 82 him and his partners. Lionel and Barron introduced Bulle's agent,

Jaime H. Hull, to the president of the Pacific Bank of San Francisco.

Hie brothers had reservations about the project. They lacked confidence in Bulle and Hull and did not want to live in Sonora to insure the success of the undertaking. Before committing funds, they insisted on certain guarantees to decrease risk. They agreed to invest $20,000, withdrawing either $10,000 from the Tombstone branch or $5,000 each from the branch and the Tucson bank. By late 1881,

Bulle and his partners felt they could not meet the guarantees, and the matter ended.^

Lionel and Barron Jacobs took an active role in the Tucson community. Barron built a two-story adobe house at the corner of

Meyer and Alameda, and he and his wife Yetta made it a social center of town. Barron also won a seat on the Pima County Board of

Supervisors. Lionel spent much of his time commuting between

Tucson and San Francisco. In August and September of 1881 he toured

Europe. While absent from Tucson, he investigated Barron's request for minute books for the supervisors. He finally suggested to Barron that he draw up his own forms or inquire on the East Coast."" JUionel also gave advice on the form and content of the bonds that Pima County planned to issue.

In opening the Pima County Bank in January of 1879, Lionel and

Barron Jacobs sought to participate in the economic boom of southern

Arizona. Ihey offered a wide array of services and kept informed of the changes in the banking business so as to be able to accommodate 83 customers. As the volume of business in deposits, loans, and collections grew, the brothers opened a branch bank in Tombstone.

Always cautious they successfully weathered the minor local panic caused when Lord and Williams declared bankruptcy. As Arizona's economy changed, the Jacobs brothers in turn changed their operations to take advantage of new opportunities. 84

ENDNOTES TO CHAPTER II

"'"Tucson Weekly Star, December 5, 1878. Bridenstine, "Commercial

Banking in Arizona," 11; A. R. Gutowsky, Arizona Banking (Temper

Bureau of Business Research and Services, College of Business

Administration, Arizona State University, Occasional Paper 1, 1967),

3, 7-8.

2 M. I. Jacobs to Lionel and Barron Jacobs, June 7, 1875,

Folder 7, Series 1, Box 1, JP, AHS.

3 Lionel Jacobs to Barron Jacobs, October 24, 1875, Folder 7,

Series 1, Box 1, JP, AHS. Agger, Organized Banking, 54.

4 Lionel Jacobs to Barron Jacobs, October 24, 1875, Polder 7,

Series 1, Box 1, JP, AHS. Schweikart, Banking in Arizona, 9-10.

^Lionel Jacobs to Barron Jacobs, March 17, November 30, and

December 8, 1875, all in Folder 7, Series 1, Box 1; and November 8,

1877, Folder 10, Series 1, Box 2; Barron Jacobs to Lionel Jacobs,

November 5 and 9, 1876; M. I. Jacobs to Lionel Jacobs, March 29, 1876, all in Folder 8; L. Wolf to L. M. Jacobs & Company, October 4, 1876,

Folder 9, all in Series 1, Box 1, JP, AHS. Wright, Banking in

California, 4, 105-107. 85 g Lionel Jacobs to Barron Jacobs, November 15, 1877, Folder 10,

Series 1, Box 2, JP, AHS. Rosalie Crowe and Sidney B. Brinckerhoff, editors, Early Yuma: A Graphic History of Life on the American Nile

(Yuma, Arizona: Yuma County Historical Society, 1976), 54; Bret Harte,

Tucson, 51, 74; John Myers Myers, The Last Chance: Tombstone's Early

Years (New York: E. P. Dutton & Co., Inc., 1950), 25-37; Lamar, The

Far Southwest, 465; Paul Hughes, Bank Notes (Phoenix: First National

Bank of Arizona, 1971). Albert Steinfeld, "Commercial Interests," in

Tucson Citizen, January 1, 1890; Tucson Arizona Weekly Star,

November 8, 1877.

7 M. Calisher to Lionel Jacobs, May 26 and June 7, 1877;

M. Calisher to Barron Jacobs, October 30, 1877; Lionel Jacobs to

Barron Jacobs, November 8 and 15, December 10, 12, and 14, 1877;

M. I. Jacobs to Barron Jacobs, December 24, 1877; J. M. Cohn to

Barron Jacobs, February 12, 1878, all in Folder 10; Lionel Jacobs to

Barron Jacobs, May 13, 1878, Folder 13, all in Series 1, Box 2, JP, AHS.

Q Lionel Jacobs to Barron Jacobs, January 16 and 28, April 15, 17, and 20, May 13, and June 26, 1878, Folder 13, Series 1, Box 2, JP, AHS.

"Two years Hence," Tucson Citizen, November 2, 1878. Agger, Organized

Banking, 24-26. The Jacobs brothers used the money in the "Discount

Fund" to buy promissory notes, paying its "present value," which was less than the mature value. When the notes reached maturity, the brothers received the full amount. 86 g Lionel Jacobs to Barron Jacobs, April 20, 1878; Barron Jacobs to

Lionel Jacobs, September 27, and October 18, 1878, both in Folder 13,

Series 1, Box 2, JP, AHS.

10 Barron Jacobs to Lionel Jacobs, October 12 and 18, 1878;

Albert Jacobs to Bob [?], September 12, 1878, all in Folder 13,

Series 1, Box 2, JP, AHS.

•^"Barron Jacobs to Lionel Jacobs, September 4, 1878, Folder 5,

Box 3; Lionel Jacobs to Barron Jacobs, October 30 and November 30,

1878, L. M. Jacobs & Company Letterbook, Volume 40, JFP, SC, UAL.

Barron Jacobs to Lionel Jacobs, October 12, 18, and 27, and

December 5 and 12, 1878, all in Folder 13, Series 1, Box 2, JP, AHS.

To obtain the money for the capital, the Jacobs brothers had to juggle accounts. They withdrew $10,000 from the trustee account, and called in the $5,000 loan held by Leopoldo Carrillo. Barron expressed concern about terminating a mortgage that yielded 2% per month interest, but he acquiesed to Lionel's plans.

12 Barron Jacobs to Lionel Jacobs, October 27 and November 12,

1878, Polder 13, Series 1, Box 2; M. I. Jacobs to Lionel Jacobs,

January 17, 1879, Folder 15, Series 1, Box 3, JP, AHS. Lionel

Jacobs to Barron Jacobs, October 30 and November 30, 1878, L. M.

Jacobs & Company Letterbook, Volume 40, JFP, SC, UAL. Pima County

Bank Articles of Incorporation, December 24, 1878, Miscellaneous

Book [MB], I, 895, Pima County Records [PCR], Tucson, Arizona. 87

Tucson Weekly Star, November 21 and December 5, 1878. "Phillip W.

Smith," First National Bank poster, c. 1976, at Tombstone Chamber of

Commerce, Tombstone, Arizona. The poster contains a biographical

sketch of Smith. Alphonse "Frenchy" Lazard came to Tucson in 1859.

He was related to the Lazard Freres brothers, prominent merchants

and bankers of New Orleans and San Francisco. Blain Peterson Lamb,

"Jewish Pioneers in Arizona, 1850-1920," (unpublished Ph.D.

dissertation, Arizona State University, 1982), 97-99; Sonnichsen,

Tucson, 62.

13Pima County Bank Articles of Incorporation, December 24, 1878,

MB, I, 895, PCR, Tucson, Arizona; Barron Jacobs to Lionel Jacobs,

November 7 and 12, December 12, 15, 17, and 28, 1878, Folder 13,

Series 1, Box 2, JP, AHS. Lionel Jacobs to Barron Jacobs, November 30,

1878, L. M. Jacobs & Company Letterbook, Volume 40; "Petty Cash

Taken from Drawer: Cost of Setting up Banking Office," L. M. Jacobs &

Company, Volume 37, Item #4, JFP, SC, UAL. "A Bank," Tucson Weekly

Star, December 5, 1878. Gutowsky, Arizona Banking, 10; Agger,

Organized Banking, 59.

14 Lionel Jacobs to Pa [M. I. Jacobs], February 26, [1879];

Lionel Jacobs to Murphy, February 26, 1879, both in Pima County Bank

Letterbook; first entry in Pima County Bank Journal A, January 2,

1879, JFP, SC, UAL. Hughes, Bank Notes, 14. Tucson Weekly Star,

November 21, 1878. 88

^Lionel Jacobs to Barron Jacobs, November 30, 1878, L. M. Jacobs

& Company Letterbook, Volume 40, JFP, SC, UAL. "New Banking

Business," Tucson Citizen, March 28, 1879; "A Bank for Tucson,"

ibid., November 30, 1878.

"^Lionel Jacobs to Barron Jacobs, November 30, 1878, L. M.

Jacobs & Company Letterbook, Volume 40, JFP, SC, UAL. Barron Jacobs to Lionel Jacobs, December 12 and 24, 1878, Folder 13; Neahr to

L. M. Jacobs & Company, December 21, 1878, Folder 14, all in Series 1,

Box 2, JP, AHS. "New Banking Business," Tucson Citizen, March 28,

1879.

17 Barron Jacobs to Lionel Jacobs, December 15, 1878, Folder 13,

Series 1, Box 2; M. I. Jacobs to Lionel Jacobs, January 14, 1878;

C. D. Putnam to L. M. Jacobs,January 27, 1879, both in Folder 15,

Series 1, Box 3, JP, AHS. B. Hdmans to L. M. Jacobs, January 17,

1879, Folder 1, Box 4; L. M. Jacobs to G. T. June & Company, April 29,

1879, in Pima County Bank Letterbook, Volume 78, JFP, SC, UAL.

Advertisement for Pima County Bank, Tucson Citizen, January 11, 1879.

18 Barron Jacobs to Lionel Jacobs, October 9, 1878, Folder 13,

Series 1, Box 2, JP, AHS. The brothers had moved their San Francisco bank account from the London and San Francisco, Limited, to the

Pacific Bank in 1878. L. M. Jacobs & Company Investment accounts,

L. M. Jacobs & Company Ledger A, Volume 47; Lionel Jacobs to Barron

Jacobs, November 30, 1878, L. M. Jacobs & Company Letterbook, Volume 40; Barron Jacobs to Lionel Jacobs, December 28, 1878, Folder 4, Box 2;

Statement of Pima County Bank account with First National Bank of

Chicago, July 1879, Folder 5, Box 4, all in JFP, SC, UAL.

Advertisement for Pima County Bank, in Tombstone Daily Nugget

(Arizona), October 2, 1879.

19 Murphy to L. M* Jacobs, January 31, 1879, Van Blarcom to

L. M. Jacobs, May 15, 1879, both in Folder 22, Series 2, Box 4,

JP, AHS. L. M. Jacobs to Messrs. Randall & Danagh of Grand Rapids,

Michigan, February 8, 1879, in Pima County Bank Letterbook,

Volume 78, JFP, SC, UAL. Agger, Organized Banking, 115-116.

20 Murphy to L. M. Jacobs, January 31 and February 21, 1879,

Folder 22, Series 2, Box 4; Barron Jacobs to Lionel Jacobs,

December 20 and 28,1878, Folder 13, Series 1, Box 2; Van Blarcom to L. M. Jacobs, March 17, 1879, Folder 22, Series 2, Box 4, JFP,

SC, UAL. L. M. Jacobs to Murphy, February 26, 1879; L. M. Jacobs to Messrs. Randall & Danagh, February 8, 1879; Albert Jacobs to

Murphy, March 3 and 4, 1879, Pima County Bank Letterbook, Volume 78,

JFP, SC, UAL. Advertisement for Pima County Bank in Tombstone

Nugget, October 2, 1879. Schweikart, Banking in Arizona, 17.

21 Barron Jacobs to Lionel Jacobs, December 20 and 28, 1878,

Polder 13, Series 1, Box 2; Van Blarcom to L. M. Jacobs, March 17,

1878, Folder 22, Series 2, Box 4; Pima County Bank Cryptogram 1879

Cipher Phrase Book, Folder 23, Series 2, Box 4, JP, AHS. L. M. 90

Jacobs to Van Blarcom, March 1 and 18, 1879; Lionel Jacobs to Murphy,

February 15, 1879, all in Pima County Bank Letter book, Volume 78;

Pima County Bank Code Book, Volume 77, Item #9, JFP, SC, UAL.

Schweikart, Banking in Arizona, 17.

22 Murphy to L. M. Jacobs, January 9, 1879, Polder 22, Series 2,

Box 4; M. I. Jacobs to Lionel Jacobs, January 15 and April 4, 1879,

Polder 15, Series 1, Box 3, JP, AHS. Lionel Jacobs to Pa [M. I.

Jacobs], April 5, [1879]; Albert [Jacobs] to Pa [M. I. Jacobs],

February 22, ]1879], both in Pima County Bank Letterbook, JFP, SC, UAL.

23 Mitchell, History of the Greenbacks, 109-119; Angell, Story of Money,197-298.

24 M. I. Jacobs to Lionel Jacobs, January 15, 23, and 29, 1879,

Polder 15; Lionel Jacobs to Barron Jacobs, November 21, December 26 and 27, 1879, all in Polder 15; and January 3, 1880, in Polder 16, all in Series 1, Box 3; Murphy to L. M. Jacobs, February 18 and 19, and

March 3, 1879, Folder 22, Series 2, Box 4, JP, AHS. Albert Jacobs to Murphy, March 14, 1879; L. M. Jacobs to Murphy, February 12 and 24, and March 29, 1879; D. Calisher to Uncle [Lionel Jacobs], April 3 and

11, 1879, Polder 3,Box 4; Lionel Jacobs to Dave [Calisher], April 8 and

11, 1879; L. M. Jacobs to Neahr, February 17, 1879; L. M. Jacobs to

H[all] M. Porter, February 25, March 10, 12, and 18, 1879; L. M.

Jacobs to Louis Rosenbaum, March 20, 1879, all in Pima County Bank

Letterbook, Volume 78; Wells, Fargo & Company, Express money receipt April 17, 1879, Folder 3, Box 4; P. W. Smith to Pima County Bank,

September 25, 1880, Polder 4, Box 5,JFP, SC, URL.

25 Lionel Jacobs to Pa [M. I. Jacobs], March 28, April 12, and

May 5, 1879; L. M. Jacobs to Dave [Calisher], May 8, 1879; L. M.

Jacobs to Porter, March 18 and May 5, 1879; L. M. Jacobs to

Fosenbaum, March 20, 1879; L. M. Jacobs to Sandoval & Bulle,

March 18, 1879, all in Pima County Bank Letterbook, Volume 78,

JFP, SC, UAL. Murphy to L. M. Jacobs, March 25, 1879, Folder 22,

Series 2, Box 4, JP, AHS.

26 Lionel Jacobs to Pa [M. I. Jacobs], May 20 and 30, 1879,

Pima County Bank Letterbook, Volume 78; Lionel Jacobs to Barron

Jacobs, October 13, 1879, Folder 9, Box 4, JFP, SC, UAL. Dave

[Calisher] to Uncle [Lionel Jacobs], May 24, 1879; M. I. Jacobs to

Lionel Jacobs, June 3, 1879; Lionel Jacobs to Barron Jacobs,

August 2, 1879, all in Folder 15, Series 1, Box 3; M. I. Jacobs to

Lionel Jacobs, February 16, 1880; M. I. Jacobs to Barron Jacobs,

February 25 and July 6, 1880, in Polder 16, Series 1, Box 3, JP, AHS.

27 Murphy to L. M. Jacobs, January 2 and 6, 1879; Wells, Fargo

& Company Express money receipt to Pima County Bank, January 27, 1879

Receipt from Pima County Bank to P[inckney] R. Tully, June 25, 1879, all in Folder 22, Series 2, Box 4; Deposit slip from Pacific Bank for

Pima County Bank, April 25, 1879, Polder 23, Series 2, Box 4; Murphy by H. H. Reynolds to B. M. Jacobs, June 7 1880, Folder 24, Series 2, 92

Box 4; Murphy to Pima County Bank, September 17, 1880, all in Folder 25,

Series 2, Box 4, JP, AHS. L. M. Jacobs to Murphy, February 18 and

March 29, 1879, Pima County Letterbook, Volume 78, JFP, SC, UAL.

Advertisement for Pima County Bank, Tombstone Weekly Nugget (Arizona),

October 2, 1879.

28 Lionel [Jacobs] to Dave [Calisher], April 8, 1879; Lionel

[Jacobs] to Abe [Franklin], July 7, 1879; Statement of position of

Pima County Bank at close of week, February 8, 1879, all in Pima

County Bank Letterbook, Volume 78; D. Calisher to Uncle [Lionel

Jacobs], April 11, 1879, Folder 3, Box 4; Statement of position of

Pima County Bank at close of week, July 19, 1879, Folder 5, Box 4,

JFP, SC, UAL. Advertisement for Pima County Bank, Tombstone Weekly

Nugget, October 2, 1879. Fifty Years, 4.

29 D. Calisher to Uncle [Lionel Jacobs], April 22 and May 24, 1879,

Folder 15, Series 1, Box 3; L. M. Jacobs to P. W. Smith, July 22, 1880,

Folder 27, Series 2, Box 4; P. W. Smith to B. M. Jacobs, June 18 and

August 11, 1881, Folder 28, Series 2, Box 5, JP, AHS. Barron Jacobs to Lionel Jacobs, July 31, 1879, Pima County Bank Letterbook,

Volume 78; Lionel Jacobs to Barron Jacobs, October 13, 1879, Folder 9,

Box 4, JFP, SC, UAL. Advertisement for Pima County Bank, Tucson Star,

January 12, 1879; Advertisement for Pima County Bank, Tombstone Weekly

Nugget, October 2, 1879. Agger, Organized Banking, 120-122, 125. 93 30 Lionel Jacobs to Barron Jacobs, December 5 and 27, 1879;

D. Calisher to Uncle [Lionel Jacobs], April 22, 1879, all in Polder 15,

Series 1, Box 3; B. M. Jacobs to P. W. Smith, July 19, 1880; John F.

Merrill to B. M. Jacobs, October 20, 1880, both in Folder 26, Series 2,

Box 4, JP, AHS. Lionel Jacobs to Barron Jacobs, November 25, 1879,

Folder 9, Box 4; L. M. Jacobs to L. H. Eawes, May 12, 1879, Pima

County Bank Letter book, Volume 78, JFP, SC, UAL. Agger, Organized

Banking, 120-122.

31Lionel Jacobs to Barron Jacobs, September 11 and November 12,

1879, Folder 9, Box 4; L. M. Jacobs to Hooker, April 9, 1879;

L. M. Jacobs to Cashier, Bank of San Bernardino, San Bernardino,

California, February 12, 1879; L. M. Jacobs to M. L. Woods, March 18,

1879; Lionel Jacobs to M. I. Jacobs, April 12, 1879, all in Pima

County Bank Letter book, Volume 78, JFP, SC, UAL. Advertisement for

Pima County Bank, Tombstone Weekly Nugget, October 2, 1879.

Gutowsky, Arizona Banking, 10.

32 L. M. Jacobs to C. H. Veil, February 8, 1879; Pima County Bank

Statement of Affairs at close of February 22, 1879; L. M. Jacobs to

Hooker, April 9, 1879; Uncle Lionel [Jacobs] to Dave [Calisher],

March 12, 1879; L. M. Jacobs to Jim Sam, March 13, 1879, all in Pima

County Bank Letterbook, Volume 78, JFP, SC, UAL.

"^D. Calisher to Uncle [Lionel Jacobs], March 10 and 16, and

April 3, 1879, Folder 3; and May 3, 1879, Folder 4; and July 10, 1879, 94

Polder 5, all in Box 4; Uncle Lionel [Jacobs] to Dave [Calisher],

March 12, 17, 20, and 21, April 2, 5, and 11, May 5, 8, and 30, and

July 11 and 21, 1879; Lionel Jacobs to Pa [M. I. Jacobs], July 5, 1879?

L. M. Jacobs to G. H. Oury, April 5, 1879; William A. Scott, Jr. to

James Brash, November 27, 1879, all in Pima County Bank Letterbook,

Volume 78, JFP, SC, UAL. Oury to L. M. Jacobs, March 31, 1879,

Folder 9, Series 1, Box 1; D. Calisher to Uncle [Lionel Jacobs],

April 21 and 23, and June 14, 1879, in Polder 15, Series 1, Box 3;

M. I. Jacobs to Lionel Jacobs, May 11 and 27, 1880, Polder 16,

Series 1, Box 3, JP, AHS.

34 L. M. Jacobs to Sam, March 13, 1879; Lionel Jacobs to Dave

[Calisher], March 20 and 21, and May 5, 1879, all in Pima County

Bank Letterbook, Volume 78, JFP, SC, UAL.

^Lionel Jacobs to Pa [M. I. Jacobs], March 28, April 12 and 30,

[1879], in Pima County Bank Letterbook, Volume 78, JFP, SC, UAL.

M. I. Jacobs to Lionel Jacobs, April 4, 1879, Polder 15, Series 1,

Box 3, JP, AHS. Bradford Luckingham, The Urban Southwest: A Profile

History of Albuquerque—El Paso—Phoenix—Tucson (El Paso: Texas

Western Press, 1982), 11-12; Lamar, The Far Southwest, 463.

^M. I. Jacobs to Lionel Jacobs, April 14, 18, and 22, May 12,

22, and 30, and June 9, 1879, all in Polder 15, Series 1, Box , JP,

AHS. Hubert Howe Bancroft, History of California, 7 vols.

(San Francisco: The History Company, Publishers, 1890; reprint 95

New York: McGraw-Hill Book Company [date?]), VII, 162-163, 370-375,

383-385, 389, 400.

37 Lionel Jacobs to Pa [M. I. Jacobs], May 20 and 30, July 10,

1879, all in Pima County Bank Letterbook, Volume 78, JFP, SC, UAL.

Lionel Jacobs to Barron Jacobs, July 31, 1879, Polder 15, Series 1,

Box 3, JP, AHS.

38 Lionel Jacobs to Barron Jacobs, August 4 and December 29, 1879,

Folder 15; M. I. Jacobs to Barron Jacobs, January 31, 1880, Polder 16, all in Series 1, Box 3, JP, AHS. M. I. Jacobs to Barron Jacobs,

September 2, 1879, Folder 8, Box 4; Lionel Jacobs to Barron Jacobs,

September 23, and October 4 and 8, 1879, Folder 9, Box 4, JFP, SC, UAL.

39 M[artin] W. Kales to L. M. Jacobs, February 3, 1879, Folder 2,

Box 4; L. M. Jacobs to G. C. Smith, February 15, 1879; Uncle Lionel

[Jacobs] to Dave [Calisher], March 3, [1879]; L. M. Jacobs to Murphy,

March 3, 1879, L. M. Jacobs to Messrs. Randall & Danagh, February 8,

1879, all in Pima County Bank Letterbook, Volume 78; J. E. Dooley &

Co. Bankers to L. M. Jacobs & Co., January 15, 1879, Folder 1, Box 4;

J. Goldwater & Bros, to L. M. Jacobs & Company, November 19, 1879;

T. Farish to Pima County, November 29, 1879, both in Folder 7, Box 4,

JFP, SC, UAL. E. Jne. Brehone, Laza^d Freres Bankers, San Francisco to

Pima County Bank, August 22, 1879, Polder 22, Series 2, Box 4; Browne &

Manzanares to L. M. Jacobs & Company, June 24, 1879, Folder 15,

Series 1, Box 3; Murphy to L. M. Jacobs, March 20, 1879, Folder 22, 96

Murphy to Pima County Bank, November 17, 1879, Folder 23, both in

Series 2, Box 4, JP, AHS. Advertisement for Pima County Bank

Tombstone Weekly Nugget, October 2, 1879.

40 L. M. Jacobs to T. B. Smith, March 5, 1879; L. M. Jacobs to

M. L. Moods, March 18, 1879; A. Jacobs to J. Grindarini & Co.,

March 17, 1879; A. Jacobs to Sam, March 17, 1879; L. M. Jacobs by

Albert Jacobs to S. S. Arnold, May 10, 1879; L. M. Jacobs to

G. C. Smith, February 15, 1879, all in Pima County Letterbook, Volume

78; Kales to L. M. Jacobs, February 3, 1879, Polder 2, Box 4; Parish to Pima County Bank, November 29, 1879, Polder 7, Box 4; JFP, SC, UAL.

Kales to L. M. Jacobs, April 12, 1879, Folder 22, Series 2, Box 4,

JP, AHS.

41 Murphy to L. M. Jacobs, February 24, 1879; Sol Lewis to

L. M. Jacobs, May 3, 1879, both in Folder 22, Series 2, Box 4, JP, AHS.

L. M. Jacobs to W. H. Rogers, March 1, 1879; L. M. Jacobs to Dave

[Calisher], March 17, 1879; L. M. Jacobs to E. W. Morse, April 14,

1879; L. M. Jacobs to Kales, April 15, 1879, all in Pima County Bank

Letterbook, Volume 78, JFP, SC, UAL.

42 E. Germain & Company to Pima County Bank, July 31, 1879,

Folder 22, Series 2, Box 4, JP, AHS.

43 Lionel Jacobs to Pa [M. I. Jacobs], March 18 and April 14, 1879;

Barron Jacobs to Lionel Jacobs, August 5, 1879; L. M. Jacobs to Frank

Choate, April 8, 1879; List entitled "Jury Certificates held by Pima 97

Co. Bank. Draw Warrant favor L. M. Jacobs," March 31, 1879; L. M.

Jacobs to A. M. Franklin, May 28, 1879, all in Pima County Bank

Letterbook, Volume 78; Pima County Bank Weekly Statement for the

Week Ending August 30, 1879, Polder 5; Lionel Jacobs to Barron Jacobs,

October 16 and 20, 1879, Folder 9, both in Box 4, JFP, SC, UAL.

M. I. Jacobs to Lionel Jacobs, Folder 15, Series 1, Box 3; Frank

Choate to Cashier, Pima County Bank, April 1, 1879, Polder 22, Series 2,

Box 4, JP, AHS. Advertisement for Pima County Bank, Tombstone Weekly

Nugget, October 2, 1879. Agger, Organized Banking, 50-52. The Jacobs brothers invested a portion of the bank's capital in securities, principally in Territory of Arizona, Pima County, Yuma County, and

Tucson city warrants. These investments acted as a reserve and collateral for loans from correspondents. Using their knowledge, the brothers offered to purchase securities for customers.

44 L. M. Jacobs to E. T. Clark, Territorial Auditor, March 19, 1879,

Pima County Bank Letterbook, Volume 78, JFP, SC, UAL.

45 M. I. Jacobs to Lionel Jacobs, January 10, 14, and 31, 1879;

Lionel Jacobs to Barron Jacobs, December 15, 1879, all in Folder 15,

Series 1, Box 3; Invoice of A. Hock & Company, Practical Lithographers,

Engravers and Power Press Printers to Pima County Bank, March 10, 1879;

Stork, Phipps & Company to Pima County Bank, March 15, 1879, both in

Folder 22, Series 2, Box 4, JP, AHS. L. M. Jacobs to A. L. Bancroft &

Company, February 14, 1879; A. Jacobs to Messrs. Sullivan, Page, Haynes & Company, March 7, 1879, both in Pima County Bank Letterbook,

Volume 78; A. L. Bancroft & Company by George S. Kinay to Pima County

Bank, February 7, 1879, Folder 2, Box 4, JFP, SC, UAL.

46 Lionel Jacobs to Barron Jacobs, September 25, October 22 and 23,

1879, Folder 9, Box 4; A. Jacobs to Murphy, February 10 and 20, 1879,

Pima County Bank Letterbook, Volume 78, JFP, SC, UAL. Lionel Jacobs to Barron Jacobs, December 5 and 8, 1879, Folder 15, Series 1, Box 3,

JP, AHS. In the fall of 1879, the Jacobs tangled with the Deputy

Collector of the Internal Revenue over the taxes the bank owed. The

problem revolved around defining capital stock and amount paid-in.

The brothers consulted financiers in San Francisco and won their case, lowering the amount of taxes due. After the railroad reached Tucson

William A. Scott, Jr., secured several important accounts for the

Pima County Bank: Mark McDonald, an important mining figure; Haggin

& Tevis Company; and Sissin, Wallace & Company.

47 L. M. Jacobs, "Banking in Arizona," typescript, 4-5, Folder 75,

Box 12; Farish, Moody & Farish to Scott, Manager Pima County Bank,

January 15, 1880; Lewis Kingman to Scott, February 15, 1880, both in

Folder 26, Series 2, Box 4; Murphy to L. M. Jacobs, April 2, 1879,

Folder 22, Series 2, Box 4; J. A. Graves to Manager Pima County Bank,

August 9, 1879, Folder 71, Series 3, Box 12, JP, AHS. L. M. Jacobs to

Jno. J. Gosper, March 10, 1879; L. M. Jacobs to Dave [Calisher], May 12,

1879; L. M. Jacobs to Jno. B. Allen, June 19, 1879, all in Pima County 99

Bank Letterbook, Volume 78; James Corbin to P. W. Smith, Manager

Pima County Bank & Company, July [?], Folder 6, Box 4, JFP, SC, UAL.

48 Murphy to L. M. Jacobs, February 7, 1879, Folder 22, Series 2,

Box 4, JP, AHS. L. M. Jacobs to H. H. Nazro, May 28, 1879? Barron

Jacobs to Lionel Jacobs, July 31, 1879, Pima County Bank Letterbook,

Volume 78, JFP, SC, UAL.

49 Lionel Jacobs to Pa [M. I. Jacobs], April 12, 1879, Pima County

Bank Letterbook, Volume 78; Lionel Jacobs to Barron Jacobs,

September 8 and 17, and November 15, 1879, all in Folder 9, Box 4,

JFP, SC, UAL. Lionel Jacobs to Barron Jacobs, December 1, 1879, and

January 5, 1880, Folder 16, Series 1, Box 3, JP, AHS. Advertisement for Pima County Bank, Tombstone Nugget, October 2, 1879. Hughes,

Bank Notes, 12. In the fall of 1879, the Jacobs momentarily considered a merger with the Bank of Arizona in Prescott, upon hearing that its owners Solomon Lewis and Martin Kales were contemplating a move to Phoenix. Mark Jacobs presented the idea to

Lewis, but nothing happened. Lewis and Kales opened a branch in

Phoenix and hired William Hazeltine as cashier of the Prescott office.

^Lionel Jacobs to Barron Jacobs, October 27, 29, and 30, and

November 3, 1879, Folder 9, Box 4, JFP, SC, UAL. Lionel Jacobs to

Barron Jacobs, November 21, 1879, Folder 15, Series 1, Box 3, JP, AHS.

Tucson Star, January 27, 1880. 100

"^Lionel Jacobs to Barron Jacobs, October 23 and 30, and

November 3, 1879, Folder 9, Box 4, JFP, SC, UAL. Lionel Jacobs to

Barron Jacobs, January 6, 1880, Folder 16, Series 2, Box 3, JP, AHS.

52 Lionel Jacobs to Barron Jacobs, September 17 and 23,

October 4, 13, and 23, and November 13, 1879, all in Folder 9, Box 4;

L. M. Jacobs to Van Blarcom, July 22, 1879; L. M. Jacobs to Nazro,

April 30, 1879, both in Pima County Bank Letterbook, Volume 78, JFP,

SC, UAL. Lionel Jacobs to Barron Jacobs, July 31, November 17, and

December 1, 5, 8, and 26, 1879, Folder 15; and January 3 and 5, 1880,

Folder 16, all in Series 1, Box 3; P. W. Smith to B. M. Jacobs,

January 15, 1880, Folder 27, Series 2, Box 4, JP, AHS. Tucson Star,

January 27, 1880.

53 Myers, Last Chance, 46, 54.

54 P. W. Smith to B. M. Jacobs, January 17, 1880, Folder 27,

Series 2, Box 4, JP, AHS. L. M. Jacobs to P. W. Smith, January 26,

1880; B. M. Jacobs to P. W. Smith, January 30, 1880, Pima County

Letterbook, Volume 78, JFP, SC, UAL. Bridenstine, "Commercial

Banking," 33-35. Pima County Bank Articles of Incorporation,

December 24, 1878, MB, I, 895, PCR, Tucson, Arizona. The Pima County

Bank charter read: "That the business in which the Incorporation [is] to engage is that of banking in all. its branches."

^B. M. Jacobs to P. W. Stnith, March 1, 1880; B. M. Jacobs to

H[eyman] Solomon, May 1, 1880, both in Pima County Bank Letterbook, 101

Volume 79; Copy of Records of Pima County Bank stockholders meeting on March 3, 1880, copied April 15, 1882, Pima County Bank Records,

Volume 84, JFP, SC, UAL. Tucson Citizen, March 6, 1880.

56 B. M. Jacobs to P. W. Smith, March 1, 1880, Pima County Bank

Letterbook, Volume 79; Pass Book, Agency of Pima County Bank in account with Patrick Lynch, April 11-June 3, 1881; Pass Book, Agency of Pima County Bank in account with Leigh & Miramontz, January 24-

September 10, 1881, both in Item #6, Volume 77; H. Solomon to Pima

County Bank, September 18, 1880; P. W. Smith to Pima County Bank,

September 25, 1880, both in Polder 4, Box 5, JFP, SC, UAL.

Advertisement for Pima County Bank, Tombstone Nugget, December 1, 1881.

B. M. Jacobs to P. W. Smith, July 19 and September 20, 1880; B. M.

Jacobs by Scott to Agency of Pima County Bank, June 30, 1880;

Auerback Goldberg & Company to Pima County Bank, May 24, 1880; Scott to P. W. Smith, June 19, 1880, all in Folder 26, Series 2, Box 4;

L. M. Jacobs to P. W. Smith, June 19, 1880, Folder 16, Series 1, Box 3; and July 22, 1880, Folder 27, Series 2, Box 4, JP, AHS. ttyers, Last

Chance, frontispiece.

57 W. H. Seamans, Deputy Collector's Office of U.S. Internal

Revenue, to P. W. Smith, August 31, 1880; Thomas Cordis, Collector's

Office U.S. Internal Revenue, to Agency of Pima County Bank,

December 22, 1880, both in Folder 27, Series 2, Box 4; B. M. Jacobs to

P. W. Smith, December 8, 1880, Folder 16, Series 1, Box 3; List of

Balances for Agency of Pima County Bank, January 15, 1881, Folder 29, 102

Series 2, Box 5; Lionel Jacobs to Barron Jacobs, November 3, 1881,

Folder 17, Series 1, Box 3, JP, AHS. L. M. Jacobs to H. Solomon,

March 7, 1881, Folder 1, Box 6, JFP, SC, UAL.

58 Cashier to J. I. M. Watt, Esq., January 29, 1880; Cashier to

Jno. B. Wither Company, January 29, 1880; Cashier to William Quinlan,

Jr., January 29, 1880, all in Pima County Bank Letterbook, Volume 78;

Bill from Tucson El Fronterizo, December 10, 1880, Folder 4, Box 5,

JFP, SC, UAL. Quinlan to B. M. Jacobs, February 9, 1880, Folder 26,

Series 2, Box 4; M. I. Jacobs to Barron [Jacobs], September 10,

October 5, 7, and 21, 1880, Folder 16, Series 1, Box 3; Nazro to

B. M. Jacobs, October 25, 1880, Folder 24, Series 2, Box 4; M. I.

Jacobs to Lionel [Jacobs], February 2 and 9, 1881, Folder 17, Series 1,

Box 3, JP, AHS.

59 Lionel Jacobs to Barron Jacobs, November 26, 1877, Folder 10,

Series 1, Box 2; L. M. Jacobs, "Banking in Arizona," typescript, 3,

Folder 75, Box 12, JP, AHS. Lionel Jacobs to Barron Jacobs,

September 8, October 4 and 8, and November 10, 1879, Folder 9, Box 4,

JFP, SC, UAL.

^Lionel Jacobs to Barron Jacobs, December 1, 1879, Folder 15,

Series 1, Box 3; and January 5 and 6, 1880, Folder 16, Series 1,

Box 3; M. I. Jacobs to Barron Jacobs, December 4 and 24, 1879,

Folder 15; and January 8 and February 2, 1880, Folder 16, all in 103

Series 1, Box 3, JP, AHS. Lionel Jacobs to Barron Jacobs, November 10,

1879, Folder 9, Box 4, JFP, SC, UAL.

61m. I. Jacobs to Barron Jacobs, March 1, 1880? Anilus H. Stick to L. M. Jacobs & Company, March 9, 1880; M. I. Jacobs to Lionel

Jacobs, May 29, 1880, all in Polder 16, Series 1, Box 3, JP, AHS.

Advertisement for L. M. Jacobs & Company, Tucson Weekly Star, April 29,

1880.

62 "Millions in It," Tombstone Epitaph (Arizona), May 1, 1880.

63 P. W. Smith to Pima County Bank, February 9, 1881; M. I.

Jacobs to Lionel Jacobs, February 14, 1881; Telegram from H. Solomon to B. M. Jacobs, February 9, 1881; Lionel Jacobs to Barron Jacobs,

September 1, 1881, all in Folder 17, Series 1, Box 3, JP, AHS.

B. M. Jacobs to H. Solomon, October 26, 1881, Folder 5, Box 6, JFP,

SC, UAL.

64 Lionel Jacobs to Barron Jacobs, March 29, April 14, 15, and 21,

June 24, and November 3, 1881; M. I. Jacobs to Barron Jacobs, June 14 and 21, all in Folder 17, Series 1, Box 3; Avery [Katz] to Barron

[Jacobs], June 11, 1880, Folder 16, Series 1, Box 3; Jaime H. Hull to

B. M. Jacobs, June 9, 1881; G. Bulle to B. M. Jacobs, June 15, 1881;

[J. H. Hull] to B. M. Jacobs, June 23, 1881, all in Folder 28, Series 2,

Box 5; Hull to [Jacobs], [1881], Folder 19, Series 1, Box 3, JP, AHS.

Lionel Jacobs to Barron Jacobs, June 29, 1881, Folder 9, Box 6, JFP,

SC, UAL. 104 65 Avery [Katz] to Barron [Jacobs], February 21, 1881; Edmund E.

Katz to Uncle [Barron Jacobs], April 4, 1881; Lionel Jacobs to Barron

Jacobs, March 29, April 14 and 25, June 24, September 1 and 23, 1881, all in Polder 17, Series 1, Box 3, JP, AHS. 105

CHAPTER III

THE FIRST NATIONAL BANK AND THE BANK OF TUCSON

In 1882, Lionel and Barron Jacobs reorganized the Pima County

Bank into the First National Bank of Tucson. Times were prosperous, and they enjoyed a reputation for fair dealing and unquestioned integrity. In the second half of the 1880s, however, the economic picture in southern Arizona dramatically changed when the mines in

Tombstone shut down operations and Indian raids hampered settlement.

To meet these economic fluctuations, the Jacobs modified the structure and operations of their institution. They abandoned their status as a national bank and reorganized as the Bank of Tucson, a smaller agency.

The brothers were conservative bankers who kept a healthy capital reserve and charted a careful course in their business dealings. They wisely anticipated change and sought to provide modern banking services.^"

Hie early 1880s were "honeyed years" for southern Arizona, said the editor of the Tucson Citizen. Mining activity in Tombstone reached a peak; agriculture and new businesses appeared to support the expanding population. Demands for cash and accommodations for transactions increased. Customers dealt in larger amounts and exchanged and transfered money with more frequency. 2 106

To keep pace with their competitors, the Jacobs brothers expanded and updated their business operations. In the East they opened an account with the Hanson National Bank of Boston. In the West they approached the Bank of California, correspondents for their Tucson competitors Lord and Williams and L. Zeckendorf and Company. Lionel and Barron also began selling insurance. They asked William A. Scott,

Jr., assistant cashier, who directed the daily operations of the bank, to handle the insurance, while Barron stepped aside to supervise investments. After a year, the brothers felt that Scott spent too much time with insurance and neglected regular bank affairs. Barron returned to overseeing the bank. Barron fired the bookkeeper, Fred

Harrison, and redistributed duties. Jacobs took over bank correspon dence from Scott and assigned him to keep the daily blotter of deposits and payments. Barron also remodeled the bank office, installing a new teller counter with a railing.^

Lionel, who had returned to New York from a trip to Europe, made other recommendations. He felt that Barron should pay himself at least $1,000 per year, now that he was devoting most of his time to the institution. The bank also should seek more customers:

I find we are too conservative in seeking for patronage. We should not hide our light under a bushel and refrain from asking persons for business. In the first place it is a business duty to do sot;] secondly we get no credit for not doing so ... . Why shouldn't we talk business to people when we get a chance.^

The Pima County Bank faced the problem of limited capital, which prevented its full participation in the brisk business climate. Hie 107

Jacobs brothers had boosted their capital base to $100,000 through borrowing from the Pacific Bank in San Francisco. Their bank loans had swelled to the maximum level—and still opportunities beckoned.

In the summer of 1881, after much discussion they decided that the best course of action was to convert their facility to a national bank and operate under the regulation and supervision of the United

States government.^

When they planned the Pima County Bank, Lionel had studied the possibilities of tying it to the national banking system, but the conditions in Arizona, as well as their own financial circumstances, dictated that a private bank was best. Within two years, conditions had changed. The Jacobs bank had a firm base and fine reputation, especially with the closure of Lord and Williams in Tucson in October of 1881. Safford, Hudson, and Company handled a large volume of business, but had experienced minor problems. The Jacobs brothers conducted a smaller operation, but had faithful, satisfied customers.

In banking, more so than in other businesses, confidence and trust formed the cornerstone of success. Building upon this foundation, the brothers believed that a "national bank" would instill even more confidence.^

The time seemed appropriate. Arizona was prosperous and the genercil optimism promised an expanding volume of financial transactions.

The national economy also appeared stable. Even California was

"emerging from the Commercial darkness which Surrounded us some time past," Mark Jacobs wrote to his sons. For Lionel and Barron personally, 108 the time also seemed right. Several of their financial ventures had proven unprofitable, if not a complete loss. For example, in 1880,

Lionel had obtained a flour mill in Florence built by James Brash, who had defaulted on his loans, but the mill failed to make a profit.

In the same year, the brothers funded their nephew Abraham Franklin's mercantile store in Safford. The store soon folded amid a multitude of debts. Then, with the bankruptcy of Lord and Williams, the brothers had difficulty collecting on "Indian vouchers." All of these misfortunes, Lionel lamented to Barron, "will serve to diminish very materially the apparent gains of these past two years." 7

In November of 1881 on the heels of the failure of Lord and

Williams, the Jacobs moved foward with their plans to open a national bank in Tucson. The bankruptcy of their competitor had created demand for financial services that exceeded the business capacity of both the Pima County Bank and Safford, Hudson, & Company. Tucson also lost its U.S. Depository. The Jacobs wanted the depository, for it involved a large input of deposits. To obtain the federal plum, they needed federal ties. As a national bank, their institutions would Q qualify for the Depository.

The Jacobs sought support for a national bank. They knew that contacts with the influenticil financial circles in San Francisco and

New York could enhance their application. Mark Jacobs, on behalf of his sons, met with the president of the Pacific Bank, Dr. R. H.

McDonald. Once the Jacobs brothers had begun serious planning,

McDonald "expressed himself strongly in favor of National Banks" and 109

agreed to consider supporting their move. He would offer advice, but

declined to invest in the new venture. Mark Jacobs also contacted

businessmen in San Francisco. He approached George B. Hooper, who

owned a firm in Tucson, but Hooper was not interested. He opposed

national banks and said he would like to obtain the Depository for his

own business. However, Hooper expressed "the most friendly feelings" 9 toward the Jacobs brothers.

In New York, Lionel contacted the president and cashier of the

Chemical National Bank. He broached the idea of a Tucson national

bank, and the president, George G. Williams, expressed favorable

sentiments. However, Chemical National and its officers and

shareholders, as individuals, would decline investing in a venture

"so far out West, even if 18% per annum can be secured." Such

attitudes toward the West were typical of the times. An acquaintance

in San Francisco wrote Barron about the image of Arizona:

I see you have had quite a considerable [sic] quantity of troubl [sic] there in the way of wash outs—and Indian troubles. These indian [sic] troubles frighten all of our people to death—none dare to come. I think it is high time that Robt Larsen Sec of war [sic]— should send troops enough and crush the thing out. It certainly is a great draw back to that country. There is g[r]eat talk and excitement in regard to it here.

Unable to find business support in San Francisco or New York, Lionel and Barron decided to rely on their own resources to get a national bank approved and opened.

They studied the regulations covering the organization and requirements of a national bank. They had founded the Pima County 110

Bank in December of 1878 without making inquiries and had run the

business as an "informal personal matter." Unlike other states and

territories, Arizona at the time had no bank rules or laws. At the

national level, however, the Banking Act of 1863 bristled with

regulations. Hie act specified that five or more persons had to

submit an application that contained financial information on the

founding members, location of the bank and size of local population,

and capital structure. As the Tucson population in 1881 exceeded

7,000, the new institution had to have $100,000 in capital, divided

into shares of $100 each. To begin operations, at least fifty

percent of the capital must be pledged, and the remainder promised in

monthly installments equalling 10% of the total. A national bank

charter ran for twenty years, or until closure from voluntary

liquidation or forced dissolvement because of violations of the law.

Shareholders would elect a board of directors, each of whom must be

a United States citizen and resident of the city for at least one year.

Each director would purchase at least ten shares and take an oath to

conduct faithfully the duties of his office.^

The government also required safeguards. Banks capitalized at

$150,000 or less had to purchase United States Treasury bonds, equal to one-fourth of thier holdings, as security for customer deposits.

A national bank could not make loans on or purchase its own stock, and

its debts could not exceed its unimpaired capital. To protect depositors further the bank would maintain a reserve of 15% of the total deposits. For "country banks," institutions in cities of less Ill than 50,000 population, three-fifths of the reserve could be kept in

a national bank in a "reserve city" (any place over 50,000 population

so designated) or in a central reserve city (New York, Chicago, or

St. Louis)

In December of 1881, Lionel and Barron Jacobs completed an application for a national bank charter. They planned to capitalize at $500,000 with $100,000 paid-in at the time of opening. Lionel went east to New York to seek support there and in Washington, D. C., and while in the East he met William Zeckendorf, a Tucson merchant who spent time in New York, and received a pledge for $10,000 of stock. Joe Stick of Stick Brothers, New York merchants with whom the

Jacobs had done business since the early 1870s, subscribed to $15,000 in stock and promised to procure letters from New York politicians addressed to the Secretary of Treasury and to the Comptroller of the

Currency to support the charter application. Lionel asked Chemical

National Bank to obtain the U.S. Treasury bonds needed to cover the new institution's banknote circulation. Back in Tucson Estevan Ochoa, a leading Tucson merchant and partner with Pinckney R. Tully, president of the Pima County Bank, promised to write letters and ask friends in New Mexico and "Pacheco [?] and [General] Rosecrans from

California" to endorse the project. In Washington, D.C., Lionel approached Granville Oury, Arizona's territorial delegate to Congress, who assured him that he would use his political contacts to spur approval.^ 112

In Tucson, by early January of 1882, Barron had obtained the

required five investors: himself, Lionel, P. R. Tully, John C. Handy,

a local physician, and J. M. Haskell, a local businessman. On

February 6 the brothers offered 2,000 shares to the public, Samuel

Hughes, a leading businessman, bought ten shares, and R. W. Leatherwood,

former mayor of Tucson, five shares. The brothers retained control by

buying a majority of the stock: Lionel bought 700 shares and Barron

260 shares. A majority of the investors were leading businessmen of

southern Arizona. Included were rancher George Pusch, merchant

Theodore Welisch, entrepreneur E. N. Fish, and merchant-freighter

Estevan Ochoa. On March 29 the Jacobs brothers filed the articles

of incorporation for the first national bank in the Territory of

Arizona with the Pima County recorder's office. On April 17, the

First National Bank of Tucson opened its doors, replacing the old 14 Pima County Bank.

As part of the services of their new institution, Lionel and

Barron planned to issue banknotes, a privilege accorded national banks.

To circulate banknotes, they had to buy additional U.S. Treasury bonds

to back the issue. Lionel asked William Quinlan, cashier of the

Chemical National Bank, for a loan, to purchase the bonds, offering

the treasury bonds, county warrants, individual notes, or "city

obligations of New York people" as collateral. Quinlan accepted the treasury bonds as collateral. He advised the Tucsonans that treasury

bond prices would be lower in sixty days, but they would not wait."^ 113

The Jacobs studied the seven banknote denominations authorized

and decided to issue $5 notes. To insure redemption the issuing

banks had to deposit specie with the Treasury equal to five percent

of the notes in circulation. After two years, the First National Bank

showed on its "Report of Condition" that its banknote issue stood at

between $30,000 and $50,000.^

From the first, the First National Bank of Tucson conducted a

large volume of business. Customers from the Pima County Bank as well

as newcomers to the region used its services. The customers consisted

of small depositors as wall as mining companies. One of the first

decisions by the directors was to curb the bank's dealings in foreign

currency. Jacobs notified the depositors of the decision and asked

those with Mexican silver accounts for instructions on what to do with

the balance. Some customers transfered the amount to regular U.S.

currency accounts, while others withdrew their money. However, as

Mexican money continued to circulate in large quantities because of

the mining activities, the directors in March of 1883 reversed their

policy. Barron wrote the Comptroller of Currency Jonathan Jay Knox

in Washington, D.C., for instructions on keeping separate accounts in

Mexican silver."^

The First National's success enabled the Jacobs in August of

1882 to obtain their other objective—designation as the U.S.

depository for Arizona. As a result they could now handle all

government financial transactions within the territory, the bank supplying federal disbursing officers with currency in the required 114

denominations. The military also paid for goods and services with 18 drafts drawn on the Jacobs bank.

Operating the bank required close attention to regulations. Loans

to a firm or individual could not exceed ten percent of the bank's

capital and surplus. Real estate mortgages could not be accepted as

collateral, for national banks could not own real estate. In issuing

banknotes, a bank had to maintain a five percent redemption account

to secure the currency. In monitoring the financial standing of each

national bank, the government required that "reports of condition" be

submitted to the Comptroller of Currency five times a year. These

reports contained statements of assets and liabilities, detailed

schedules showing loans and discounts; stocks, bonds, and mortgages

owned by the bank; amounts due from reserve agents; amounts due from

state and private banks and bankers if exceeding one-tenth of the

bank's capital; and checks and cash items. By law the bank had to

publish its "reports" in the local newspapers. To insure fulfillment of these rules, Treasury Department examiners scrutinized bank books 19 at unannounced intervals.

Several regulations were annoying. For example, national and state banks had to affix a two-cent revenue stamp to every check, and revenue collectors visited the banks to exam cancelled checks. When the Tucson bank became a Depository, Barron wrote the Treasury

Department for a set of these official stamps and penalty envelopes.

The Assistant Treasury Secretary replied that his department did not 115

furnish these items and sent a circular on how to acquire them. In 20 July of 1883 Congress repealed the revenue stamp tax.

When organizing the First National Bank of Tucson, Lionel and

Barron considered the fate of the agency bank in Tombstone. Federal

regulations allowed a state or territorial bank to retain its branches

when it converted to a national bank, but the Jacobs brothers decided

to reorganize the Tombstone branch as a separate institution. A local

bank could handle the needs of the mining communities more efficiently.

With the help of Phillip W. Smith, branch manager, Lionel and Barron

designated the agency the Cochise County Bank on May 1, 1882. Though they owned a majority of the shares, the brothers made Smith president;

E. B. Gage, superintendent of the Grand Central Mine, vice-president;

Charles Solomon, a Tombstone businessman, cashier? and Heyman Solomon, 21 his father, managing director.

The Cochise County Bank served Tombstone and the neighboring copper town of Bisbee. The mines regularly required cash for payrolls and mining sales, forcing the bank to import large quantities of currency and gold. As the First National Bank was initially the only correspondent, Charles Solomon ordered the money from Barron. If the

Tucson institution ran short, Solomon could place an order with the

San Francisco correspondent, or Barron would borrow from Safford,

Hudson & Company. In May of 1882, for example, J. B. Haggin of

Tombstone received from New York two telegraphic transfers totaling

$49,000. Neither the Cochise County Bank nor the First National Bank 116

could handle this amount, so Barron borrowed $40,000 from Safford, 22 Hudson & Company.

Barron disliked being the Tombstone bank's intermediary with

financial institutions in San Francisco and New York. He advised

Charles Solomon that the First National Bank could no longer "accept

as Cash any drafts of Mining Companies, for the reason that same will

not be taken & credited as Cash by any of [our] correspondents."

Mining companies should deposit money with correspondents to the credit

of the First National Bank for their use, or they could "draw their

drafts & put than in for collection, [but] in latter case we will not

be . . . disposed to make any advances on the strength of such drafts."

Barron also changed the methods of operation. "Our stockholders," he

wrote Heyman Solomon, "object to the plan of your drawing [funds]

through this Bank, and insists that you be instructed to make

arrangements to draw direct and have your drafts charged up to you by

the Bank you draw on . . . ." Barron wanted to keep his stockholders

happy. He told Solomon: " . . . as I dc not want any dissatisfaction to exist you will oblige me by making the arrangement I proposed and 23 thus allay any grumbling.

lb do as Barron ordered, the Solomons had to acquire correspondents beside the First National Bank. Charles came to Tucson to confer and was instructed to "write each bank and inclose [sic] them a check and state to then that you wish to open an a/c and do business direct [and] also have a cipher code direct." The Solomons did as asked and by the end of 1883 the Cochise County bank had eleven correspondents: two in 117

San Francisco, three in New York, and one each in Tucson, Los Angeles, 24 Boston, Philadelphia, Chicago, and St. Louis.

The Tombstone bank provided the usual customer services: checking accounts, certificates of deposit, bills of exchange, loans, and collections. It also tried to meet local needs. Cochise County

Bank acted as agent for mining companies in shipping bullion to assayers. The cashier also acted as a quasi-stock broker. Patrons desiring to sell mining stock informed Solomon of what was available, and he passed the information to interested parties locally and nationally. Customers wanting to purchase specific stock instructed the cashier to do so, using funds in their bank accounts. To accomplish these purchases, Solomon set up accounts with stockbrokers 25 M. Herman of San Francisco and Samuel White, Jr., of Philadelphia.

Cochise County bank easily converted from a branch agency to a separate entity. The Jacobs brothers were not listed as officers, but they required regular reports on loans and discounts and issued instructions as needed. On reviewing one report, they advised Charles

Solomon that it was time to renew or collect past due papers. On another occasion Barron notified Heyman Solomon: "I think [E. T.]

Hardy uses the line of discount too heavily—we have considerable of 26 his paper here."

Despite the success of the Tombstone institution, the Jacobs revamped its officer structure in early 1883. In March P. W. Smith sold his store in Tombstone to Oberfelder & Company and resigned as president. Charles and Heyman Solomon found their working arrangement 118 with the Jacobs strained and Ifeft the bank. The Jacobs brothers

promptly named Lionel the manager and hired Albert A. Springer as cashier. Hie arrangement proved satisfactory. Hie brothers agreed that the Tombstone institution would be "Lionel's," while Barron would own the major shares in and manage the First National Bank of 27 Tucson.

As they converted their banks, the Jacobs brothers carefully watched the actions of Safford, Hudson & Company. Their principal competitor conducted a large volume of business and remained strong, although John Wasson, one of the four original parties, had withdrawn.

In the fall of 1881 while the Jacobs were readying their application,

Safford, Hudson & Company also applied for a national bank charter.

Charles Hudson had experienced a minor financial setback with the closing of Lord and Williams a month earlier, and believed that national bank status would resolve his problems. The incorporators were Hudson, James Toole (earlier, an original partner) and Albert

Steinfeld, nephew of the Zeckendorfs and an enterprising local merchant. Anson P. K. Safford, the other founder, disposed of his

Arizona business interests at this time and moved to Florida. Hudson actually received an approved charter before the Jacobs did, but he proceeded no further. Presumably, Safford's withdrawal and the support of the Jacobs firm by Delegate Oury and leading Tucson businessmen forced Hudson and Toole to drop their plans. Instead, they bought 119

Safford's share of the bank and renamed the institution Hudson & 28 Company, Bankers. >

Though the First National Bank and the Cochise County Bank

conducted business with Hudson & Company, hostile feelings existed

between the two institutions. Barron rarely called on Hudson &

Company for favors, and he aided his rival'only when they were in a difficult situation. As time went on, the ill feelings grew stronger.

In May of 1884, when E. B. Gage desperately needed $15,000 in gold currency, Barron arranged for $5,000 to be delivered as a telegraphic transfer on Hudson & Company in Tombstone. He advised Albert Springer of his actions and warned: "This latter [$5,000] we got as an especial favor, because we have placed than under obligations to render us that favor whenever we required it & they having done so 29 now, they will probably not do so again."

The hostile feelings created problems for some of the Jacobs customers. For example, Germain and Montgomery, merchants in Benson, presented the Cochise County Bank a check drawn on Hudson & Company by a man named Howell, and Springer sent it to the rival institution for payment. Hudson & Company refused to honor it, claiming lack of funds, and Springer placed the check under protest (a legal act to force payment). Receiving word of this action, Germain and Montgomery complained that Springer had acted rashly. They knew that Howell had deposited a San Francisco draft with Hudson & Company, and presumed that there had been a delay in collecting it. They chastized Springer 120

for compelling his customers "to suffer on account of the dislike &

Jealousy that exists between your Bank & that of Hudson & Co.

In southern Arizona, banks prospered according to the economic

health of the region. Through the early 1880s local businessmen were

optimistic. The Tombstone mines produced increasing quantities of ore,

and the cattle industry prospered as the newly completed Southern

Pacific Railroad allowed access to markets on the Pacific Coast and

the cattle centers of Kansas City and Chicago.31

By 1884 signs of trouble appeared on the national scene. After

four years of growth, the economy became depressed and prices tumbled

as a highly favorable export situation evaporated. Domestic silver

had been declining since the 1870s because an expanding production

in the West coincided with an international shift to the gold standard.

In 1878 Congress provided supports by passing the Bland-Allison Act,

which authorized the Secretary of Treasury to purchase $2 million to

$4 million worth of silver at market value for minting of dollars as

subsidiary coinage. Despite the passage of the act, silver prices

continued to fail as it did not allow unlimited purchase of the metal.

In view of the worldwide economic conditions, foreign investors

withdrew capital in such businesses as railroads and mines. As they sold their stock and gold flowed out of the country, the value of securities fell. The economic problems culminated in a financial

panic in New York City that began on May 8, 1884. In the aftermath, two national banks in the city closed, and several others suffered 32 major setbacks. 121

Locally, Tombstone also began having problems. In 1881 underground

water seeped into two of the largest mines, the Contention and the

Grand Central. Mine owners installed pumps and began extracting ore

below the water level, but by early 1884 the pumps could no longer control the water. As they began operating at a loss, the mine owners cut wages from four dollars to three dollars per day. The

Miner's Union refused to work at the new rate and called a strike.

The depressed national economy and the continued decline of silver bullion prices forced the absentee owners to make a decision. Father than operate at a loss, they closed the Tombstone mines and ordered more powerful pumps. On May 1, 1884, the Grand Central shut down and 33 in a few days the Contention, Toughnut and others followed suit.

The mine closures placed a strain on the Tucson and Tombstone banks. Reduced income caused a general stagnation in consumer buying.

The demand for cash suddenly jumped as miners withdrew their deposits and prepared to leave town. In mid-April the mine owners warned the banks that they would require cash to meet the last payroll on June 1— then they moved the date to May 1. The banks rushed to prepare for 34 heavy cash withdrawals.

The Cochise County Bank successfully weathered the strain, but

Hudson & Company did not fare so well. As soon as the Grand Central

Mine announced its closure, the Cochise County Bank drew on the First

National Bank of Tucson for funds. Barron shipped $10,000 in gold and arranged with Hudson & Company for a telegraphic transfer of $5,000.

To aid its Tombstone office, Hudson & Company sent over $125,000. 122

However, this sum so depleted the institution's cash reserve that it

halted daily operations. Hudson could not liquify any negotiable

papers and other securities to obtain needed funds. On May 9, 1884,

the home office of Hudson & Company in Tucson announced its closure 35 and the appointment of an assignor.

Hie failure of Hudson & Company created an uproar in southern

Arizona. Emotions ran high. Many small depositors in Tucson and

Tombstone lost their entire savings. In Tombstone, miners, agitated

by their recent decision'to strike for higher wages, crowded in front

of the Hudson & Company office and threatened violence. Depositors

believed (and Tombstone cashier M. B. Clapp confirmed) that the

parent bank had made too many speculative loans. However, directors

James Toole and Charles Hudson blamed the problem on the lack of

notice given by the mining companies.^

Actually, Hudson & Company failed because of inadequate reserves.

The cash on hand was too small to meet the sudden demand for money in

Tombstone. Also, the bank's surplus money and capital had been invested in securities that could not be sold quickly for cash. For example, Charles Hudson as cashier had invested several thousand dollars in local mining stocks whose values tumbled because of the troubles of the mines and the general stock market decline. Any attempt to rescue Hudson's investments was fruitless. Under these 37 circumstances, Hudson & Company closed its doors.

Hie failure of Hudson & Company shook confidence in local banks.

Businessmen hesitated to invest and people questioned the soundness of 123 the other financial institutions. The Jacobs banks, however, were strong and solid. Hudson & Company's failure, Barron told an Arizona

Star reporter, would not adversely affect the First National, for it held none of its rival's paper nor had it loaned them money recently.

First National customers had $150,000 on deposit, and the bank had nearly that amount on hand or on reserve with a correspondent.

Additionally, the bank had $109,000 in treasury bonds to secure circulating banknotes and government deposits. To reassure the public

Barron republished his May 3 "report of condition" in the Tucson Star, and the newpaper editor declared that "The First National is sound to to the pound.

Despite its claims of solvency and strength, the First National suffered a substantial withdrawal of deposits. In the days following

Hudson & Company's closure, the principal depositors in the Jacobs' institution personally assured Barron that they would continue their accounts. However, the First National bank's statement for June 20 showed a drop in all deposits: individual deposits subject to checks decreased by $63,296.38; and demand certificates of deposit by

$11,501.40. Another indicator of the heavy demand for money was the lower average reserve. In late March, Barron reported that the reserve was 65% of deposits and bank balance, while on June 20 he reported 44% of deposits and bank balance. However, the Jacobs weathered the crisis and by the end of September, the bank began to recover slightly. Individual checking deposits increased nearly $2,500. 124

and demand certificates of deposit rose nearly $5,000. The reserve 39 average stood at 62%.

The Cochise County Bank in Tombstone encountered a more severe crisis. After the closure of Hudson & Company on May 9, customers also made a run on the Jacobs' bank, and Springer scrambled to obtain the needed cash. Barron immediately sent $5,000 from the First

National Bank, plus instructions and advice:

I do not dean it proper to leave this place [Tucson] so I have got Col. J. M. Haskell [a bank director] to go and meet you in case you can assure him that that amount will keep you from closing your doors. You may deliver to him such collaterals as you have to secure us & also tell him how everything stands. We cannot spare you any more Cash, more exchange and if this amount will not pull you through you need not take it.

Springer met his customers' demands. He not only accommodated most of his smaller patrons, but also shipped a large monthly remittance to A. A. Castaneda & Company in Bisbee. He tightened his loan policy as he had no money to spare. Though a minor run by depositors occured, most of Springer's patrons visited or wrote for information on the standing of the Cochise County Bank. Within a month, affairs settled down and business returned to normal. The

Cochise County Bank suffered a decrease in total deposits, but it had survived and held the public's confidence. Joe Goldwater, an employee of A. A. Castaneda & Company and a friend of Springer, offered a word of consolation: "Hoping soon to hear that you are in better humor

& less trouble & at same time congratulating you, on downfall of 125

Tombstone Rothchild which will make you very soon a profitable

Business."^"

Goldwater's views proved correct. After four months on strike the

local union accepted $3.00 a day. Hie mines in Bisbee continued to

flourish. As it had no competitor the Cochise County Bank now

handled most of the transactions in southeastern Arizona. Creditors

of the defunct Hudson & Company asked Springer to file claims with

the assignee on their behalf. T. L. Stiles, the assignee, in

November of 1884 stated he was shipping funds to the Cochise County

Bank "to finish paying 10% to Hudson & Co's Creditors." He also 42 asked permission to conduct his business in the bank's offices.

Lionel and Barron had weathered the local banking crisis. They had acted cautiously when dealing with miners and mining companies.

They welcomed the business of the larger mines such as the Grand

Central and Contention, but limited loans to smaller mining operations and demanded unquestionable collateral. Unlike Hudson & Company, they also avoided investing bank funds in mining stock. Government regulations prohibited the use of bank capital or surplus for such ends. Also, the brothers had limited their dealings with Hudson &

Company. Though Barron called in "favors" and asked the rival firm to transfer money to Cochise County Bank, he cautioned Springer on extending favors to the Tombstone office of Hudson & Company. He 126

offered as reasons:

L. M. [Lionel] would not approve of your so doing in view of the fact of their refusing to render your Bank favors some time ago, & for that reason & for others which I do not dean necessary to mention, I think it prudent for you to abstain from taking their exchange or loaning them any money without instructions from L. Mo or advise from us here.4^

The events of 1884 signaled the end of an economic boom in

Arizona Territory. Though the Tombstone strike lasted only a few

months, mining production there never again reached the levels of

1882. The new pumps installed by the Grand Central and Contention could not contain the flooding. Many "adventurous pioneers" who had

arrived with the railroad and profited from the boom years now moved on to new mining prospects in Arizona and the West. Eastern and 44 California investments m Arizona waned.

Despite the signs of economic stagnation, Tucson businessmen remained optimistic. Rumors of a new bank briefly circulated. In

September of 1884, Barron reported to Springer that the Anglo-

Californian Bank of San Francisco might establish a bank in Tucson.

Instead, David Henderson, a long-time Arizona resident, opened a private agency called D. Henderson, Banker on November 17, 1884. In the late 1870s Henderson and his brother had operated a mercantile store in Prescott, then moved the store to the silver mining town of

Globe, where David acted as the unofficial local banker. After

Hudson & Company failed, Henderson apparently believed that Tucson's business community would support a second bank. Henderson worked hard 127 to recruit customers in southern Arizona, and his relationship with 45 the First National Bank of Tucson was friendly.

Though Tucson businessmen seemed optimistic, Lionel and Barron

Jacobs sensed signs of change. Their banks were suffering. The

Cochise County Bank was hard pressed for cash and had few depositors.

In Tucson Barron and his directors worried over the fact that a large amount of funds earmarked for loans was not being used. Government 46 regulations complicated the problem.

Lionel and Barron felt that government restrictions hindered the operations of their bank. For example, they had dropped the Pacific

Bank as the San Francisco correspondent in 1882, and maintained their largest reserve account with the Bank of California. In June of 1884 the First National Bank's account totaled $12,730.93, which exceeded one-tenth of its capital. The Treasury Department warned Barron that this amount broke the regulation limiting the amount of a loan to one party. He protested that the account was not a loan but reserves. In response, a department official informed him of a Supreme Court ruling delineating "that deposits made by one bank with another are loans of money, the same as paper discounted." He went on to advise: "You will therefore please see that amounts due to your association from

State and Private Banks and Bankers do not, individually, exceed, in amount the one-tenth of the Capital of your bank. Hie restriction 47 does not apply to amounts due from National Banks."

Government regulations also limited the bank's response to the changing economic climate. As Eastern investors lost interest, the 128

territory had to rely more on regional capital, provided by loans from

local banks. However, the First National bank, hobbled by rules,

could not provide the necessary credit. Cash became scarce as the

economy declined. The Jacobs brothers could have issued more $5

banknotes, but falling interest rates on treasury bonds limited profit

and the law restricting the number of these notes in nationwide 48 circulation prevented them from doing so.

To keep their banking business healthy, Lionel and Barron Jacobs decided to abandon their national status. During the late summer of

1884 they started liquidating the bank. In August the bank relinquished its appointment as the regional U.S. Depository. Next, the Jacobs brothers needed a consensus among two-thirds of the stockholders to voluntarily liquidate the firm. In late January of

1885, the stockholders gave their approval, and with all requirements fulfilled, the First National Bank of Tucson closed its doors on

January 31. The institution announced in the local newspapers its voluntary liquidation and informed "all note holders and other creditors of said association ... to present the notes and other 49 claims against the association for payment."

On February 1, Lionel and Barron opened another financial institution—the Bank of Tucson. The new bank was a private organization with Barron as sole owner. Lionel had decided to concentrate his interests in the Cochise County Bank. Free of federal regulations, the Bank of Tucson operated with a smaller capital. Barron offered the same services as before. He bought and 129

sold gold, silver, and other bullion; purchased territorial, city, or county warrants on order; provided loans; handled bills of exchange;

and transfered funds through correspondents, including two overseas in

London, England, and Dublin, Ireland.

In scaling down their banking business, the brothers made a wise decision. Southern Arizona's economy in the late 1880s was flat. Hie

Tombstone mines remained flooded and silver prices were low. In 1886 the pump hoist works of the Grand Central Mine burned, and the other large mine, the Contention, refused to pump water for both mines. A few months later, a second fire consumed the Contention. Facing the high cost of replacing the pumps, the mines shut down.^

The copper mines in Bisbee also faced problems. In 1884, Phelps,

Dodge & Company and the Copper Queen Mining Company, which faced the depletion of its original lode, discovered the same vein, and commenced negotiations over the orebody in an attempt to avoid a long-term lawsuit. Meanwhile, the copper market weakened, forcing a decrease in prices from twenty-five cents to approximately ten cents a pound. As the survival of both mines depended on the new vein, the companies merged and became the Copper Queen Consolidated Mining

Company. However, the new firm carried a large debt and possessed few 52 funds in its treasury.

Other problems loomed. In 1885, Geronimo and other Chiricahua

Apache Indians left the San Carlos Reservation and raided ranches and threatened settlers in southeastern Arizona and northern Sonora, Mexico.

Their activities momentarily discouraged settlement and investment in 130

the region. The cattle industry experienced hard times in the late

1880s. For nearly a decade, ranchers had been overgrazing the lands

of southern Arizona, and the resulting erosion of the grasslands

became noticeable during the drought of 1885. These conditions, combined with nationally falling beef prices, depressed the cattle

business. The economy reached its lowest point in the early fall of

1886, when the military captured Geronimo and his band and started reducing payrolls. These events deprived local merchants of a large

part of their market.^

As the economy stagnated, Barron encountered difficulties. Hie scarcity of currency proved to be the most immediate problem. In May of 1886 the cash reserve of the Bank of Tucson became so low that

Barron requested the cashier of the Cochise County bank to refrain from drawing on him for currency until further notice. By September, cash became more abundant, but the Bank of Tucson lacked Eastern and

Western bills of exchange. Barron attempted to obtain them from several sources, including the Cochise County Bank, offering to purchase exchange bills for cash. As his funds dwindled Barron hesitated to loan money. He also restricted accommodations to the

Cochise County Bank. For example, in October of 1886, he refused to send $5,600 to purchase Tombstone city warrants, stating that he 54 needed "funds to loan to our home customers."

While Barron restricted banking operations, Lionel's Cochise

County Bank in Tombstone expanded its base of customers. The cashier,

Albert Springer, recruited business from copper and cattle interests 131

as well as the larger silver companies. The bank provided cash for the payrolls of the Bisbee mines by shipping currency monthly to

A. A. Castaneda & Company. He also accepted consignments of copper ore, contracting with Ladenburg & Thompson of New York to assay and sell the metal. Smaller mines, such as the Arizona Prince, which lacked the resources of the Copper Queen Mining Company, used his 55 services.

Springer found new clients. He obtained the account of the new

Nogales & Sonora Mining & Smelting Company, and sought business among the copper mines in Sonora, Mexico. He cashed the personal checks for the general manager of the Cananea Mining Company, Mexico, and handled international exchange for the miners. Besides the mines,

Springer also obtained business from several of the new cattle companies in southeastern Arizona. He granted loans to the Erie 56 Cattle Company, and collected notes on the Chiricahua Cattle Company.

Springer offered a variety of services. He furnished Mexican dollars to merchants in small tcwns and to other clients in Mexico.

He drew his supply from his San Francisco correspondent, the Bank of

California, and L. Zeckendorf & Company of Tucson. Cattlemen required

Mexican coin when they purchased stock in Mexico. For example,

Springer shipped $1,000 in Mexican dollars to John H. Slaughter, 57 prominent rancher, who was purchasing cattle in Magdalena, Sonora.

Springer also bought and sold county and territorial warrants and bonds in the cochise County Bank. He received requests from investment companies nationwide. For example, Rollins & Young 132

Investment Securities of Denver, Colorado, inquired as to the quantity available (and price) of Arizona county and territorial warrants and

bonds. Springer dealt principally in Cochise and Graham County bonds, but he occasionally traded other securities upon demand. For example, one client asked for information on the market price of Maricopa 58 County and Arizona Canal bonds.

Springer often called upon the Jacobs brothers for assistance, particularly to fill orders for gold and currency. As these requests generally placed a strain on the Bank of Tucson, Lionel and Barron encouraged the cashier to draw on his correspondents in San Francisco,

Los Angeles, and Albuquerque, New Mexico. Springer soon placed the 59 Cochise County Bank in a firm position and stopped relying on Barron.

During the 1880s—an era of boon and bust in southern Arizona—

Lionel and Barron Jacobs had successfully adjusted their banking operations to meet the changing needs of the region. To handle the business boom created by the mining industry in Tombstone, the brothers organized the First National Bank of Tucson and opened a

Tombstone branch known as the Cochise County Bank. By 1884, however, the Jacobs sensed the signs of economic change and restructured their banks. They closed down their national bank and moved to a smaller agency, the Bank of Tucson, and modified the Cochise bank to carry a more diverse clientele and operate independently of its sister institution. By adopting conservative banking practices, the brothers withstood the economic strigencies of the times and retained the public trust. 133

ENDNOTES TO CHAPTER III

"'""First National Bank," Tucson Star, April 16, 1882; "Pima

County," Tucson Citizen, January 1, 1895.

2 "Pima County," Tucson Citizen, January 1, 1895. Caroline Mary

Hughston, The Tricennial of the Consolidated National bank of Tucson

1890-1920 (Tucson, Arizona: Consolidated National Bank, 1920), 3, in

Ephemera File: Tucson Collection, Tucson: Business—Banks—

Consolidated National Bank, AHS; Rufus Kay Wyllys, Arizona: The

History of a Frontier State (Phoenix, Arizona: Hobson & Herr, 1950),

246-247; J. J. Wagoner, History of the Cattle Industry in Southern

Arizona, 1540-1940 (Tucson: University of Arizona Bulletin, Social

Science Bulletin No. 20, 1952), 37-44.

^Hanover National Bank, Boston, to B. M. Jacobs, Folder 24,

Series 2, Box 4; M. I. Jacobs to Lionel Jacobs, February 25, 1881;

Lionel Jacobs to Barron Jacobs, April 25, June 24, and September 23,

1881, all in Folder 17, Series 1, Box 3, JP, AHS.

4 Lionel Jacobs to Barron Jacobs, September 23, 1881, Folder 17,

Series 1, Box 3, JP, AHS.

^Lionel Jacobs to Barron Jacobs, January 6, 1880, Folder 16;

M. I. Jacobs to Lionel Jacobs, February 25 and March 7, 1881; 134

Lionel Jacobs to Barron Jacobs, October 6, 1881; M. I. Jacobs to

Barron Jacobs, October 31, 1881, all in Folder 17, all in Series 1,

Box 3, JP, AHS.

6[M. I. Jacobs] to Barron, October 28, 1881, Folder 17, Series 1,

Box 3, JP, AHS. Barron Jacobs to H. Solomon, October 29, 1881, Folder 5,

Box 6, JFP, SC, UAL. Agger, Organized Banking, 52-53.

7 M. I. Jacobs to Lionel Jacobs, May 27 and December 16, 1880,

Folder 16; and February 25 'and March 7, 1881; Lionel Jacobs to

Barron Jacobs, September 1, 1881, all in Folder 17, Series 1, Box 3,

JP, AHS. "Indian Vouchers" were promissory drafts for supplies

issued by Indian agents, payable by the federal government.

Q Lionel Jacobs to Barron Jacobs, June 24 and November 3, 1881;

M. I. Jacobs to Barron Jacobs, November 8, 10, and 17, 1881, all in

Folder 17, M. I. Jacobs to Lionel Jacobs, January 3, 1882, Folder 18, all in Series 1, Box 3, JP, AHS. Lionel Jacobs to Barron Jacobs,

September 29, 1881, Folder 9, Box 6, JFP, SC, UAL. Fifty Years, 6.

9 M. I. Jacobs to Barron Jacobs, November 8, 10, 17, and 21, 1881;

Lionel Jacobs to Barron Jacobs, Nbvember 3, 1881; M. I. Jacobs to

Lionel Jacobs, December 6 and 27, 1881, all in Folder 17, Series 1,

Box 3, JP, AHS. Lionel Jacobs to Barron Jacobs, December 6, 1881,

Folder 9, Box 1, JFP, SC, UAL. Wright, Banking in California, 47.

^Lionel Jacobs to Barron Jacobs, December 10, 1881; John C.

Bell to [?] Jacobs, September 7, 1881, both in Polder 17, Series 1, 135

Box 3, JP, AHS. History of the Chemical Bank, 1823-1913 ([New York]: privately printed, 1913; reprint New York: Arno Press, 1980), 65;

Wyllys, Arizona, 204. Bell was referring to the military attempts during the summer and fall of 1881 to return the Chiricahua and Warm

Spring Apaches to the San Carlos Reservation.

"'""'"Lionel Jacobs to Barron Jacobs, November 3, 1881, Folder 17,

Series 1, Box 3, JP, AHS. Pima County Bank Articles of Incorporation,

December 24, 2878,. MB, I, 895, PCR, Tucson, Arizona. Bridenstine,

"Commercial Banking," 32-33; Gutowsky, Arizona Banking, 10; Agger,

Organized Banking, 215-217; Bret Harte, Tucson, 51. Tucson's population in 1880 stood at 7,007.

12 Agger, Organized Banking, 217-221.

"^First National Bank of Tucson letterhead with attached copy of a newspaper advertisement for the bank, Folder 32, Series 2, Box 5;

M. I. Jacobs to Lionel Jacobs, January 3, 1882, Folder 18; Lionel

Jacobs to Barron Jacobs, December 10 and 14, 1881, Folder 17, all in

Series 1, Box 3, JP, AHS. Lionel Jacobs to Barron Jacobs, December 6,

1881, Folder 9, Box 1, JFP, SC, UAL.

14 M. I. Jacobs to Lionel Jacobs, December 17, 1881, Folder 17;

January 3, 1882, Polder 18, both in Series 1, Box 3, JP, AHS. B. M.

Jacobs to Corlies, Macy & Co., January 27, 1882, Pima County Bank

Letterbook, Volume 83; Stub Record of Original Shareholders of First

National Bank (Tucson), 1882, Item #3, Volume 77; Bill from C. R. Drake, 136

Pima County Recorder, to B. M. Jacobs of Pima County Bank, March 29,

1882, Folder 1, Box 7, JFP, SC, UAL. Sonnichsen, Tucson, 45-46, 91-92,

130-132, 179. "Our Banks," Tucson Star, April 15, 1882; Advertisement

for the First National Bank of Tucson, Tucson Star, April 16, 1882.

^Lionel Jacobs to Barron Jacobs, December 14, 1881, Folder 17,

Series 1, Box 3, JP, AHS.

^Report of Condition of the First National Bank of Tucson,

March 31, September 30, and December 31, 1884, all in Box 9, JFP,

SC, UAL. Report of Condition of the First National Bank of Tucson,

April 24, 1884, Folder 34, Series 2, Box 6, JP, AHS. John Jay Knox,

A History of Banking in the United States (New York: Bradford Rhodes

& Company, 1903? reprint New York: Augustus M. Kelley, Publishers,

1969), 120-122; Agger, Organized Banking, 61, 219-220.

17 Report of Condition of the First National Bank of Tucson by

Assistant Cashier J. E. Allison, [no date], 1882, Folder 6; Barron

Jacobs to Charles Solomon, May 22, 1882, Folder 3, both in Box 7;

B. M. Jacobs to Jonathan Jay Knox, Comptroller of Currency, March 23,

1883, in First National Bank of Tucson Letterbook, Volume 84, JFP,

SC, UAL. E. K. Wright to B. M. Jacobs, August 16, 1882; C. I. De Baum to B. M. Jacobs, September 15, 1882, both in Folder 31, Series 2, Box 5;

Quinlan to B. M. Jacobs, May 31, 1882, Folder 33, Series 2, Box 6,

JP, AHS. 137 18 F. G. Borneman, Acting Assistant U.S. Treasurer, to First

National Bank of Tucson, U.S. Depository, September 25, 1882;

James Gilfreecur, U.S. Treasury Department, to First National Bank of

Tucson, October 7, 1882, both in Folder 31, Series 2, Box 5, JP, AHS.

19 A. Wyman, U.S. Treasury Department, to Cashier of First

National Bank, Tucson, September 29, 1883; Knox to President or

Cashier, October 3, 1883, both in Folder 32, all in Series 2, Box 5,

JP, AHS. Report of the Condition of The [First National Bank of

Tucson] at close of 31 December 1883, Box 8, JFP, SC, UAL. Agger,

Organized Banking, 218-221.

20 [illegible signature], Assistant Secretary of Treasurer, to

B. M. Jacobs, Cashier, August 21, 1882, Folder 31; H. C. Rogers,

Deputy Collector, to First National Bank, March 16, 1883, Folder 32, both in Series 2, Box 5, JP, AHS.

21 Extract from March 3, 1880, Records of Pima County Bank, copied

April 15, 1882, First National Bank Letterbook, Volume 84; P. W. Smith to B. M. Jacobs, April 24 and 28, 1882, Folder 2, Box 7, JPF, SC, UAL.

Charles Solomon to B. M. Jacobs, May 2, 1882, Folder 36, Series 2,

Box 6, JP, AHS.

22 Ben Williams to Cochise County Bank, May 5, 1882; B. M. Jacobs to Charles Solomon, May 6 and 25, 1882, all in Folder 3, Box 7;

P. W. Smith and B. M. Jacobs, April 24, 1882, Folder 2, Box 7, JFP, 138

SC, UAL. Charles Solomon to B. M. Jacobs, May 17, 1882, Folder 36,

Series 2, Box 6, JP, AHS.

23 B. M. Jacobs to Ctharles] Solomon, May 25, 1882, Folder 3,

Box 7, Barron M. Jacobs to H. Solomon, June 3, 1882, Folder 4, Box 7,

JFP, SC, UAL.

24 Charley [Solomon] to Father [Heyman Solomon], June 7, 1882,

Folder 4, Box 7; Thompson's Bank Note & Commercial Reporter Co. to

Cochise County Bank, November 30, 1883, Folder 5, Box 8, JFP, SC, UAL.

25 L. Vesaria to B. M. Jacobs, April 25, 1882, Folder 2, Box 7;

Thomas White to Hi Solomon, May 8, 1882; M. Herman to Cochise County

Bank, May 12, 1882? W. M. Kughan to Cochise County Bank, May 23, 1882;

Paul Bennett to Cochise County Bank, May 10, 1882; Herman to P. W.

Smith, May 2, 1882, all in Polder 3, Box 7, JFP, SC, UAL.

26 B. M. Jacobs to H. Solomon, May 27, 1882, Folder 3, Box 7;

Barron M. Jacobs to H. Solomon, June 3, 1882, Folder 4, Box 7, JFP,

SC, UAL.

27 B. M. Jacobs to A[lbert] Springer, January 8, 1883, Folder 32,

Series 2, Box 5; Barnett & Block to Cochise County Bank, March 16, 1883,

Folder 37, Series 2, Box 6, JP, AHS. Thompson's Bank Note &

Commercial Reporter Co. to Cochise County Bank, November 30 and

December 24, 1883, Folder 5, Box 8; Springer to Jones & Roswood,

March 24, 1884, Folder 1, Box 9, JFP, SC, UAL. 139 28 [M. I. Jacobs to Barron Jacobs, October 28, 1881; Lionel Jacobs to Barron Jacobs, December 14 and 19, 1881, all in Folder 17, Series 1,

Box 3, JP, AHS. Lionel Jacobs to Barron Jacobs, December 16, 1881,

Folder 9, Box 6, JFP, SC, UAL. "Notice," Tucson Citizen, January 5,

1882; "Moving to Florida," ibid., December 31, 1881; "A Public Loss," ibid., January 6, 1882; "Hudson & Co.," Tucson Weekly Arizona Citizen,

April 16, 1882.

29 B. M. Jacobs to P. W. Smith, February 1, 1882, First National

Bank Letter book, Volume 84; B. M. Jacobs to Springer, May 3, 1884,

Folder 6, Box 9, JFP, SC, UAL. Charles Solomon to B. M. Jacobs,

May 17 and 25, 1882, Folder 36, Series 2, Box 6, JP, AHS.

^Germain & Montgomery, Benson, to Springer, April 21, 1883,

Folder 36, Series 2, Box 6, JP, AHS.

"^Myers, The Last Chance, 232.

32 Current, et. al., American History, 529; Milton Friedman and

Anna Jacobson Schwartz, A Monetary History of the United States,

1867-1960 (Princeton: Princeton University Press, 1963), 99-101.

33 W. J. "Jack" Way, The Tombstone Story (Tombstone, Arizona:

W. John Way, 1965), 28; Odie B. Faulk, Tombstone: Myth and Polity

(New York: Oxford University Press, 1972), 165-166; Myers, The Last

Chance, 232. "Stoppage of the Grand Central," Tucson Star, May 2, 1884. 140 34 "A Heavy Failure: Hudson & Co. Assigns for Benefit of

Creditors," Tucson Star, May 9, 1884; ibid., May 11, 1884.

35 B. M. Jacobs to Springer, May 3, 1884, Folder 6, Box 9, JFP,

SC, UAL. "A Heavy Failure," Tucson Star, May 9, 1884.

36 "A Heavy Failure," Tucson Star, May 9, 1884; ibid., May 11,

1884; "Hudson & Co. at Tombstone," ibid., May 11, 1884.

37 Tucson Star, May 13, 1884; "A Heavy Failure," ibid., May 9,

1884. Friedman and Schwartz, Monetary History, 101.

38 "Judge Silent Interviewed," Tucson Star, May 11, 1884; "A

Heavy Failure," ibid., May 9, 1884; "Report of the Condition of the

First National Bank of Tucson in the Territory of Arizona at the Close of Business April 24th 1884," ibid., May 11, 1884; "It Is Generally

Reported," ibid., May 12, 1884.

36 Report of Condition of the First National Bank of Tucson,

June 20, 1884, Folder 34, Series 2, Box 6, JP, AHS. Report of

Condition of the First National Bank of Tucson, March 31 and

September 30, 1884, Folder 1, Box 9, JFP," SC, UAL. "A Heavy Failure,"

Tucson Star, May 9, 1884; "Report of the Condition of the First

National Bank of Tucson . . . April 24th, 1884," ibid., May 11, 1884.

40 B. M. Jacobs to Springer, May 11, 1884, Folder 6, Box 9,

JFP, SC, UAL. 141

^Goldwater to Springer, May 11, 1884; Joe [Goldwater] to Springer,

May 12 and 13, 1884, all in Folder 4, Box 9; Lewis Williams to Springer,

May 11, 1884, Folder 2, Box 9, JFP, SC, UAL.

42 Goldwater to Springer, May 11, 1884; Joe [Goldwater] to Springer,

May 12, 1884, both in Folder 4, Box 9; Banker & Hamilton to Cochise

County Bank, May 12, 1884, Folder 2, Box 9, JFP, SC, UAL. W. H. Trask,

Valley National Bank, St. Louis, to Cashier, Cochise County Bank,

July 31, 1884; Springer to B. M. Jacobs, October 14, 1884, both in

Folder 38, Series 2, Box 6; T. L. Stiles to Springer, November 3 and

28, 1884, Folder 39, Series 2, Box 7, JP, AHS. Tucson Star, May 8 and

13, 1884. Charles H. Dunning and Edward H. Peplow, Jr., Rock to

Riches (Pasadena, California: Hicks Publishing Company, 1966), 119;

Myers, Last Chance, 232-233; Faulk, Tombstone, 168.

43 Lionel Jacobs to Barron Jacobs, September 14, 1881, Folder 17,

Series 1, Box 3, JP, AHS. B. M. Jacobs to Springer, May 7, 1884,

Folder 6, Box 9, JFP, SC, UAL. Tucson Star, May 13, 1884. Agger,

Organized Banking, 218.

44 ' "Pima County," Tucson Citizen, January 1, 1895. Myers, Last

Chance, 232-233; Faulk, Tombstone, 168-171; Lynn R. Bailey, Bisbee

Queen of the Copper Camps (Tucson, Arizona: Westernlore Press, 1983),

33-35. L. M. Jacobs, "Financial," in Pima County: Its Varied

Resource and Unequalled Advantages: Mecca of the Southwest: Its 142

History, Past and Prsent and Future Outlook, supplement to Tucson

Citizen, January 1, 1890; Tucson Star, May 11, 1884.

45 B. M. Jacobs to Springer, September 17, 1884, Folder 6, Box 9?

and April 13, 1885, Folder 1, Box 12, JFP, SC, UAL. D. Henderson to

B. M. Jacobs, September 1 and October 29, 1881, Folder 17, Series 1,

Box 3, JFP, SC, UAL. Tucson Star, May 12 and November 16, 1884;

"David Henderson," Tucson Citizen, September 30, 1892. David

Henderson, Clipbook #255, AHS. David Henderson Biographical File,

SC, UAL. "David Henderson and the Sale of University Bonds,"

Tucson Star, February 12, 1935. Lamb, "Jewish Pioneers in Arizona,"

63, 140.

46 A. A. Castaneda & Co. to Springer, June 10, 1884, Folder 4,

Box 9, JFP, SC, UAL. "A Heavy Failure," Tucson Star, May 9, 1884.

Agger, Organized Banking, 218; Ross M. Robertson, The Comptroller and Bank Supervision: A Historical Appraisal (Washington, D.C.:

Hie Office of the Comptroller of the currency, 1968), 65.

47 Report of the Condition of the First National Bank of Tucson,

June 20, 1884, Folder 34, Series 2, Box 6, JP, AHS. J. S. Langworthy to B. M. Jacobs, September 18, 1884, Folder 3, Box 9, JFP, SC, UAL.

48 Gutowsky, Arizona Banking, 3, 10; Phillip Cagan, "The First

Fifty Years of the National Banking System—An Historical Appraisal," 143

in Banking and Monetary Studies, edited by Deane Carson (Homewood,

Illinois: Richard D. Irwin, Inc., 1963), 22-23, 25; Knox, A History

of Banking, 138-139, 176, 190.

49 First National Bank Letterhead, August 29, 1884, Folder 6,

Box 9, JFP, SC, UAL. Check of First National Bank of Tucson on Bank

of California, pay order to Joaquin Fompa, September 22, 1884,

Folder 39, Series 2, Box 7; S. M. Whiteside to B. M. Jacobs,

January 20, 1885, Folder 19, Series 1, Box 3, JP, AHS. "Letter from the Acting Secretary of the Treasury . . . December 16, 1889,"

House Executive Document 101, 51 Congress, 2 Session, Serial 2858.

"Letter from the Acting Secretary of the Treasury . . . February 28,

1895," Senate Executive Document 103, 53 Congress, 3 Session,

Serial 3280. Two other national banks, the First National Bank of

Prescott and the First National Bank of Phoenix, had been established within Arizona after the First National Bank of Tucson, but both had closed in 1884. "Notice," Tucson Star, February 3, 1885.

"Notice," Tucson Star, February 3, 1885; Advertisement of the

Bank of Tucson, Tucson Citizen, May 4, 1885.

"*^L. M. Jacobs, "Financial," in supplement to Tucson Citizen,

January 1, 1890. Faulk, Tombstone, 169-171.

52 Bailey, Bisbee, 32-35. 144 53 Lamar, The Far Southwest, 472-474? Sonnichsen, Tucson, 98;

Wagoner, History of Cattle Industry, 44-45.

54 B.M. Jacobs to Springer, May 4 and June 19, 1886, Folder "Bank

of Tucson 1886," Box 14; B. M. Jacobs to Springer, May 6 and

October 13, 1886, Folder 1, Box 14; B. M. Jacobs to Springer, May 20,

1885, Folder 1, Box 12; and October 22, 1885, Folder 3, Box 11, JFP,

SC, UAL. L. M. Jacobs, "Financial," in supplement to Tucson Citizen,

January 1, 1890.

55 Goldwater to Springer, April 10, 1885; A. A. Castaneda & Co. to

Springer, March 9, 1885, both in Folder 2, Box 12; J. Dunn, Cashier

Bank of California to Springer, March 9, 1885, Folder 6, Box 11;

Ladenburg, Thalmann & Co. to Springer, September 20, 1885, Folder 2;

and October 14 and 29, 1885, Folder 3, Box 11; Fred W. Heyne, Arizona

Prince Copper Co. to Springer, October 13, 1885, Folder 3, Box 11,

JFP, SC, UAL.

56 P. D. Norton to Springer, March 18, 1886, Folder 41, Series 2,

Box 7, JP, AHS. S. W. Wood, Superintendent, Tornadeo MR Co.,

Dos Cabezas, to Springer, Folder 4, Box 10; Hugh White, Nogales &

Sonora Mining & Smelting Company, to Springer, April 27, 1886;

Henderson to Springer, April 7, 1886, both in Polder 2, Box 13;

J. J. Williams of Copper King Mine, Sonora, Mexico, to Springer,

March 14, 1885, Folder 2, Box 10; E. H. Price, General Manager of

Cananea Mining Company, Sonora, Mexico, to Springer, October 28, 1885, 145

Folder 3, Box 11; Erie Cattle Co. by E. A. Shattuck to Cochise County

Bank, February 22, 1886, Folder 1, Box 13, JFP, SC, UAL.

57 Goldwater to Springer, May 1, 1885, Folder 2, Box 12; H. S.

Kaufman, Cashier of First National Bank of El Paso, to Aflbert] E.

Jacobs, December 15, 1886, Folder 6, Box 13; Bank of California to

Cochise County Bank, March 25, 1885, Folder 6, Box 11; L. Zeckendorf

& Co. to Springer, June 15 and August 5, 1885; L. Zeckendorf & Co. to

Cochise County Bank, June 11 and November 4, 1885, all in Folder 6,

Box 12, JFP, SC, UAL.

58 Record of "Cochise County Bank 1/28/86 Purchase this date for

a/c of Henry Berobsherma, Shelbina, Mo. the following Wts.," Folder 1,

Box 13; Rollins & Young, Investment Securities of Denver, to Springer,

May 11, 1885; N. W. Harris & Co., Investment Bankers to Springer,

June 12, 1885, both in Folder 4, Box 10, JFP, SC, UAL.

59 B. M. Jacobs to Springer, March 6 and 11, 1885, Folder 1,

Box 12, JFP, SC, UAL. 146

CHAPTER IV

THE JACOBS BROTHERS RETIRE

Lionel and Barron Jacobs had survived the turbulent 1880s, with

their financial operations intact. During the next two decades, as

population increased throughout the Arizona territory, Phoenix and

Tucson developed into commercial centers, the copper mines prospered,

irrigated agriculture thrived, and cattle raising rebounded. As the

territory matured, banking changed. Personal circumstances forced the Jacobs brothers to relinquish partial control of their operations to another banker and close the Tombstone branch. A few years later, they lost the leadership role in the bank they had founded to another

powerful financier, but they immediately shifted their interests to a competitor institution. At their retirement from the business scene in 1913, they could view with pride their contributions to the growth of their land of choice.^"

During the late 1880s Lionel and Barron Jacobs faced troubling problems in maintaining control of their banks. In January of 1885,

Lionel went to Tombstone, reorganized the affairs of the Cochise County

Bank, and left specific instructions for Albert Springer, the cashier.

To keep a check on matters, he returned as he could to review the banking operations there. Lionel actually spent most of his time on other investments, which required him to travel to San Francisco and 147

New York. While away, Lionel relied on Barron to keep an eye on the

Cochise County Bank and placed Albert Jacobs as Springer's assistant.

In the spring of 1886, Barron suffered a bout of ill health and 2 recalled his brother Albert to Tucson.

David Henderson continued to be the Jacobs brothers' main

competitor in Tucson. Initially, Henderson followed Barron's approach

and monitored his financial operations closely, modifying his banking

business to conserve his capital of $75,000. He gauged changing

economic conditions with care and was alert to maintain financial

stability. However, Henderson continually searched for business opportunities. To free himself to pursue other affairs, in 1386 he sold a share of his bank to Merrill P. Freeman, the former postmaster of Tucson, and appointed him cashier.3

Aware that both the Jacobs brothers and Henderson were interested in new businesses, Freeman proposed that the Bank of Tucson and

D. Henderson, Banker merge. Barron hesitated, reluctant to give up control of his institution, but he soon reconsidered. The local

banking scene was changing. In December of 1886, Albert Springer resigned as cashier of the Cochise County Bank, and Lionel sent his brother Albert to run the institution. Barron wanted a vacation. His health remained poor and he hoped to take his wife and daughter on a tour of Europe. Lionel needed Barron to stay in Tucson, because he and David Henderson, along with several California businessmen, had organized a national bank in San Diego, and Lionel was cashier. Under these circumstances, Barron agreed to the merger of the two Tucson 148

banks. Both men knew that the local economy was improving after the

stagnated summer of 1886. By combining their capital, the new bank 4 could profit from the recovery.

In June of 1887, Barron Jacobs and David Henderson completed the

merger and on the twenty-third day of the month they opened the

Consolidated Bank of Tucson. The offices were on Congress Street in

the Henderson building. Barron was president; Henderson, vice

president; and Merrill P. Freeman, cashier. "The consolidation of

the Bank of Tucson and that of D. Henderson," the Tucson Star reported,

"will give Tucson the strongest banking house in Arizona. All the

officers are experienced banking men, well known throughout the 5 territory as such."

Freeman as cashier was a major factor in making the new bank a

success. He gained the confidence of the community, while at the

same time maintaining the conservative banking policies of his

predecessors. Merrill Freeman, a Star reporter said, was "an affable

and courteous gentleman" who was "pleasingly firm when the collaterals

are not satisfactory." In late 1887 with the minor upsurge of the

economy, Freeman effectively handled an active demand for currency.

As the bank's funds became fully utilized, he charged a premium when

supplying currency to other banks, such as the Cochise County Bank.

He also provided the army paymaster with large sums of money on a regular basis.®

Upon his return to Tucson from abroad in early 1888, Barron Jacobs took an active role in the operations of the Consolidated Bank, though 149 now in the capacity of president. Highly pleased with the arrangements, he approached Henderson and Freeman about incorporating the bank. The two men agreed. On April 15 Henderson filed articles of incorporation for the Consolidated Bank of Tucson, and the institution issued $50,000 worth of stock in 500 shares at $100 par value. The incorporation ran 7 from April 2, 1888, to April 2, 1908.

That fall, Freeman became seriously ill and Barron took over the operations of the bank. The following February, at the stockholders annual meeting, Freeman resigned as cashier and sold his shares to

H. E. Lacy, manager of the Tucson Gas Company and chairman of the

Pima County Board of Supervisors. Barron remained president, Lacy became vice president, and Henderson the cashier. Henderson hired

Herbert B. Tenney as assistant cashier. Tenney was a local businessman g and a formal territorial legislator.

The new arrangement proved to be temporary. In June of 1889,

Henderson resigned as cashier and sold his interest in the Consolidated

Bank of Tucson to Lionel Jacobs. Lionel had moved to San Francisco in late 1888 when the San Diego National Bank closed. He returned to

Tucson in early June to become cashier. A newspaper reporter commented that the prosperity of the new bank "will be enhanced by the additional capital, facilities and experience of Mr. Jacobs." To obtain funds to buy Henderson's shares, Lionel at the end of June closed the Cochise

County bank. Mining activity in Tombstone had declined and Albert 9 Jacobs found it difficult to recruit customers. 150

Meanwhile, Merrill Freeman, while recovering in San Francisco, negotiated with businessmen from Tucson and Hartford, Connecticut, to establish a second bank in Tucson. Southern Arizona was recovering from the eceonomic slump, and cattle raising and agriculture had joined mining as the major industries in the region. However, more capital was needed to speed its development. A second bank could help.

Freeman recruited Samuel Hughes, one of the city's pioneers and a former investor in the First National Bank of Tucson; Felix S. Haas, a prominent local merchant; and George Pusch, of the wholesale butcher firm Pusch & Zellweger and a local rancher. R. Ballerstein of

Hartford, Connecticut, also invested money in the new bank."^

On August 1, 1889, the Santa Cruz Valley Bank opened its doors in Tucson. Hughes was president, Haas, vice president, and Freeman cashier. Pusch and Ballerstein served as directors. The capital of the bank stood at $50,000, with half paid-in. Freeman offered full banking services, granting loans, accepting deposits for checking accounts and certificates of deposit, buying or making advances on gold dust and bullion, making advances on city or county warrants and escrows received, negotiating county and municipal bonds, and selling drafts on major cities and bills of exchange on European banks.

Freeman also emphasized in a newspaper advertisement that the bank had a "large fire proof Vault at the service of our friends.

Despite the competition, the Consolidated Bank of Tucson and the

Jacobs brothers continued to prosper. A substantial increase in transactions reflected the economic improvement in business and real 151 estate values in Pima Cojnty and southern Arizona. Barron and Lionel endeavored to attract a large and diverse patronage. The Consolidated

Bank's clients, according to the Tucson Citizen, included "leading officers, merchants, ranchmen, and several counties [governments] in the Territory." Prompt service and careful policies marked the Jacobs operations. Lionel and Barron had earned a reputation as financiers, and the public considered than preeminent authorities "on everything 12 that relates to the financial institutions of the territory."

Hie Consolidated Bank of Tucson prospered, but the Jacobs brothers soon faced a challenge to their control of the institution. In June of 1889, when David Henderson sold his interest in the bank to the

Jacobs, he made plans to convert the Consolidated Bank into a national bank. He believed that Tucson's economy had recovered enough to support a national institution. Henderson filed for a charter application with the Comptroller of the Currency, and received it in early 1890. However, Henderson did not include Lionel and Barron in his plans. Their ideas on policies differed, making it impossible for then to work together. Henderson had matured his plans with the cooperation of the other stockholders of the bank, including Vice

President H. E. Lacy and Assistant Cashier Herbert Tenney, and two outside parties E. W. Graves of Tucson and P. M. Lilianthal of

San Francisco."^

Lionel and Barron saw their control of the bank slipping and decided to dispose of their shares in the institution which they had founded eleven years earlier. On March 9, 1890, at a special meeting 152

of the stockholders, they sold their interest to Henderson and

Lilianthal and resigned their positions. Henderson replaced Barron

as president and Tenney moved up to cashier. E. W. Graves became

assistant cashier. The new group of stockholders voted unanimously

to implement the national charter granted Henderson. On April 19 the 14 Consolidated National Bank opened its doors.

The Jacobs brothers shifted their assets to another bank in Tucson,

the Santa Cruz Valley Bank. They approached Merrill Freeman and his

associates and requested permission to buy $25,000 of the unissued bank

stock. On May 17 the stockholders met and approved the sale. The

brothers also purchased additional stock from R. Ballerstein and with

this move obtained control of the Santa Cruz Valley bank. The

stockholders elected new officers: Barron Jacobs replaced Samuel

Hughes as president; Hughes replaced Felix Haas as vice president;

and Freeman remained as cashier. Barron and Lionel had worked well

with Freeman after the merger of the Bank of Tucson and D. Henderson,

Banker, and felt comfortable with him handling the daily operations.

Barron willingly accepted the presidency as it had evolved into an

influential position. As president he could determine the policies

and direction of the bank.*5

Freeman welcomed the Jacobs brothers to the management of the

Santa Cruz Valley Bank. The bank's correspondents also praised the new arrangement. They especially noted the selection of Barron as

president. James M. Donald, cashier of the Hanover National Bank,

Boston, wrote: "We note the circular of your Bank in regard to his 153

[B. M. Jacobs] catling into the Presidency, and certainly you have a great deal of advantage." The editor of the Tucson Citizen reported that "it looked like old times to see B. M. Jacobs to the fore in the management." Hie experience and success of the Jacobs brothers insured "the certainty that their management of the Santa Cruz in the 16 future will be as successful as in the past."

In 1890 Arizona businessmen were optimistic. Hie territory had grown to more than 90,000 people. Railroads crisscrossed the land and miles of canals had been built to aid agriculture. Hie Sherman

Silver Purchase Act, recently passed by Congress, spurred hope in the silver industry, as the legislation required the government to buy silver for coinage. Territorial businessmen increasingly turned their 17 attention to national issues. 1 The Jacobs•brothersdecided to keep pacie by nationalizing the

Santa Cruz Valley Bank. Shortly after assuming control in May of

1890, Barron began working toward this goal by improving bank services.

For example, he arranged with the London, Paris & American Bank and the Nevada Bank, both of San Francisco, and the Chemical National Bank of New York to aid customers with large transactions. That summer the brothers applied for a national bank charter, and on October 10, 1890, they received it. On the thirtieth the Arizona National Bank succeeded the Santa Cruz Valley Bank. Its capital remained at $50,000, and

Barron continued as president, Samuel Hughes as vice president, and 18 Merrill Freeman as cashier. 154

The Arizona National Bank prospered. It dealt in territorial, county, and city warrants on a large scale, obtaining than from various sources, including Arizona correspondents. For example,

Freeman purchased Tombstone City General Fund warrants from the Bank of Tombstone. To accommodate customers, the Jacobs brothers added more correspondents: the Farmers' & Merchants' Bank of Los Angeles;

State National Bank of El Paso, Texas; the Valley Bank of Phoenix; and the Bank of Tombstone. The Consolidated National Bank had larger deposits and handled a greater volume of transactions, but the Arizona

National Bank built a reputation as a solid institution. After a year and a half, the Arizona National reported that its "surplus" fund

(reserve for emergencies) had increased from $3,000 to $8,000 and 19 undivided profits stood at $7,924.07.

The Arizona National Bank specialized in transactions involving exchange and currency. Periods of money scarcity in the nation created problems. In 1892, with Eastern exchange in short supply throughout the West, Freeman requested the Farmers' & Merchants' Bank, a Los Angeles correspondent, to remit $5,000 to the St. Louis correspondent, the National Bank of Commerce. However, he quickly cancelled the order when the cashier in Los Angeles replied there would be a 20 cents per $100 charge to supply the necessary Eastern exchange.

Instead, Freeman obtained the exchange from the Valley Bank of Phoenix by trading Western exchange for Eastern. Gold coins also went through cycles of availability. In 1892 the Arizona National Bank possessed 155

more coin than needed, and offered William Christy, cashier of the

Valley Bank, a supply. Hie Valley Bank cashier replied that he had 20 "plenty on hand."

Lionel had invested in the Arizona National Bank, but took no part

in its everyday operations. He spent time in travel to California and

New York, supervised his Arizona investments, and became involved in

territorial politics. In 1890 he served as chairman of the powerful

Democratic Territorial Central Committee. By November of the

following year, however, he decided to take an active role in the bank.

At the annual meeting he replaced Samuel Hughes as vice president, 21 while Barron and Freeman retained their positions.

In 1893 the United States suffered a severe economic panic which

vitally affected the banking scene in Arizona. On the national level,

problems stemming from overspeculation, labor unrest, and low

agricultural prices preciptated a stock market crash in May. Arizona's

economy felt the effects of the depression that followed. Falling

prices caused farmers to sell their products at ruinously low prices,

and the cattle industry stagnated after years of drouth and a weak

market. Banks in Arizona found that farmers, ranchers, merchants,

and mine owners could not meet their obligations. A majority 22 extended the loans until the depression lifted.

The Arizona National Bank survived the Panic of 1893 in fairly good shape. Hie directors kept its reserves at a high level and its surplus at $7,500. To maintain public trust, the Jacobs brothers ran 156 advertisements in the local newspapers, emphasizing the institution's

"abundant resources" and that it was "prepared to transact any business in the line of banking that A Solid Institution CAN DO OR A

Conservative Concern SHOUID DO!" Hie bank even offered aid to other institutions in the territory who were having difficulties.

Beginning in May Freeman shipped gold coins to the Bank of Tombstone, which anticipated a run, but by July the cashier informed Freeman to cease shipments. The bank run did not materialize when the mines discharged workers. Hie Arizona National Bank also supplied cash to the Valley Bank of Phoenix by trading for New York exchange. To provide the currency, the Jacobs brothers and Freeman imported it from the State National Bank of El Paso, Texas, paying with Eastern 23 exchange.

The crisis caused changes on the banking scene in Arizona and the nation. Institutions in large Eastern cities formed clearing house associations to regulate charges on services and correct shortages of currency. The bank in Kansas City adopted clearing house rules, compelling members to charge $1.00 per $1,000 for collecting or remitting checks, drafts, or notes written on Kansas City or on items drawn on other towns. New York City banks also organized a clearing house, and in August the cashier of the Chemical National Bank asked

Freeman to clearly mark "Payable only through New York Clearing House" 24 across the face of the checks sent there.

During the first months of the crisis, the Arizona National Bank had relied on New York exchange to transact business. However, by 157 late summer the cashier of the First National Bank of Chicago informed

Freeman that "because of the disinclination of New York Banks to ship currency against balances, New York Exchange is ruling [valued] at a heavy discount in this market, having been all the way from $5.00 to

$30.00 per thousand." A month later the situation reversed and cash became abundant. The Chemical National Bank cancelled the use of the clearing house stamp on checks, and by early 1894, the First National

Bank of Chicago lowered the interest on daily balances to 1 1/2% per annum, citing the "large accumulation of money at the principal centers and the lack of demand by reason of the general stagnation of buisness.

Unstable conditions caused an increase in expenses for collecting and transferring funds. C. R. Morehead, president of the State

National Bank of El Paso, wrote Freeman: "We find the Banks all around us are charging for everything they do which will last until things Settle down." Though the State National limited its commission to actual expenses, other correspondents charged a set percentage to all customers. The banks of Phoenix formed a Bankers Association in early 1893, and agreed to a commission of "1/4% of 1% on all collections." William Christy, cashier of the Valley Bank, wrote

Freeman that the association allowed no exceptions to "be fair and 26 equitable all around."

Other important issues surfaced during the economic troubles.

In 1893 the Arizona legislature enacted the first territorial banking law. It declared that the Territorial Auditor would be Bank Comptroller 158 and authorized him to license banks and make unannounced annual examinations of institutions under his supervision. The Arizona

National was exempt from the control of the territorial bank comptroller, but the Jacobs brothers closely followed the effects of the new law. The legislature also passed a bill taxing the stock of banks. As they were the only corporations to feel the tax, the banks in Arizona took the matter to court. In April, William Christy of

Valley Bank notified Lionel and Barron that the cashiers in Phoenix had refused to give the territorial assessor certain information, 27 especially a list of stockholders.

Lionel and Barron Jacobs worried about the validity of some bonds the bank had purchased. In November of 1892 the Territorial Loan

Commission issued Arizona Funding Bonds, and the Jacobs brothers obtained some of them. Questions soon arose about the authority of the commission to issue such bonds, as the U.S. Congress had placed limits on territorial indebtedness. Hie brothers questioned their colleague William Christy, who also was the Territorial Secretary of the Treasury; about the matter, and he assured them that a

Congressional act covered the expenses of the Loan Commission. In

April of 1893, however, Lionel and Barron asked to exchange these bonds for warrants, and Christy, with the approval of the commission, did so. These papers included Pinal, Graham, and Yuma counties warrants, Maricopa School District No. 1 warrants, and Tombstone and

Prescott city warrants dated October 31, 1892, and January 28, 30, and

February 8, 1893. Christy reaffirmed the legality of the proceedings, 159

offering a written guarantee to collect them when called for payment, 28 thus protecting Arizona National from losses.

In August of 1894 Lionel and Barron placed their warrants on the

market. They gave the option for the papers to John C. Abbott of

Investment Securities of Hartford, Connecticut. However, before

Abbott offered the warrants, he required a Judge Dillon, who was a

bond lawyer in Connecticut, to certify the validity of the bonds for

which these warrants had been exchanged. He asked the brothers to

supply the bond numbers, which warrants applied to each bond, and a

certified transcript of the records of the 1893 meetings of the Loan

Commission. The latter included the vote for exchanging of the bonds,

the dates of the votes, the signature of the chairman and the

attestment of the secretary. Abbott also wanted a copy of the order

of the commission authorizing Christy as treasurer to make the

exchange. Long delays occurred when the Jacobs sent incomplete papers.

In the meantime they forwarded the transcripts of a special meeting of the commission held on October 19, 1894, which approved preambles and 29 resolutions referring to the exchange.

Abbott still held back on the Jacobs warrants. He required the certificates by Dillon, but would not proceed with incomplete papers.

He again pressed the Jacobs brothers for correct information and cited the dwindling market for warrants. Abbott offered to release his option to allcw the Arizona bankers to go with someone else. But

Lionel and Barron wanted to stay with him. Finally, in November,

Abbott gave up on receiving the correct papers and put the warrants on 160 the market. He warned that most buyers would insist on Judge Dillon's opinion. Also some might become aware that a few warrants used in the exchange were for irregular obligations, namely the bonds of a defunct narrow railroad near Tucson. In December, Abbott, reassured that the Arizona National Bank was not involved with the railroad

bonds, agreed to keep the warrants on the market. The Jacobs brothers renewed his option indefinitely, and in the next few months the warrants sold.^

Local concerns during the Panic of 1893 spotlighted the relation of Arizona's economy to that of the nation. The Jacobs brothers had kept pace by adding connections with other financial centers, and as the depression eased, they profited from these lines of communication.

In February of 1895 the First National Bank of Chicago contacted the

Arizona National Bank and arranged to draw drafts on the Tucson institution. The Chicago bank mentioned the increased requests for exchange on Tucson. A year later, the Arizona National Bank handled a large amount of government business that required an account with the First National Bank of Los Angeles, a U.S. Depository. The bank already had a correspondent in that city, the Farmers' & Merchants', and Barron courteously wrote to its cashier to inform him of the 31 procedures to conduct business with its competitor.

The Arizona National underwent a change in officers. In

December of 1895, Merrill P. Freeman resigned as cashier to accept the position of vice president at the rival Consolidated National Bank.

Two banks in Phoenix had also offered him positions, but he chose to 161 stay in Tucson. Lionel resigned as vice president and temporarily replaced Freeman as cashier. The stockholders brought in Fred

Fleishman, local druggist and newcomer to the bank, to be vice president. A month later, R. W. Wood, formerly with the Bank of

Tombstone, became the permanent cashier. To keep Lionel as an officer, the brothers created a second vice presidency for him. In

July of 1896, Wood resigned to return to his home in Los Angeles, and

Lionel resumed the position of cashier. The Arizona National hired 32 J. M. Qrmsby to be assistant cashier.

With the new officers in place, Lionel settled into conducting business at the Arizona National Bank. He handled transactions for customers throughout Pima, Cochise, Graham, and Pineil counties and dealt with the usual problems of banking, including the cycles of cash and exchange. In the summer of 1896, the Arizona National Bank had a cash surplus, and Lionel contacted the three banks in Phoenix about their needs. C. J. Hall of the Phoenix National Bank replied that the local institutions also possessed a surplus. At this time, the California market for New York exchange became "demoralized."

The decline in prices affected the remittances Lionel sent to correspondents in San Francisco and Los Angeles, for they refused to accept the drafts at par. When he attempted to obtain San Francisco exchange from the Phoenix National Bank, Hall refused, saying he shipped currency to get exchange. By September, Eastern and Western exchange became scarce, forcing Arizona banks to ship money to cover drafts 162

Lionel continued as cashier of the Arizona National Bank, but his health was poor and he spent much time in San Francisco. He relied more and more on Ormsby to conduct the daily work of the bank.

At the annual meeting in 1903, Lionel resigned as cashier and 34 replaced Fleishman as vice president. Ormsby became cashier.

For nearly ten years, the Arizona National bank had prospered and expanded its volume of business. Deposits had increased from $71,000 to $211,000. The Consolidated National Bank carried larger deposits and handled more transactions, but the Jacobs institution enjoyed public confidence and acquired the nickname of Arizona's "Bank of

England."3"'

The Arizona National Bank continued to flourish despite increased competition. The Bank of Safford opened in April of 1899 and a few months later I. E. Solomon, a prominent merchant, and five other businessmen established the Gila Valley Bank in neighboring

Solomonville. In 1900, the Bank of Bisbee appeared on the scene.

In Tucson, the Southern Arizona Bank and Trust Company was founded in

1903. A business slump occurred in 1900 which vitally affected smaller institutions. Competition, poor management, and insufficient capital forced the closing of two banks in Phoenix and two in Yuma.

Also, banks that relied on one industry such as mining or agriculture experienced problems. But the Arizona National remained strong and solid.36

In 1903 the territorial bankers formed the Arizona Bankers'

Association. The purpose of the association was to provide help to 163

its members in times of trouble. Lionel, Barron, and J. N. Ormsby,

the cashier of the Arizona National, were charter members. Though

the brothers did not serve as officers, they participated in the 37 meetings and discussions of problems and policies.

In 1907 the United States suffered another economic depression.

Stock market speculation caused the panic, and the "financial debacle"

centered in the Eastern money markets. Arizona avoided the full force

of the dislocation. The major effect was a severe drop in copper

prices, which had reached record levels in May of 1907. Overabundance

of copper, combined with the "speculative manipulations" of copper

company stocks, contributed to the price collapse. Arizona banks

which relied on the mines suffered the most. Between 1907 and 1913, seven banks failed and six others consolidated or changed ownership to avoid closure. Hie largest banks in Tucson, the Arizona National

Bank and the Consolidated National Bank, had no difficulties during this period. Small banks such as those in Globe experienced runs by customers to withdraw money, but public optimism and the use of clearinghouse currency limited the crisis. When the territorial economy returned to normal, the Arizona National Bank emerged as 38 Arizona's third largest financial institution.

By 1910, Lionel and Barron had been bankers for thirty-one years, and were regarded as knowledgeable, successful financiers. They had founded the predecessor of the Consolidated National Bank, the largest in the territory, and had successfully transformed the

Santa Cruz Valley Bank into the Arizona National Bank. Colleagues in PLEASE NOTE:

Page(s) rnissing in number only; text follows. Filmed as received.

UMI 165 the financial and business community regularly sought their opinions on various matters. In 1909, for example, the National Bank of Arizona in

Phoenix asked Barron to participate in board meetings as an "associate."

By doing so, he helped to bind closer the banking institutions of 39 Phoenix and Tucson.

The Arizona Bankers' Association asked Lionel to present his views on the progress of banking in Arizona at one of their meetings. In his speech, he mentioned the introduction of "machinery," especially the typewriter and telephone, to ease workloads. Although Arizona bankers used modern methods and equipment, the national banking system still classified them as "country bankers." Lionel cited the example of trying to sell quality county bonds in New York City, only to have a

Wall Street broker emphasize that they were "a little too far away from the Bowery." Jacobs applauded the intelligence and skill of

Arizona bankers. As country bankers, they performed a wide variety of services outside the "prescribed sphere of the routine duties."

To advise customers asking for counsel, bankers constantly sought the latest knowledge about the local scene. They were experts on economic trends, commercial law, real estate values, history of local residents, and the status of various stocks. Their primary role was to serve the public.vo • 40

The Jacobs brothers saw Tucson continue to grow. The cattle industry in southern Arizona had emerged from the doldrums of the

1890s and flourished. The growing number of small farmers increasingly deposited their funds in local banks. Mining activity resumed as 166

prices rebounded. Eastern investors used Tucson banks to handle their

business when they bought mines and investigated promising investments.

Ihe construction of the El Paso and Southwestern Railroad from Tucson

through Cochise County and into Texas introduced money into the local

economy. Businessmen even predicted that the opening of the Panama

Canal would enhance Tucson's economy. People and goods would travel

through the canal and disembark at Guaymas, Mexico, then take the

railroad to Tucson. Fran there, they vrould disperse to various 41 destinations in the Western United States.

Ihe Arizona National Bank, sharing in the economic boom after

1910, employed extra personnel to handle the business. Ihe directors

pronounced the $50,000 capital too small to meet demands and urged that it be increased to $100,000. In November of 1912 the stockholders

approved a complete reorganization, including the increased capital, and added two more directors to total seven. New officers and directors were: Barron Jacobs remained president; J. Knox Corbett, a local businessman, became vice president? and Frederick Thorpe, former cashier of the Consolidated National Bank, replaced Ormsby, who resigned. New directors included Fred Fleishman, J. P. Hohersen,

Phil C. Brannen, George Pusch, and 0. C. Parker. The stockholders also approved the Jacobs brothers' suggestion to build a $25,000 surplus reserve by selling the $50,000 additional unissued stock at $25 over the par of $100.^

With the reorganization of the Arizona National Bank in 1912,

Lionel and Barron decided to retire. Lionel was age 72 and Barron 66. 167

They wanted to relinquish control while the bank was flourishing. 43 The opportunity now had cone. They made plans to sell their stock.

During the summer of 1912, the owners of the Solomon-Wickersham

Mercantile Company expressed an interest in purchasing the Arizona

National. Charles Solomon, Isadore Solomon, David Wickersham, and

Phoebus Freudenthal owned a controlling interest in the Bank of Safford and wanted to expand into growing Tucson. That fall, they entered negotiations with Lionel and Barron, but the talks stalled on

December 19. The Arizona National already had put up for sale the unissued stock, and several parties had bought shares. However, Lionel and Barron announced that they would hold those shares until the bank's reorganization was completed. On the twenty-fourth, they met with the Solomons, Wickersham, and Freudenthal and sold most of their shares to them. That day Lionel released the news of the change in 44 management.

During January and February of 1913, a transition in management occurred. Businessmen from Safford and Tucson who had worked with the

Solomons purchased the rest of the new bank stock. The new group of stockholders elected officers and directors. They chose Charles

Solomon as president, Phoebus Freudenthal as vice president, and

Frederick Thorpe as cashier. The newly elected board of directors consisted of the officers and Fred Fleischman of Tucson, Isadore

Solomon of Solomonville, E. W. Clayton of Safford, George Pusch of

Tucson, John H. Campbell of Tucson, Mose Drachman of Tucson, H. W.

Fenner of Tucson, Fred Ronstadt of Tucson, and Lionel and Barron Jacobs. 168

Though relinquishing control, Lionel and Barron still retained a few

shares in their bank. With these decisions, the Jacobs brothers,

after forty-six years, removed themselves from active participation 45 in the banking world of Tucson.

Lionel and Barron had played a major role as businessmen, bankers,

and public-spirited citizens in the development of southern Arizona.

They came to the territorial capital at Tucson from California as

young merchants seeking business opportunities and quickly identified

with the community. Opening a mercantile store, they perceived the

local need for cash and credit and drew on the resources and advice of Mark Jacobs, their father who lived in California, and opened a money exchange and lending business in the early 1870s. By expanding their services to meet the changing needs of the region, the brothers prospered and at the same time helped link Tucson with the outside world through contacts with businessmen and financiers in various parts of the nation and Mexico.

By the end of the 1870s, the Jacobs had become quasi-bankers, and impressed by the growth of the Arizona economy, they opened

Tucson's first bank, the Pima County Bank. Unlike the owners of the Bank of Arizona in Prescctt, the territory's first, Lionel and

Barron had no formal banking experience. They spent their first year learning the details and procedures of their new business, relying on their father, who had settled in San Francisco, to provide information. Ihe brothers also expanded their business dealings to 169 the outside world by acquiring correspondents in several major cities.

To meet customer demands, the Jacobs brothers kept close watch on events in the nation and in the territory. When they saw the mining activity in Tombstone create a business boom, they opened a branch of the Pima County bank there. Seeking to handle a larger volume of trade, they reorganized and opened the First National Bank of Tucson. In 1884, Lionel and Barron sensed the winds of economic change and modified their operations to meet the downturn, abandoning 46 their national status to operate the smaller Bank of Tucson.

Throughout their banking career, the Jacobs brothers were conscious of image and reputation, and followed careful, conservative business policies. Their banks maintained large, easily accessible reserves to meet unexpected events. Unquestionable collateral was required for loans, and only limited credit allowed to mining interests.

By such practices they sailed through the local crisis caused by the closures of Lord and Williams in 1881 and Hudson & Company in 1884.

Lionel and Barron made a special effort to control the direction of their financial institutions. In 1890, when they lost the leadership role to David Henderson, they shifted their interests and assumed control of a competitor, the Santa Cruz Valley Bank. The Jacobs brothers worked to expand by reorganizing it as the Arizona National

Bank. Safe and secure they successfully weathered the Panics of 1893 and 1907.

At their retirement in 1913, Lionel and Barron Jacobs were preeminent bankers in Arizona. They had helped steer Tucson and the 170 southern part of the territory through troubled times, providing capital to meet the needs of the mining, cattle, and agricultural industries. The Jacobs brothers also at times had involved themselves in territorial politics, county politics, and cultural activities of

Tucson.

Lionel and Barron Jacobs stepped out of the banking picture in

1913, but they remained in Tucson. Lionel, who had married in 1910, continued to travel between Tucson and San Francisco, and died in

1922 at the age of 82. Barron lived in Tucson until the late 1920s, when ill health forced him and his wife to move to Washington, D.C., to live with their daughter. He died there in 1936. Both men were pioneers in the truest sense of the word. Their legacy continues today as the Valley National Bank of Arizona. Lionel and Barron Jacobs were not colorful frontier characters, but reserved businessmen who made wise decisions for the benefit of their community and themselves.4^ 171

ENDNOTES TO CHAPTER IV

"'""The Man, the Idea, the Bank," Tucson Citizen, October 27, 1929.

The material in the Jacobs manuscript collections at AHS and SC, UAL ends at 1897. Hie personal letters between Lionel Jacobs and Barron

Jacobs end after 1883, the remainder of the collection consisting of business correspondence. Much of the information on movements of people and the status of the banks are available in the Tucson Star and Citizen.

2 Lillian [?] to Lionel Jacobs, January 8, 1885, Folder 19,

Series 1, Box 3, JP, AHS. B. M. Jacobs to Springer, May 5, 1886,

Folder 1, Box 14; Lionel M. Jacobs to Springer, October 7, 1885, telegram, Folder 3, Box 11, JFP, SC, UAL.

3 Enclosure in letter from George F. Jones to Springer,

February 17, 1886, Folder 42, Series 2, Box 7, JP, AHS. "David

Henderson," Tucson Citizen, September 30, 1892; "Change in Banking

Circles: Mr. M. P. Freeman Becomes Vice-President of the Consolidated

National," Tucson Star, December 15, 1895; "Hon. M. P. Freeman,"

Tucson Citizen, February 14, 1895. Hughston, Tricennial of the

Consolidated, 3.

4 Rand tfcNally & Co. to L. M. Jacobs, December 3, 1886; H. S.

Kaufman to A. E. Jacobs, December 15, 1886, both in Folder 6, Box 13; 172

B. M. Jacobs to A. E. Jacobs, January 5, 1887, Folder "Bank of Tucson,"

Box 14; L. M. Jacobs, Cashier San Diego National Bank, to A. E. Jacobs,

September 13, 1887, Folder 2, Box 15, JFP, SC, UAL. "Change in

Banking Circles," Tucson Star, December 15, 1895; "Hon. M. P. Freeman,"

Tucson Citizen, December 14, 1895; "Bon Voyage," Tucson Star, June 23,

1887. Hughston, Tricennial of the Consolidated, 3. David Henderson

and Lionel Jacobs had incorporated the San Diego National Bank in

July of 1887 to profit from the real estate boom in southern California

Henderson became president. Lamb, "Jewish Pioneers in Arizona," 240.

^Advertisement of D. Henderson, Banker, Tucson Star, June 22, 1887

Advertisement of Consolidated Bank of Tucson, ibid., June 24, 1887;

"Tucson and Vicinity," ibid., June 7 and 24, 1887.

^M. P. Freeman to A. E. Jacobs, November 8, 1887, Folder 3; and

December 23, 1887, Folder 4, both in Box 15, JFP, SC, UAL. "Santa

Cruz Valley Bank," Tucson Star, August 4, 1889.

7 B. M. Jacobs to A. E. Jacobs, Folder 1, Box 17, JFP, SC, UAL.

Articles of Incorporation of Consolidated Bank of Tucson, Articles of

Incorporation Book, I, PCR, Tucson, Arizona, 108-109.

Q Lionel M. Jacobs to S[elim] M. Franklin, February 2, 1889,

Folder 1, Box 2, Selim Franklin Papers [SFP], SC, UAL. "Consolidated

Bank of Tucson," in supplement to Tucson Citizen, January 1, 1890;

"HOn. M. P. Freeman," Tucson Citizen, December 14, 1896;

"Contributions," supplement to ibid., January 1, 1890. 173 g Lionel M. Jacobs to S. M. Franklin, June 6, 1889, Folder 1, Box 2,

SFP, SC, UAL. Tucson Star, June 16, 1889; Tucson Citizen, June 15,

1889; "Brevity," ibid., June 15, 1889. In early 1888, the real estate market collapsed in southern California, and the San Diego National

Bank closed its doors within a few months. Lamb, "Jewish Pioneers in

Arizona," 240. The Bank of Tombstone, owned by George Berrott,

George H. Carrel, and R. W. Wood, businessmen from Nogales, Arizona, in the summer of 1887 opened with a $100,000 capital and competed with

Cochise County Bank for the limited business in southeastern Arizona.

Advertisement of Cochise County Bank, Tombstone Epitaph (Arizona),

June 28, 1889; Advertisement of the Bank of Tombstone, Tombstone

Epitaph, August 13, 1887.

^R. Ballerstein, Hartford, Connecticut, to President & Directors of the Santa Cruz Valley Bank, April 11, 1890, Polder 2, Box 18, JFP,

SC, UAL. "Brevity," Tucson Citizen, June 15, 1889; "Santa Cruz Valley

Bank," Tucson Star, August 4, 1889; "Brevity," Tucson Citizen, August 5,

1889; "Pima County," ibid., January 1, 1895; Advertisement of Santa

Cruz Valley Bank, Tucson Star, August 4, 1889.

^Ballerstein to President & Directors of the Santa Cruz Valley

Bank, April 11, 1890, Folder 2, Box 18, JFP, SC, UAL. "Santa Cruz

Valley Bank," and advertisement for Santa Cruz Valley Bank, both in

Tucson Star, August 4, 1889; "Brevity," Tucson Citizen, August 5, 1889.

12 "Consolidated Bank of Tucson," in supplement to Tucson Citizen,

January 1, 1890. 174

^Tucson Citizen, February 18, 1890; "National Bank," Tucson

Star, March 9, 1890; '"Ihe New Bank," ibid., March 10, 1890.

14 "National Bank," Tucson Star, March 9, 1890; "The New Bank,"

ibid., March 10, 1890; Advertisement for Consolidated National Bank,

Tucson Citizen, April 20, 1890. Henderson stayed with the Consolidated

National Bank for just a short time, selling his shares to local

businessmen in April of 1891. "Consolidated National Bank," Tucson

Star, April 19, 1891.

^Ballenstein to President & Directors of Santa Cruz Valley Bank,

April 11, 1890, Polder 2, Box 18, JFP, SC, UAL. "Local News,"

Tucson Citizen, May 17, 1890; Advertisement for Santa Cruz Valley

Bank, ibid., May 18, 1890; "Tucson's Banking Capital," Tucson Star,

May 19, 1890.

16 James M. Donald to Freeman, May 26, 1890, Folder 46, Series 2,

Box 7, JP, AHS. "Local News," Tucson Citizen, May 15, 1890.

17 Lamar, The Far Southwest, 475; Cagan, "First Fifty Years of

National Banks," 25.

18 [illegible], Manager London, Paris & American Bank,

San Francisco to B. M. Jacobs, May 20, 1890; Isaiah W. Hellman,

President Nevada Bank, San Francisco, to B. M. Jacobs, President,

June 2,1890, both in Folder 47, Series 2, Box 8, JP, AHS; Quinlan 175

Cashier Chemical National Bank to Santa Cruz Valley Bank, May 21, 1890,

Folder 5, Box 18, JFP, SC, UAL.

19 Hie Bank of Tombstone, owned by a group of businessmen

headquartered in Nogales and operated by R. W. Wood, continued to

handle the banking needs of southeastern Arizona after the closure of

Cochise County Bank in 1889. In 1893 the Bank of Tombstone became

a branch of the International Bank of Nogales, changing its name to the Tombstone Bank. Undated [1890?] advertisement postcard for

Arizona National Bank, Folder 7, Box 2; H. J. Fleishman, Assistant

Cashier Farmers' & Merchants' Bank, Los Angeles, to B. M. Jacobs,

December 16, 1890, Folder 4, Box 18, JFP, SC, UAL. R. W. Wtood to

Arizona National Bank, August 1 and 11, 1891, Folder 48? and August 12,

1892, Polder 51; and December 2, 1893, Folder 52, all in Series 2,

Box 8; and May 16, 1893, Folder 53, Series 2, Box 9, JP, AHS. Tucson

Star, October 26, 1890; Report of Condition of Arizona National Bank at close of March 1st 1892, Tucson Star, March 13, 1892; Advertisement for Arizona National Bank, Tucson Star, October 30, 1890.

20 John Milner, Cashier, Farmers' & Merchants' Bank, to Freeman,

January 13, 1892; Freeman to William Christy, January 16 and

February 4, 1892, all in Folder 4, Box 19, JFP, SC, UAL.

21 Lionel M. Jacobs to S. M. Franklin, July 8, 24, and 28, and

August 4, 1891, Folder 1, Box 2, SFP, SC, UAL. "Democracy: Mass

Meeting at the Opera House Last Evening," Tucson Star, October 29, 176

1890; Advertisement for Arizona National Bank, Tucson Star,

November 6, 1891.

22 Schweikart, History of Banking in Arizona, 25-26? Lamar,

The Far Southwest, 475; Wagoner, History of the Cattle Industry,

53-54; Current, et. al., American History, 528-530.

23 Wood, Cashier of Bank of Tombstone, to Arizona National Bank,

May 16, 1893, Polder 53, Series 2, Box 9; C. R. Morehead, President of State National Bank of El Paso, to Arizona National Bank, June 15,

July 20 and 26, 1893, Polder 53, Series 2, Box 9, JP, AHS.

Advertisement of Report of Condition of the Arizona National Bank,

December 6, 1894, Tucson Star.

^Van Blarcom to Sir, April 27, 1893, Folder 1, Box 20, JFP,

SC, UAL. Quinlan to Arizona National Bank, August 7, 1893, Folder 52,

Series 2, Box 8, JP, AHS.

25 Christy to Freeman, June 19 and July 20, 1893, Folder 53,

Series 2, Box 9; Quinlan to Freeman, on letter from Freeman to

Chemical National Bank, September 25, 1893, Polder 52, Series 2,

Box 8, JP, AHS. R. J. Street, Cashier of First National Bank of

Chicago, to Arizona National Bank, August 21, 1893, Folder 1, Box 20,

JFP, SC, UAL. 177 26 Morehead to Arizona National Bank, July 20 and 26, 1893,

Etolder 53, Series 2, Box 9, JP, AHS. Christy to Freeman, February 2,

1893, Folder 1, Box 20, JFP, SC, UAL.

27 Christy, Valley Bank of Phoenix, to Freeman, April 28, 1893,

Folder 53, Series 2, Box 9? Wood to Arizona National Bank, December 2,

1893, Folder 52, Series 2, Box 8, JP, AHS. Bridenstine, "Commercial

Banking," 35-37; Schweikart, History of Banking in Arizona, 24-25.

2fl Christy to Freeman, April 22, 1893, Folder 53, Series 2, Box 9,

JP, AHS. John C. Abbott to L. M. Jacobs, October 4, 1894, Folder 6,

Box 20, JFP, SC, UAL. Ward R. Adams, History of Arizona, ed. Richard E.

Sloan, 4 vols. (Phoenix: Record Publishing Co., 1930), II, 54.

29 Abbott, Investment Securities, Hartford, Connecticut, to

Freeman, August 14, 1894; to Arizona National Bank, August 18, 24, and

30, September 10, 17, 19, and 27, 1894; to B. M. Jacobs, September 15 and October 30, 1894; and to L. M. Jacobs, October 4 and 16, 1894, all in Folder 6, Box 20, JFP, SC, UAL.

^Abbott to B. M. Jacobs, October 30, 1894; to Arizona National

Bank, November 15 and 26, and December 7, 1894, Folder 6, Box 20, JFP,

SC, UAL.

31 F[rank] E. Brown, Second Assistant Cashier, First National Bank of Chicago, to Arizona National Bank, February 19, 1895, Folder 1,

Box 21; Fleishman to B. M. Jacobs, May 23, 1896, Folder 2, Box 13, 178

JFP, SC, UAL. J. M. Elliott, President of First National Bank of

Los Angeles, to Arizona National Bank, June 22, 1896, Folder 58,

Series 2, Box 9, JP, AHS.

32 Fleishman to Arizona National Bank, December 18, 1895, Folder 56,

Series 2, Box 9, JP, AHS. "Hon. M. P. Freeman," Tucson Citizen,

December 14, 1896; "Change in Banking Circles," Tucson Star,

December 15, 1895; Tucson Citizen, December 16, 1895, and January 7,

1896; "The City in Brief," Tucson Star, December 17, 1895, and

January 8, 1896; "A Banking Change: Mr. R. W. Wood Becomes Cashier at the Arizona National," Tucson Star, January 7, 1896; Tucson Star,

July 14, 1896; Advertisement for Arizona National Bank, Tucson Star,

December 22, 1896.

33 C. J. Hall, Cashier Phoenix National Bank, to Arizona National

Bank, July 23, August 5, and September 12, 1896, Folder 4; C. Atschul,

Manager, London, Paris & American Bank, to Arizona National Bank,

July 31, 1896, Folder 3, both in Box 22, JFP, SC, UAL. C. B. Shaffer,

Assistant Cashier First National Bank Los Angeles, to Arizona National

Bank, August 8, 1896, Folder 57, Series 2, Folder 9, JP, AHS. "Change in Banking Circles," Tucson Star, December 15, 1896.

34 Advertisement for Arizona National Bank, Tucson Star,

January 31, 1899, and June 11, 1905; Report of Condition of the

Arizona National Bank, ibid., May 17, 1898. 35 Report of Condition of the Arizona National Bank, Tucson Star,

March 13, 1892, and February 18, 1899; Report of Condition of the

Consolidated National Bank, ibid., April 5, 1898. "Arizona National

Bank," in Who's Who in Arizona, comp. Jo Connors (Tucson: Jo Connors

1913), I, 171-172.

36 Schweikart, History of Banking in Arizona, 27-31; Elizabeth L.

Ramenofsky, From Charcoal to Banking: The I. E. Solomons of Arizona

(Tucson, Arizona: Westernlore Press, 1984), 146-147, 155-56.

37 Schweikart, History of Banking in Arizona, 41; Bridenstine,

"Commercial Banking," 51-53. "Qrmsby Goes to Valley Bank: Leaves

Tucson Where He Has Been Prominent on Affairs of Town Several Years,"

Tucson Star, December 22, 1912.

38 Schweikart, History of Banking in Arizona, 41-47; Bridenstine,

"Commercial Banking," 42-45.

39 Schweikart, History of Banking m Arizona, 51.

40 L. M. Jacobs, "Banking in Arizona," typescript, Folder 75,

Series 5, Box 12, JP, AHS.

41 "Tucson Banks Show Effect of Big Boom: Deposits Past Year 20

Per Cent Greater Thany [sic] Any Previous Year; Mining and Cattle

Industries Factors," Tucson Star, December 6, 1912. 180 42 "Tucson Banks Show Effect of Big Boom," Tucson Star,

December 6, 1912; "Bank Will Have Two Assistant Cashiers," Tucson

Citizen, December 13, 1912; "Capital Stock Is Increased to $100,000:

Changes Made in Arizona National Bank Which Will Be Effective

January 1; New Directors Named," Tucson Star, November 26, 1912.

43 "Arizona National Not to Reorganize: Contemplate New

Management Failed to Agree on Terms," Tucson Star, December 20, 1912.

44 "Arizona National Not to Reorganize," ibid., December 20, 1912;

"Thorpe To Be Cashier of Reorganized Bank: Old Institution Will Pass

Into Hands of New Management Soon—The Capitalization Is Increased,"

ibid., December 1, 1912; "Control of Local Bank Is Acquired: Arizona

National Stock Has Been Purchased by Solomon, Wicker sham and Co. of

Gila and Graham Counties," ibid., December 27, 1912. Ramenofsky,

Charcoal to Banking, 183.

45 "Solomon In New President of Bank: Officers and Directors Are

Chosen Pending Action by Comptroller of Currency on Application to

Increase Capital Stock," Tucson Citizen, January 23, 1913; "Notice to

Shareholders," Tucson Star, January 24, 1913; "Reorganized Bank

Selects New Officers: Chas. Solomon and Ph. Freudenthal Are President and Vice President of Arizona National Bank," ibid., January 24, 1913;

"Thirty Six Years Ago," Tucson Star, May 18, 1950. "List of

Stockholders of The Arizona National Bank of Tucson, 1913," in Tucson:

Business—Banks—Arizona National Bank, Ephemera File, AHS. 181 46 Mark Jacobs continued to aid and advise his sons until his

death in 1894. Golden and Golden, "Mark I. Jacobs Family," 113-114.

47 "Mrs. Jacobs Is Now Executrix: Court Confirms Appointment Long

Contested by Selim Franklin," Tucson Star, February 17, 1928; "Jacobs

Inheriting Taxes Paid in Full," Tucson Star, May 22, 1926; "Mrs. Barron

Jacobs, Tucson Pioneer Dies," Tucson Star, October 16, 1951; "Barron

Jacobs Taken by Death: Pioneer Tucson Merchant and Banker Dies at

Age of 89 Years," Tucson Star, November 19, 1936. Arizona National

Bank operated under the Solomon-Wickersham group until 1925 when it

merged with the Consolidated National Bank. In 1934 the Valley Bank of Phoenix bought the Consolidated National, and a year later obtained national status, becoming the Valley National Bank. Schweikart,

History of Banking in Arizona, 102. "Arizona National Bank Unites with Consolidated National, Charles Solomon Is President," Tucson

Citizen, February 10, 1925 182

REFERENCES

PRIMARY

Manuscripts

Arizona Historical Society/ Tucson

Arizona National Bank, Tucson, Condensed Statements at Close of Business, September 12, 1914, November 10, 1915, November 17, 1916, March 5, 1917, November 15, 1920, September 15, 1922, April 3, 1923, all in Tucson: Business—Banks—Arizona National Bank, Ephemera File.

Mose Drachman Collection, unprocessed.

David Henderson. Clipbook #255.

Henry C. Hooker. Biographical File.

Jacobs Papers. 10 boxes, 1868-1896.

"List of Stockholders of The Arizona National Bank of Tucson 1913." Tucson: Business—Banks—Arizona National Bank, Ephemera File.

Bill from Lord and Williams to L. M. Jacobs & Company. Tucson: Business—Banks—General, Ephemera File.

Pima county Records, Tucson Arizona

Consolidated Bank of Tucson, Articles of Incorporation, April 2, 1888, Articles of Incorporation Book, I, 108-109.

Pima County Bank Articles of Incorporation, December 24, 1878, Miscellaneous Book, I, 895. 183

University of Arizona, Special Collections

Selim M. Franklin Papers.

David Henderson. Biographical File.

Jacobs Family Papers. 22 boxes and 177 volumes, 1861-1900.

Government Documents

Federal Census—Territory of New Mexico and Territory of Arizona: Excerpts from the Decennial Federal Census 1860 for Arizona County in the Territory of New Mexico, The Special Territorial Census of 1864 Taken in Arizona and the Decennial Federal Cenus, 1870, for the Territory of Arizona. Washington, D.C.: U.S. Government Printing Office, 1965.

Treasury Department, Office of the Secretary. "Bank in which the Public Money Is Deposited, Letter from the Acting Secretary of the Treasury Transmitting in Response to a resolution of the House of Representatives." December 16, 1889. House of Representatives Ex. Doc. No. 101, 51 Congress, 2 Session, Serial 2858.

Treasury Department. "Letter from the Acting Secretary of the Treasury . . . ." February 18, 1895. Senate Ex. Doc. No. 103, 53 Congress, 3 Session, Serial 3280.

Books

Barter, G. W., compiler. Directory of the City of Tucson for the Year, 1881. San Francisco: H. S. Crocker & Co., Printers, 1881.

Newspapers

Florence Arizona Citizen, 1878.

Tombstone Epitaph (Arizona), 1880, 1887, 1889.

Tombstone Nugget (Arizona), 1882

Tucson Arizona Daily Citizen, 1878-1880, 1882, 1885, 1889-1890, 1892, 1895-1897, 1912, 1920, 1925

Tucson Arizona Daily Star, 1880, 1882, 1884-1885, 1887, 1889-1897, 1899, 1905, 1912-1913, 1926, 1928, 1935-1936, 1950-1951. 184

Tucson Arizona Weekly Citizen, 1881-1882.

Tucson Arizona Weekly Star, 1876-1878, 1880.

SECONDARY

Books

Agger, Eugene E. Organized Banking. New York: Henry Holt & Company, 1918.

Altshuler, Constance Wynn. Starting with Defiance; Nineteenth Century Arizona Military Posts. Tucson: The Arizona Historical Society, 1983.

Angell, Norman. The Story of Money. Garden City, New York: Garden City Publishing Company, Inc., 1929.

Bailey, Lynn R. Bisbee: Queen of the Copper Camps. Tucson, Arizona: Westernlore Press, 1983.

Bancroft, Hubert Howe. History of California. 7 vols. San Francisco: The History Company, Publishers, 1890.

Bret Harte,John. Tucson: Portrait of a Desert Pueblo. Woodland Hills, California: Windsor Publications, Inc., 1980.

Clarke, Dwight L. William Tecumseh Sherman: Gold Rush Banker. San Francisco: California Historical Society, 1968.

Crowe, Rosalie, and Sidney B. Brinckerhoff, editors. Early Yuma: A Graphic History of Life on the American Nile. Yuma, Arizona: Yuma County Historical Society, 1976.

Current, Richard N., et. al. American History: A Survey. New York: Alfred A. Knopf, 1963.

Dunning, Charles H., and Edward H. Peplow, Jr. Rock to Riches. Pasadena, California: Hicks Publishing Company, 1966.

Faulk, Odie B. Tombstone: Myth and Reality. New York: Oxford University Press, 1972.

Fifty Years of Growth in Tucson, 1903-1953. Tucson: Southern Arizona Bank and Trust Company, 1953. 185

Friedman, Milton, and Anna Jacobson Schwartz. A Monetary History of the United States, 1867-1960. Princeton: Princeton University Press, 1963.

Gutowsky, A. R. Arizona Banking. Temper Occasional Paper Number 1, Bureau of Business Research and Services, College of Business Administration, 1967.

Hughes, Paul. Bank Notes. Phoenix, Arizona: First National Bank of Arizona, 1971.

Hughston, Caroline Mary. The Tricennial of the Consolidated National Bank of Tucson, 1890-1920. Tucson: Consolidated National Bank, 1920. Found in Ephemera File: Tucson Collection, Tucson: Business—Banks—Consolidated National Bank, Arizona Historical Society.

Huntoon, Peter. Arizona Money. Pamphlet. [Phoenix, Arizona]: The Valley National Bank, 1983.

Knox, John Jay. A History of Banking in the United State. New York: Bradford Rhodes & Company, 1903. Reprint New York: Augustus M. Kelley, Publishers, 1969.

Lamar, Howard Roberts. The Far Southwest, 1846-1912: A Territorial History. New York: W. W. Norton & Company, Inc., 1970.

Luckingham, Bradford. The Urban Southwest: A Profile History of Albuquerque—El Paso—Phoenix—Tucson. El Paso: Texas Western Press, 1982.

Massey, J. Earl. America's Money: The Story of Our Coins and Currency. New York: Thomas Y. Crowell Company, 1968.

Mitchell, Wesley Clair. A History of the Greenback: With Special Reference to the Economic Consequences of Their Issue; 1862-65. Chicago: The University of Chicago Press, 1903.

Myers, John Myers. The Last Chance: Tombstone's F^riy Years. New York: E. P. Dutton & Co., Inc., 1950.

Parish, William J. The Charles Ilfeld Company: A Study of the Rise and Decline of Mercantile Capitalism in New mexico. Cambridge, Massachusetts: Harvard University Press, 1961.

Ramenofsky, Elizabeth L. From Charcoal to Banking: The I. E. Solomons of Arizona. Tucson, Arizona: Westernlore Press, 1984. 186

Robertson, Ross M. Ihe Comptroller and Bank Supervision: A Historical Appraisal. Washington, D.C.: The Office of the Comptroller of the Currency, 1968.

Rohrbough, Malcolm. Ihe Trans-Appalachian Frontier: People, Societies, and Institutions, 1755-1850. New York: Oxford University Press, 1978.

Sonnichsen, C. L. Tucson: The Life and Times of an American City. Norman: University of Oklahoma Press, 1982.

Schweikart, Larry. A History of Banking in Arizona. Tucson: The University of Arizona Press,1982.

Theobald, John and Lillian Theobald. Wells Fargo in Arizona Territory. Tempe: The Arizona Historical Foundation, 1978.

Wagoner, Jay J. Arizona Territory, 1863-1912: A Political History. Tucson: University of Arizona Press, 1975.

. History of the Cattle Industry in Southern Arizona, 1540-1940. Tucson: University of Arizona Bulletin, Social Science Bulletin No. 20, 1952.

Way, W. J. "Jack." The Tombstone Story. Tombstone, Arizona: W. John Way, 1965.

Wright, Bentjamin] C. Banking in California 1849-1910. San Francisco: H. S. Crocker Co., 1910. Reprinted New York: Arno Press, 1980.

Wyllys, Rufus Kay. Arizona: The History of a Frontier State. Phoenix, Arizona; Hobson & Herr, 1950.

Articles

Anderson, George L. "Banks, Mails, and Rails, 1880-1915." In John G. "Clark, ed. The Frontier Challenge: Responses to the Trans- Mississippi West. Lawrence: Kansas University Press, 1971. Pp. 275-307.

Cagan, Phillip. "The First Fifty Years of the National Banking System— An Historical Appraisal." In Deane Carson, ed. Banking and Monetary Studies. Hbmewood, Illinois: Richard D. Irwin, Inc., 1963. Pp. 15-42.

Connors, Jo, compiler. "Arizona National Bank," In Who1'6 Who in Arizona. Tucson: Jo Connors, 1913. I, pp. 271-273. 187

Fierman, Floyd S. "The Spiegelbergs: Pioneer Merchants and Bankers in the Southwest." American Jewish Quarterly, LVI (June 1967), 384-425.

Golden, Richard L. & Arlene A. Golden. "Hie Mark I. Jacobs Family: A Discursive View." Western States Jewish Quarterly, XIII (January 1981), 99-114.

Hemann, Chuck. "When Bankers Wore Boots." Arizona Highways, LIII (September 1971), 7-10.

Lyon, William H. "Hie Corporate Frontier in Arizona." Journal of Arizona History, IX (Spring 1968), 1-17.

Stanley, Gerald. "Merchandising in the Southwest: The Mark I. Jacobs Company of Tucson, 1867 to 1875." American Jewish Archives, XXIII (April 1971), 86-103.

Miscellaneous

"Phillip W. Smith." First National Bank poster, located in Tombstone Chamber of Commerce, Tombstone, Arizona, c. 1976.

Theses

Bridenstine, Don C. "Commercial Banking in Arizona—Past and Present." Unpublished Ph.D. dissertation, University of Southern California, 1958.

Iamb, Blaine Peterson. "Jewish Pioneers in Arizona, 1850-1920." Unpublished Ph.D. Dissertation, Arizona State University, 1982.