By Rebecca A. Kobrin

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.[1] 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.[2]

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.[3] Far from strictly academic, debates over all of these issues continue to this day.

Few individuals better encapsulate how Russian Jewish immigrants’ distinctive approach to credit changed commercial banking in New York City than Saul Singer. What Lamont saw as immigrant Jews’ immoral practices was actually Russia’s wild west approach to credit and debt repayment. Singer appreciated the power of credit and seeming credit worthy. Born in Sevastopol in 1882, Singer’s “credit worthiness” enabled him to buy and run a store by the time he was a teenager. His father Max (1844-1920) emigrated to the United States in 1892; Saul followed him seven years later.[4] Once in the United States, Saul found a job as garment worker. After five years of hard work as a cutter, he borrowed some money to set up his own garment production shop, which he named Singer Brothers. During the First World War, his business expanded dramatically. By 1918, he opened his own suit and cloak manufacturing shop and was elected president of the Cloak, Suit and Shirt Manufacturer’s Protective Association. This position enabled Singer to play a central role in moving the entire garment industry to what would become known as the Garment District, introducing him to the world of New York real estate development built on low-interest financing. Singer’s activities in building the Garment District attracted the attention of Bernard Marcus, son of the founder of Bank of United States who hoped to ensure that the Bank of United States would be the main financial institution providing mortgages for new construction of the Garment District. Marcus invited Singer to become a vice president in the Bank. One of many vice presidents, Singer made clear immediately that he would not be satisfied to just lure in prospective builders. He wanted to transform the bank as he had transformed the Garment District, pushing for the bank’s rapid expansion — an expansion that went directly against founder Joseph Marcus’s tradition of prudent stewardship. In August 1927, less than a month after the elder Marcus’s death, Singer suggested to Bernard Marcus that they expand the bank by creating a subsidiary company to engage in the buying and selling of bank shares. He proposed to call it City Financial Corporation. Once it was established, Marcus and Singer named themselves directors of this syndicate, and then began to speculate on the shares of the Bank of United States. Pumping up the Bank’s stock price so it could then swap its own stock to acquire other banks, such as the Central Mercantile Bank, which it took over in 1928. In 1929, the scheme was used to acquire the Colonial and Municipal Bank and Trust Company — the largest bank in Brooklyn.

By May 1929, after the completion of these mergers, Bank of United States not only possessed fifty-seven branches but also served 440,000 depositors throughout New York City. It also had under its corporate aegis three safe deposit companies, numerous real estate subsidiaries, an insurance company, and a securities subsidiary. They established another subsidiary, Bankus Corporation, to invest in the types of ventures, such as real estate, that New York State’s banking law had forbidden to banks since 1914. Quintessential New York City landmarks such Garment Center Capital, Art Deco Beresford and San Remo apartment buildings that overlook New York City’s Central Park owe their existence to the financing of Bank of United States.

As it expanded its branches, the bank attracted many clients from the City’s foreign-born working poor. A look into Bankruptcy court petitions for priority payment, illustrate that the bank may have been run by Jewish immigrants but it served a broad clientele from a wide variety of backgrounds. Less than half of claimants gave English as their primary language on the 1930 census. Indeed, Bank of United States attracted a clientele among those who historically have been “unbanked” in New York City — the immigrant worker who did not speak English — by offering financial services and credit to them all. Employing a large team of translators, as immigrant banks had done prior to World War I, the Bank of United States understood that in order to participate in the world of American finance, immigrants needed to understand the services being offered them. More importantly, the Bank of United States provided these immigrant depositors with access to uncollateralized loans. Providing loans for anyone who had a deposit account enabled hopeful immigrants who were not considered creditworthy by other banks in New York City to gain access to credit, earning the bank the loyalty of its foreign-born clientele but perhaps the disdain of members of the Federal Reserve, like JP Morgan’s Tommy Lamont.[5]

Image of Jewish Daily Forward Day after bank closed

The diverse foreign origins of those making claims suggest that the Bank of United States filled a void left by the closing of hundreds of immigrant banks over the course of the 1920s. The lost world of immigrant banking was a direct result of the efforts of New York State’s Banking Superintendent who dedicated himself to pursuing, “a policy of advising private [immigrant] bankers to close their doors.[6] Banking Superintendent Joseph Broderick drew on prohibition-era discourse to motivate legislators to pass new banking law as he urged them that “we need to pass laws to act as a deterrent to the formation of new bootleg banking concerns BY IMMORAL IMMIGANTS.”[7] Broderick’s analogy between unregulated immigrant bankers and renegade bootleggers made his feelings clear: alcohol and credit-access were both threats to the moral fiber of the nation.

But those running the Bank of United States appreciated that immigrants and their American-born children needed a place to bank. They believed in credit access for the working poor. Indeed, over the last two weeks in December ninety-one years ago, as members of the New York Federal Reserve Board turned their back on the Bank of United States, it was their belief that its immigrant clientele would not make larger waves in the market. They were wrong, blinded by their biases. Indeed, “when the bank was finally liquidated,” as Milton Friedman notes, “it paid back 92.5 cents on the dollar. Had the other [Federal Reserve] banks cooperated, no one would have lost a penny because it did have assets and that it could have been saved.”[8] Long held views of “immigrants” and “Jews” clouded the judgement of members of the New York Federal Reserve Bank who made a New York city drama into a national tragedy and changes the landscape of commercial banking in New York City.[9]

Rebecca A. Kobrin is the Russell and Bettina Knapp Associate Professor of American Jewish History at Columbia University. She is the author of Jewish Bialystok and Its Diaspora, editor of Chosen Capital: The Jewish Encounter with Capitalism and Purchasing Power: The Economics of Jewish History (with Adam Teller).

[1] “Bankirn shafen nokh geld far de depositors fun united stat bank,” Forverts December 9, 1930.

[2] Milton Friedman and Anna Schwartz, The Great Contraction, 1929-1933 (Princeton, reprint, 2009); Michael A. Bernstein, "Why the Great Depression Was Great," in Steve Fraser and Gary Gerstle, eds. The Rise and Fall of the New Deal Order (Princeton, 1990), 32-54; Peter Temin, Did Monetary Policy Cause the Great Depression (New York: Norton, 1975).

[3] These topics are explored more fully, beginning in 1870 in my forthcoming book, Credit to the Nation: East European Jewish Immigrants and American Finance, 1870-1930 (Harvard 2020).

[4] FINANCE LIFE WORK OF 3 INDICTED MEN, New York Times (1857-Current file); Feb 11, 1931; ProQuest Historical Newspapers New York Times (1851-2006) w/ Index (1851-1993), p. 16.

[5] Evelyn Dewitt to FDR, December 25, 1930 Reel 15 Governors papers, FDR Library.

[6] Legislative Bill Jacket 1930, chap. 679, Reel #5, New York Public Library – Science, Industry and Business Library, New York, NY.

[7] Memorandum from Joseph Broderick to Mr. Samuel Rosenman, Counsel to the Governor, n.d., Legislative Bill Jacket 1930, chap. 678, Reel #5, New York Public Library – Science, Industry and Business Library, New York, NY.

[8] Milton Friedman, “Free to Choose” PBS Series. Episode 3 “Anatomy of a Crisis,” 6:37-6:55.

[9] Claire Lemercier, Claire Zalc, “For a New Approach to Credit Relations in Modern History,” Annales. Histoire, Sciences Sociales 2012/4 (67th Year): 662-663.

The Bank of United States, East European Jews and the Lost World of Immigrant Banking