New York Bank of the United States
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The New York Bank of the United States was a bank in the Bronx, New York City, whose collapse is considered to be the first of many during the Great Depression. Despite its small size, it had hundreds of thousands of depositors, and the effects of its collapse made it important in US financial history.
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[edit] Beginnings and Architecture
The first big bank collapse after the Crash of 1929 began at a little limestone branch built in 1921 at the southeast corner of Freeman Street and Southern Boulevard in the Morrisania section of the Bronx. Now little more than a shell, it is a ruined monument in the history of American finance.
The modest structure was the first Bronx branch of the grandly titled Bank of the United States, begun in 1913 by Joseph S. Marcus, a Lower East Side garment manufacturer and financier. It served both established and newly arrived immigrants and its ambitious name was apparently chosen to impress (or confuse). It had no government connection and although in 1926 such an appellation became outlawed, the legislation was not retroactive and so didn't apply to this bank.
The Bronx branch was built in 1921. A tiny little neo-classical limestone structure with a chamfered corner and great bronze torchieres outside, it was designed by Louis Allen Abramson.
Marcus died in 1927 and his son Bernard took over during the bank's expansion through mergers from five branches in 1925 to 62 throughout New York City in 1930.
[edit] The Great Depression
The bank's stock was publicly traded, and there were rumors in the financial community in mid-1929 that the institution was shaky, but it weathered the Wall Street Crash of 1929, popularly known as Black Thursday. However, whether because of continuing reports of its shaky finances or because of depositors' needs for cash as the Depression began, its reserves dropped from over $200 million in October 1930 to $160 million in December. On December 8 a previously announced merger with three other banks was called off.
On Dec. 10, a Wednesday, $2 million was withdrawn from the Bronx branch by 2,500 depositors, one of whom stood in line for two hours to empty a $2 savings account. The commotion attracted a crowd of over 20,000.
The next day, The New York Times attributed the rush to a "false rumor" by a disgruntled investor. Nevertheless, nervous depositors formed long lines at other branches. An unidentified bank officer contended that the trouble was started by brokers seeking commissions from panic selling of the bank's stock. But on December 11, Joseph A. Broderick, New York State Superintendent of Banks, closed the institution. It never reopened.
The bank had 400,000 depositors — more than any other in the country — and immediately hurt were garment businesses that needed money for their payrolls. Claims began to be processed in an orderly manner, but on December 21 a crowd of 3,000 shouting "We want our money!" tried to storm the padlocked Bronx branch. Six people were arrested, all Bronx residents. Charges were dropped the next day.
A Monetary History of the United States by Milton Friedman and Anna Jacobson Schwartz, calls its failure the largest ever in American banking up to that time. The bank ultimately paid out over 80 percent on its deposits. But the obvious public panic set the stage for a series of bank failures that continued until 1933.
In public hearings, it was disclosed that two months prior to its closure bank officers had burned ledgers and other records in the incinerator of The Beresford (a luxury apartment building on Central Park West), which it had helped finance. According to Skyscraper Dreams, by Tom Schactman, the Beresford, The San Remo and the Century were ultimately sold at distress prices to satisfy loans from the Bank of the United States.
[edit] After the Great Depression
Photographs from the 1940's show the building in operation as The National Bronx Bank, but today it is only a boarded-up shell. The floor is littered with fallen plaster and skylight framing hangs crazily down from the ceiling -- anyone can enter through the roof. The marble facing of the tellers' cages is falling away.
The city's Department of General Services has owned the building since 1984. A sale at auction to a private owner in 1985 fell through and in another auction in 1989 the building went for $65,000 to two investors, Jose Medina and Raoul Santiago. Mr. Medina says that he planned to renovate for store occupancy, but that city regulations regarding reconstruction were too restrictive. The Department of General Services has declared them in default and the investors lost their $13,000 deposit.
[edit] References
- Friedman, Milton and Anna Jacobson Schwartz. A Monetary History of the United States
- Gray, Christopher. "Streetscapes: The Bank of the United States in the Bronx; The First Domino In the Depression," The New York Times, August 18, 1991
- Schactman, Tom. Skyscraper Dreams
