On their third ballot of the busy morning of Dec. 2, 1916, the Waco jurors unanimously agreed on what to do with the small-town banker with the blood of a state official on his hands.
For years T.R. Watson and two of his sons, Ed the vice-president and W.R. the cashier, had run the Farmers & Merchants State Bank in Teague like their own private piggy bank. As the latest generation of a respected family with deep roots in the Central Texas town, they were regarded as above reproach by their friends, neighbors and depositors.
The fact of the matter was the Watsons’ bank had been practically insolvent since 1914 if not sooner. Cash reserves were far below the legal level, but that did not keep the father and sons from dipping into the cash-strapped kitty for personal loans.
The shameful shenanigans may have been a closely guarded secret in Teague but not in Austin, where bank examiners were well aware of the Watsons’ suspicious practices. But to shut down any bank, even one as badly run as the Farmers & Merchants, was a last resort that the commissioner of insurance and banking sought to avoid at all cost.
As a result, the Watsons got off with a stern “talking to” and a warning to get their affairs in order or else. This ritual was repeated with the changing of the seasons but to no avail and for a very simple reason. The shady bankers understood they could continue conducting business as usual without the slightest fear of the state coming down on them.
But all that changed when the new governor replaced the spineless state commissioner with a man who took banking regulations seriously.
John S. Patterson was a Tennessean, who came to the Lone Star State in 1896 and opened a law office in Waco. He became good friends and business partners with James E. Ferguson, a Temple banker with political ambitions. He campaigned long and hard for “Farmer Jim” in his 1914 gubernatorial bid and was rewarded the next year with an appointment as commissioner of insurance and banking.
Patterson realized from the outset that the Farmers & Merchants in Teague was a problem bank with a capital P. He put the Watsons on notice and made it as clear as he possibly could that this was their last chance.
In late August 1916, Patterson returned to Teague with his chief examiner, Eldred McKinnon. In the presence of the Watsons, they went over the books with a fine-toothed comb and discovered the bank was in worse shape than ever before.
Instead of the legal minimum of $15,000, cash reserves had dwindled to less than $2,000. The hopelessly insolvent state of the institution was compounded by $60,000 in “forged paper” the Watsons carried on the books to make the dead-on-arrival depository appear to be in the pink.
At closing time, T.R. Watson went home to dinner leaving his boys to butt heads with the watchdogs. Later that evening, Ed phoned to urge him to hurry back because there was “trouble” at the bank. Unsure what he meant by that alarming choice of words, the elder Watson grabbed his gun on the way out the door.
Ten minutes later, Commissioner Patterson officially informed T.R. Watson in front of his sons that he was closing the Farmers & Merchants for good. In the next breath, Patterson “ordered McKinnon to place a notice on the window to the effect the bank was closed.”
T.R. pleaded for more time, but the commissioner would not hear of it. Patterson told him in no uncertain terms that he had run out of time and second chances.
The text of the appeals court ruling on Watson’s murder conviction describes what happened next: “At this juncture, Patterson started out of the bank. The evidence shows that as Patterson passed out of the door (TRW) shot him, then turned and fired at McKinnon. McKinnon testifies that after TRW fired one shot that one of (his) sons (Ed) grabbed or took the pistol from his father and fired at him as he ran out the back way.”
The examiner survived without so much as a scratch, but his superior was not as fortunate. Patterson lived long enough to reach a Waco hospital, where he died of a single gunshot wound the following day.
The murder trial of T.R. Watson was held in Waco and lasted a month and a half. It took two whole weeks to pick the jury because most candidates expressed “moral scruples” that would have prevented them from imposing the death penalty. In the end, the 12 men that heard the case compromised on a sentence of 99 years.
The killer of John S. Patterson spent less than two calendars behind bars. In November 1918, a month after granting Ed Watson a full pardon on a pair of two-year terms for forgery, Acting Gov. Rienzi M. Johnston did the same for dear old deadly dad.
In the public explanation of his controversial pardon, Johnston wrote that the 61 year old convict was “far advanced in years” and “suffering with malignant cancer and has only a short time to live.” The substitute governor, who was sitting in for Gov. William P. Hobby, did not say what would have been wrong with letting the murderer die in prison.
“Texas Boomtowns: A History of Blood and Oil,” Bartee’s new book, is now available! Order your autographed copy in time for Christmas by mailing a check for $28.80 to Bartee Haile, P.O. Box 152, Friendswood, TX 77549 or on-line at www.barteehaile.com.
