15639. City Trust & Banking Company (New York, NY)

Bank Information

Episode Type
Suspension → Closure
Bank Type
state
Start Date
May 21, 1840
Location
New York, New York (40.714, -74.006)

Metadata

Model
gpt-5-mini
Short Digest
2a9b7e0b

Response Measures

None

Description

Articles (Mar–Jun 1840) describe fraudulent issue of post notes, insolvency and appointment of a receiver (Joseph Willoughby) on/around May 21, 1840. No article describes a depositor run or heavy withdrawals; the firm is in chancery and placed in receivership, i.e., suspended and effectively closed. Bank_type set to 'state' because it was a newly chartered local banking concern under the state's new banking law (not a National or Trust bank).

Events (2)
1. May 21, 1840 Receivership
Newspaper Excerpt
The subscriber has been appointed by the Chancellor ... Receiver of the estate, funds, and effects of the City Trust and Banking Company of the City of New York. JOSEPH WILLOUGHBY, Receiver of the Estate, &c., Dated New York, 21st day of May, 1840. Also: Mr. Humphreys was appointed ... That gentleman was unable to attend ... Joseph Willoughby, Esq. has now been appointed to the office, and enters upon the duties immediately. (May 21, 1840).
Source
newspapers
2. May 21, 1840 Suspension
Cause
Bank Specific Adverse Info
Cause Details
Fraudulent issuance of large amounts of 'post notes', insufficient real assets, alleged embezzlement and improper mortgage transfers; insolvency uncovered leading to chancery action and receivership.
Newspaper Excerpt
The City Trust and Banking Company, now in the hands of a receiver.
Source
newspapers

Newspaper Articles (5)
1. March 14, 1840 Morning Herald New York, NY
Article from Morning Herald, March 14, 1840

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Article Text

There is very little prospect of an immediate improvement in these rales. The confidence in foreign paper is very much impaired by the rogueries and rascalities that are daily discoveredin the new banks, started in this city, and also in some of the old ones. The public mind is kept in a continued state of anxiety, and it requires the eyes of an argus to detect and expose the innumerable tricks that are practised by the speculators. The City Trust and Banking Company is the most bold of these speculators. In May last, it made larger issues of pest notes, at 12 months; and in October last, still large issues at six months. Every means has been used to obtain property for this fraudulent paper; a short time since an advertisement appeared, stating that a large amount of these notes were wanted at 18 Wall street, at cents on the dollar. Noname was given, and no person could be found who authorised the insertion. It now appears that a arge amount of heirissues are about falling due, and of course cannot be paid. In these circumstances, with an impudence, almost unparelleled, the following notice is made public in a Philadelpkua paper, where there is a large, amount in circulation: Caution to the Public.-A large amount of Post Notes of the City Trust and Banking Company, New York, of the denomination of $50 and $100 also, a large amount of certificates of deposites, payable to E. P. Watts, have been purloined from the institution, and will, in no case, be paid by the bank. A. ASBOTT, Casaier, Of all audaeious attempts to hambug the public, we think this is the most barefaced, and, at the same time, the most in. genious method of avoiding payment of liabilities. If the notes were fairly due and protested, the whole concern would exploded and be wound up, but if they can prolong its ricketty existence a few weeks longer, some new victims may be discovered in the meantime, and they may be able to make a smash as respectable'as Robert White & Co. Their impudence and ingenuity deserve a splendid denouement. Our Harrisburg correspondent informs us that committees of conference have been appointed on the subject of the resumption bill on which the two houses have disagreed. There the matter will probably rest. It appears, a new bill has been introduced into the House of a character to attract attention from the old bill. It provides, as will be seen by reference to the letter of our correspondent, that the banks shall resume in February 1841, provided they lend the state sufficient money to pay the interest on stock and carry on the works of public improvement. This will require about $3,500,000. in addition to the loan already taken-the amount to be advanced by the banks pro rata, according to their capitals. This bill is very nearly of the character of that which authorised the charter of the U.S. Bank.Itemlists the interests of the people, by providing for internal improvement, and gives the Bank the opportunity of gain ing another teptowards perpetuating the suspension. Pennsylvania will have no more money wherewith to pay her debts in 1341 than now: but her debt will have been increased $1,000,000 and the annual interest $200,000. The bill, however, is of that character which is generally popular with the members, because the fancied advantages it holds out to their constituents, and they are able to shove off a little longer the question of taxation The banks of Philadelphia generally do not wish for this postponement of resumption. It is only those banks which are managed by speculators, who are also apoliticians, and whenever they get in trouble they endeavor to legislate themselves out of it. There are many banks in this city, of the same character. The Manhattan Bank, and the Bank of Commerce, are examples. The former institution has been ruined by its connection with the Government, by which the speculators in charge of it only have nefited, and a reverse in commercial af. faira bas brought it down. The latter has thus far been nothing t a cloak for the movements of the clique of political brokers, who operate on the Government in Albany, through their tool, Mr. Ruggles, and use the Bank of Commerce as a cloak in this city. Several other banks havesimilar connection, and will explode. All those banks that have kept aloof from politics and speculations, are doing well, and can pay their debts. This class of banks in Philadelphia are preparing to come out in open hos. tility to the others. The recent proposition put forth, under the signature of Hamilton, that New York and Boston should take the bonds of the U. S. Bank, in payment of the debts due those cities, by the fourteen sound banks, has been answered in: Bos. ton paper to the effect that the bonds of those banks will be readily taken, but not those of the U. S. Bank That institution cannot expect to make the eastern debts of the sound banks pay her debts to them. She is now in that position in which any securities are preferred to hers. This cannot last, even if they are allowed by law to continue theirsuspension until 1841, they cannot hold together so long. One of the heaviest borrowers in the market, at this moment is the Corporation of New York. The abominable extravagance and mismanagement of the city finances has been such as to call for the severest censure. Wehave received the anmual statement of the comptroller, for the year ending Dec. 31st 1839. The receipts and expenditure have been as follows:Expenditure. Receipts. 911.500 Bonds, $1,153,241 Tax, 1839. 206,637 89,769 Interest, water loan, 1839, 19,206 539,230 Printing. Borrowed on bonds. 82,750 1,895,024 Interest on stocks. Water loan, 870,080 Water commissioners. 1,106,014 Other sources, 2,217,556 Other expenses, Total $4,543,744 $4,543,663 The Comptroller was authorised to borrow on the credit of the corporation, on bonds, in anticipation of the revenues for $1,359,000 the year. Of this has been borrowed as follows:250,000 From New York State Bank 100,000 " Bank of Commerce 20,000 " Tradesmans' Bank " 20 000 Seventh Ward Bank a 24,230 Individuals or 7 cent bonds " Total borrowed $414,230 There has been paid to the Water Commissioners 7 per cent bonds at par, as follows:Redeemable June 1. 1840, 401,750 Aug. 1. 1840, 221,500 Sept. 1, 1840, 232,000 855,250 Paid to aundry -

2. May 21, 1840 Morning Herald New York, NY
Article from Morning Herald, May 21, 1840

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Article Text

# MONEY MARKET. Wedhesday, May 20-6 P. M. The movements at Harrisburg, and the precarious situation of the State of Pennsylvania have a depressing effect upon the markets at the Stock Board to-day. Sales were small, and prices fell. U. 8. Bank declined per cent.; North Am. T. & Banking Co., per cent.; Del. & Hudson, per cent.; Harlem, 4 per cent. There is but little doing in domestic bills, and the discount is increasing, particularly on Georgia and Mobile. The country money of this State is again becoming deranged. It will be recollected, last fall, after the State Bank ceased to redeem Safe-ty Fund money in this city. the rate of discount rose very high, and continued so until the 9th of Nov., when a convention of Safe-ty Fund Banks was held at Auburn, whereby it was arranged that a bank should be appointed in Albany or Troy, to act as agent to seal up the bills and notify each bank by mail of the amount of its notes then on hand for redemption. The Bank so notified to redeem its bills, so sealed up at the end of 16'days after the sealing by drafts or funds current in Albany. The agency charged 1-10 of 1 per cent for conducting the business. The new banks generally came into this arrangement, under which the rate of discount gradually fell from 5 a 6 per cent to 1 a 11 per cent, both for Red Back and Safety Fund. The banks were to keep the system of exchanging with each other, and adjusting the balances. To this arrangement, the Safety Fund Banks still adhere, but most of the banks under the new law have been thrown out at the agency, and the discount on them is rapidly rising. The following is a list of those still redeemed at the agency:- All the Utica Banks, Geneva Ithica Genessce Bank at Le Roy, Mohawk Valley, All Safety Fu..d Banks All Syracuse, "Watertown. "Rochester, except Western New York, Fort Plain, Agricultural Bank, Herkimer. These bills are taken in Wall street at 11 a 2 per cent discount, and all other free bank bills at 3 per cent discount. The position of the red money is very uncertain. The brokers buy very cautiously, and that which is redeemed today may not be redeemed tomorrow. Many of the new banks are on the eve of an explosion, and agents of some of the western banks in this city are selling their bills at a constantly increasing discount. Many of them will be unable to comply with the terms of the new law, requiring them to keep funds in Albany or New York for the redemption of their bills. The law goes into operation on the 1st of July, and every means is used meanwhile, on the part of the weak banks, to force a circulation, depreciate their bills, and buy them in at a discount, or explode with a large circulation out. It will be recollected that Mr. Humphreys was appointed, some time since, as receiver, by the Court of Chancery, to wind up that infamous concern called the City Trust and Banking Company. That gentleman was unable to attend to the duties, and Joseph Willoughby, Esq. has now been appointed to the office, and enters upon the duties immediately. It appears that this concern has on deposite with the comptroller $2,000 of Arkansas stock, worth 76 per cent, and has out $1,200 of the bills obtained from the comptroller. So far the operations were honest. It has, however, in circulation at the south, west, and southwest, upwards of $800,000 of post notes; to meet which it has assets of $70,000, nominally, in bonds and mertgages. Of these, two only are of any value; one is for $7,000 on two farms in Geneva, and the other $12,000 on a farın in Virginia, This latter mortgage has been abstracted from the bank in the following manner:-It stood in the name of Greeley, of the firm of Weston & Greeley, brokers, in Wall street, for $15 000. Weston, being one of the directors, went into the bank room with the president and one or two others, and they passed a resolution to receive their post notes in pay-ment of mortgages. Immediately after, Weston went to the teller, Ackerman, and asked him to lend him $15,000 post notes; he had, however, but $14,950 on hand, and Munson found $50 more, which made up $15,000. Weston then paid this to Abbott, the cashier, who delivered him the mortgage. This Weston gave to Greeley, and Abbott gave back the post notes to Ackerman. Measures are taken to recover this document for the beneft of the creditors of the bank. There is great hopes hat this concern will be made an example of. The tea sale to-day exhibited the same features which characterised the former ones. It was well attended, and went off with spirit. The details will be found under the head of "State of Trade," as also a sale of real estate, under a chancery order, at prices which indicate the depreciation of that description of property. The Pennsylvania Legislature as yet have done nothing. A bill has been introduced to establish a branch of the U. S. Bank at Pottsville, with a capital of $1,000.000. This is probably part of the locofoco anti-bank principles. Nothing has been done towards providing the means of paying the interest on the State debt in August next. The subject does not seem to be worthy of notice. The credit and standing of the State of Pennsylvania, and with it the whole United States, depends upon the manner in which she discharges her present present indebtedness, and provides for future contingencies. A few short weeks may find her prostrate, and yet no movement is made to avert the impending fate. Her faith seems to be as strong in the U. S. Bank as in the days of its most undoubted credit. The assets of that institution are, it is well known, dependent upon that section of the country whose chief means of wealth is in its production of cotton. The culture of that article has been, for the last few years actually a means of impoverishing the coun-try in which it is raised. The producers of it have purchased their supplies from other sections, at prices regulated by our own fluctuating currency, while their sales have been made in a foreign and dearer currency. The proceeds of cotton in a specie currency have formed the means of purchasing of ali the southern States. By the operation of credit, the currency of this country has been inflated until prices of supplies have risen much higher in proportion than that of cotton. Therefore, while the power of purchase among the cotton growers has been regulated abroad, the rates at which they purchase has been regulated at home; the consequence has been, that cotton has been a losing business. The following is a table of the crop of cotton and its value for each year, from 1833 to 1840:- CROFS AND VALUE OF COTTON IN THE UNITED STATES, WITH THE VALUE OF BREADSTUFFS CONSUMED ANNUALLY IN THE COTTON GROWING STATES. Crops. Price. Value. Value of Price of Baies. Breadstuffs, Flour. 1592 1.078.000 10 cts $42 880 000 $36-000-000 $5

3. May 22, 1840 Morning Herald New York, NY
Article from Morning Herald, May 22, 1840

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Article Text

# MONEY MARKET. Thursday, May 21--6 Р. М. The want of confidence in the market generally, causes a continued decline in stocks. Notwithstanding the amount of unemployed capital, a further decline was manifest in most stock today. The failure of a broker was reported at the board, er, in broker's phrase, a "lame duck waddled out of the street," caused by time purchases of North American Trust, which has fallen 4 per cent since the commencement of the week. It closed today at a decline of per cent from the closing sale of yesterday. United States Bank declined per cent, Harlem per cent, Farmers' Insurance 1) per cent, Stonington per cent. There is very little doing in sterling bills, and prices are nominally the same. Domestic bills evince no material change. The following sales of state stocks were made at auction, by order of the comptroller, to redeem the bills of the Farmers' Bank of Seneca County, and those of the City Trust and Banking Company: $3,000 Michigan 6 per cents, 1861, 51 per cent, $1,530 1,000 Indiana 5 " 1861, 65 " 650 6,000 Arkankas 6 " 1861, 55456" 3,330 Under the head of "State of Trade" will be found the particulars of a sale of real estate in Brooklyn. We yesterday laid before our readers some of the particulars of the City Trust and Banking Company, now in the hands of a receiver. The startling facts which have been brought to light and exposed in this paper, concerning the new banking institutions, are well calculated to alarm the real friends of the banking and credit system for the permanency of its existence. The present stagnation of trade, and indisposition to invest capital, grow out of the want of confidence created by the demoralized state of the public mind in regard to mercantile honor. It was the habit of the English capitalists, some time since, to charge upon the Americans generally that in their business transactions, "roguery was the rule, and honesty the exception." The honorable and self-sacrificing mander in which the merchants of the United States redeemed their honor, in 937, went far to reverse that opinion, and establish the fact hat honesty is the ru e and roguery the exceptior. The present course of many of the States and most of the banking institutions is very likely to destroy the reputation which the prompt integrity of the American merchants has earned. New York stands highest in credit at this moment, but her character is in the hands of a most unprincipled set of men, whe, under the cover of the new Banking Law, have committed the most daring and disgraceful frauds upon the community. On the first passage of the law, innumerable banks were started by holers of real estate at old prices. The law does not prescribe the manner in which the capital should be paid up, but merely requires that they should be paid up. Speculators availed themselves of this, and any amount of bonds and mortgages could be procured with which to create capital. It was the practice of all the banks, at one time, to issue stock on deposite of mortgages; the stock was then sold in the market for what it would bring. In very many instances the property in the mortgages which were so deposited, had been previously mortgaged to the full amount of its marketable value. The institution, therefore, issued the stocks without having any equival at whatever. Ia masy instances operations of this kind were resorted to, in order to raise the necessary amount of stocks to deposit with the comptroller, in order to obtain a sufficient amount of genuine circulating bills, to give a character to the concern, whatever it might be. This was the post-tion of things one year ago-it was then supposed that the markets would take a favorable turn, and that the U. S. Bank, and the other speculative leaders would again be able to inflate the currency so as to enable all the small banks to keep out all the circulation they could procure. In this they were disappointed. The times grew worse, and in the fall the arrangement for the redemption of brils in this city ceased, and being followed by the failure of the Southern Banks, confidence was so far destroyed, that a specie circulation could not be kept out. This turn in affairs opened the door to a new system of fraud in the issue of post notes, to circulate as money. Many banks in this eity and state, composed of an association of individuals as needy and unprincipled as those of the City Trust & Banking Company, began to issue post notes to circulate as money, It is true the law expressly forbade this; but the comptroller "was no wizard," and they easily evaded it by saying they did issue them to circulate as money. The proceedings of the City Trust and Banking Company are a fair sample of the proceedings of these concerns. They made a small deposite with the comptroller, and received about $1200 in true bills. They then hired a place in Fulton street, and employed agents to pass off post notes in all directions, for any kind of property and at any price. They commenced their operations-A. Abbott, cashier, and J. B. Munson, president. The fitting up of the bank was to cost $400. The man who contracted to do it called on them twice for money while work, and received each time $50 in good money, making $100. When the work was finished he called for the balance. A receipt was written eut for him, which he signed, and received $300 rolled up in a paper and sealed; he did not examine it, but supposed it to be good money. Some time after, on opening it he found it to be post notes This was the manner of their operations: Agents were sent out to the country towns, east and west; $700 worth of clocks were bought at Bristol, of one man, at high prices, who foolishly took post notes; other agents were sent south, to buy cotton; and others again west, to purchase produce. In this way, near $800,000 of this fraudulent paper has been put out, but the property really obtained for them will probably not exceed $150,000 in value. This has been divided among the getters up of the concern, and used for their own private purposes. The banking house has been seized under a landlord's warrant, but as this conflicts with the chancery in-junction, it will probably be abandoned. The securities in the hands of the comptroller were sold today to meet the regular bills. The receiver now in possession of the assets of the bank, will probably realize $20,000 to meet nominal claims of $800,000. This is an outline of one concern. There are many in the state and city which have pursued similar operations here have issued post notes $4,000,000 Stocks issued without security. 13,000,000 $7,000,000 True circulation issued. 4,500,000 By this it appears that the new banks have issued 50 per cent more fraudulent paper than of the legitimate bills. It is high time that some example was made of the audacious swindlers who have so long been preying upon the public. This post note swindling is, however, by no means confined to the New York Banking Association.s The United States Bank was the first to set the example, and the first to fail on them. That concern has now out upwards of $10,000,000 post notes, which her agents distributed all over this country and Europe, making use of the credit of the bank to obtain the money of unsuspecting parties; and on the maturity of the notes she refuses to pay them, except in her own irredeemable bills.. This atrocious swindling transaction has been legalized by the Pennsylvania legislature. Its demoralizing effects are worse than that of the small banks of this State. The institution not only takes advantage of the ignorance of others in order to obtain their money for her worthless paper, but her agents have been in every direction tempting the public disbursing officers to take her bills in exchange for the specie funds of the Government, thereby defrauding the public creditors of 7 per et of their just dues, thus not only committing roguery, but creating rogues. These facts have been repeatedly before the public, and have been countenanced by the state authorities Every attempt to compel honesty on the part of the banks, and by restoring confidence to revive credit has been denounced by its presses as a destructive course. The discredit which attaches itself to the swindling operations of the banks of this State, is for similar reasons destroying the credit of the U. S, Bank and the State of Pennsylvania. It is in vain to expect that men in possession of real capital, will invest that capital in a quarter where such unblushing disregard to the rights of creditors is avowed. Where there is no security for property, но eredit can exist. Sales at the Stock Exchange 100 shas U.S. Bk 72 50 do do 860d 99 25 do do 30d 72 5 do do 99 00 do do 830d 72 495 do Harlem RR 43 100do do 72 50 de do nw 434 55 do Del & Hud 72

4. May 30, 1840 Morning Herald New York, NY
Article from Morning Herald, May 30, 1840

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N TOTICE is hereby given that the subscriber has been appointed by the Chancellor of the State of New York Receiver of the estate, funds, and effects of the City Trust and Banking Company of the City of New York, pursuant to the provisions of the revised statutes of the State of New York, All entitled Of proceedings against corporations in equity.' persons indebted to said company are to render an account of all debts and SUIRS of money owing by them to said company, and to pay the same to the said receiver by the first day of July next all persons having in their posse ssion any property or effects of the said company are to deliver the same to me the said receiver by the same day; all the creditors of the said company are to deliver their respective accounts and demands to the said receiver by the first day of August next. And all persons holding any open or subsisting contracts of the said company are to present the same in writing and in detail to the said receiver, at his office, corner Centre and Walker streets, in the City of New York, on or before the said first day of August next. Dated New York. 21st day of May, 1840. JOSEPH WILLOUGHBY. Receiver of the Estate, &c., my27 3w of the City Trust and Banking Co.

5. June 1, 1840 Morning Herald New York, NY
Article from Morning Herald, June 1, 1840

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OTICE is hereby given that the subscriber has been appointed by the Chancellor of the State of New York Receiver of the estate, funds, and effects of the City Trust and Banking Company of the City of New York, pursuant to the provisions of the revised statutes of the State of New York, entitled Of proceedings against corporations in equity." All persons indebted to said company are to reuder an account of all debts and sams of money owing by them tosaid company, and to pay the same to the said receiver by the first day of July next all persons having in their posse ssion any property or effects of the said company are to deliver the same to me the said receiver by the same day; all the crecitors of the said company are to deliver their respective accounts and demands to the said receiver by the first day of August next. And all persons holding any open or subsisting contracts of the said company are to present the same in writing and in detail to the said receiver, at his office, corner Centre and Walker streets, in the City of New York, on or before thesaid first day of August next. Dated New York, 21st day of May, 1840. JOSEPH WILLOUGHBY, Receiver of the Estate, &c., my27 3w* of the City Trust and Banking Co.