Service Trust Company

Bank Information

Episode Type: Run → Suspension → Closure
Bank Type: trust company
Start Date: July 1, 1929*
Location: Passaic, New Jersey (40.857, -74.128)

Metadata

Model: gpt-5-mini
Short Digest: 0d705a55

Response Measures

Full suspension, Books examined

Other: State banking department took possession of the banks; legal/legislative inquiry and criminal investigation followed.

Description

Articles report a loss of public confidence and a slow run preceding the state Department of Banking and Insurance closing/taking over the Service Trust Company (and sister banks) on July 24–25, 1929. Closure was by state authority (department takeover); no reopening is mentioned in the provided articles and the bank was taken over, so classified as suspension leading to closure.

Events (3)

1. July 1, 1929* Run

Cause: Bank Specific Adverse Info
Cause Details: Loss of public confidence triggered by revelations of inside financial manipulation, unsecured/doubtful notes and drastic overvaluation of real estate on the bank's books; vague rumors amplified withdrawals (a slow run).
Measures: No specific bank-led measures described in these articles; state examiners intervened and clearing house issued reassurance that depositors likely would be paid in full.
Newspaper Excerpt: the bank had been running loss for months and that something like slow run on the bank had been started by public distrust ... followed by vague rumors
Source: newspapers

2. July 24, 1929 Suspension

Cause: Government Action
Cause Details: State Department of Banking and Insurance closed and took over the bank after examiners discovered about $300,000 capital impairment and ongoing losses revealed by legislative inquiry and examinations.
Newspaper Excerpt: The doors of three banks ... were closed today by the New Jersey Department of Banking and Insurance ... 'property and affairs' of the banks were taken over by the department.
Source: newspapers

3. July 26, 1929 Other

Newspaper Excerpt: The activities of the company which closed Hobart Trust, the Bank and the Service Trust, are to be investigated ... Grand Jury ... indictments against Harry Weinberger ... alleged manipulation of trust funds and kidnaping of Willard H. Elliott, vice-president the Hobart Trust Company ... were announced by the prosecutor. Those abuse trust funds, Justice Black said ... the stock of the Hobart Trust Company [and] the stock Service Trust Company have manipulated by one Harry H. Weinberger
Source: newspapers

Newspaper Articles (3)

1. July 24, 1929 The Record Hackensack, NJ

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Article Text

State Department Closes Three Passaic Banks After Discovery Of $300,000 Capital Impairment Banks Controlled By New Jersey Securities Company Taken Over in Entirety By Banking and Insurance Department - Weeping Women Depositors Storm Doors in Vain Drastic Write-up of Real Estate on Books Cause of Impairment, Commissioner Says in Explanation of Act. ACTION MAY HINGE ON LEGISLATIVE INQUIRY (By Associated Passaic, N. J., July 24. The doors of three banks controlled by the New Jersey Bankers' Securities company. holding concern, were closed today by the New Jersey Department of Banking and Insurance. They were the Hobart Trust company, the Service Trust company and the Merchants' bank. Employes arriving for work at the three banks this morning were sent home without explanation, and notices were posted on the doors of the institutions announcing that the "property and affairs' of the banks were taken over by the department. DEPOSITORS AT DOORS crowds of depositors, among gatherthe doors the word offered as The New last inquiry by the its attention bank of the president of the and the board Senator chairman of the Stamler set the declared the "The and board Hobart Trust the depositors drastic depositors the Elliott caused seepage The general formerly presi Hobart Trust company and held for he described KIDN APING CONNECTION. steadfastly his meant of Soon his his East board appointed and which began to passed quickly James to Prosecutor TO Friday undivided 34 other

2. July 25, 1929 The Republican Springfield, MA

Article from The Republican, July 25, 1929

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Article Text

JERSEY CLOSES PASSAIC BANKS FACING CRASH Forces Hobart Trust and 2 Subsidiaries With 5 Million Deposits to Suspend Passaic, N. J., July 25-The Hobart Trust company of Passaic and its two branch banks, the Service Trust company New Jersey and the Merchants bank of Passaic, which have combined deposits of more than $5,000,000 list of positors Into many thousands. were closed today by order of the state department of banking and insurance. This action followed the report of examiners that the bank had been running loss for months and that something like slow run on the bank had been started by public distrusti by the mysterious the former vicepresident. Willard Elliott, which was followed by vague rumors involvthe bank Bank examiners found that the loss of public confidence, originally greatly lation by the inside financial manipulation of the bank's affairs revealed by a legislative inquiry last year, was Tapidly "drying up" the bank, so that state was taken to conserve its assets. was asserted, however that the depositors probably would receive 100 per cent on the dollar. State Commissioner Frank H. Smith who ordered the bank and ts branches closed, said today that his examiners were mistic about the chances of paying dollar for dollar. The Passale clearing house issued this statement The clearing house met this morn. Ing and the that the depositors of the Hobart Trust company would be paid in full. There is no connection of the Hobart Trust company and Its branches with any other bank in the Passaic clearing Among the reasons for closing the bank the existence of unsecured notes of large amount and doubtful value and the sensational marking of the value of the real property of the bank Three years ago the bank valued its real property. used banking purposes, at only $10,000. Its value since then. but the present figure or $715,000 considered The assessed valuation of the today $236,300. of the bank own estimate Its Another of the bank's loss is said to be high

3. July 26, 1929 The Herald Statesman Yonkers, NY

Article from The Herald Statesman, July 26, 1929

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Article Text

ELLIOTT UNABLE Former Of Hobart Trust Was To Be Examined On Alleged Passaic, July 26.-Supreme Court Charles Black today charged the Passaic County Grand indictments against Harry Weinberger. connection failure the New Jersey Bankers' Company and the kidnaping of Willard H. Elliott, vicepresident the Hobart Trust Comsubsidiary the facts as represented by the prosecutor. After sharply "those abuse trust funds," Justice Black prosecutor has submitted evidence to show that the stock of the Hobart Trust Company the stock Service Trust Company have manipulated by one Harry H. you find the facts to be as he presented them. shall your return an indictment or indictWeinberger founded the Bankers' Securities which went yesterday banks which it closed their These are Hobart Trust, the Service Trust and the While the Grand Jury was deliberating in deposthe banks the dispelled by Frank H. Smith, State and He that the receivers not without authority of his and that not be granted satisfied the banks could be firm basis. Elliott. who intimated that he kidnaped that affairs of his could juggled around, was not able to testify before the Grand Jury. He still confined his home East Orange suffering from nervous breakdown. Passaic. July H. Elliott, former the suspended Hobart Trust Company, cannot appear witness Grand Jury because ness, was learned at his West Orange Elliott. was scheduled to be examined on his alleged and the the of the Hobart Bank and its two banks, suffering from Mrs. Elliott said her husband had forbidden by his physician to his bed. was however, that among who had served for today's Jury session were law partner H. Weinberfounder the New BankMinturn listed director of the securities The activities of the pany which the closed Hobart Trust, the Bank and the Service Trust, are to be investigated The East Side Business Men's Ashas issued for meeting tonight of depositors the suspended banks. The petition the court and permit the sale of the Hobart Bank branches to responsible Pasbusiness who will see the depositors do not lose. Paterson. with litrally maze and couninclude the dishere today will asked affairs the New Jersey Bankers' Securities and find the why its the Hobart Trust of Pasby the was the as he has detail. the kidnaping Willard treasurer Hobart Trust and its receive the first the jury Although have been belatedly several legislators charged the findings the Davis Investigating which about year delved the Bankers' SecuriElliott who authorities beholds the key the situation. Elliott himself has said that from June his banking conThat will have He has said that plained. suspected narcotic and bootleg ring tried his protest to secure loans from his bank under the guise legitimate business ventures. There occurrence that receive disappeared on the day State examiner was ination the Hobart Service Trust Elliott the with after his Bank Examiner showed Mrs Elliott papers apparently signed Elliott "palsied She declared her husband wrote clearly and couldn't have been the signer the identical. except the wavering Frank director of the bank and friend probably will be called. He vises Mrs. Elliott refrain from forming authorities when band disappeared. The Sunday following disappearance, according Mrs. Elliott, he suggested her husmight have gone away with woman.