Knickerbocker Trust Company

Knickerbocker Trust Company

The Knickerbocker Trust, chartered in 1884 by Fred Eldridge, a friend and classmate of J.P. Morgan, was at one time one of the largest banks in the United States and a central player in the Panic of 1907. As a trust company, its main business was serving as trustee for individuals, corporations and estates.

The founding president was Frederick G. Eldridge, with Charles T. Barney as vice president.

The bank was housed in a Roman-style temple designed by McKim, Mead, and White (1902-04, "illustrated") at the Northwest corner of 34th Street and Fifth Avenue. It had branch offices at 66 Broadway, in Harlem and The Bronx.

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.

This became public, and on October 21 the National Bank of Commerce announced that it would stop accepting checks for the Knickerbocker Trust Company, triggering a run of depositors' demanding their funds back. Charles Barney requested a meeting with J.P. Morgan to discuss financial assistance for the bank, but was rejected. Because of this and the failure of the bank he shot himself on November 14, 1907.

According to author John Steele Gordon, :"Depositors lined up in front of the bank's headquarters on the future site of the Empire State Building to demand their funds. The bank closed the next day after an auditor found that its funds were depleted beyond hope. The bank's president, Charles Barney, shot himself several weeks later, prompting some of the bank's outstanding depositors to commit suicide as well."

The resulting Panic of 1907 exacerbated an ongoing decline in the stock market that saw the Dow Jones Industrial Average lose 48% of its value from January 1906-November 1907. The banking crisis is also seen as the final straw that led congress to form the Federal Reserve System in 1913.

The company opened some weeks after its forced closing and paid off all depositors in full with interest. In 1912 its assets were acquired by Columbia Trust Company, forming the Columbia-Knickerbocker Trust Company. This entity was acquired by the Irving Trust Corporation in 1923, which was in turn acquired by the Bank of New York in 1989.

The Knickerbocker "Bank" is referenced in the movie "Auntie Mame" in Mame's brother's will.

Notes

ources

*John Steele Gordon, "The Great Game".

*The Story of the Trust Companies By Edward Ten Broeck Perine, 1916.

External Links

[http://www.jekyllislandhistory.com/Gallery/1301.shtml Vintage advertisement]


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