Macdonald’s Bank Robbery (Part 1)
Pioneer Victoria banker Alexander Davidson Macdonald and wife.
“One of the last remaining links with Victoria’s perfect crime—a scandal that made headlines as far as San Francisco—has fallen to the wrecking crews of progress. A landmark for more than a century, imposing Springfield Manor of 633 Michigan Street, is being razed to make way for a 23-storey apartment building...”
Such was my lead-in, in March 1969, to the tragic story of Macdonald’s Bank and its mysterious robbery that has become one of Victoria’s most enduring legends.
I was reminded of this fascinating story by a front-page story in the Victoria Times Colonist about a high-stakes “legal imbroglio” between the leaseholders and owners of Orchard House, situated at 647 Michigan Street, and overlooking the western edge of Beacon Hill Park.
That’s not the subject of my tale; rather, it’s the story of Orchard House’s predecessor, Springfield, that intrigues me—and makes me wonder if there really is such a thing as bad karma...
Today’s tale, a real who-dun-it, began in the late 1850s when a young, bearded Scotsman named Alexander Davidson Macdonald arrived in the booming colony of Vancouver Island.
Born in ancient Inverness, the 30-year-old son of an English army colonel had emigrated to New Orleans to work for several years in an uncle’s bank. Succumbing to the call of the wild west he tried his hand at business in California then decided upon Victoria after hearing stories of the Cariboo gold rush.
The enterprising Scotsman immediately noted a pressing need for a bank and set about to fill the void by opening the colony’s first banking house on March 12, 1859. The Victoria office, at Yates and Wharf streets, offered a complete banking service—and general store.
“The early career of the bank was a prosperous one. Its San Francisco agents were the firm of Tallant and Wilde. It sold bills of exchange on New York and London; made advances on gold dust for money or exchange in San Francisco, and purchased navy bills and bills of exchange on London,” according to an old account.
Then the ambitious Macdonald built a sawmill at Port Douglas on Harrison Lake and incorporated a steamboat service between the mill settlement and Fort Langley.
During the first three years business went so well that Macdonald opened a branch office in the Cariboo mining community of Richfield, then built and lavishly furnished one of the most beautiful homes in Victoria. Situated on a sylvan acre at the corner of what’s now Douglas and Michigan streets, the white brick mansion with its “gracefully carved window arches, fancy balcony railings, porches, lookout tower and circular drive round a formal garden centred by fountain” cost $12,000, a magnificent sum in that day and age.
Macdonald was handsome and gregarious, his bride attractive and charming. The popular couple soon became leading members of Victoria’s social elite, Springfield House being the scene of luxurious parties. Macdonald was even elected to city council.
But, by the close of 1862, business was not going so well, gold dust shipped by Macdonald’s bank having fallen from a high of $600,000 in 1861 to $330,000. The reason for this serious decline in business wasn’t a lack of confidence in the bank but increasing competition from two newcomers to the local commercial scene, the Bank of British North America and the Bank of British Columbia. Both were large, established institutions with considerably greater capital.
The manager of the Bank of B.C., which was British-chartered and which had already cut deeply into Macdonald’s trade in gold, complained to the colonial government that Macdonald was issuing his own banknotes in denominations of $1, $5 and $10 from “William’s Creek” [his Richfield Branch]. “I would respectfully wish to point out to his Excellency that the issue of Bank Notes by private Bankers whatever their Capital may be, is detrimental to the interests of Chartered Banks, and is fraught with the greatest danger to the whole Community. I consider it my duty to lay the matter respectfully before his Excellency and I will be glad to learn what steps can be taken to put a stop to so dangerous a precedent.”
By government standards, the response was swift.
The Bank Note Act restricting the issuance of bank notes coming into effect just six months later.
Under the Banking Act Macdonald had until March 1, 1865 to meet the new legislation either by obtaining a royal charter from Her Majesty’s government or by “an act of the local legislature of the colony, authorizing [his company] to carry on business after that date”.
Macdonald decided upon the former course and accordingly made preparations to sail for England where he hoped to obtain a royal charter by organizing a joint stock company to assume control of his bank. He would sail that winter after the annual peak of business occasioned by the fall clean-up of the Cariboo miners.
But Macdonald never got to England.
A year earlier, he’d appointed John Waddell, “about 60 years of age, tall, alert, businesslike and generally attractive,” manager of the Victoria office. When Macdonald headed for Cariboo in June 1864, Waddell was left in charge of the Yates Street branch with clerk and bookkeeper Josiah Barnett. For three months business was conducted as usual, Waddell and Barnett carrying on their duties as they had previously.
Late in the evening of Sept. 22, 1864, Waddell, Barnett and the bank’s agent R.T. Smith were still at work, preparing a shipment of coin and notes which Smith was to take to the Richfield branch the next morning by steamer.
When the treasure was ready—$15,000 in gold sovereigns, $10,000 in American gold pieces and several thousand dollars in currency, dust and silver—it was placed in a heavy safe in the fireproof vault.
“The safe and vault were then locked up by Mr. Barnett, who brought the vault key to Mr. Waddell, stating that he had not taken out the metal slide or plug which prevents the safe lock from being picked, as although Mr. Macdonald had once shown him how to take it out and put it in, he had forgotten how to do it.”
Waddell was about to throw the key into a drawer when Barrett suggested he keep it with him, and he accordingly placed it in his pocket. Waddell apparently didn’t know the secret of operating the lock guard either; when the three men left at 10 p.m. the safe was locked but its protective slide hadn’t been positioned.
At 7:30 next morning, janitor James Doghery entered the office to clean up. Finding it ransacked, he rushed to inform Waddell, who returned with him to find the bank “completely gutted”.
“An entrance had been effected by a skylight in the roof at the rear of the premises,” reported the Colonist, “by means of a ladder which customarily stood there, and the thieves had got down to the floor of the bank room by it by a light carpenter’s ladder which, singularly enough, was the exact length for the purpose, and evidently belongs to someone residing in the vicinity, although it has not yet been claimed.
“The burglars then easily made their way into the room where the vault was placed, and apparently at once proceeded to the safe containing the money, as another safe of a superior kind was passed by, untouched. The safe was opened without difficulty; owing to the metal slide not being removed, all that was necessary being simply to insert a small piece of iron and turn it round. The robbers had made use of the ash bucket, to which they had fastened a piece of spun yarn, to hoist their plunder up to the skylight, and lower it on the outside.”
Also found in the plundered office were “two iron rings containing four or five common unpolished tumbler keys (one of which fitted the vault door), and a three-quarter-inch steel bar about two feet long, and flattened at one end”. The crowbar had been used to jimmy the office door and force the safe.
The Colonist and Victorians speculated as to the burglars’ choice of tools, expressing the view they were not of the type “generally used by ‘cracksmen,’ and the general opinion is that the thieves placed them there as a blind”.
Even more curious is the observation that police handling of the case was less than vigorous—so much so, in fact—that their investigation “solicited the most pointed expression of astonishment” from citizens. As evidence of haphazard police work, the editor noted that the steamer George S. Wright had sailed at 8 o’clock that morning, about the same time that janitor Dogherty was sounding the alarm. It was quite possible, critics maintained, that the robbers could have boarded the steamer and thus had already left the colony.
Yet the speedier ship Fideliter wasn’t dispatched after the Wright although she’d had steam up and could have easily overtaken the other ship before she’d cleared Juan de Fuca Strait. Worse, when the sidewheel steamer Enterprise sailed at 10 a.m., police simply stationed a man at her gangplank—not to thoroughly search all freight and luggage but to “see no suspicious-looking packages went on board”. Also, numerous small craft had been allowed to clear harbour without being investigated.
Late that afternoon—finally—authorities tried to charter the Fideliter. It was too late; she was engaged. All they could do then was send bank agent Smith to Olympia, Washington Territory, on the Caledonia to telegraph Astoria police to search the George S. Wright upon her arrival. The flaw in this belated scheme was the fact that vessel would already have docked at Portland, meaning any robbers aboard could have already have landed there with the loot.
By the following morning, police were engaged in a mad scramble to find clues but their quarry, like all good criminals, had vanished into thin air. One officer, perhaps inspired to greater effort by the reward of $3000 offered by Macdonald’s Bank for the arrest and conviction of the robbers and recovery of the stolen money, arrested clerk Barnett on very vague suspicion. Mr. Feuillet, Johnson Street blacksmith, felt impelled to ask the Colonist to print that, no, he hadn’t been arrested on suspicion of complicity as rumoured.
Manager Waddell had a complete list of serial numbers of the missing currency circulated among other banks and business houses.
Wild rumours swept the city; their unkind content can be guessed by the Colonist’s having to warn its readers that unfounded gossip could permanently ruin the reputations of innocent people. These bitter rumours most certainly had been directed at Macdonald and his employees. In a letter to the editor, John Waddell pleaded with the public to await further developments before hurling accusations.
Days then weeks passed without the arrival of Alexander Macdonald from the Cariboo although Magistrate Augustus Pemberton had sent a message urgently requesting his immediate return. Then another week passed and still Macdonald failed to show, much to everyone’s consternation. Pemberton finally ordered clerk Barnett freed on his own recognizance on $500 bond. He was ultimately released “without a stain on his character”.
On October 12 the Colonist reported: “We are pleased to learn from Mr. John Work, who has just returned from Cariboo, that Macdonald and Co. are meeting their liabilities, and redeeming all their notes as fast as presented. Mr. Macdonald may be expected here by next boat.”
But several boats came and went and still no banker Macdonald. The Victoria branch remained closed.
In the meantime, the government had increased the reward by $500, bringing it to a tantalizing total of $3500 which was a king’s ransom at that time. But no information as to the identities of the criminals or the whereabouts of the money were forthcoming.
A touch of comedy lightened the drama two weeks later when clerk Barnett—still free on bail—was dispatched to Portland to investigate two men who’d been arrested as suspicious characters for having embarked on a wild spending spree with British banknotes. It proved yet another empty lead.
Then it was November. A.D. Macdonald still hadn’t returned although his bank had increased the reward to $5000. Finally, two full months after the robbery, he reached Victoria. Anxious depositors asked if he planned to reopen the bank but the harried banker made no immediate reply, instead calling a meeting of his creditors for December 6th.
On that date he announced that the bank was in serious trouble: liabilities exceeded assets by $11,000. A committee was appointed to study the matter and report back to creditors on December 23rd. The day before, A.D. Macdonald sailed for San Francisco. He never returned.
News of his secret departure stunned the city and threw creditors into panic. But Macdonald was gone, leaving three letters with close friends that explained his surprise move., One, addressed to the committee chairman, read:
“From information received by this steamer [the mail ship S.S. Nevada] I find it necessary in order to accomplish anything in San Francisco to extricate myself out of the position I am placed in, to go there personally to explain the state of my affairs, and I have been within the past few days threatened with personal violence on the streets, and before that my liberty would be jeopardized if it were known that I intended to go by the present steamer. I am desirous that as few should know of my intention as possible, for although I am desirous to do all that I can to satisfy those holding claims against me the duty I owe to others, as well as to my creditors, requires that I should adopt this course to protect myself from personal restraint. [He’s referring to the fact that debtors could be sent to prison in those days.]
“I shall know in two or three days in California what I can do, and will communicate to you by return steamer.”
Macdonald had slipped out of town unobserved by rowing to Race Rocks and flagging down the outbound sip,. The man who rowed his boat that day was John Waddell. Why Macdonald had escaped like a thief in the night was bitterly debated for many years but time has come to the tragic banker’s defence. The innocent victim of his bank’s robbery, he faced the very real threat of debtor’s prison and threats to his personal safety.
Filed in the bankruptcy proceedings of the supreme court was a letter written to Macdonald by “Several Friends” which reads:
“”If you don’t pay and return those moneys you have collected on receipt of this, it will cost you your life, wherever you go. If you want to die a rogue—do so! This is a sure warning from—Several Friends.”
Whatever Macdonald’s motives for taking flight, he was gone, never to return, his once prosperous bank ruined. Creditors originally hoped for a return of 37 1/2 cents on the dollar but it’s unlikely they received even a fraction of that. All of Macdonald’s possessions and real estate, including his beautiful home, Springfield, were auctioned off. His mansion, built at the cost of $12,000, sold to its mortgagor for $6000.
Upon his arrival in the Bay City Macdonald did attempt to secure financial aid but it was no use. In fact, he had difficulty in supporting his family, losing his first job when recognized as the rogue banker from Victoria. He later managed a flour mill at Alameda then moved to the Black Hills of North Dakota; he died in 1913 in San Francisco.
In October 1967 the Victoria Daily Times reported the demolition of British Columbia’s first bank: “To most casual observers it is just another old building being torn down but to old-timers it is the end of a historic landmark. The building in question is on the south-east corner at Yates and Wharf streets. It is Macdonald’s Bank, first financial house in the colony of Vancouver Island.
“Today, the building is almost demolished and a modern structure is being erected to take its place. Yet, all is not to be done away with. Parts of the building—such as the widow shutters—are to be given a place in the provincial government archives...”
Macdonald's once luxurious Springfield Manor being demolished in 1969.
Reporter Dave Stock went on to recap the story of the infamous robbery of over a half-century before and noted that the historic site was to be occupied with a warehouse and business office. The only reminder “to signify the historic importance which this corner played in the development of Victoria will be a plaque attached to the side of the building which will probably read: ‘Site of Macdonald’s Bank, first in Victoria.’”
So many questions remain unanswered.
The too-casual placing of the treasure in a safe without securing the slide that prevented the lock being picked—not that that really mattered if one of the keys found on the floor fitted the safe as was reported in the press. Why wasn’t the money stored in the second, “superior” safe? The ladder used to descend from the skylight was of perfect length for the task, suggesting the robbery was planned rather than the ladder having been borrowed for the occasion.
The timing was perfect, too, being committed precisely when the valuable shipment of gold, silver and banknotes ($30,000 in 1859, for example, was the equal of over $900,000 in 2020 dollars!) was being kept overnight for shipment to the Cariboo the next day. The shoddy police investigation also appears to have been quite out of character for the Victoria of that day.
Questions, questions, questions.
As for the public rumours and accusations against Macdonald and the bank personnel, were they far wrong with their insinuations that it was an inside job? Macdonald was in the Cariboo and appears to have had to struggle for a living thereafter but what of Manager Waddell, clerk/bookkeeper Barnett and courier R.T. Smith who, it turned out, was also a substantial account holder?
Josiah Barnett, upon his release from jail “without a stain on his character” appears to have dropped from sight, at least as viewed from this late date. Not so R.T. Smith who, having lost $13,000 in the bank debacle, went on to rebuild his fortune and to achieve short-term notoriety in North Dakota for an entirely different reason. (I shall tell you all about it in due course.)
Which brings us to bank manager John Waddell. Ah, now we’re getting warm!
(To be continued)
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