So many banks failed during the Depression that President Roosevelt declared a banking holiday and soon after the F.D.I.C. was established to guarantee deposits up to a certain amount.  Ironically, in De Leon Guaranty Bank was the prime example of why such legislation was needed.

      B.J. Pittman Sr. had been associated with De Leon banking from 1901 when he went to work for the Bank of De Leon.  The owner, William Dale obtained a national bank charter and when he sold the bank in 1903, B.J. Pittman ran the day to day operations.  That bank ultimately became the First State Bank and when it sold yet again during the oil boom, B.J. Pittman and others left the bank and started the Guaranty State Bank.

        Banking history shows literally hundreds of banks in Texas named Guaranty and it is for a good reason.  The Texas Legislature created a fund to guarantee depositor’s money.  It was an idea that was well ahead of its time but perhaps not complete in its concept.

       A law was enacted on May 12, 1909 which required state chartered banks to protect its depositors by participating in either the Depository Guaranty Fund or in the Bond Security System.   Under the Guaranty system banks paid a percentage of their deposits to the fund.  Under the Security System banks were required to purchase a bond insurance policy  in an amount equal to the bank’s capital stock.  

     The stockholders of the new bank elected to use the Guaranty Fund to protect its depositors and selected the name Guaranty State Bank as did many of the state chartered banks in Texas following the fund’s creation.  De Leon’s Guaranty State Bank was chartered on April 15, 1920 and opened on the west side of Texas Avenue in the building that is now three doors north of Weaver Drug.

      Beginning in September 1920, the Guaranty Fund began to be hit by massive numbers of bank failures, mostly in northwest Texas and mostly centered around the oil booms of Ranger, Desdemona, Breckenridge and Wichita Falls.  Crop failures, coupled with a significant increase in post World War I inflation and a massive decline in wholesale prices, and the plummeting of the price of oil, brought on a recession that lasted through 1921.   The largest number of bank failures in Texas were in Stephens, Eastland, Comanche and Young counties with 41% of all bank failures in Texas occurring in these counties.  Two banks closed in Jakehamon; one in Sipe Springs; one in Gustine which included J. Doss Miller and B.J. Pittman in its ownership; all but one bank in Eastland County closed including three Desdemona banks; and all but one bank in Stephens county closed.  In De Leon, the First State Bank failed. 

      De Leon’s Guaranty State survived this crisis primarily because it had been organized after the oil boom had ended, but the heavy demands placed on the Guaranty Fund forced the Legislature to change the law and most Guaranty Fund banks opted to switch to the Bond Security System.  De Leon’s Guaranty Bank was one of the last to make that switch, converting on July 9, 1926 and changing its name at that time to Security State Bank.

       Following the financial crisis of 1920-21, the economy of the area began a moderate recovery.  Total assets of Guaranty State reached $381,217.00 at the end of 1925, but over the next five years both the Guaranty (by then Security Bank) and the F&M had experienced significant declines.  At year end 1930, Security State had only $185,371.71 in assets and $114,668.61 in deposits.   Twenty-two days later on January 22, 1931 depositors arrived at the bank to find it closed.   The F&M had assumed the assets and deposits of the bank.

        No documented records of the assumption have been located and nothing providing any details of the takeover appear in the minutes of the F&M.  The only records are two statements in the Free Press.   J.D. Tate, Cashier of the F.&M. was quoted as saying, “I was agreeably surprised to fined the affairs of the bank in as good (of) condition as they were.  The bank was perfectly solvent.  There was absolutely no demand for its liquidation in (its) present condition.”

        B. J. Pittman, President of Security State indicated that he was anticipating the continuing decline of the economic conditions in the county.  He noted that Security was holding 25% of its deposits in cash.    One of the factors that may have contributed to Pittman’s and the Security board’s decision to close the bank were the deaths of his two longtime banking associates W.C. Streety in 1928 and bank director J. Doss Miller in December 1929.

    Above:  The Security State Bank staff in 1928 (L-R) Mark Johnson, Nina E. Butler Adams and B.J. Pittman Sr.  Photo provided by Nina Butler Adams for the De Leon Centennial book.

     Left:  Thelma Collie Daniell posting customer statements in the early 1920’s.  Thelma started with the bank when it opened.  Evan Barker  was the Cashier.  Daniell replaced him as Cashier. Photo provided by Thelma Daniell for the De Leon Centennial book.

Guaranty State Bank

B.J. Pittman, Farmers and Merchants Bank of De Leon, Texas

Security State Bank of De Leon Texas

First National Bank of De Leon Texas

First State Bank of De Leon Texas

    The Guaranty State Bank float in the De Leon Free Fall Fair of 1922 or 1923.  The float is in front of the Pittman home now directly south of the F&M Bank. 

    B.J. Pittman Sr. is driving and Mrs. Pittman is standing outside the car to his left.    The ladies inside the car are Opal Inzer, Louise Pittman, Letha Smith, Thema Collie and Flossie Stover.  Standing is Georgia Rowse. At the time, Rowse and Smith were teachers in De Leon.

    Pittman’s youngest son, Ralph is on the ladder.