Sowing Grief: Depositors Fight for Their Money
Walter Davis was shrewd. Echols makes that clear from the start of this chapter. He set up a holding company called Fleming and Company, named after his handyman, to shuffle foreclosed properties around and keep bad debts off his books. He acquired thirty houses and commercial buildings in the Springs, fifteen houses and an apartment building in Pueblo, and more in Denver. All built on other people’s misery through foreclosures.
In normal times, that portfolio would have been his safety net. But these were not normal times.
The Scheme Falls Apart
Here’s what Echols uncovered: from 1920 to 1932, Walter paid his depositors almost $450,000 more in interest than their money had actually earned. He was paying 5 to 6 percent on deposits that were earning him less than 4 percent. That’s a Ponzi scheme. He wasn’t promising crazy returns like Charles Ponzi himself, but the math was the same. Robbing Peter to pay Paul.
When the Depression made people too broke to open new accounts or make loan payments, the whole thing collapsed. By 1932 his association owed $30,000 in back taxes on foreclosed properties that were now close to worthless.
And Walter knew it was coming. He shipped his wife Lula to New Orleans, then Havana, then Miami, then New York. His daughter Dorothy was studying law in Boulder. His mistress Eva rented a safety deposit box and stashed a diamond ring and $3,000 in cash inside.
Then in late May, an Italian American woman confronted Walter as he locked up his office. She demanded her money. When he refused, she tried to shove him into a car where her husband was waiting at the wheel. Walter coughed up some cash just to get free. He later told his family he feared for his life during those last weeks.
“Walter Davis and $1,000,000 Are Missing”
On June 3, 1932, the local muckraking paper Common Sense Weekly called him “Double Dynamite Davis.” That same day, Walter got on a train to Denver and then headed to New York.
He told his lawyer he was going to Washington to meet with federal officials about sorting out his association. Instead he went straight to the Waldorf Astoria, where Lula was staying.
On June 19, he called his lawyer from New York and resigned. Put the association into receivership. Done.
When the authorities opened the City’s safety deposit box at the bank, they expected $300,000 to $400,000 in bonds. What they found: seven lapsed life insurance policies, three empty envelopes, and $3,700 in Liberty Bonds.
The headline said it all. “Walter Davis and $1,000,000 Are Missing.”
The final number was worse. The association had $2 million in deposits. Its actual liquid assets were basically nothing. The shortfall came to about $1.25 million.
The Women Take the Hit
Here’s the thing about this chapter that really stuck with me. Walter vanished. His male employees got almost zero scrutiny. But the women in his life got raked over the coals.
Eva Terry, his mistress, was dragged from Denver to Colorado Springs by a detective. She was “sassy and belligerent” during questioning. When she admitted to being the “other woman” without a shred of shame, investigators decided she must be hiding something. They threw her in jail. For a week. They searched her apartment and found nothing but a small clock with Walter’s initials on it. They tried to get the IRS to prosecute her for tax evasion on his gifts. They seized her safety deposit box contents.
When Eva demanded her release, the press took it as proof she was guilty. But when Ed Sharer, one of the other B&L men, acted defiant in the same situation, the press read it as proof of his innocence. Echols doesn’t belabor this point. She doesn’t need to.
Lula came back to Colorado Springs and was interrogated for hours by the receiver, the police chief, and her own brother-in-law Roy. She broke down into “hysterical sobbing” when she walked into her house and saw Walter’s photograph. The newspaper headline the next day: “Hysterical during police quiz.”
And then there was Dorothy. Depositors hatched a plan to kidnap her to force Walter to come back. The police took it seriously enough to put a 24-hour detail on the Davis home.
The Depositors Get Organized
About two thousand depositors showed up at a mass meeting on July 1, only a week after the news broke. They formed a Depositors’ Committee. They chose the muckraking newspaper editor J. Herbert Pratt as chairman.
They went after the B&L commissioner, Eli Gross, who was underqualified and whose “advisory board” included Walter Davis himself. They went after the receiver and his lawyers. They went after the mayor.
But here’s the problem. They never pushed for stronger regulation of building and loans. Not once.
Echols draws a direct line between the Depositors’ Committee and the El Paso County Taxpayers Association, an anti-government group whose leaders included former KKK members. These groups wanted less government, not more. They wanted to slash taxes, cut public services, and privatize utilities. They saw the B&L scandal not as evidence that the industry needed oversight, but as proof that government was corrupt.
In Chicago, swindled depositors went the opposite direction. They pushed the federal government to protect their savings. When New Deal agencies stepped in, Chicago workers took “tremendous comfort” in the government’s new role.
In Colorado Springs, the depositors doubled down on the very anti-regulation philosophy that let Walter Davis operate unchecked in the first place.
Echols connects this directly to the modern conservative movement. From Goldwater to Nixon’s “Silent Majority” to Reagan’s argument that government itself was the problem. The seeds were planted in the 1930s, in places like Colorado Springs, by people who got swindled and then decided the answer was even less government.
It’s a pattern that keeps repeating. And nobody seems to notice.
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