Nowadays, bank deposits are insured by the Federal Deposit Insurance Corporation up to $100,000, recently raised by legislation to $250,000.
A century ago, however, bank depositors’ funds were kept secure only by the reputation and stability of responsible banking institutions. Like Wells Fargo Nevada National Bank, which operated under the leadership of President Isaias W. Hellman “on the most safe and conservative lines.”
When war erupted in Europe in August 1914 , credit froze and banks and investors hoarded gold, causing worldwide financial panic . Banks on the East Coast began trading paper IOU’s, or clearing house certificates , instead of gold.
On the Pacific Coast, Hellman led bankers in a different direction — continuing payments in gold, as usual, to restore confidence and keep interest rates in check.
The public showed its confidence in Hellman’s bank by depositing more money with Wells Fargo over that summer than all the rest of the national banks in San Francisco combined.
During the war, Wells Fargo Nevada National bank helped sell Liberty Loans and invested in U.S. Treasury Certificates. Afterward, Wells Fargo steered a course of cautiousness as the economy shifted back to peacetime.
At the meeting of the Bank’s stockholders in 1920, Hellman said with typical honesty: “We cannot promise our stockholders extraordinary large earnings. Such profits cannot be made in legitimate banking, but we can count on gradual and steady growth. Our ambition is not to be the largest bank in San Francisco, but to be the soundest and the best.”