15600. Chelsea Bank & Trust Co. (New York, NY)

Bank Information

Episode Type: Run → Suspension → Closure
Bank Type: state
Start Date: December 23, 1930
Location: New York, New York (40.714, -74.006)

Metadata

Model: gpt-5-mini
Short Digest: f5568663

Response Measures

Full suspension, Books examined

Other: State superintendent took possession; arrests made of those spreading false rumors.

Description

Contemporary articles (Dec 23–24, 1930) report a run on the Chelsea Bank & Trust Co. caused by circulating rumors; State Superintendent Joseph Broderick took possession and closed the bank to preserve assets. The run preceded the state takeover/closure, which appears permanent in these accounts.

Events (2)

1. December 23, 1930 Run

Cause: Rumor Or Misinformation
Cause Details: Malicious/false rumors circulated (largely by telephone) about the bank's condition, causing abnormal withdrawals and a run beginning Dec. 22–23, 1930.
Measures: Bank officers and police investigated rumor sources; some branches saw lines of depositors; emergency squads dispersed crowds.
Newspaper Excerpt: The run developed Monday night and continued yesterday morning. Broderick said it was caused by rumors.
Source: newspapers

2. December 24, 1930 Suspension

Cause: Government Action
Cause Details: State superintendent took possession and closed the bank to preserve assets for depositors after the run; action described as a takeover by the state banking superintendent.
Newspaper Excerpt: State Superintendent of Banks, Joseph Broderick, today took possession of the Chelsea Bank & Trust Co.... The closing followed run which developed last night and continued this morning.
Source: newspapers

Newspaper Articles (8)

1. December 23, 1930 St. Louis Post-Dispatch St. Louis, MO

Article from St. Louis Post-Dispatch, December 23, 1930

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DEPOSITS Chelsea Bank & Trust Co., New York, Taken Over After Capital. YORK, Dec. State Superintendent of Banks, Joseph Broderick, today took possession of the Chelsea Bank Trust Co., depository largely patronized by actors and others the theatrical business. It was capitalized at and had deposits and total resources of The closing followed run which developed last night and continued this morning. The Chelsea Bank Trust Co. founded in and has officers. It national and state depository. It not of either Federal or the New York Clearing House, the membership of which includes virtually of the largest financial houses New York City. The bank owns Cholesa Exchange Safe Deposit Co., and in 1928 organized the Chelsea Exchange Corporation to deal in securities. Broderick said the bank was taken over to preserve assets for depositors, as rumors had caused abnormal withdrawal of deposits. Bank officers and police sought to learn if malicious and concerted campaign was under way to injure banks by circulating false rumors about their financial condition. The rumors been spread. mostly by telephone, by persons apparently interested in starting runs of financial houses. One inlawyer for small bank, fold the New York Sun the telephone propaganda campaign had been reported him to fostered by inimical to the United States. Two men charged with circulating false about the condition of the Chelsea Bank Trust Co. arrested last night. Miami Beach Bank Closed After Heavy Run. By the City Bank of Miami which derwent heavy yesterday, lowing the closing the City National Bank Miami. did not open this president and cashier, said the bank closed the order Bank Examiners to protect its The bank had a capital stock surplus of $50,000 and deposits the last Two Suspensions in Conn.. Ordered by State. Dec. Two Hartford banks. the Riverside Trust Co. and Palotti. Andretta Co., were suspended today by Bank Lester Shippee following on both depositories which been in progress since last July Andretta control of the Riverside Trust Co The State Manual for gives capital Trust surplus undivided profits deposits and commercial The New branch of Pallotti. Andretta closed noon by order of the Bank Compositors after had heard of the action at the Hartford office. By Press Dec. State division of Insurance and Banking today announced that the Peoples Bank of Gretna. had suspended business. The bank was capitalized at and had posits of Ramsey

2. December 24, 1930 The Cincinnati Enquirer Cincinnati, OH

Article from The Cincinnati Enquirer, December 24, 1930

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RAIL SHARES In Forward Movement Anticipating Results From Consolidation Conference. Persistent Demand Reflected By Motor Group-Speculatives Close Highly Irregular. SPECIAL DISPATCH TO THE ENQUIRED New York, December 23-The stock market today displayed a fairly firm tone. Whether the market's relative stability reflected strong support is open question, but the net results were approximately in line with ex pectations of those who disregard minor news as an influence on the price trend. The market had descended below the half-way level from the top of the last spurt, but it had not violated this level convincingly enough to discourage renewed buying at today's lowest prices. Volume was sustained above the two-million-share total and prices displayed resistance to pressure, which won some new speculative support. Actually, however, the days' fluetuations were difficult to interpret in their forecast of future trend. The close found advances and recessions about equally divided number, fractional gains being recorded in the leading industrials and rails, on the average, while utilities lost ground on the day. A flurry of selling followed the weekly Iron Age summary, which reported that steel mill operations may get down to 25 per cent over the holidays. The review, however, emphasized that January promises some betterment, with forward orders showing increase, particularly in railroa dbuying. The New York Central placed orders for 170,000 tons of rails for 1931 delivery. As whole, 'the market held relatively firm. Leaders Stage Rally. Steel common's movements were duplicated in most of the important stocks. It declined as low as 136%, only to rally two points higher and close at 138% for gain of %. American Can closed down pending more definite developments from the resumed Eastern consolidation conferences, the railroad shares as group were inclined to dullness, although they held generally steady in price. Atchison advanced five points on the day and New York Central 4% Pennsylvania, Baltimore & Ohio and Nickel Plate were higher, presumably in anticipation of hopeful news from the merger conference. Investment demand was evident in Chesapeake & Ohio. The more speculative stocks were highly irregular, Auburn closing up few points, while Case was in supply. The motor stocks continued to refleck persistent demand. Buying naturally in character. but is based on confidence in the long-te: prospects for the industry, particularly for its strongest units. Chrysler was heavily bought by interests who have just assumed bullish position on the entire group. Nash also was in persistent demand: Geleral Motors up, and others in the group likewise reflected buying from semi-speculaof tive quarters. Copper shares were relatively firm. in response additional evidence of sustained buying of the metal, despite fractional advance in its price. Reduction in the Federal Reserve Bank of New York rediscount rate to 2 per cent from the former rate 2½, was announced after the market closed. The action will come as pleasant to the stock market, although the rate has been so low as to make relatively unimportant any further lowering. The Dow, Jones industrial averages showed the following changes at the close: 30 industrials 162.93, up 51: 20 railroads 96.14, up 23; 20 utilities 59.94, off .16. The banking was considered precarious in the early trading, especially as regards the Chelsea Bank & Trust Co. Then false reports circulated in the street that the bank had made its peace with creditors and would pull together. These reports stimulated a false confidence and traders bought stock rapidly, easily sending the entire list into higher ground. The fact that the sentiment as regards the bank's status had been holstered up, made the announcement of closing complete surprise and immediately precipitated selling all around. Highs And Lows. New York, December 23-A total of 80 issues reached new low points on the New York Stock Exchange today, while no issues touched new high levels. These totals compare with no highs and 54 lows on Monday, and no highs and 414 lows on What Stock Market Did Tnes. Mon. Number advances 236 147 Number declines 378 505 Stocks unchanged 175 141 Total Issues traded 789 793

3. December 24, 1930 The Cincinnati Enquirer Cincinnati, OH

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Prices Fluctuate Within Narrow Range COTTON. RAIL SHARES In Forward Movement Anticipating Results From Consolidation Conference. Persistent Demand Reflected By Motor Close Highly Irregular. SPECIAL DISPATCH TO THE ENQUIRER New York, December 23-The stock market today displayed fairly firm tone. Whether the market's relative stability reflected strong support is open to question, but the net results were approximately in line with expectations of those who disregard minor news as an influence on the price trend. The market had descended below the half-way level from the top of the last spurt, but it had not violated this level convincingly enough to discourage renewed buying at today's lowest prices. Volume was sustained above the two-million-share tota land prices displayed resistance to pressure, which won some new spéculative strength. Actually, however, the days' fluetuations were difficult to interpret in their forecast of future trend. The close found advances and recessions about equally divided number, fractional gains being recorded in the leading industrials and rails, on the average, while utilities lost ground on the day. A flurry of selling followed the weekly Iron Age summary, which reported that steel mill operations may get down to 25 per cent over the holidays. The review, however, emphasized that January promises some bettermen. with forward orders showing an increase, particularly in railroad buying. The New York Central placed orders for 170,000 tons of rails for 1931 delivery. As whole, the market held relatively firm. Leaders Stage Rally. Steel common's movements were duplicated in most of the important stocks. It declined low as 136%. only to rally two points higher and close at 138% for gain of American Can closed down pending more definite developments from the resumed Eastern consolidation conferences, the railroad shares as group were inclined to dullness, although they held generally steady in price. Atchison advanced five points on the day and New York Central 414 Pennsylvania, Baltimore & Ohio and Nickel Plate higher, presumably in anticipation of hopeful news from the merger conference. Investment demand was evident in Chesapeake & Ohio. The more speculative stocks were highly irregular, Auburn closing up few points, while Case in supply The motor stocks continued to refleck persistent demand. Buying naturally in character. but is based on confidence in the long-t for the industry, particularly for its strongest units. Chrysler was heavily bought by strong interests who have pust assumed bullish position on the entire group. Nash also was in persistent demand: Geleral Motors was and others in the group likewise reflected buying from semi-speculative quarters. Copper shares were relatively firm. in response to additional evidence of sustained buying of the metal. despite fractional advance in its price Reduction in the Federal Reserve Bank of New York rediscount rate to per cent from the former rate of 2½, was after the market closed. The action will come as pleasant to the stock market, although the rate has been SO low as to make relatively unimportant any further lowering. The Dow, Jones industrial avereges showed the following changes at the close: 30 industrials 162.93, up 51: 20 railroads 96.14, up .23; 20 utilities 59.94, off .16. The banking situation was con sidered precarious in the early trading. especially as regards the Chelsea Bank Trust Co. Then false reports were circulated in the street that the bank had made its peace with creditors and would pull together. These reports stimulated false confidence and traders bought stock rapidly, easily sending the entire list into higher ground. The fact that the sentiment as regards the bank's status had been bolstered up, made the announcement of closing complete surprise and immediately precepitated selling all around. Highs And Lows. SPECIAL DISPATCH TO THE New York, December 23-A total of 80 issues reached new low points on the New York Stock Exchange today, while no issues touched new high levels. totals with no highs and 54 lows on Mon day, and no highs and 414 lows on What Stock Market Did Tnes. Mon. Number advances 236 147 Number declines 378 505 Stocks unchanged 175 141 Total traded 789 793 Issues

4. December 24, 1930 Evening Star Washington, DC

Article from Evening Star, December 24, 1930

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DOORS OF GOTHAM BANK ARE CLOSED Institution Patronized by Theatrical People Taken Over by State. By the Associated Press. NEW YORK, December 24.-The Chelsea Bank & Trust Co., a small institution patronized mostly by theatrical people, was taken over by State Supt. of Banks Joseph Broderick yesterday following heavy withdrawals. Broderick said he closed the bank to preserve its assets for depositors. The institution operated seven offices. It owned the Chelsea Exchange Safe Deposit Co. and the Chelsea Exchange Corporation, a securities firm. The run developed Monday night and continued yesterday morning. Broderick said it was caused by rumors. Officials began an investigation of reports that a malicious campaign was under way to injure banks by circulating false rumors. When the notice of closing was posted at the Bronx branch yesterday afternoon a line of 300 depositors stormed the door. Several patrolmen rushed through the crowd with drawn revolvers and formed a small circle around the doorway. Emergency squads dispersed the crowd. There was no disorder at other branches. The Chelsea Bank was a National and State depository, but not a member of either the Federal Reserve or the New York Clearing House. It was capitalized at $2,500,000, had deposits of approximately $18,000,000 and total resources of $23,000,000. A

5. December 25, 1930 Evening Star Washington, DC

Article from Evening Star, December 25, 1930

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TWO CHELSEA BANK INQUIRIES STARTED Roosevelt Asked to Investigate State Office's Relation to Closings. By the Associated Press. NEW YORK, December 25.-Two inquiries are under way to find the source of rumors blamed for the closing of the Chelsea Bank & Trust Co. Tuesday. Gov. Roosevelt was petitioned by a group of small depositors in the Bank of United States to invoke the State Moreland act to investigate the relation of the State Banking Department to the closing of the Bank of United States and of the Chelsea Bank. A letter from counsel for the group of East Side depositors called attention to the manner in which the Bank of United States took over, prior to April, 1929, the affairs of a number of other banks and questioned whether this could have been done under proper supervision by the banking department. While plain clothes men sought to trace reports of rumor mongering, Assistant Attorney General Washburn issued subpoenas for the records of a dozen brokerage houses dealing in bank stocks. Washburn said he would question brokers about their handling of Chelsea Bank stock in an effort to learn whether false rumors were circulated by short sellers of the stock in search of profit. Supt. James Broderick of the bank department issued a statement saying that so far as he knew there was nothing wrong with the condition of the Chelsea Bank. He took possession of the bank's assets, he said, after a run started by rumers caused increasing withdrawals from the bank.

6. December 25, 1930 The Daily Worker New York, Chicago, NY

Article from The Daily Worker, December 25, 1930

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FRAME-UP RUMOR CHARGE ON 'REDS' Wall St. Knew Inside Dope On Banks (CONTINUED FROM PAGE ONE) withdrawn nearly $3,000,000 out of a total of $19,000,000 in savings accounts. This, according to the Journal of Commerce, led to an unloading of the bank stocks, which further weakened the bank, participating the general run and the final closing of the bank by Broderick, state superintendent of banks. Instead of publishing facts about the inside condition of the Bank o the United States and the Chelsea Bank & Trust Co., the Tammany politicians are directing their fire against the workers who are organizing themselves to demand the return of their deposits in full. As for "rumors," an article in the New York Evening Post of last Saturday, by Frank J. Williams, exposes the fact that Wall Street has "the best unofficial espionage systems in the world with rumor as its most useful arm." The main fact is that it was not all "rumors" that closed the Chelsea Bank & Trust Co. On the very day that the Bank of the United States shut the New York Times attempted the old trick of laying the blame on "rumors." Subsequent facts showed that the bank had been robbed from the inside by wholesale looting. However, the "rumor factory" of Wall Street is based on the fact that the big financiers have inside information. The Evening Posst sarticle points out, for instance, that "Long before the war broke out in 1914 professional Wall Street knew it would come and sold stocks and bought grain." The article goes on to say: "Hasn't it been true that for several days prior to each (bank) failure of recent months heavy selling has been seen in stocks. Wall Street knew by the grapevine route that bad news was to be announced. Some of the rumors were able even to tell the exact hour and day announcements would be made." The so-called "rumors" emanated from Wall Street, where the big stock gamblers had learned the inside information of the bank's condition weks before the crash came and were able to unload their stsock. No amount of framing-up by Tammany stool-pigeons and dicks will be able to fool the workers as to the real conditions of the country, with production down to the lowest levels since 1908, with more than 9,000,000 unemployed, and with banks carshing in all parts of the country.

7. December 26, 1930 Evening Star Washington, DC

Article from Evening Star, December 26, 1930

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BANK RUN INVESTIGATION PURSUED IN NEW YORK By the Associated Press. NEW YORK, December 26.-Communists and short-selling brokers of bank stock were equally suspected today in official attempts to trace to inspired sources the run which has resulted in the closing of the Chelsea Bank & Trust Co. early this week. Against neither group, however, were those in authority prepared to make supported accusations, although it was intimated the State banking department had information tangible enough to warrant the attention of District Attorney Crain. The closing of the Chelsea Bank & Trust Co., a small institution patronized largely by stage people, was blamed by Joseph A. Broderick, State banking superintendent, upon a run which gained in proportions until the doors had to be closed to safeguard the institution's assets.

8. January 5, 1931 The Brooklyn Daily Times Brooklyn, NY

Article from The Brooklyn Daily Times, January 5, 1931

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SEES ALL BANKS ON GOOD BASIS Stephenson Says Suspensions Put Strong Banks in Better Position. The American banking situation in indicated as sound by condition statements of leading banks as of December 31, showing an unusual degree of Reports of the larger New York City banks as of December 31, in. sued in response to the call of the Comptroller of Currency, generally show decreases in deposits from the 24 call but sharp in. creases In liquid assets. The shrinkage in deposits was a natural in view of the closing of many of the smaller banks and executives have turned many of their assets into ready cash to meet any extraordinary withdrawals that might develop. While suspensions of banks last year were unusually large 60 per cent. of the banks that were closed were capitalized at $25,000 or under and located in towns of less than 1,000 population, while 80 per cent. were not even members of the Federal Reserve System. In addition, evidences of mismanagement were found in some of the institutions, indicating that the closings were not entirely due to any fundamental weakness in the structure. Bank suspensions during the first eleven months of 1930 as reported by the Federal Reserve Board num. bered 981 involved deposits of $515,000,000. while in the ninemonth period from 1921 to 1929 inclusive, there were 5.642 suspen486,00. Failures continued during December, climaxed by the closing of the Bank of United States and Chelsea Bank & Trust Co. in New York City Few of these banks have yet their doors Reviewing the banking particularly with respect to the number of suspensions in 1930, Rome C. Stephenson, president of the American Association, declared today that to some extent the take passive role, and that its policies reflect Many business firms, he said, are finding difficulty in their obligations, no that the difficulties of the banks are thereby increased.