Norwich Bank - Norwich, CT

Bank Information

Episode Type: Suspension → Closure
Bank Type: state
Start Date: July 1, 1913*
Location: Norwich, Connecticut (41.524, -72.076)

Metadata

Model: gpt-5-mini
Short Digest: a265342b

Response Measures

None

Description

Article (New-York Tribune 1913-07-27) describes a recent failure of the Norwich bank due to losses from indirect/misrouted check collection through correspondents. No run or depositor crowding is described; a receiver is mentioned, so the bank closed/failed.

Events (2)

1. July 1, 1913* Receivership

Newspaper Excerpt: his claim for the amount of the with the receiver of the Norwich bank.
Source: newspapers

2. July 1, 1913* Suspension

Cause: Correspondent
Cause Details: Losses from indirect/misrouted check routing through correspondents and agents led to the bank's financial failure.
Newspaper Excerpt: the Norwich bank had failed.
Source: newspapers

Newspaper Articles (1)

1. July 27, 1913 New-York Tribune New York, NY

Article from New-York Tribune, July 27, 1913

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Article Text

INDIRECT CHECK ROUTING System Causes Losses at Times and Is Out of Date. That banks will continue until the end of time to tempt fate by indirect routing enof checks, so long as the process exchange them to escape some the is proved by some that happen every "The United States the checks which fail ables charge, things fails, Some says of fully time Investor." of a collec- of bank are tion because this bank has suspended infound to have suffered from sent always direct routing. If they had been by the the bank which owed them would to direct method possible they failure most been paid prior to the offending have these circumstances the checks Under which could have sent the called bank and failed to do so is usually and it has direct to make good the loss, it was upon great difficulty in proving that not delinquent. just interesting case in point It has arises An called to our attention. failure of been connection with the recent downin bank at Norwich, Conn., whose financial a followed hard upon the Finfall of the United chain Like all of Conbanks with ishing misfortunes of several Company which less States that this affiliated. bank was more or collecting necticut ambitious to shine as a other it was It arranged with banks in them. agent to collect checks for Norwick parts drawn upon banks in that enwhether or upon banks throughout have an only portion of the state. We who emtire that some of the banks conidea it to collect this very going ployed territory for them are the now siderable to rue the day that they began practice. the checks that failed of of this colAmong Because of the failure Conlection one drawn on a town in which bank was not far from Norwich sonecticut will call P. A resident of P was check journing we in the South and gave a bank. the bank at P to a Southern its upon The Southern bank sent the check course to Louis correspondent. a natural this St. since at that St. Louis bank The bank keeps its bank forwarded the at Albany and the Albany the enough, Southern St. bank Louis reserve. but check to bank to a not to the bank at P. Norwich. The bank at P and the bank at P to Norwich. Before 8 sent bank sent promptly it it at to remitted Norwich reached remit from the Norwich bank Albany tance the Norwich bank had failed. Naturally there was some chagrin down for the Southern town when payment Southern in check did not come. The for this called upon the resident of which P bank check to make good the one reanother had originally cashed for him. He bank it ceived the letter from the Southern once where he now was, and at investiat P. his home bank to make an check visited He found that his original his gation. already been charged against the had He was in distress until to cashier balance. of the bank at P explained against that he had recourse at law and the him bank which misrouted the check not failed to get the money. its fault of his, but Some of the in this devious piece to to persuade the man have ticipated own therefore through fault. tried any banks through of who at routing check P parfile his claim for the amount of the with the receiver of the Norwich bank. been He might have done so had he not which on his guard by his home bank. he. put warned him that the other banks, not should be compelled to push the claim against the Norwich one. There is nothing novel about this case. the The interesting fact is that all of of contributed to this piece were big banks devious who routing banks, to must whom be the law requiring due diligence familiar. One would be inclined will to ask very why big and intelligent banks take these risks. The answer is probably that, in the long run, the saving of exchange through unlawful routing more loss than compensates for the occasional which is experienced.