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Knickerbocker Trust Company

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The Knickerbocker Trust was a bank based in New York City that was, at one time, among the largest banks in the United States. It was a central player in the Panic of 1907.

Knickerbocker Trust
IndustryInvestment banking
Founded1884 (1884)
Defunct1912 (1912)
FateAcquired
SuccessorBank of New York
HeadquartersNew York City, United States
Key people
Frederick G. Eldridge
John P. Townsend
Charles T. Barney
Charles H. Keep

History

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The original Knickerbocker Trust office, 1893.
 
Knickerbocker Trust (right, built 1909) and Manhattan Life Bldgs., 60 & 66 Broadway

The bank was chartered in 1884 by Frederick G. Eldridge, a friend and classmate of financier J.P. Morgan. As a trust company, its main business was serving as trustee for individuals, corporations and estates. Eldridge was the founding president serving until his death in 1889.[1] Eldridge was succeeded by John P. Townsend, who served as president for five years until he resigned to become president of the Bowery Savings Bank.[2] After Townsend's resignation, Robert Maclay was unanimously chosen to be the new president, with Charles Tracy Barney as vice president.[3] When Maclay retired in 1897, Barney was elected president.[4]

Panic of 1907

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In 1907, its funds were being used by then-president Charles T. Barney in a plan to drive up the cost of copper by cornering the market. This gamble came undone due to the dumping of millions of dollars in copper into the market to stop a hostile takeover in an unrelated organization. Barney requested a meeting with J.P. Morgan to discuss financial assistance for the bank, but was rejected. The board of Knickerbocker Trust asked Barney to resign after he admitted involvement in the F. Augustus Heinze and Charles W. Morse speculations.[5]

That afternoon, the National Bank of Commerce announced it would no longer clear checks for the Knickerbocker, triggering a run of depositors demanding their funds back that forced the Knickerbocker to suspend operations.[6][7] George L. Rives, Henry C. Ide and Ernst Thalmann were named receivers. The failure of the Knickerbocker was the impetus for the Panic of 1907,[8][9] and exacerbated an ongoing decline in the stock market that saw the Dow Jones Industrial Average lose 48% of its value from January 1906 to November 1907. The banking crisis is also seen as the final event that led Congress to form the Federal Reserve System in 1913.[10]

A. Foster Higgins of Greenwich, Connecticut, served as successor president of Knickerbocker (Barney shot himself on November 14, 1907).[11] Higgins was 77 years old and quite garrulous.[12] Foster made public statements, including one following the death of Barney, that greatly embarrassed the Rehabilitation Committee under F.G. Bourne and William A. Tucker that was trying to get the trust company on its feet again.[13][14] Nevertheless, the company reopened some weeks after its forced closing and paid off all depositors in full with interest.[11]

In March 1908, Charles H. Keep became president of the Knickerbocker Trust.[15] He had previously served as Assistant Secretary of the Treasury from 1903 to 1907 under Secretary L. M. Shaw during President Theodore Roosevelt's administration followed by his appointment as New York State Superintendent of Banks. He served in that role for less than a year until he was appointed to the New York Public Service Commission, from which he resigned in 1908 to become president of the Knickerbocker.[16]

Mergers and acquisitions

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Share of the Irving Bank-Columbia Trust Company, issued 12 March 1923
 
The Knickerbocker Trust and The Waldorf-Astoria Hotel, charcoal and pastel on brown paper by Joseph Pennell, ca. 1904–1908

In February 1903, Knickerbocker Trust acquired the Washington Bank, afterwards opening a branch in the seven-story Smith Building at 148th Street and Third Avenue in the Bronx Financial District.[17][18] In November 1912, the company bought its Bronx branch building, which was considered the Bronx's first skyscraper when it was built in 1900.[19]

In 1912, its assets were acquired by the Columbia Trust Company, forming the Columbia-Knickerbocker Trust Company.[20] One of the principal shareholders of the Columbia was Hetty Green and her son, Ned Green, was a director. At the time, Columbia had deposits of more than $21,000,000 and Knickerbocker had deposits of approximately $38,000,000. Columbia's president, Willard V. King,[a] served as president of the new company and Knickerbocker's president, Charles H. Keep,[b] became chairman of the board.[23] It was said that one of the deciding factors with the Columbia interests was Knickerbocker's hold on the uptown field. Columbia Trust had no branches and had outgrown its headquarters at 135 Broadway.[24]

In 1914, the name was changed back to Columbia Trust Company before it was acquired by merger by the Irving Bank of New York (which had been founded in New York in 1851) in February 1923.[25] After the merger, it was called the Irving Bank-Columbia Trust Company. In September 1926, the company was renamed Irving Bank and Trust Company before it acquired the American Exchange-Pacific Bank after which it was renamed the American Exchange Irving Trust Company.[26] In 1929, the name was changed again to the Irving Trust Company.[27]

On October 7, 1988, the Irving Trust board signed an agreement to merge with Bank of New York ending a yearlong battle as Bank of New York engineered a hostile takeover. At the time of the merger the combined banks became the United States' 12th largest bank with asset of $42 billion.[28] During that year Irving had been trying to participate in a friendly merger with Banca Commerciale Italiana.[29]

Knickerbocker Trust Building

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The opening of the Knickerbocker Trust office at the northwest corner of 34th Street and Fifth Avenue

The New York City bank was housed in a Roman-style temple designed by McKim, Mead, and White and erected between 1902 and 1904 (illustrated) at the northwest corner of 34th Street and Fifth Avenue.[30] Stanford White's design allowed for the possibility of adding nine stories of offices upon the structure.[31] It had branch offices at 60 Broadway, in Harlem and The Bronx.[11]

The Stanford White building was enlarged by ten stories in 1921, and the façade completely redesigned in 1958, with its signature pilasters covered over; it still remains, its original form unrecognizable.[32]

Presidents of Knickerbocker Trust

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References

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Notes
  1. ^ The directors of the Columbia Trust at the time of merger were: Edward Howland Robinson Green, John D. Barrett, Samuel G. Bayne, Union N. Bethel, Robert S. Bradley, Harold B. Clark, F. H. Eaton, James M. Gifford, Henry Goldman, William N. Harte, A. Barton Hepburn, Willard V. King, G. H. Kinnicut A. R. Kuser, C. F. Mathewson, J. R. McGinley, W. H. Nichols, A. G. Paine, C. W. Seamans, Hermann Selcken, Frederick Strauss, Arthur Turnbull, M. M. Van Beuren, and F. W. White.[20]
  2. ^ The directors of the Knickerbocker Trust at the time of merger were: Benjamin L. Allen, Gideon Louis Boissevain, Frederick Gilbert Bourne, Franklin Quimby Brown, Edward H. Clark, Lewis L. Clarke, H. Rieman Duval, J. Horace Harding, Charles F. Hoffman, William B. Joyce, Charles H. Keep, Samuel T. Peters,[21] William Austin Tucker,[22] and Payne Whitney.[20]
Sources
  1. ^ a b "OBITUARY.; FREDERIC G. ELDRIDGE". The New York Times. 23 July 1889. Retrieved 17 February 2021.
  2. ^ a b "DEATH OF JOHN P. TOWNSEND; President of the Bowery Savings Bank Succumbed to Heart Disease Sunday Night. APPARENTLY IN GOOD HEALTH The Well-Known Banker Had Just Finished Dinner with His Family in Tarrytown – Career of a Successful Business Man". The New York Times. 13 September 1898. Retrieved 17 February 2021.
  3. ^ a b "PRESIDENT ALFRED B. MACLAY; Chosen Unanimously to Manage the Knickerbocker Trust Company". The New York Times. 25 July 1894. Retrieved 17 February 2021.
  4. ^ "C.T. BARNEY'S HOUSE BURNED.; Country Residence at Southampton, L.I., Destroyed – Family Fled for Life – Loss, $250,000". The New York Times. 17 November 1901. Retrieved 17 February 2021.
  5. ^ "The Panic of 1907". Federal Reserve. Retrieved 25 March 2023.
  6. ^ "Barney and the Trust Company. No Irregularities – His Own Story of Why He Quit", The New York Times, November 15, 1907.
  7. ^ Lord, p. 186.
  8. ^ Mark Sullivan, Our Times, 1900-1925, Vol. III, pp. 502–504. New York: Charles Scribner's Sons, 1930.
  9. ^ Lord, pp. 188–189.
  10. ^ Edward Ten Broeck Perine. (1916), The Story of the Trust Companies.
  11. ^ a b c d John Steele Gordon. (1999), The Great Game: The Emergence of Wall Street as a World Power: 1653–2000.
  12. ^ Some 20 years before, he had been a committee chairman in the Connecticut State Assembly. Roscoe Conkling Fitch, History of the Fitch Family, Vol. II, pp. 265–266. Detroit: Privately published, 1930.
  13. ^ "Higgins Denies Interview. Says He Did Not Make Statements Criticizing Morse and Barney", The New York Times, November 17, 1907.
  14. ^ Lord, pp. 189–190.
  15. ^ a b "CHAS H. KEEP HEADS THE KNICKERBOCKER; Voting Trustees Retain Only Five of the Old Directors and Cut Board to Fifteen. RESUMPTION ON THURSDAY Bankers and Business Men Make Up the New Board – Receivers May Get $200,000 Each In Fees". The New York Times. 23 March 1908. Retrieved 17 February 2021.
  16. ^ TIMES, Special to THE NEW YORK (31 August 1941). "CHAS. H. KEEP DIES; EX-TREASURY AIDE; Assistant Secretary, 1903–07, Once State Superintendent of Banks, Was 80". The New York Times. Retrieved 17 February 2021.
  17. ^ "THE REAL ESTATE FIELD; Columbia-Knickerbocker Trust Co. Buys Its Bronx Branch Building in 149th Street Centre – Sales in Harlem – $75,000 Yonkers Deal – Brooklyn Market". The New York Times. 9 November 1912. Retrieved 17 February 2021.
  18. ^ "Charles F. Minor Elected Vice President of the Columbia Trust Company". Trust Companies. Trust Companies Pub. Association: 38. 1915. Retrieved 17 February 2021.
  19. ^ "TRUST COMPANY BUYS BRONX BUILDING". The New York Times. 17 November 1912. Retrieved 17 February 2021.
  20. ^ a b c "TWO MORE BIG TRUST COMPANIES TO MERGE; Plan Under Negotiation for Consolidating the Columbia and Knickerbocker". The New York Times. 15 May 1912. Retrieved 17 February 2021.
  21. ^ "SAMUEL T. PETERS DEAD.; Coal Dealer Gave a Rare Collection of Jades to Art Museum". The New York Times. 22 October 1921. Retrieved 17 February 2021.
  22. ^ Who's who in New York City and State. Lewis Historical Publishing Company. 1918. p. 1077. Retrieved 17 February 2021.
  23. ^ a b "RATIFY TRUST MERGER.; Stockholders of Both Columbia and Knickerbocker Take Action". The New York Times. 5 June 1912. Retrieved 17 February 2021.
  24. ^ "GETTING COLUMBIA TRUST.; Knickerbocker Control Is Said to be Waiting Only Formal Action". The New York Times. 18 May 1912. Retrieved 17 February 2021.
  25. ^ "BANK CONSOLIDATION IS NOW IN EFFECT; Merged Institutions Take Name of Irving Bank-Columbia Trust Company. WILL RETAIN ALL OFFICES Has $17,500,000 Capital and Sur- plus, and Undivided Profits of $10,500,000". The New York Times. 8 February 1923. Retrieved 17 February 2021.
  26. ^ "AMERICAN EXCHANGE AND IRVING BANKS IN $735,000,000 MERGER; New Institution to Be Next in Size to National City and Chase National. CHIEF OFFICERS ANNOUNCED Greater Facilities for World Trade Promised Customers – Terms of Union. $735,000,000 MERGER FOR IRVING TRUST". The New York Times. 15 October 1926. Retrieved 17 February 2021.
  27. ^ "Bank of New York Mellon, The". www.dfs.ny.gov. New York State Department of Financial Services. Retrieved 17 February 2021.
  28. ^ Quint, Michael (1988-10-08). "Irving Signs Merger Deal, Ending Fight". The New York Times. ISSN 0362-4331. Retrieved 2020-05-31.
  29. ^ Glaberson, William (1988-09-27). "Irving Says Suitor Made Rival Flee". The New York Times. ISSN 0362-4331. Retrieved 2020-05-31.
  30. ^ The marble mansion of the dry-goods magnate A.T. Stewart, first of the grandiose palaces on Fifth Avenue, was demolished to make way for it.
  31. ^ Digital Metro New York: Knickerbocker Trust Company, 1910 photograph.
  32. ^ Gray, Christopher (March 5, 2009). "Streetscapes: Fifth Avenue and 34th Street: Stanford White's Backdrop for the Panic of 1907". The New York Times. Retrieved 2009-03-06.
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