It’s been a long time since I’ve watched the Clint Eastwood Dollars trilogy and there are a few things I’ve forgotten.
At the end of the second movie For a Few Dollars More, The Man With No Name is left with a wagonload of corpses, all of which are worth a bounty to him. The total amount of cash involved escapes me right now but it was a considerable sum. The bounty on El Indio alone was $10,000, dead or alive of course. As far as I’m aware, these assets are not given a mention in the third movie The Good, The Bad, and The Ugly, so I’m going to assume TMWNN put all his readies in the bank to provide for his old age (if any). This is because I don’t have him down as an investment guru, although I may be wrong.
The Good, The Bad and The Ugly takes place during the American Civil War and I can’t recall the war getting a mention in For a Few Dollars More. Therefore I assume that the action in For a Few Dollars More takes place before 1861 but fairly close to that year. And so:
(1) What rate of interest could TMWNN expect on his money from a bank in 1860?
(2) Was inflation a factor which could have affected the value of TMWNN’s savings portfolio?
(3) If TMWNN’s bank had been robbed by the James Gang in 1870, would he have lost all his assets or would the bank have accepted full responsibility for all losses?
(4) If TMWNN had to take the hit, at what stage in US history did banking become a totally safe haven for the customer’s cash?
(2): Not so much in that period. There was some war-related inflation, but I’m not sure that it would have overwhelmed his investments. (I’m open to correction on this point.)
(3): Not sure. If the bank folded as the result of a robbery (or one of the multitude of financial busts of the nineteenth century), he would have been SOL. If the bank stayed solvent, his money, pooled with everyone eles’s in the bank’s assets, were actually still there. He could sue, I guess, but I have no idea how much he might expect to recover in that situation. A lot of people were ruined by bank failures well into the 20th century.
(4): Not yet. The FDIC was created in 1933 but not funded until 1934. Initial insurance coverage was $2,500 and then $5,000, going up to $10,000 in 1950 and $100,000 in 1980. (IRA’s were insured to $250,000, last year.)
What would be the difference? (I believe it is the depositor who is insured; the bank has to buy the insurance.)
In a real-life situation, a robbery is going to result in the loss of the cash on hand. Most of a bank’s assets are going to be wrapped up in loans to people and businesses. If the cash removed could be recovered within a few days of monthly debt repayment, the bank would take a loss from their profits, but would still continue to function. If the bank could not recover from the robbery in time to honor its own obligations, then it would fail, dumping it into the lap of the FDIC process.
Banks often didn’t pay interest on deposits in the Nineteenth Century. Instead, they provided the free service of keeping your money safer than it would be in your house. (Chances are you couldn’t afford the security that a bank could, and if you were robbed you automatically absorbed 100% of the loss.)
In general, no. Throughout most of the Nineteenth Century, the trend in prices was down. TMWNN would have deposited specie and eventually withdrawn specie, which would have appreciated in value.
First of all, Wild West bank robberies were much rarer than Hollywood would have you believe.
Second, a bank robbery doesn’t necessarily lead to bank failure. Willie Sutton is said to have robbed banks because “that’s where the money is”, but as George Bailey explains in It’s a Wonderful Life, the banker’s problem is just the opposite–most of the money isn’t there, it’s out in loans. The cash on hand at any given time doesn’t necessarily represent a life-threatening fraction of the bank’s assets.
No doubt small banks have become insolvent as a result of robberies. I’ve never seen any statistics on this phenomenon, but I’m sure it happened. In such a case the bank would be liquidated and the depositors would get only a fraction of their money back. Even in the Nineteenth Century, some states had state insurance schemes, and some banks had private insurance with large central banks. These schemes often failed in times of stress and generally fell short of full protection.
Federal deposit insurance was instituted during the Great Depression, since which time the cost of bank failures has been borne by tax assessments imposed on banks and passed on to all depositors.
*Every state west of the Missouri/Minnesota/Texas line, specifically, Arizona, California, Colorado, the Dakotas, Kansas, Idaho, Nebraska, Nevada, New Mexico, Oklahoma, Oregon, Utah, Washington, and Wyoming.[2] The time frame was 1859-1900.
However many gangs, and the James/Younger outfit in particular, operated east of this area, from Iowa in the north to Texas in the south including, of course, Missouri. The bank robbery in For a Few Dollars More takes place in El Paso, Texas. Your comment:
leads me back to Hollywood and the oft used device of a gang discovering when a bank will be cash rich and taking it accordingly. In For a Few Dollars More the prize is $1 million and I am guessing that such a loss would hurt any bank, even a large one.
The FDIC was created in 1933 but not funded until 1934. Initial insurance coverage was $2,500 and then $5,000, going up to $10,000 in 1950 and $100,000 in 1980. (IRA’s were insured to $250,000, last year.)