Rebecca Kobrin: Too Big to Fail in 1930

Source: The NY Jewish Week, 12-3-10

History’s silence on the Jewish immigrant entrepreneurs behind the Bank of United States.

Front page and back cover of the Bialystoker Stimme,  Nov. 1921. Front page and back cover of the Bialystoker Stimme, Nov. 1921.

On the morning of Dec. 11, 1930, thousands of people lined Delancey Street to withdraw their savings from the Bank of United States. Rumors had circulated for days that the largest retail bank in New York, with over 440,000 depositors and $300 million in assets, was insolvent. Founded by Russian-Jewish immigrant entrepreneur and garment manufacturer Joseph S. Marcus in 1913, the bank, despite its grandiose name and the large portrait of the Capitol adorning its main branch, was actually just a provincial New York retail bank. The bank advertised mainly in the Yiddish press and catered primarily to immigrant Jews and their organizations scattered throughout Manhattan, Brooklyn and the Bronx. Its name convinced many immigrant depositors that, unlike other shady financial enterprises scattered throughout the city, it was, “as solid as the Bank of England.” It was this continued deep trust, The New York Times reported, that made policemen unnecessary to control the “throngs” who gathered around the bank that morning. All were calm, failing to recognize that the bank’s president, Bernard Marcus (Joseph’s son), and first vice president, Saul Singer, a garment manufacturer turned real estate entrepreneur and banker, had depleted the bank’s assets through heavy speculation in its own stock and through risky real estate investments.

Wall Street financiers, led by J.P. Morgan, Jr., refused to risk their funds to help save the bank, despite the pleas of Joseph Broderick, New York State’s superintendent of banking, and Hebert Lehman, the state’s lieutenant governor, who warned that they were “making the most colossal mistake in the banking history of New York.” The bank was closed; within days, thousands of depositors throughout the country, who mistakenly assumed the bank’s credit was on par with that of the federal government, ran to withdraw funds from their local banks. Indeed, if a bank named the Bank of United States could fail, then no bank was truly safe. In short, as one historian argued, “the damage done by the failure of the Bank of United States to both depositors and the banking community remains inestimable.”…READ MORE

While further research is needed to address these questions, as we mark the 80th anniversary of the dramatic rise and demise of the Bank of United States, we need to reconsider how we conceptualize and think about the nexus of economics and Jewish history, particularly in the United States. We need to think more broadly about Jewish entrepreneurship and openly discuss those who failed along with those who succeeded. Indeed we already know much about successful, American Jewish bankers such as Jacob Schiff and Paul Warburg. But in fact, the implementation of long-lasting government financial reforms, namely the FDIC, came in response to the schemes of Saul Singer, not the achievements of Schiff or Warburg. Perhaps if we shift our focus in the writing of Jewish economic history, we will be able to see more fully the multifaceted role Jews played in the evolution of America’s distinctive brand of capitalism and its regulation.

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1 Comment

  1. Really appreciate the article. Nice work

    Reply

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