the epochal collapse of the bank of united states -- 9/21/20

Today's selection -- from The Outsider: Albert M. Greenfield and the Fall of the Protestant Establishment by Dan Rottenberg. The dramatic failure of the Bank of United States in 1931 was one of the signature events of the Great Depression:

"The Bank of United States, founded in New York in 1913, had grown rapidly through mergers until it was that city's fourth largest deposit bank, with 450,000 depositors and sixty-two branches by 1930. Like Greenfield's Bankers Trust, Bank of United States was created and owned by Jews and was heavily oriented toward real estate. Like Bankers Trust, Bank of United States bore a deceptively pretentious name (a play on the similarly titled Bank of the United States that Andrew Jackson had closed in 1836), a title deliberately designed to fool its immigrant customers into thinking it enjoyed government support. (The bank reinforced its misleading message by hanging a large oil portrait of the U.S. Capitol in its lobby.)

Crowd of depositors gather in the rain outside Bank of United States after its failure

"Beginning in mid-October 1930 a combination of legal problems and subpar real estate mortgages and loans triggered a run on the Bank of United States that depleted its deposits by more than $50 million. On November 24, three leading New York banks announced an agreement to rescue the Bank of United States by including it in a four-way merger that would create a megabank, headed by the president of the Federal Reserve Bank of New York and supported by a $30 million loan from New York's Clearing House Association. But two weeks later, on December 8, the Wall Street bankers who dominated New York's Clearing House Association suddenly withdrew their support, and the merger plan fell apart. Two days later, the Bank of United States closed -- the largest bank failure in the United States since the crash the previous year.

"Years later, financial historians concluded that Bank of United States was indeed mismanaged and deserved to fail. But at the time, its failure was widely attributed to the anti-Semitism of Wall Street bankers. Joseph Broderick, the New York state superintendent of banks, noted that only two or three weeks before, these same bankers 'had rescued two of the largest private bankers of the city, and had willingly put up the money needed.' The J.P. Morgan partner Russell Leffingwell described the Bank of United States dismissively as 'an uptown bank with many branches and a large clientele among our Jewish population of small merchants and persons of small means and small education, from whom all its management was drawn.'

"J.P. Morgan Jr. himself, the Morgan firm's titular head, was an outspoken anti-Semite who sincerely perceived Jews as a global fifth column that feigned loyalty to host governments while furtively advancing foreign plots. 'The Jew is always a Jew first and an American second,' Morgan wrote to Harvard's president in 1920. 'I cannot stand the German Jews,' he wrote to the president of the Museum of Natural History in 1916, explaining his refusal to attend any board meeting where Felix Warburg was present, 'and will not see them or have anything to do with them .... In my opinion they have made themselves impossible as associates for any white people for all time.' E. T. Stotesbury, as Morgan's senior representative in Philadelphia, was known to spend much of his time in New York and was presumed to be sensitive to his senior partner's concerns."



Dan Rottenberg


The Outsider: Albert M. Greenfield and the Fall of the Protestant Establishment


Temple University Press


Copyright 2014 by Dan Rottenberg


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