Borough Bank - Brooklyn, NY

Bank Information

Episode Type: Run → Suspension → Closure
Bank Type: state
Start Date: January 1, 1907*
Location: Brooklyn, New York (40.660, -73.951)

Metadata

Model: gpt-5-mini
Short Digest: 3b895cba

Response Measures

Accommodated withdrawals, Borrowed from banks or large institutions, Full suspension, Books examined

Other: Clearing House instructed correspondents to stop clearing for Borough Bank; publicity and Clearing House action precipitated run and closure.

Description

Newspaper accounts describe Clearing House publicity and withdrawal of clearing privileges in January 1907 that led to runs and the immediate closing/failure of the Borough Bank. Later articles refer to the Borough Bank as having failed and its former president prosecuted. Classified as a run that produced suspension/closure (permanent failure).

Events (3)

1. January 1, 1907* Run

Cause: Local Banks
Cause Details: Clearing House ordered stopping of clearing for Borough Bank (and another Brooklyn bank); the publicity of that action precipitated heavy withdrawals.
Newspaper Excerpt: They told me to stop clearing for the Borough Bank and the Brooklyn Bank. I sent out the notices, and the two banks closed their doors. The publicity caused a run on my bank.
Source: newspapers

2. January 1, 1907* Suspension

Cause: Local Banks
Cause Details: Clearing House withdrew clearing privileges and publicity led to the banks closing their doors (suspending payments/operations).
Newspaper Excerpt: They told me to stop clearing for the Borough Bank and the Brooklyn Bank. I sent out the notices, and the two banks closed their doors.
Source: newspapers

3. * Receivership

Newspaper Excerpt: It was after the failure of the Borough Bank of Brooklyn that Gow, in order to protect Ward and others, entered into the dissolution agreement.
Source: newspapers

Newspaper Articles (5)

1. May 10, 1912 The Evening World New York, NY

Article from The Evening World, May 10, 1912

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Article Text

# BANK SUES WARD & GOW. First National Wants $100,000 on a Promissory Note. The First National Bank of New York has sued the advertising firm of Ward & Gow on a promissory note for $100,000. Interest is asked for from Sept. 27, 1907. Judgment was obtained in March, 1910. Since then Gow has begun a proceeding to have set aside an agreement of dissolution of partnership between him and Ward. The bank now demands that the Court appoint a receiver for the firm. It is said the firm has contracts for advertising which will return a profit of two and a half millions of dollars. It was after the failure of the Borough Bank of Brooklyn that Gow, in order to protect Ward and others, entered into the dissolution agreement.

2. June 8, 1912 New-York Tribune New York, NY

Article from New-York Tribune, June 8, 1912

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Article Text

"Might Ruin Us," Jones Said. "I protested at this. saying that it would mean trouble for us; in fact, might ruin us," said the witness. "They told me that these three banks must bring their balances up to $500,000, or I should stop clearing for them. So the Chelsea bank brought up its balance, but the Brooklyn banks did not. Then the Clearing House told me to stop clearing for the two Brooklyn banks. "I protested. and asked for a committee to look into my books. They sent a committee with accountants and stayed up all night examining the bank. When they finished they said my bank was in good condition and complimented me. But they told me to stop clearing for the Borough Bank and the Brooklyn Bank. I sent out the notices, and the two banks closed their doors. The publicity caused a run on my bank. "I had about $9,500,000 on deposit, and the run decreased this. I went to the Clearing House for a loan. I got altogether $2,800,000. That was in January, 1907. I was taken ill about this time, with pneumonia, having been unconscious for long periods, and when I got back Mr. Kelly had been elected president of the bank. I resigned. Shortly afterward the Clearing House sent out a notice calling in the loans of the Oriental, and the bank had to close." The witness said he understood that Mr. Kelly had been made president at the suggestion of the Clearing House committee. He produced the Kelly letter at this point. and Mr. Untermyer read it. Erskine Hewitt, formerly vice-president of the Oriental Bank. and Charles K. Beekman. a former director and counsel for the bank, testified in regard to several conferences they, together with Mr. Kelly,

3. January 21, 1913 New-York Tribune New York, NY

Article from New-York Tribune, January 21, 1913

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Article Text

# TWO BANKERS SENTENCED FOR STEALING FUNDS Sullivan and Shears in Court-Reasonable Doubt Certificate for Later. The unusual sight of two former bank presidents handcuffed and brought into court to be sentenced for grand larceny drew a large crowd to the Supreme Court in Brooklyn yesterday, when Justice Crane sentenced David A. Sullivan to an indeterminate term of from two years to four years in Sing Sing at hard labor and Bree R. Shears to three months in the penitentiary. Sullivan had been convicted of misappropriating $20,000 while he was the president of the Mechanics and Traders' Bank, just about the time the financial institutions were on the verge of the panic. Shears, also found guilty of misappropriating money, had formerly been the head of the Borough Bank, which failed. As soon as Shears received his sentence he was admitted to bail in $5,000 on a certificate of reasonable doubt, former Assistant District Attorney Elder, his attorney, having raised the point that his client was not guilty of larceny, as the money he was charged with stealing had been paid back with interest before a complaint was made to a magistrate. Sullivan was led away to the prison van a few minutes after sentence had been passed upon him. Justice Jaycox shortly afterward, sitting ex parte, issued an order, which acts as a stay, directing District Attorney Cropsey to show cause why a certificate of reasonable doubt should not be granted to Sullivan, pending the determination of an appeal from his conviction by the higher courts. The question will be argued to-morrow, and should the certificate be issued Sullivan will also be admitted to bail. John J. Curtin, his legal representative, says he will appeal.

4. April 17, 1913 Meade County News Meade, KS

Article from Meade County News, April 17, 1913

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Article Text

out waiting to wind up the receivership: For this they paid the trust company $200,000. They paid every depositor every single cent they had in the bank. They paid the expenses of the receivership amounting to $245,000 more, a total expense of $445, 000. They have paid the stockholders' dividends, amounting to 37 1/2 per cent, and still have $1,500,000 of assets left untouched, showing that at the time the bank was forced out of business it had assets in its hands that have actually paid over 200 per cent on a forced market. And this is the story of the Oriental Bank. The financial pirates of Wall street broke up the Brooklyn Bank and the Borough Bank; they broke Jones, plundered the Oriental and sent it to the wall with a crash; they blasted the reputation of Kelly, broke his heart, and he died in less than a year. But before he died he left a written statement, giving this story as I have given it to you. But this is only one of the many instances that could be given. One hundred and ten banks and trust compenies have been bought out consolidated, or forced to the wall in New York City during the last ten years, and it is for the people to say whether or not this financial brigandage shall longer be telerated. "The Stock Exchange" next week.

5. April 25, 1913 Barton County Democrat Great Bend, KS

Article from Barton County Democrat, April 25, 1913

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Article Text

was sound and solvent and in good condition; that it was doing a legitimate business; was being neither used nor abused by anyone, but required that it discontinue its clearing relations with the two Brooklyn banks. The result was that the Brooklyn Bank and the Borough Bank promptly closed their doors. Jones had also been engaged in promoting an electric railroad from Boston to New York City. He had negotiated the sale of its securities and had a profit of $500,000 almost in hand when he was advised to discontinue his operations. He declinedi to comply with the request and the next day certain New York newspapers printed a story that Mr. Jones and the affairs of the Oriental Bank were being investigated by the district attorney's office. This story, together with the action of the Clearing House, caused a run on the bank. / Jones converted the assets of the bank into cash, and paid every depositor on demand. His deposits dwindled down from ten, and a half millions net to three and a hal millions, but no suits having been brought, and no prosecution having been instituted, public confidence began to be restored, and the deposits climbed back to $4,500,000. It was then that due to the strain and worry incident to his troubles, Jones took sick and while he was confined to his bed, with periods of delirium, a committee representing the Clearing House went to his home and demanded his resignation as president of the bank. / This was according to a rule of the Clearing House requiring any bank officer to resign his official position upon demand by the Association. Jones protested against such action. He told them that every dollar he had in the world was invested in this bank; that not only was his money at stake, but that his reputation and his very all was involved, but that if such action were necesIsary) to save a single cent to a sin₇ gle depositor he would gladly resign. They insiste upon his resignation, he signed it and they took it away with them. They then went to Mr. Hugh Kelly, president of the board of directors, and requested that he accept the presidency of the bank. Kelly told them that if he was to be a "threeday president'' he wanted nothing to do with it, but they assured him. that the Clearing House would see them