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Grays Harbor Currency saves Aberdeen banks on November 7, 1907.

HistoryLink.org Essay 7389 : Printer-Friendly Format

On November 7, 1907, three Aberdeen bankers issue private bank notes dubbed Grays Harbor Currency to counter the effects of the Panic of 1907. The currency, printed in haste on just one side, will serve as legal tender and will keep banks open until conventional currency is made available several months later. Their quick action will restore confidence in the local banking system.

New York Shenanigans

It did not seem, at first, that the financial shenanigans of Augustus Heinze, the United Copper Company, and the Knickerbockers Trust Company of New York would have much of an impact on the relatively isolated communities on Grays Harbor. Heinz had unsuccessfully tried to corner the stock of the United Copper Company, and when it was learned that the president of Knickerbocker Trust, one of the nation's largest banking institutions, was implicated in the scandal, there was a run on the banks as depositors withdrew their assets. This failure of confidence soon spread, resulting in a nationwide financial crisis. The financial panic they ignited in 1907 was soon felt on the streets of Aberdeen.

On November 7 of that year, the managers of the First National Bank of Portland notified W. H. France, founder of the Montesano State Bank, that the current financial panic would force indefinite suspension of cash deliveries to area banks. A shortage of cash could be disastrous for local banks, so France, W. J. Patterson of Aberdeen's Hayes & Hayes Bank, and the president of the Hoquiam First National Bank, cooperated in a plan to confront the financial crisis.

Fast Action

The three rushed to Tacoma and had a supply of private bank notes printed up, each labeled "Certificate of the Associated Banks of Chehalis County" (the name of Grays Harbor County until 1915) and signed by each banker. Such was their haste that only one side of the notes was printed before the trio whisked them back to Aberdeen.

Once each of the area's banks had posted sufficient collateral such as secured loans, they were issued a share of the certificates, which would serve as surrogates for cash. When the financial panic subsided several months later, all of the certificates were redeemed for legal tender and carried to a mill in Hoquiam, where the Grays Harbor Currency was burned.

Sources:
Edwin van Syckle, The River Pioneers: Early Days on Grays Harbor (Seattle: Pacific Search Press, 1982).


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