The Knickerbocker Trust Company: A Banking History

The Knickerbocker Trust Company was a major banking institution in New York City, founded in 1873 by George W. Perkins and others.

It was a private bank that catered to the wealthy elite of Manhattan, offering checking and savings accounts, as well as loans to its clients.

The bank's early success was fueled by the growth of New York City's economy during the late 19th century.

The Knickerbocker Trust Company's demise came in 1907 when a run on the bank occurred due to concerns over the bank's liquidity.

The Knickerbocker Trust Company has a rich history that dates back to 1884 when it was chartered by Frederick G. Eldridge.

Eldridge, a friend and classmate of financier J.P. Morgan, founded the company as a trust company, serving as trustee for individuals, corporations, and estates.

The company's first president, Eldridge, served until his death in 1889.

John P. Townsend took over as president after Eldridge's passing, but only lasted five years before resigning to become president of the Bowery Savings Bank.

Robert Maclay was unanimously chosen to be the new president, with Charles Tracy Barney as vice president.

Maclay retired in 1897, and Barney was elected president.

The Panic of 1907 was a pivotal event in American financial history, and it's fascinating to see how it affected the Knickerbocker Trust Company. The panic was triggered by a cornering attempt on the copper market by Otto Heinze, which failed spectacularly on October 16, 1907.

The stock of United Copper plummeted from $30 to $10 in a single day, leaving Heinze financially ruined. The crash of United Copper stock was so severe that it was traded on the curb, outside the New York Stock Exchange.

The failure of Heinze's cornering attempt had a ripple effect on the financial system, leading to a chain of bank runs and failures. The Knickerbocker Trust Company was one of the first to be affected, with depositors withdrawing $8 million in less than three hours on October 22, 1907.

The panic quickly spread to other banks and trust companies, including the Trust Company of America and the Lincoln Trust Company. By October 24, 1907, a chain of failures had littered the streets of New York, including the Twelfth Ward Bank, Empire City Savings Bank, and the Hamilton Bank of New York.

Here's a brief timeline of the key events leading up to the Panic of 1907:

The Panic of 1907 was a watershed moment in American financial history, leading to the creation of the Federal Reserve System in 1913. It's a sobering reminder of the fragility of the financial system and the importance of prudent banking practices.

The Knickerbocker Trust Company's leadership and governance were a key factor in its downfall. The company's president, Charles T. Barney, was a well-respected figure in New York City's financial community.

However, Barney's leadership was marred by his poor decision-making and lack of oversight. He was known to have made reckless loans to his friends and associates, including his own brother-in-law.

Barney's leadership style was also marked by a lack of transparency and accountability, which contributed to the company's demise. The company's board of directors was ineffective in overseeing Barney's actions, and the company's financial statements were often inaccurate.

The Knickerbocker Trust Building was a New York City bank housed in a Roman-style temple designed by McKim, Mead, and White.

The building was erected between 1902 and 1904 at the northwest corner of 34th Street and Fifth Avenue.

Stanford White's design allowed for the possibility of adding nine stories of offices upon the structure.

It had branch offices at 60 Broadway, in Harlem, and The Bronx.

The building was enlarged by ten stories in 1921, and the façade completely redesigned in 1958, but its original form remains unrecognizable.

Presidents of various countries have demonstrated unique leadership styles that have shaped the course of history.

Abraham Lincoln, the 16th President of the United States, is known for his strong leadership during the Civil War. He issued the Emancipation Proclamation, freeing slaves in Confederate territory.

George Washington, the first President of the United States, set the standard for future presidents with his honesty and integrity. He voluntarily stepped down after two terms, establishing a precedent for peaceful transfer of power.

Franklin D. Roosevelt, the 32nd President of the United States, led the country through the Great Depression and World War II. He implemented a series of reforms known as the New Deal to help alleviate suffering.

Nelson Mandela, the first black President of South Africa, ended apartheid with his leadership and vision. He served as President from 1994 to 1999 and received the Nobel Peace Prize in 1993.

The Pujo Committee was a special committee convened by Representative Arsène Pujo to investigate a "money trust", the de facto monopoly of Morgan and New York's other most powerful bankers. This was in response to widespread fears concerning plutocracy and concentrated wealth.

Morgan's bank had survived the panic, but the trust companies were badly damaged, leading some to believe that the panic had been engineered to damage confidence in trust companies so that banks would benefit. Morgan lost $21 million in the panic, a significant amount for him.

The committee issued a scathing report on the banking trade, finding that the officers of J. P. Morgan & Co. also sat on the boards of directors of 112 corporations with a market capitalization of $22.5 billion. This was a staggering amount, equivalent to the total capitalization of the New York Stock Exchange.

Morgan testified before the committee, facing several days of questioning from Samuel Untermyer. A famous exchange between the two men highlights the fundamentally psychological nature of banking: "Is not commercial credit based primarily upon money or property?" Untermyer asked. Morgan replied, "No, sir. The first thing is character."

Here's a list of the key findings of the Pujo Committee:

Morgan's health began to decline after the hearings, and he died on March 31, 1913, nine months before the Federal Reserve officially replaced the "money trust" as lender of last resort.

The Knickerbocker Trust Company was involved in a significant case.

The case, Knickerbocker Trust Company v. Oneonta, Cooperstown and Charlotte Valley Railroad Company, was filed in the Appellate Division of the Supreme Court of New York, Third Department.

The full title of the case is KNICKERBOCKER TRUST COMPANY, Plaintiff, v. ONEONTA, COOPERSTOWN AND CHARLOTTE VALLEY RAILROAD COMPANY, Defendant.