The Tale of the Telluride Banker Who Robbed for Good

(Bloomberg Opinion) -- The West has always embraced its outlaws.

Jesse James’s birthplace in Kearney, Missouri, just outside Kansas City, was long ago turned into a museum that includes “guns and the boots Jesse was wearing when he was killed by Bob Ford.”

There’s a Billy the Kid museum in Fort Sumner, New Mexico, where he was killed by Sherriff Pat Garrett in 1881 (at the age of 21), and another Billy the Kid museum in Hico, Texas —which makes the unlikely claim that he wasn’t killed after all, but lived in Hico till the ripe old age of 91.

The Butch Cassidy museum in Montpelier, Idaho, commemorates his last bank robbery, when Butch escaped with “$5,000-$15,000 in gold, silver and currency” from the Bank of Montpelier. Utah, meanwhile, is building not one, but two Butch Cassidy museums — one of which will be in Circleville, 200 miles south of Salt Lake City, where the famous outlaw was born.

And then there’s Telluride, Colorado, where a prominent plaque recalls, with considerable fondness, the lawless exploits of Charles D. Waggoner.

Charles D. who???

The Tale of the Telluride Banker Who Robbed for Good

Waggoner was neither a gunslinger nor a bank robber. Rather, he was a banker, the president of the Bank of Telluride. In 1929, Waggoner saw what was coming with more clarity than most. In “Telluride Promise,” a lightly fictionalized account of Waggoner’s exploits, the writer Edward Massey imagines what the Telluride banker must have been thinking as the Great Depression approached:

I had been watching what was going on in the whole country and any damn fool could see, the loans were too much, the credit was too shaky, and every month more banks were failing. It was like a big wave coming in to shore and I was pretty damn convinced we were all going to get drowned by it. Right here and now and not just in our little town. Those big banks were going to be unable … to give us back the money we put on deposit with them. I needed the money to give my depositors back their money. It was better off in their mattress than in my bank … any bank … for the next couple of years.

I’ve written about bankers and banking on and off for some 30 years. Never can I recall a banker breaking the law to help his or her depositors. It’s usually the other way around: banks that break the law to take advantage of customers. (I’m looking at you, Wells Fargo.) Waggoner feared that when the Bank of Telluride went under (as he knew it would) his depositors would be left penniless. He broke the law to prevent that from happening. In Telluride, they would later call it “The Great Waggoner Swindle.”

Telluride today is a thriving tourist town centered on skiing, but in the mid- to late-1800s, it was a rough-and-tumble mining town, where the main activities included gambling, drinking and prostitution. By the 1920s, however, the mines had become unprofitable, and the population was dwindling.

Waggoner, whose unassuming looks included wire-rim glasses and a wisp of a moustache, was one of the town’s most prominent citizens; today, his grand home is on Telluride’s historical walking tour. He helped build a hospital dedicated to the miners, many of whom would die of lung disease they contracted in the dank, dusty conditions. To an unusual degree for a burgher, Waggoner empathized with the town’s working class — most of whom were his customers.

His first attempt to protect them from the coming disaster was on the up and up: He asked several of the big Denver banks to give the Bank of Telluride a loan. When they said no, Waggoner was left with no choice but to take matters into his own hands. At least that’s how he saw it.

On Aug. 30, 1929, Waggoner wrote out six telegrams, using a special code only bankers knew, and had someone he knew in Denver send them to six New York banks. The recipients were led to believe that the telegrams came from six correspondent banks in Denver — a belief reinforced by the use of the special bankers’ code. The code in the telegrams requested that funds be deposited in the Bank of Telluride’s account at the Chase National Bank in New York. The total was $500,000 ($7.3 million in today’s dollars).

The next day, a Saturday, Waggoner met up with a bank officer at the Chase National Bank on Wall Street. After confirming the money was indeed in the Bank of Telluride’s account, he wrote out some certified checks that paid off his bank’s debts. Another check was used to pay off a personal loan. Most important, back in Telluride, one of his employees had been instructed to write out certified checks against the money in the account to each of the banks customers. The amount was what they held on deposit at the Bank of Telluride. Waggoner then told his employee to get in touch with as many of the depositors as he could, so that they would come to the bank and get their check. A certified check, the bank officer explained to the depositors, could be cashed anywhere: The money was guaranteed.

From his New York hotel room, Waggoner wrote a letter to Colorado’s banking commissioner, who he knew was preparing to close his small bank. After explaining what he had done, he wrote:

I am using the money to square some matters for my bank and to help rescue my depositors from losses that they do not deserve to suffer. You will no doubt become involved in this matter, and I am sure I can count on you to defend the interests of the little people against the conscienceless Denver and New York banks. They are rapacious and soulless, and nothing would delight me more than to be a part of their downfall.

He added, “Bankers are no longer gentlemen looking out for the interests of their communities but immoral predators in relentless pursuit of profit.”

Waggoner’s swindle was a big story for a few days, on the front page of the New York papers, even rating a mention in Will Rogers’s syndicated column. (“If a city banker had pulled just such a fast one on a country boy, you’d probably never hear a word about it, and he’d end up Secretary of the Treasury.”) He was an instant folk hero. He went to Wyoming and stayed with relatives until he was arrested a few weeks later, and returned to New York to face his fate. His lawyers thought he had a good chance of beating the rap, but standing before the judge, he waved them away and pleaded guilty.

“I knew exactly what I was doing,” he told the court. “There is no one to blame but myself.” He continued:

My bank, the Bank of Telluride, is the lifeblood of my town. With it, life is sustained. Without it, there is no life. … I saw no other means to cover the bank’s deteriorating position, no other way to keep it afloat.

He added, “I would rather see the New York banks lose money than the people of Telluride, most of whom worked all their lives for the savings which were deposited in my bank.” When he finished speaking, the courtroom broke into applause.

Waggoner was sentenced to 15 years, but he was paroled six years later — by which time, it’s worth noting, the Glass-Steagall Act had become law, bringing with it federal deposit insurance. Depositors would no longer lose their money even if their bank failed. Waggoner swindles were no longer necessary.

Waggoner himself never returned to Telluride; he lived out his life, in anonymity, in Nevada. But Telluride never forgot him. Massey, the writer, told me that when he was researching his book about the swindle, he read an oral history of Telluride that resides in the town library. “I can’t tell you how many people said that they were able to hold onto their house during the Depression because of what Waggoner had done.”

The plaque memorializing the Waggoner swindle is attached to the old Bank of Telluride building, which now houses a chichi boutique. There is no ambiguity where the town stands on his crime. Waggoner, it says, was “the Robin Hood who stole from the rich to protect the people of Telluride.”

Oh, and one other thing: the New York banks never got their $500,000 back.

This quote comes from “Bank Job: The Story of C.D.Waggoner,” by Peter F. Kenworthy.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. He is co-author of “Indentured: The Inside Story of the Rebellion Against the NCAA.”

©2019 Bloomberg L.P.