How A Bank Was Saved in the Last Crisis: The Story of the Men and the Model "A" That Did It

Writing Irving Bacheller in the study of his Florida home, about 1925.

Bacheller's 1929 Ford Model "A," restored by its new owner.

The recent decision of the U.S. Treasury to buy a stake in a number of large U.S. financial institutions in order to guarantee their assets and ease up on credit reminded me of a story I unearthed several years ago about the way one bank was saved in Florida in 1930. In 2006 I won a research grant to write about the life of best-selling writer Irving Bacheller, who made his name during the first half of the twentieth century with tales of American pioneer life. His first novel, Eben Holden, the story of an orphaned boy who is raised by neighbors in a log cabin, sold more than a million copies and made Bacheller both rich and famous. He went on to write seventeen more best-selling novels and counted other literary lions among his friends, including Mark Twain, Arthur Conan Doyle, and Stephen Crane.

By the end World War I, Bacheller was wealthy enough to build himself a lakeside winter home on fifty acres in tony Winter Park, Florida. He was a genial man who liked golfing, cocktails, and friends as much as he liked his writing so when he was immediately drawn into the civic and social life of this little Florida town he could not have been happier. He joined the board of Rollins College and taught a creative writing class there. He was a founder of Winter Park’s University Club, and began a scholarship program for local high school students. In 1927 he was drafted to be Chairman of the Board of a local bank, the Union State Bank at Winter Park.

Things were going so well for him by 1929 that he bought himself a brand new Ford Model “A” Sport Coupé with a cloth top and a rumble seat, just for his use during his winters in Florida. And then, in October, the stock market crashed. During the summer of 1930, which he spent on Long Island to escape the Florida heat, he wrote his friend Hamilton Holt, president of Rollins College: “I have never seen such an atmosphere of puzzled discouragement [in New York]. My own losses have been heavy for a scribbler.”

When he returned to Florida, he discovered that things were even worse than he thought. The Florida real estate market had crashed and there had been runs on banks throughout the United States. The President ordered all banks to close for a “bank holiday,” so that the surviving institutions could hold onto their cash reserves. What it meant in those days before Automated Teller Machines and the widespread use of charge accounts and checks, was that all commerce and business was frozen too. People without access to their bank accounts often did not have the cash to buy their food or pay their rent.

Bacheller conferred with George Kraft, the founder of the Union State Bank, and the two men decided on a bold plan. They hopped into Bacheller’s little Ford and drove all night to Tallahassee where they met the next day with state bank regulators to plead that the Union State Bank be allowed to stay open, for the sake of the community. They showed the regulators the bank’s credit and debit statements and proved that the bank was solvent and had enough cash reserves to survive a run. But state regulators could not violate the federal bank holiday order and Bacheller and Kraft made a new proposal. What if they started a new bank, not then subject to the federal order, transferred the assets of the Union State Bank to this new institution, and guaranteed all the deposits with their combined personal savings of $50,000?

The regulators scratched their heads, conferred with counsel and said they didn’t see why it couldn’t be done. Back the two men drove to Winter Park where they established the new Florida Bank at Winter Park. It stayed solvent during the entire Depression. Nobody lost a dime.

That is how a writer, his banker friend, and a little Model “A” Ford Coupé saved a bank one day. It was like a George Bailey moment from the film “It’s a Wonderful Life.”

Addendum of Coincidences:

Banker George Kraft died in 1937. Bacheller’s own fortunes as a writer did not survive the Great Depression. By the beginning of World War II, he was 81 and no longer in touch with the new realism that had entered popular fiction. He sold his Winter Park estate and fifty acres for $37,258 and lived on the proceeds of that sale until his death, at the age of 90, in 1950. During the war he sold his Model “A” to a soldier whose wife was a teacher and needed transportation to her job.

Fast forward to 1960, when banker George Kraft’s son Ken looked out the window of his Winter Park home one day and saw a hot rod buzz by. It looked to him like an old Model “A” that had been souped up by a local kid and he had always wanted to restore a Model "A". Winter Park was still a small town, and when Ken Kraft asked around, he found the young man who owned the car and bought it from him for $50. But it wasn’t until Ken Kraft began to restore the old Coupé that he uncovered the car’s history. It was Irving Bacheller’s car. The one Ken’s father George, and Irving Bacheller had driven through the night to the Florida state capitol in order to save the bank and thus, save a little town. Ken Kraft still has that car. The bank, after changing hands a number of times, is now a Bank of America. Bank of America is one of the banks in which the U.S. government will soon invest. It’s true. You can look it up.