# Wild West Banking Question **URL:** \ **Category:** Factual Questions\ **Created:** [January 1, 2007, 5:24pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318 "2007-01-01T17:24:32Z")\ **Posts on this page:** 9\ **Page:** 1
**Author:** ![Chez\_Guevara](https://avatars.discourse-cdn.com/v4/letter/c/aeb1de/32.png) [@Chez\_Guevara](https://boards.straightdope.com/u/Chez_Guevara)\ **Post date:** [January 1, 2007, 5:24pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/1 "2007-01-01T17:24:32Z")
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? Thank you. ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [January 1, 2007, 5:46pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/2 "2007-01-01T17:46:55Z")
(1): [http://eh.net/hmit/interest\_rate/](http://eh.net/hmit/interest_rate/) (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.) ---
**Author:** ![Common\_Tater](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/common_tater/32/13846_2.png) [@Common\_Tater](https://boards.straightdope.com/u/Common_Tater)\ **Post date:** [January 1, 2007, 6:06pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/3 "2007-01-01T18:06:13Z")
Bank robbery used to be taken much more seriously prior to FDIC, the locals were on their ass at least as quick as law enforcement, if not quicker. ---
**Author:** ![postcards](https://avatars.discourse-cdn.com/v4/letter/p/8e8cbc/32.png) [@postcards](https://boards.straightdope.com/u/postcards)\ **Post date:** [January 1, 2007, 6:16pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/4 "2007-01-01T18:16:14Z")
Doesn’t the FDIC only insure against banks failing of their own accord, or do they cover robberies as well? ---
**Author:** ![tomndebb](https://avatars.discourse-cdn.com/v4/letter/t/b9e5f3/32.png) [@tomndebb](https://boards.straightdope.com/u/tomndebb)\ **Post date:** [January 1, 2007, 6:33pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/5 "2007-01-01T18:33:49Z")
[QUOTE=postcards] Doesn’t the FDIC only insure against banks failing of their own accord, or do they cover robberies as well? [/QUOTE] 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. ---
**Author:** ![Chez\_Guevara](https://avatars.discourse-cdn.com/v4/letter/c/aeb1de/32.png) [@Chez\_Guevara](https://boards.straightdope.com/u/Chez_Guevara)\ **Post date:** [January 1, 2007, 6:58pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/6 "2007-01-01T18:58:23Z")
[QUOTE=Chez Guevara] (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? [/QUOTE] > [@tomndebb](#): > > 1. 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.) Point taken. No bank is totally safe. Let’s say safe from the impact of a bank robbery, a point you address in your second post. ---
**Author:** ![Freddy\_the\_Pig](https://avatars.discourse-cdn.com/v4/letter/f/a587f6/32.png) [@Freddy\_the\_Pig](https://boards.straightdope.com/u/Freddy_the_Pig)\ **Post date:** [January 1, 2007, 8:04pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/7 "2007-01-01T20:04:24Z")
[QUOTE=Chez Guevara] (1) What rate of interest could TMWNN expect on his money from a bank in 1860? [/quote] 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.) > [@](#): > > (2) Was inflation a factor which could have affected the value of TMWNN’s savings portfolio? 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. > [@](#): > > (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? First of all, Wild West bank robberies were [much rarer](http://www.fee.org/publications/the-freeman/article.asp?aid=2806) 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. > [@](#): > > (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? 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. ---
**Author:** ![Chez\_Guevara](https://avatars.discourse-cdn.com/v4/letter/c/aeb1de/32.png) [@Chez\_Guevara](https://boards.straightdope.com/u/Chez_Guevara)\ **Post date:** [January 2, 2007, 7:16am UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/8 "2007-01-02T07:16:49Z")
There is some surprising detail on that link. > [@](#): > > Put generally, we found the western bank-robbery scene to be a myth. Yes, a handful of robberies occurred. In the roughly 40 years, spread across these 15 states\*, we identified three or four definite ones; and in subsequent correspondence with academics anxious to help us “clarify the record,” perhaps two or three others were pointed out. We missed two “biggies,” both by Butch Cassidy and the Sundance Kid (including the famous Telluride robbery in the late 1890s). Still, the record is shockingly clear: there are more bank robberies in modern-day Dayton, Ohio, in a year than there were in the entire Old West in a decade, perhaps in the entire frontier period! \*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: > [@Freddy the Pig](#): > > 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. 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. Many thanks. ---
**Author:** ![Elendil\_s\_Heir](https://avatars.discourse-cdn.com/v4/letter/e/7cd45c/32.png) [@Elendil\_s\_Heir](https://boards.straightdope.com/u/Elendil_s_Heir)\ **Post date:** [January 2, 2007, 4:05pm UTC](https://boards.straightdope.com/t/wild-west-banking-question/386318/9 "2007-01-02T16:05:59Z")
Paraphrased from _Butch Cassidy and the Sundance Kid_: Butch: What happened to the old bank? Bank teller (bitterly): People kept robbin’ it. Butch: Really? What a shame. Now, that was a nice bank.