Archives West Finding Aid

The first national bank to be established in Montana Territory was originally organized by Samuel T. Hauser as a private bank under then name S.T. Hauser and Company. It received a national charter as the First National Bank of Helena on April 5, 1866, with a capitalization of $100,000. The bank's first officers were S.T. Hauser, president; and Theodore H. Kleinschmidt, Cashier. Originally housed in a grocery store on Main Street, the bank erected its own building in 1866 at the corner of Main and Wall streets, near where Helena's first gold strike had been made two years before. The building was twice consumed by fire in 1869 and 1874, but was rebuilt each time on the same site. In 1886 a new First National Bank building was erected at the corner of Main and Grand streets, at a cost of between $35,000 and $40,000. For many years the bank's chief business was the handling of gold dust, which was the accepted medium of exchange. The average price of $17.50 per ounce varied considerably from gulch to gulch, depending on the fineness or the dust. The evaluation and purchase of gold dust was thus a job for an expert and Cashier T.H. Kleinschmidt was such an expert, with the reputed ability to distinguish exactly which gulch a shipment of gold dust came from. In addition to the gold trade, the Bank bought and sold coin and government vouchers and acted as a collection agency. An assay office was operated in connection with the Bank by Augustus Steitz. Although initially organized to serve the needs of the mines and miners, the First National Bank grew and changed with the times and shifted its emphasis to serving the growing cattle and sheep industries. Under the leadership of officers Hauser (President), A.J. Davis (Vice President), E.W. Knight (Cashier) and T.H. Kleinschmidt (Assistant Cashier) the Bank was strong enough to withstand the severe ranch losses of the winter of 1886-1887 with little adverse effect. By 1893, Helena had six national banks and several local banks. No other city in the country had a comparable per capita bank capitalization or deposits as Helena. However, the Panic of 1893 brought an end to this prosperity. During a two week period in July 1893 more than a million dollars in coin and currency were withdrawn from Helena's banks. On July 27, the First National Bank suspended operations. With the cooperation of the Bank's depositors and creditors business was resumed on January 23, 1894. The following December the First absorbed the Helena National Bank, which had previously merged with the Second National Bank. With the exception of Hauser, the old officers were replaced. Vice President E.D. Edgerton took over the actual operation of the Bank. This new organization, however, could not save the Bank,. In September 1896 the First National Bank closed and a Receiver was appointed. The Bank's failure was due to a combination of national and local problems. Nationally, the currency system and banking laws were inadequate to deal with the major depression of the 1890s. Locally, Helena's economy was in decline. The Bank had been mismanaged for a number of years, with excessive loans granted to bank officers, deficient legal money reserves and excessive overdrafts and overdue paper.