by Paul R. Spitzzeri
This is one of those stories where the hometown boy makes good and then everything turns very, very bad and it is also a reflection of boom time ambitions, self-delusion, and good old fashioned greed. The fact that it took place in Hollywood adds to the tale because the film capital of the world was no stranger to excess and scandal.
Whereas Walter P. Temple, during much of the same period as this story, pursued an aggressive agenda of speculation and risk in many of the same arenas, his financial collapse was one largely dictated by a typical boom period problem of becoming overextended.
For Gilbert Henry Beesemyer, however, who was born and raised in Hollywood and who considered a brilliant financier with a sterling track record, his dramatic downfall took him beyond the legal pale in a scandal that had no parallel in its particular domain for many decades.
Today’s highlighted object from the Museum’s holdings is a pamphlet titled “1929 As Seen By Gilbert H. Beesemeyer [sic]” and concerns the completion of a landmark Hollywood skyscraper, the Bank of Hollywood Building, and the story of how its anchor tenant grew dramatically, as did Beesemyer’s other business interests, in the preceding several years during the Roaring Twenties boom.
Born in February 1885 in what was known as the Cahuega Township, Beesemyer’s mother was Sophia Gallwas and his father, William, was a farmer. As with so many migrants to California, William came out from his native Missouri (his parents were German immigrants) for his health when he was in his teens. Sophia migrated with her family to Los Angeles in 1879.
He first worked for the well-known Spreckels family and their massive sugar business before coming down to the San Fernando Valley and then to what became Hollywood. He married Sophia, who was born in Indiana of German migrant parents, in 1882 and Gilbert was the first of their six children, including two daughters.
The Beesemyer farm was bounded by what became Sunset Boulevard on the north and Santa Monica Boulevard on the south, with Bronson Avenue on the west and Western Avenut to the east. Of the four sons, it wasn’t just Gilbert who became prominent in the area. Clarence was a top executive for Gilmore Oil Company and the General Petroleum Company and also was president of the powerful Los Angeles Chamber of Commerce, William was a stockbroker, and Louis was a prominent Beverly Hills dentist. As the film industry began to mature in the community, a portion of the ranch was sold to Warner Brothers.
Gilbert, however made a particularly remarkable mark on Hollywood, which was named during the Boom of 1880s, was incorporated in 1903 and, seven years later, annexed to Los Angeles. He was a cashier for the Hollywood National Bank from 1906 to 1918 and then had brief stints for a few years as a contractor, a car dealer, and as the treasurer of Filmusic Company, before launching the Guaranty Building and Loan Association with $25,000 in capital in 1921.
Already popular and trusted as a Hollywood native son, Beesemyer also took on the aura of a financial wizard while running the building and loan as secretary and manager and it started out small, building houses in the community, but grew exponentially as the early Twenties real estate boom developed including major commercial development in Hollywood’s burgeoning business district.
Within just a few years, by 1924, Guaranty had about $1 million in deposits and built the Guaranty Loan Building, the second height-limit (11 story) structure in Hollywood, following the Taft Building from the same year. One of the tenants was film legend Rudolph Valentino, who ran his production company out of an office there.
As the years went on, the scale and scope of Guaranty grew and Beesemyer added two related firms, the Guaranty Holding Corporation and the North American Bond and Mortgage Company. By the end of the decade, deposits reached some $11 million and Beesemyer broadened his business interests to include being vice-president of the state building and loan association and was also president of the United States Guaranty Association, with which Guaranty was affiliated, and which boasted of $33 million in deposits among its constituent associations, including one in Fresno, of which he was a director. He was also vice-president of a major Ventura building and loan association and was the principal of Investors of America, Inc. and of an oil company named for his only child, Elmer.
Beesemyer’s investments included property in Bakersfield, North Hollywood and Escondido; being an organizer of the Hollywood Country Club, over Cahuenga Pass and on land owned by William F. Holt, a land baron in Imperial County, where Holtville (the self-proclaimed “Carrot Capital of the World”) is named for him, and which closed in the late Thirties; serving as a director of the Hollywood Playhouse, which opened in 1927 and was later the El Capitan Theatre, the Jerry Lewis Theatre, the Hollywood Palace, the Palace and is now the Avalon Hollywood nightclub.
One of his biggest projects was the formation in 1927 with $3 million in capital of the Central Motion Picture District, Inc., which acquired land near the Hollywood Country Club in what was called Lankershim so that it could build film studios as well as subdivide property for housing projects and new towns. The concept envisioned by the firm was borrowed from the Central Manufacturing District in the industrial section of downtown Los Angeles and by which improvements were made and then leased to, say, film studios, with other property available to studios to purchase.
The firm had acquired some 130 acres and the Burbank Daily Evening Review of 16 May 1927 stated that “it is reported that a town will be started and the district will be known as Studioland.” Rumors were “that five moving picture concerns are now included in the organization plans of the huge studio project” and announcements were expected soon about the start of construction. It was projected that $20 million would be invested in the development of the massive enterprise. Mack Sennett was the first to locate his studio there and was soon followed by Al Christie, another producer of comedies. Eventually, the area became known as Studio City.
By the end of the decade, Beesemyer was something of an oracle prognosticating continued unflagging growth in the region’s industrial and residential construction sectors. For example, at the end of July 1929, he forecast $300 million in residential construction for the next five years, based on a survey he commissioned.
A table of figures used as a significant basis for the analysis showed that in 1920 there were 9,600 buildings erected at value of over $32 million. At the peak of construction three years later, the totals were nearly 26,000 units and over $110 million. From 1923, however, there was a consistent decline so that, in 1928, there were under 9,000 structures at a value of just shy of $62 million (it bears noting that Walter Temple’s Town of Temple, renamed Temple City, was established that peak year of 1923 and experienced the downturn reflected in the table). The to-date figures in 1929 showed another decline.
Beesemyer and Guaranty, which also released an interesting traffic study that summer based on vehicle counting at 50 major Los Angeles intersections, used data from the previous five years, including population growth as well as construction figures, and assumptions about the Boulder Dam and other projects and their effects on future migration and development to make the case for their predictions. Three months later came the stock market crash that ushered in the Great Depression.
Even then, the most serious effects were not until 1932, so plans continued to be made for a quick return to prosperity and more building and development. Beesemyer issued yet another study, this one done statewide, and released it in November 1929, a month after the crash, noting that loans in force from California’s building and loan associations were over $460 million, a ten-fold increase over the decade. He added that Guaranty’s resources spiked by over 58% the previous year and declared that “the building-loan institutions are in a position to provide ample funds for legitimate home-building.”
In February 1930, the grand dreams and ambitions continued as Beesemyer and a host of prominent capitalists held an outdoor dinner on the site of what was to be a Ritz-Carlton Hotel north of Franklin Avenue between Vine Street and Beachwood Drive. The hotel was slated to cost $5 million and be spread out over 22 acres “and the hotel and its grounds will have a sweeping view of the whole city.”
Beesemyer was president of the syndicate with Hollywoodland developer Sidney H. Woodruff as a vice-president and directors including A.Z. Taft of the Taft Building in Hollywood; railroad president David W. Pontius; contractor and former Los Angeles Chamber of Commerce president Arthur S. Bent; drug company owner Frederick W. Braun; Los Angeles Times publisher Harry Chandler; downtown Los Angeles developer and 1932 Olympic Games lead organizer William May Garland; and James B. Van Nuys.
Suddenly, a shockwave hit Hollywood and its financial and building circles when, at the end of 1930, it was announced by Charles A. Whitmore, the state building and loan commissioner, who was soon forced to resign, that Beesemyer made a written confession that, from the time he formed Guaranty nearly a decade before and in which he’d retained ownership of two-thirds of its stock, he’d been embezzling funds from the exponentially growing deposits of the firm and its associated companies.
Widely reported throughout the nation, the report was that
the confession, Whitmore said, was given to him and directors of the association early Friday [5 December] after which Beesemyer was taken into custody.
He was charged with grand theft. Whitmore said the confession disclosed the most amazing and elaborate speculations of their kind in California in recent years.
Mentioned was the Bank of Hollywood, for which the namesake building celebrated in the pamphlet was constructed and which, like Guaranty, failed to open its doors on the following Monday, with both closing permanently due to the massive scale of the embezzlement. Whitmore tried to calm the water by stating that the crime “should not be allowed to shake public confidence in the building and loan business” while he acknowledged that “this is the greatest defalcation in recent years and comes at a time of unrest.”
Though the disgraced financier tried to obtain parole at least a couple of times, he remained at the maximum security prison for ten years. In late September 1939, actor Noah Beery appeared at a parole hearing on the behalf of his friend and business partner and told the panel that “my brother Wallace, who lost $80,000, also wants to see Mr. Beesemyer freed and given another chance.” Undoubtedly, however, many who were bilked by Beesemyer felt otherwise. The actor made his plea and then dropped down into his chair gasping for breath and begging, “somebody please get me out of here.”
Beesemyer was, however, soon paroled and left San Quentin nearly nine years to the day he arrived on 8 January 1940. He did not, however, return to his hometown and, instead, resettled on the opposite end of the country in Baltimore where he worked for a chemical company. It was years later before he came back to California and, in 1956, when a Virginia woman who worked for a savings and loan embezzled $2 million over two decades, Beesemyer’s name was revived in national press accounts because his embezzlement was still the largest in American history to date. In some ways, he was akin to Bernard Madoff, though that investment titan’s fraud was in the tens of billions of dollars.
Given the spectacular demise of Beesemyer and the incredible damage he wrought on depositors in his building and loan association and related firms, the pamphlet shown here takes on a powerful resonance beneath the surface. In it, he talks about the formation of the Bank of Hollywood, known for four years as the Central Commercial Trust & Savings Bank, in 1922 in simple quarters in a wood-frame building on Santa Monica Boulevard and Vine Street.
With its “Spirit of Service” well established, the institution moved two years later to the Kress drug store building, after that business moved to the shiny new Taft Building, while the old location was kept open as a branch. After four years, the Kress store quarters were inadequate, so there was another move in June 1928 to a new structure back at Santa Monica and Vine and allowed for the “strong, friendly, helpful and modern BANK OF HOLLYWOOD that you now know.”
The new eleven-story building and its sumptuous ground floor bank quarters, however, was a tremendous leap forward and the latter deemed “among the finest in the country.” With an emphasis on “completeness” and “convenience” in service to customers. Highlighted were the variety of services in accounts, exchange, escrow, letters of credit, commercial and real estate loans, and safe deposits, as well as the massive vault.
Tipped in the pamphlet is a typed note, dated 16 May 1929, signed by Beesemyer and addressed to “Dear Friend”, inviting them to visit the new quarters two days later and adding “you will be so proud as we are, to have the newest and finest banking room and building in town . . . I will be looking for you.”
Beesemyer took the opportunity, with the completion of the building move of the bank to announce his resignation as president and installation as chairman of the board, while drug store owner Samuel Kress became vice-president. Eight months later, the pretense of safety, security, and stability crumbled with the news of Beesemyer’s staggering deceit and deception.
As for the building, a second tower was added in 1930 and the structure was long known as the Equitable Building. Although it decayed in recent decades, it was rehabbed and is now the 60-unit Lofts at Hollywood and Vine and the structure is a City of Los Angeles historic-cultural landmark. Incidentally, adjacent to the building is the Pantages Theatre, built by another local notable, theater impresario Alexander Pantages, who went to jail in 1930 for an attack against a young woman, Eunice Pringle, though a second trial led to his acquittal the following year.