On a particularly cold morning ninety-one years ago this month, the owner of a small candy store in the Bronx went to his branch of the Bank of United States to withdraw some much-needed cash. Over the past two years, the bank had been selling its shares to its depositors throughout New York city to help raise funds, guaranteeing their investment would maintain its value. The Bank promised it would buy back shares at any point. Now, this storeowner was taking them up on it. When the bank manager refused to buy back the stock, reassuring that even at its current price, the stock was a shrewd investment, the store owner stormed out of the bank. He then started spreading rumors that the Bank of United States, the largest retail bank in the United States was insolvent. Few could believe it because over the course of the 1920s, it had expanded from just four branches in Manhattan to fifty-seven branches scattered throughout all the boroughs with dozens in the Bronx and Brooklyn. No one ever thought this bank with over $268 million in deposits could fail. But over the next several hours, this story made thousands line up outside this Bronx bank’s branch, intent on liquidating their savings. In the following days, thousands more depositors throughout the city flocked to their branches to withdraw their savings.
Despite its impressive size, grandiose name and number of depositors, no other financial institution stepped up to bail it out. Over the next two weeks, despite the pleas of New York State’s elected officials, the New York Federal Reserve Bank hesitate in stepping in. To be sure, other banks in similar circumstances had been saved. But as Thomas William Lamont of JP Morgan & Co. pointed out, few wanted to risk their firm funds for a bank that “catered to immigrants” and that was run by “those Jews,” namely, Bernard Marcus, whose father came from Russia and Saul Singer, who was born in Odessa. Outside New York City, the specifics of the Russian Jewish immigrant bank leadership were unknown, but its name led many to associate it with larger federal government. Its failure, as Milton Friedman has argued, ignited a banking crisis that led to the great “money hoard,” setting in motion the Great Depression, in which the gross national product fall thirty-one percent, and millions of Americans lose their jobs.
Before it ballooned into a national crisis, the drama that made a bank panic into a failure played out on the streets of New York City as immigrant ambition, financial acumen and religious or ethnic biases collided in the world of finance. Founded and run by Russian Jewish immigrants and catering to New York City’s foreign-born workers, the Bank of United States was seen as a peripheral financial institution not worthy of attention by the likes of Tommy Lamont. Recalling its rapid expansion and precipitous fall reminds us of the role unregulated immigrant banks played in early-20th century New York, as well as the long-standing debates over credit access, banking regulation, and immigration. Far from strictly academic, debates over all of these issues continue to this day.