In 1880 Mr. Charles T. Merrill, a son-in-law of W. A. Russell, proprietor of the old Russell House, engaged in the banking business in a small way. He received deposits and advanced cash to cigar manufacturers. He was building up quite a good business, when the failure of Seidenberg & Company, large cigar manufacturers, whose paper Mr. Merrill was carrying, caused him to go under, and Mr. Merrill's brief essay into the banking world came to an end.

In April, 1884, Mr. George Lewis, president of B. C. Lewis & Sons, bankers of Tallahassee, and Mr. George W. Allen, organized the Bank of Key West, with a capital of $50,000.00.

Among the stockholders were Judge James W. Locke, R. Alfred Monsalvatge and several cigar manufacturers.

The bank entered at once upon a remarkably successful career. It was located on the corner of Front and Fitzpatrick streets, in a building belonging to Mr. John W. Sawyer. In 1885 they erected a bank on the corner of Front street and Exchange alley, where Monsalvatge & Reed's store now stands. This building was destroyed by fire in 1886. The day after the fire, when the whole town was panic-stricken, a run on the bank was prevented by the prompt foresight of Mr. Lewis and Mr. Allen. Their books, cash, notes and all valuables were in a fireproof safe, and the second day after the fire, they were taken from the vault and moved to the United States naval station, where permission had been granted to conduct their operations until other quarters could be found. A large table was put out in front of the station, and heaps of silver dollars and packages of currency piled up on it, and bags of silver stacked all around in plain view of the passersby. Behind the table sat Mr. Allen, Mr. Lewis and their clerks.

Announcement was made that the bank was ready to transact business. The sight of so much money restored confidence, and the bank was established on a firm basis in the estimation of the people. In a few months they moved into a building erected by Duffy & Williams on the northwest side of Front street, midway between Duval and Simonton streets, where they remained until their new building on the corner of Front street and Exchange alley was finished.

The first year the bank paid ten per cent dividends, which increased each year until 1890, when a stock dividend was declared, thus increasing the capital stock to $100,000.00. The bank was doing a business far beyond its capital, but it was enabled to do this through Mr. Lewis guaranteeing the drafts of the Bank of Key West.

Mr. Allen, Mr. Gato and Mr. Monsalvatge, directors of the bank, repeatedly urged Mr. Lewis to increase the capital stock so that the bank might do business on its own resources.

This, however, he refused to do, stating that they could make larger dividends if the stock were not increased.

Mr. Lewis embarked in the banking business in Key West largely because of ill health, having suffered for some time from bronchial troubles, which necessitated him spending his winters in a warm climate. In 1889 his health was so far restored that he was able to continue his residence in Tallahassee during the winter, and he induced Mr. Allen to buy $20,000.00 worth of his stock which he sold to him for $36,000.00. He promised to remain president of the bank and to continue to guarantee its drafts. Shortly after Mr. Allen bought the stock, Mr. Lewis asked to have his remaining hundred shares transferred to his minor children, which request the directors refused. He then resigned from the presidency, but his resignation was not accepted. He was urged to retain the position until such time as the bank could call in some of its loans, and be in a position to take care of itself without his guarantee. When the news of his resignation was made public, a run on the bank started, and nearly $100,000.00 was drawn out in a few days. Matters remained in this condition until Mr. Lewis, over the repeated requests of Mr. Allen, peremptorily resigned as president, and withdrew his support from the institution.

He had committed the bank to its policy of overdrawing with its New York correspondent, in order that it might do a large business on a small capital, and when he withdrew his support, some of the bank's drafts went to protest. Mr. Lewis at once notified the State Comptroller, who on Mr. Lewis' suggestion, instructed State's Attorney Thomas Palmer to apply for a receiver, and the bank's doors were closed.

After a most extravagant administration by the receiver, in which large attorney's fees were paid and other heavy expenses incurred (the bank being in the hands of a receiver for thirteen years), it paid depositors sixty-two and half cents on the dollar. The amount paid to the depositors, and for administration of the several receiverships, amounted to considerably over one hundred per cent. of the bank's liabilities at the time the receiver was appointed.

FIRST NATIONAL BANK

In 1891 when the Bank of Key West closed its doors Mr. George W. Allen was in New York trying to prevent its failure. After the receiver was appointed, his friends in the cigar manufacturing business in New York started a movement to establish another bank in Key West to be managed by Mr. Allen, and subscribed for about $80,000.00 of the stock. With this support he returned to Key West, and in a short time organized the First National Bank of Key West, with a capital stock of $100,000.00. Its officers were George W. Allen, president; August Boesler, of the firm of Wm.Wicke & Co., vice-president; W. W. Flanagan, president of the Southern National Bank of New York, Ferdinand Hirsch, Charles Baker, Remigio Lopez y Trujillo and Oscar Rierson, directors. This institution, starting immediately after the failure of the Bank of Key West, had many obstacles to overcome, but by careful management and excellent business methods, it won the confidence and patronage of the people of Key West, and it is today one of the strongest banking institutions in the State. Its deposits are upwards of seven hundred thousand dollars. The success of the First National Bank is a tribute to Mr. Allen's banking ability, and shows conclusively that had his policies, instead of Mr. Lewis', been adopted in the management of the Bank of Key West, the failure of that institution would not have occurred.

THE UNION BANK

In 1892 the Union Bank opened its doors for business in the brick building on Front street, which had been erected for the Bank of Key West. Mr. R. Alfred Monsalvatge was president, and Mr. Jeremiah Fogarty cashier. It was an extremely conservative institution, and did not enlarge its business to any extent. After a few years existence, it returned all its deposits and went out of business. It neither made nor lost any money.

THE ISLAND CITY NATIONAL BANK

The Island City National Bank was organized and commenced business on October 16, 1905. Its officers were Mr. George S. Waite, president; Mr. Charles R. Pierce, vice-president; Mr. E. M. Martin, cashier, and Judge Jordan M. Phipps, attorney. It has a capital stock of $100,000.00, and its deposits are over three hundred and fifty thousand dollars. The first board of directors were Messrs. Geo. S. Waite, Charles R. Pierce, Jordan M. Phipps, John T. Sawyer, Richard Peacon, Theodore A. Sweeting and E. M. Martin.

-from "Key West: The Old and the New" by J. Browne. Published 1912.