Prices of listed Nevada issues were crumpling like seersuckers in the rain. By this time the awful mess that had been made of Goldfield affairs through the mistakes of Messrs. Nixon and Wingfield had resulted in a depreciation in market value of more than $100,000,000 in listed Nevada issues. This in itself was sufficient to kill a world of buying sentiment.
You have to be a rainbow-chaser by nature to be a successful promoter, but even I, despite my chronic optimism, began to feel the influence of what was transpiring. I made a flip-flop and turned bear on the whole market.
On October 17th the Heinze failure occurred in New York. Five days later the embarrassment of the Knickerbocker Trust Company was announced. I glued my ears to the ground.
Nat. C. Goodwin & Company "shorted" the mining-stock market so far as its limited capital would permit. On the day Mr. Heinze went overboard the company was already short 2,000 shares of Goldfield Consolidated at around $6. On hearing that the Knickerbocker Trust Company was in trouble it promptly shorted 2,000 shares more at a lower figure.
On the afternoon when the news reached Reno of the Knickerbocker Trust Company's embarrassment I received a private telegram from Chicago stating that the paper of the State Bank & Trust Company of Goldfield, Tonopah and Carson City had gone to protest in San Francisco. This set my blood tingling. I knew that meant a general Nevada "bust."
Next morning Nat. C. Goodwin & Company shorted 2,000 shares more of Goldfield Consolidated at about $5-1/8. Later in the day the failure of the State Bank & Trust Company was announced. A run followed on the Nye & Ormsby County Bank and its branches in Reno, Carson City, Tonopah, Goldfield, and Manhattan, and in two hours that institution, too, closed its doors.
Goldfield Consolidated promptly broke to $4 a share. Around this point Nat. C. Goodwin & Company covered its short sales, at discretion.
All of the Nixon banks in Nevada experienced runs as a result of the failure of the two Nevada banking institutions. So did the other banks.
Governor Sparks was appealed to by Nevada bank officials between two suns to come to the rescue. Without hesitation he declared a series of legal holidays to enable the banks of the State which were still standing on their feet to catch their breath. These banks finally threw open their doors, but when they did, those of Reno met depositors' withdrawals with asset money instead of legal tender. The only bank in Reno which had refused to take advantage of the enforced legal holidays was the Scheeline Banking & Trust Company. And when asset money was finally resorted to as a makeshift, M. Scheeline, the president, was made custodian of the bonds which were put up by the associated Reno banks to secure payment. This restored confidence.