Not Too Big to Fail

The Rise and Fall of the Clarkson State Bank

This week’s story concerns a major institution in the Village of Clarkson that flourished and died long before most of us were born – the Clarkson State Bank, one of the six banks in the Folda banking empire.

The Clarkson State Bank was already operating in 1886, a year before our Village was incorporated.  A business directory from November 22, 1887 featured an ad for the Clarkson State Bank, authorized capital of $60,000.  The institution did a “General Banking Business,” attending promptly to collections, negotiating farm loans, and buying and selling real estate.  The officers were F. McGiverin (President), Levi Miller (Vice-President), and I.H. Vail (Cashier).

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This first bank closed in 1889 and was re-organized in December 1890 by the Folda banking family. When the Clarkson State Bank moved across the street to a new brick building in 1901, the original bank building remained on in place for many years, housing the Clarkson Enterprise newspaper, the manufacture of the Buko Oil Cans, a real estate office, gas station, Tommy Chudomelka’s veterinary business, Ray’s Drive Inn and ultimately the Purple Palace Drive Inn.  (The building has since been moved, but reportedly still stands somewhere in Clarkson.)

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Purple Palace Drive Inn, Clarkson Nebraska, opened in 1955 as Ray’s Drive Inn

The Clarkson State Bank occupied its new brick building on main street from 1901 until it closed its doors in 1933.  Then the building was the site of the Clarkson Bank until 1952, when it moved to the recently acquired and remodeled Farmers State Bank building.

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Clarkson State Bank after 1901.  Photo courtesy of Maas et al. (2014)

The new owners of the Clarkson State Bank, the Foldas, were among the earliest immigrants to Colfax County (Rosicky 1929).  The head of the frank-foldafamily, Martin Folda, immigrated to Manitowoc County, Wisconsin in 1854, with his wife Marie and their children Frank, Joseph, and Frances.   Their eldest son John had been conscripted into military service; after being wounded in battle, John was allowed to go home for a while and then escaped in 1860 and followed his parents to Wisconsin.  Martin’s son Frank was a shoemaker by trade, but he showed his business acumen by establishing a general merchandise store in Manitowoc.  In 1868 Frank Folda set out for Schuyler with his wife, arriving when the town had only two houses; he built the third. Frank established a general merchandise store in Schuyler and, through his command of both Czech and English, was able to assist the newly arriving Czech immigrants.  He returned to Wisconsin for the other members of the family and in 1869 his parents and brothers followed him to the prairies of Nebraska.  Frank remained in Schuyler, where he built his business, purchased land, dealt in cattle and grain, and in 1887 established the first Folda bank, the Banking House of F. Folda.  At the time of his death, Frank Folda owned over 4,000 acres of land west of Schuyler, 600 head of cattle and 50 horses, and an island in the gulf of Green Bay, Wisconsin.

Martin (1812-1896) and his other two sons, John and Joseph, were lifelong farmers; they settled north of Schuyler, in the Maple Creek area near Heun.  Martin and John and their wives were pious Catholics who donated 5 acres of their land for the construction of the Holy Trinity Catholic Church and are buried in the church cemetery.   John (1836-1895) had seven sons, all of whom left the farm to follow their Uncle Frank’s lead and became bankers.  Frank Folda and his nephews Lambert, Longin, Emil, Adolph, Rainold, Jaroslav and John established a banking empire that encompassed 6 banks in Colfax and Butler counties.

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Lambert Folda, was a druggist until 1887, when with his uncle and Joseph Smatlan he established the bank in Howells, where he was active until his death in 1910.  Longin first assisted his uncle Frank, and then took a position in the First National Bank of Schuyler, while remaining active in the Folda banks. In 1897 he bought the Clarkson State Bank, built a home in Clarkson, and in 1911 moved to Corpus Christi, TX.  Adolph Folda was born in Manitowoc County in 1869 and died in 1914. He was cashier of the Colfax County Bank of Howells at the time of his death.  Rainold Folda was assistant cashier of the Clarkson State Bank at the time of his death in 1906. Jaroslav Folda became cashier and manager of the Banking House of F. Folda in Schuyler and vice-president of the Bank of Rogers.  John Folda became managing vice-president of the Colfax County Bank of Howells.

Finally, Emil Folda, who rose to become president of the Clarkson State Bank, was born in Manitowoc County, WI in 1866. While still a toddler, he came to Nebraska with his family, lived in a sod house and experienced the many hardships and deprivations of the earliest settlers.  In his memoirs, Emil noted that when he came to Nebraska with his parents in 1869 there were only three farms in the twelve miles between Schuyler and his parent’s homestead in Section 12 of Midland Precinct, near Heun.  There were no bridges, no roads and no horses, only oxen with which to travel to the nearest trading point 40 miles away, at West Point in Cuming County.  Most of the settlers made coffee of roasted grain, and sugar was scarce. Emil Folda wrote of sometimes frightening interactions with the Indians who camped nearby, and wild game (buffalo, elk, antelope and deer) that were shot for food or had to be driven off so they would not eat the crops in the field.  His father shot a Canada goose (goose is a true delicacy to the Czechs), but went to Schuyler to trade it for an even rarer commodity, sugar.  Emil remembered the early prairie fires that swept everything out of sight unless well protected, and the great snow storms that followed and swirled over the smooth, burned-out lands.  In autumn they bought a cow in West Point, but because they had no barn the cow was tied to the east side of the house near the door for the winter.  One night a blizzard blew up, and the sod house was drifted in and covered completely by snow; they opened the door and made a hole in the snow where the cow’s head was so that she could have air.  No one ventured out of the house for three days.  Creek channels were filled level with snow in the winter, and people drove right over the packed snow, sometimes 25 feet above the water.

As a boy, Emil Folda worked very hard, especially after his mother’s death in 1879 when at age 12 he became chief housekeeper and cook.  He had little opportunity for education (his formal country school education stopped at the 6th grade), and he was glad to escape the drudgery of farm work when he went to work at his uncle’s store in Schuyler at age 21.  Emil’s memoirs list all the many menial and important, part-time and full-time jobs that he took on during his life.  His daughter Olga Folda Stepanek   summarized his most notable accomplishments: at age 23 Emil joined his brother Longin in the banking business in Linwood; he became president of the Linwood Bank; in 1911 Emil became cashier of the Clarkson State Bank and soon after was named president of the Clarkson State Bank, Colfax County Bank (in Howells), and the Pilger State Bank; he was a member of the State of Nebraska Guarantee Fund Commission from 1923-1926 and active in Clarkson’s civic, social, political, and charitable clubs.  Soon after he was appointed Cashier of the Clarkson State Bank in 1911, Emil and his family moved to Clarkson. In 1912 they moved into the house recently vacated by Emil’s brother Longin Folda (now Annie’s Bed &Breakfast).

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Emil Folda home, Clarkson, Nebraska, 1926

Under the Folda’s leadership, the Clarkson State Bank grew in size and influence.  In the days before the Federal Deposit Insurance Corporation (FDIC) guaranteed deposits, one indication of the safety of putting money in a particular bank was its size.  Lots of depositors and cash signified stability – these assets cushioned the effects of a few bad loans or other investments.  The Clarkson State Bank and the other Folda Banks proudly published the growth of their assets in each edition of Clarkson’s weekly newspaper, the Colfax County Press:

Clarkson State Bank (1889) – F. McGiverin, President; Levi Miller, Vice President; I.H. Vail, Cashier.
Authorized capital – $60,000.

Clarkson State Bank (1908) – Capital – $20,000.00  L.F. Folda, President; Longin Folda, cashier.

Clarkson State Bank (1911) – Capital – $30,000.  Longin Folda, President; Emil Folda, Cashier.

Clarkson State Bank (1915) – Capital – $20,000.00; surplus and undivided profits – $15,000.00.  Longin Folda, President; J.M. Mundil, Vice-President; Emil Folda, cashier; Fred Jelinek, assistant cashier; Joseph Mundil, assistant cashier.

By August 16, 1920, the five Folda Banks boasted the following assets –  Banking House of F. Folda, Schuyler, Deposits $1,025,776.48; Colfax County Bank, Howells, total deposits $919,167.77; Clarkson State Bank, Clarkson, total deposits $577,749.37; Farmers & Merchants Bank, Linwood, total deposits $302,240.19; Bank of Rogers, Rogers, total deposits $146,036.65. For all five banks—Total Loans and bonds $2,461,649.69; Total deposits $2,806,432.46.

On May 5, 1921, the Colfax County Press reported that the condensed statements from reports of the five Folda Banks was: Banking House of F. Folda, Schuyler; Colfax County Bank, Howells; Clarkson State Bank; Farmers and Merchants Bank, Linwood; Bank of Rogers, Total deposits, $2,519,043.06 and Total Loans, Discounts, Bonds $2,341,468.83.

six-folda-banks

I haven’t tracked down financial data for the Folda banks after 1921, but it is possible that 1920 was the high water mark for these banks, as well as many others in Nebraska.  As I have written before, the Great Depression, which more or less began in 1929 for much of the country, actually began almost 10 years earlier in the agricultural Midwest.

https://clarksonhistory.wordpress.com/2013/08/11/the-end-of-the-good-times/

Crop prices, that had been high during WWI, plunged beginning in 1920, and after a brief uptick from 1923-25, continued downward until 1932.  Farm income, which had averaged $1,610 per year during WWI, dropped to $245 per year during the 1920s (Olson 1966).  The value of all farm property in Nebraska dropped 33% from 1920 to 1930, and the value of land and buildings decreased more than 48 percent.  Farmers who had taken on large debts during the war in order to buy land and increase production were finding it increasingly difficult to pay off their loans.  Farms began to fail, followed by the small town banks that financed them.

Particularly hard hit were the state banks with assets tied up in real estate and crop mortgages, the payments for which were becoming difficult to collect (Olson 1966).  Sales of farm land brought less money than the original mortgage, and foreclosures awarded the banks with land rather than the cash they needed.  Nearly 100 banks were forced to close their doors in 1924, 23 in 1926, 19 in 1927, 400 in 1928, and 106 in 1929, when the rest of the Nation’s banks began to fail for other reasons.

In some ways, the banks that failed in the 1920s were the lucky ones.  In 1911, the Nebraska legislature had created a state-based insurance program to protect depositors, the Bank Guaranty Fund.  All state banks in Nebraska were required to pay a fee (1/20th of 1% of the bank’s deposits); in return, depositors would be reimbursed from the fund in the event that the bank failed.  Emil Folda was appointed a member of the Guaranty Fund Commission which oversaw the disposition of failed banks and the reimbursement of their depositors.  In 1926 he was given 22 bad banks to administer; he moved to Omaha for 3 months to be closer to the banks he was looking after, and worked until 11 PM every night and on Sundays.  Unfortunately, the large number of Nebraska state banks that failed in the 1920s eventually drove the Bank Guaranty Fund into insolvency, and the legislature repealed the law in 1930.

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Interior of the Clarkson State Bank ca 1901

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Interior of the Clarkson State Bank ca 1915

The years of financial growth and prosperity were also marked with tragedies – the deaths of Emil’s first wife, Emilie and then his only son, Albin.  Emilie Pesek Folda died of pneumonia in 1904, leaving her husband with two young children, Albin and Laura.  Fourteen years later Albin Folda, cashier at the Clarkson State Bank, entered military service on April 27, 1918. On June 4, 1918, he sailed for France, and reached the trenches by the middle of August.  While going over the top on October 21st, Corporal Folda was struck in the head by a shell fragment, and was killed almost instantly.  The Armistice was declared soon after; Emil Folda’s telegram to his son expressing joy over the end of the Great War crossed paths with the War Department’s telegram expressing consolations over the loss of his son.

https://clarksonhistory.wordpress.com/2015/05/24/clarkson-and-the-great-war-part-6-our-honored-dead/

Emil was deeply troubled by Albin’s death, and the inability of organized religions to prevent or mollify the horrors of the Great War.  In 1920 he wrote: “My religion is no religion.  While I live – I live in clover, and when I die I die all over.  I am over fifty four years old and I have not been able to believe all that is preached to us in many churches, the Sunday school I think is alright for the children if there is not too much of the unreasonable stuff poked into the children, it is perhaps well to let them know what the people have believed in before us etc. and then let them use their own judgment in the matter.  I am afraid that we may even now be plunged into a war caused by too much religions such as the Catholic, I am opposed to any one who thinks that I must believe as he does in something that they have no proof what ever, and all the religion is nothing but guess work to my notion, and if I would support any it would be such as the universal Brotherhood-Unitarian or such other progressive movement to promote knowledge and brotherhood the same time and not keep them in the dark and in the same old tracts – just to keep them together, knowledge and science first for me every time, and if you feel that you have to go to some church then go to the one most up to date and where you can gain some knowledge, and if you want to go to church just to hear music the Catholic church will perhaps do as they have rich music and that is all I can say about it, except that the priests are perhaps the most educated as a rule of all the preachers or ministers, as they have or had to spend 12 years before they could become priests in education.  Ever since I was a boy I always have thought why don’t they preach in the churches something that you would get some good out of it in way of betterment for your self, say talk on how to take care of your body, how to live, what to do and what not to do, then tell us about the latest inventions and what is going on in the world generally, and what we are to do to better our selves and others generally.  Love thy neighbor as they self did not go in the World War.  The church may do some good for the weak and perhaps it deserves some credit, but just… go somewhere… waste of time.” (from the memoirs of Emil Folda, transcribed as written by his grandson, John Kucera).  His rejection of the faith of his parents and first wife Emilie was likely influenced by his second wife, Antonie Sadilek, the daughter of a well-known Freethinker from Wilber.

Emil Folda threw himself into his work and travel.  He traveled over the United States and to Europe.  He worked hard to keep his banks on sound financial footing as the agricultural depression of the 1920s deepened and turned into the Great Depression of the 1930s.  In the end, his efforts failed.  Both of Clarkson’s banks were victims of the Depression, and neither the Nebraska’s Bank Guaranty Fund nor any Federal insurance was available to save them and their depositors.  Frightened depositors rushed to the banks to withdraw their cash, which the banks no longer had. In March, 1933 Nebraska Governor Bryan announced that banks would declare a 3-day holiday.  That activity, as well as others initiated by the new Roosevelt Administration, stopped the panic and allowed everyone to cool off.  However, while economic activity slowly recovered over much of the Nation during the course of the 1930s, the farmers and merchants in the Midwest were not so lucky.  Nebraska had entered a 10-year period of drought which continued to stifle prosperity for the rest of “The Dirty Thirties.” The heat and drought of those years severely reduced crop yields, and what little grain and livestock was produced was sold at depressed prices.

On December 6, 1933, Clarkson’s Farmers State Bank closed its doors permanently.  Soon after, Folda’s Clarkson State Bank did the same.  On August 6, 1934 the newly organized Clarkson Bank (Emil Petr, President) opened its doors to the public and commenced doing business in the same building where the former Clarkson State Bank had operated.  Many people lost their farms and their savings when Clarkson’s banks failed, and Emil Folda was powerless to stop the suffering.  Indeed, people wondered how much of a role he had (inadvertently) played in the disaster by making bad loans and bad investments.

The failure of the Clarkson State Bank and other banks in the “House of Folda” left Emil Folda a broken man – ruined financially and in the eyes of some of his fellow citizens.  The stress was too much for him – he was found dead of a heart attack on October 30, 1935, at age 69.  The man whose religion was “no religion” was laid to rest with his immigrant ancestors in the cemetery at Holy Trinity Catholic Church at Heun, the beloved Rev. Francis Oborny officiating.  His widow, Antonie Sadilek Folda, daughter of a notorious Freethinker, continued to live in Clarkson until her death in 1960.  She was looked after for many years by her friend Mary Filipi, the wife of Clarkson’s Presbyterian minister.  Antonie Folda is buried in the Clarkson Cemetery.

A large gravestone in the David City cemetery marks the passage of three members of the Folda family, all who passed from this life before their time.

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Although the institution is gone, the sturdy building which housed the Clarkson State Bank from 1901 to 1933 still stands on the north end of main street in Our Village.

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Thanks to Adam Cerv, Cashier at today’s FDIC-insured Clarkson Bank.  Adam lives in the former Folda house (now Annie’s B&B) and provided a wealth of information, including the memoirs of Emil Folda and his daughter Olga Stepanek.  Thanks also to the Rev. Anthony J. Pluhacek, onetime pastor of Holy Trinity Church at Heun, who compiled detailed records of the Folda Family.

References:

Capek, T. 1920. The Czechs and Slovaks in American Banking.  Fleming H. Revell Company, New York, NY.

Maas, M.L., J. Krzycki, J. Brezina, and R. Waters.  2014.  Images of America – Colfax County.  Arcadia Publishing, Charleston, SC.

Olson, J.C. 1966.  History of Nebraska.  Second Edition.  University of Nebraska Press, Lincoln, NE.

Rosicky, R. 1929.  A History of Czechs (Bohemians) in Nebraska.  National Printing Co., Omaha Nebraska. http://www.usgennet.org/usa/ne/topic/ethnic/czechs/czechs.html

Stepanek, O. 1988.  The Foldas in Clarkson, Nebraska.  Memoirs of Olga Folda Stepanek.

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20 Responses to Not Too Big to Fail

  1. Bernice Cada says:

    Glenn doing what he does so well. Thank you. Most interesting. Have you started writing your own life story? Many of us are very curious about that. LOL You are wonderful!

  2. Tony says:

    Glenn – Another great story of Clarkson.

    My mom used to tell a story about my grandparents riding from Clarkson to Schuyler and back in the first car in Clarkson – owned by Folda – driving cow / horse paths as fast as he could.

    I have the gas light / lamp that stood outside of the brick bank building. I believe it was on a wooden post and needed to have lamp oil added each night and be hand lit each night.

    Tony

  3. Richard Vlach says:

    Tommy Chudomelka had his veterinarian office in the old building. When he built his clinic north of the opera house Ray’s drive in took it over

  4. Mike says:

    Thanks for all you do to document Clarkson’s history. I really enjoy reading your posts!

  5. ken kudrna says:

    Point of interest. My parents owned the Folda house for a # of years. I believe they bought it in 1960 & sold it around 1990. There was 1 other owner after that before Annie bought it.

    Very interesting story about the Foldas. Keep up the good work. I do remember the vets office being in that bldg.

    • Glenn Čada says:

      It is a grand house, up there at the top of “Bankers Row.” The Petr House B&B across the street from Annie’s also belonged to a banker, Emil Petr, who became the first President of the Clarkson Bank in 1934. It is a beautiful house, and Karen and Dean Brabec have done a great job restoring it.

  6. Ron and Bernie Cada says:

    Nicely done on a topic I Never thought about before. Thanks and keep the brain working.

  7. John Waters says:

    Glenn,
    You talked about the first bank building which eventually became the Purple Palace. That building does indeed still exist. It was purchased by Castka Electric and sits behind Marilyn Castka’s house on the south end of town.

    John

  8. Rollie Dvorak says:

    Very interesting. Joseph Folda is my Great Grandfather (father of my Grandmother Blazena (Folda) Dvorak. Nice to know at least one branch of my family tree was in banking. Thanks for posting. Rollie Dvorak.

  9. mjmyrick says:

    Glenn,

    Great article! I posted it on Schuyler Museum’s Facebook page! I think you know that I moved back to Alabama a year ago. I really REALLY miss being in Schuyler among “my people!” I made kolaches this week. They turned out yummy!

    Marie

  10. marmol1950 says:

    Glenn, sahib,

    Good piece of history! Many sad stories associated with bank failures….and in those days the bankers were included.
    As you alluded, the building housed “Dusatko, Atty at Law” for many years, then Maliha Insurance (as per your photo) and is now an attorney’s office again.
    Thanks,
    Mark

  11. Great article–I am Roberta Shonka Ortwein. Libuse Folda Jonas was my Grandmother and a sister to the Folda banking brothers, but they never mention her name!!! They also had three step-siblings born to the second wife after Jan Folda’s first wife died. My Grandmother, Libby, remained good friends with Aunt Tony (Antonia) Folda (Emil’s second wife) and I had the pleasure of spending summer days on the big porch with the two of them,
    and Aunt Alice and Uncle Emil Petr as well. My Mother was a daughter of Libby FOLDA Jonas and Vaclav Jonas. They (Jonas’) farmed the Folda homestead until the depression.

    • Glenn Čada says:

      Thanks, Roberta. I have been digging into the records of the Heun community, and of course a lot of Foldas are turning up. Your ancestors were certainly influential in Eastern Nebraska. I’m told that I have a bit of connection to the family – Marie Folda married Emmanuel Novotny, one of my grandmother’s brothers.

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