Failure followed a 'quiet' but sustained withdrawal and alleged misconduct by officers; receiver appointed.
Events (3)
1.January 8, 1911Run
Cause
Bank Specific Adverse Info
Cause Details
Persistent withdrawals after revelations and misconduct by an official (theft/knavery) and loss of depositor confidence.
Newspaper Excerpt
there began a steady but continuous withdrawal of funds by depositors who had lost confidence. It could scarcely be called a run but in its culmination today it proved quite as effective.
Source
newspapers
+4 days
2.January 12, 1911Suspension
Cause
Government Action
Cause Details
Closed/taken into custody by the State Bank Commissioner after depletion of ready resources following the run.
Newspaper Excerpt
The Carnegie Trust company has been closed by State Bank Commissioner Cheney.
Source
newspapers
same day
3.January 12, 1911Receivership
Newspaper Excerpt
Receiver Egbert and Lawyer Hartfield, in charge of the collection of money due the Carnegie and of liquidating assets, have made considerable progress.
Source
newspapers
Newspaper Articles (24)
1.January 8, 1911The Salt Lake TribuneSalt Lake City, UT
Click image to open full size in new tab
Article Text
CARNEGIE TRUST CO. CLOSES ITS DOORS Concern Named After Multimillionaire Lacks Ready Funds. Concluded From Page One. but resigned. When the Northern bank was closed and Superintendent Hotchkiss of the state department of insurance made public his investigation into its affairs, a draft drawn by Robin on the Carnegie, with which he had no account, cropped up, From that time there began a steady but continuous withdrawal of funds by depositors who had lost confidence. It could scarcely be called a run but in its culmination today it proved quite as effective. With the incoming of the new city administration the Northern bank of New York and the Carnegie Trust company both became city depositories. Comptroller Prendergast became doubtful of the Carnegie and insisted that the directors put up their personal bonds.
2.January 9, 1911Newark Evening Star and Newark AdvertiserNewark, NJ
Click image to open full size in new tab
Article Text
THE CARNEGIE TRUST FAILURE. HE collapse of the Carnegie Trust Company in New York after a "still run" on the deposits that shrunk from T $18,500,000 to about $1,500,000 follows the ruin of two smaller financial institutions by the knavery of an official. Whether there is criminal liability in the management of the trust is yet to be determined by investigation, That its affairs were shaky was known privately some time before the collapse, and hence the persistent withdrawal of deposits by those who were informed. Three minor banking concerns are seriously affected by the trust company disaster, but may be pulled through by outside aid. If there existed at this time any feeling of financial insecurity, the failure might have a bad effect generally, but business and finance are on too solid a basis for any apprehension. Special causes led to the closing of the Carnegie Trust, such as might be in operation under any banking system in the world. The New York banking laws will now be strengthened in view of this object-lesson to provide still better safeguards for depositors.
3.January 9, 1911Las Vegas OpticLas Vegas, NM
Click image to open full size in new tab
Article Text
NO REAL CAUSE FOR ALARM TRUST CARNEGIE COMPANY AN FAILURE DECLARED ISOLATED ONE STILL SEVERAL RUNS RESULT J. P. MORGAN OFFERS ASSIST. ANCE TO INSTITUTIONS AFFECTED New York, Jan. 9.-The financial situation was decidedly clearer today as the result of conferences held last night to provide against any unsettled stabi'ity of the financial organizations allied with the Carnegie Trust company. One thing appeared to be plain. That was that the trouble of the Carnegie Trust company and its allied was isolated and . the failure was not indicative of any widespread trouble in the financial world. There was a slight run on the Twelfth Ward bank in Harlem this morning, but the depositors soon were reassured and many went away without withdrawing their deposits There was also some excitement in the savings department of the Nineteenth Ward bank at 57th street and Third avenue and at its branches on 86th and 72nd streets, where several hundred people were in line. There was no disorder, however. J. P. Morgan has agreed to give whatever financial assistance is necessary to the Nineteenth ward and the Twelfth ward banks.
4.January 10, 1911The Fairmont West VirginianFairmont, WV
Click image to open full size in new tab
Article Text
MORGAN COMES TO RESCUE AND STAYS A PANIC J. P. MORGAN AND ALLIED INTERESTS COME TO THE RESCUE OF NEW YORK BANKS THREATEN. ED WITH RUNS BECAUSE OF THEIR CONNECTION WITH THE CARNEGIE TRUST COMPANY.
5.January 10, 1911Evening JournalWilmington, DE
Click image to open full size in new tab
Article Text
been after it ever since it was reorganized from the old Van Norden Trust Company. How He Will Pay For Them. To pay for the three institutions it is expected Morgan will increase the stock of the Equitable Trust Company and exchange it for the outstanding shares of three companies, making the actual cost to Morgan personally only about what the engravers' bill will be who furnishes the new stock. The $20,000,000 of assets of the three concerns which were in danger will add materially to the attractiveness of the Equitable Trust Company's balance sheets hereafter, in the opinion of financial experts, who have watched the present situation. Normal conditions prevailed at all of the banks today, the slight run on the Nineteenth and Twelfth Ward Banks and the Madison Trust Company, which prevailed yesterday not being renewed. It was stated by State Superintendent of Banks Cheney today that the affairs of the Carnegie Trust Company will be liquidated at once and no attempt will be made to put the institution in shape to continue business.
6.January 12, 1911The Parma HeraldParma, ID
Click image to open full size in new tab
Article Text
Carnegie Trust Company Closed. New York.-The Carnegie Trust company has been closed by State Bank Commissioner Cheney. The company was chartered in 1907 and had a paid-up capital of a million dollars. Its surplus was $500,000 and its undivided profits aggregated $73,000. Its gross deposits amounted to $8,900,000. The officials of the bank issued a statement saying a quiet run had been in progress for a week and ready available resources had been used up.
7.January 12, 1911Heppner GazetteHeppner, OR
Click image to open full size in new tab
Article Text
Carnegie Trust Company Closed. New York.-The Carnegie Trust company has been closed by State Bank Commissioner Cheney. The company was chartered in 1907 and had a paid-up capital of a million dollars. Its surplus was $500,000 and its undivided profits aggregated $73,000. Its gross deposits amounted to $8,900,000. The officials of the bank issued a statement saying a quiet run had been in progress for a week and ready available resources had been used up.
8.January 13, 1911Watertown LeaderWatertown, WI
Click image to open full size in new tab
Article Text
SUPPORT HALTS BANK TROUBLES Quick Action by Big Interests Prevents Possible Runs. New York.-Owing to the quick and strong support given by J. P. Morgan & Co., Kuhn, Loeb & Co. and other powerful banking interests to a situation that for a short time was delicate, the city of New York was saved from bank runs that might have led to general excitement and temporary financial derangement. When it became known that the interests named had organized themselves into a committee of defense against the probable bad effects of the failure of the Carnegie Trust Co., the apprehended runs on the Madison Trust Co. and its subsidiaries, the Twelfth Ward bank and the Nineteenth Ward bank, with several branches scattered through the city and all affiliated with the unfortunate Carnegie Trust Co. were virtually averted. Although there were steady withdrawals from these banks and their several branches all day, at no time was there a panicky feeling.
9.January 18, 1911Vilas County NewsEagle River, WI
Click image to open full size in new tab
Article Text
SUPPORT HALTS BANK TROUBLES Quick Action by Big Interests Prevents Possible Runs. New York.-Owing to the quick and strong support given by J. P. Morgan & Co., Kuhn, Loeb & Co. and other powerful banking interests to a situation that for a short time was delicate, the city of New York was saved from bank runs that might have led to general excitement and temporary financial derangement. When it became known that the interests named had organized themselves into a committee of defense against the probable bad effects of the failure of the Carnegie Trust Co., the apprehended runs on the Madison Trust Co. and its subsidiaries, the Twelfth Ward bank and the Nineteenth Ward bank, with several branches scattered through the city and all affiliated with the unfortunate Carnegie Trust Co. were virtually averted. Although there were steady withdrawals from these banks and their several branches all day, at no time was there a panicky feeling.
10.January 18, 1911Vernon County CensorViroqua, WI
Click image to open full size in new tab
Article Text
SUPPORT HALTS BANK TROUBLES Quick Action by Big Interests Prevents Possible Runs. New York.-Owing to the quick and strong support given by J. P. Morgan & Co., Kuhn, Loeb & Co. and other powerful banking interests to a situation that for a short time was delicate, the city of New York was saved from bank runs that might have led to general excitement and temporary financial derangement. When it became known that the interests named had organized themselves into a committee of defense against the probable bad effects of the failure of the Carnegie Trust Co., the apprehended runs on the Madison Trust Co. and its subsidiaries, the Twelfth Ward bank and the Nineteenth Ward bank, with several branches scattered through the city and all affiliated with the unfortunate Carnegie Trust Co. were virtually averted. Although there were steady withdrawals from these banks and their several branches all day, at no time was there a panicky feeling.
11.January 20, 1911The Lake County TimesHammond, IN
Click image to open full size in new tab
Article Text
The failure of the Carnegie Trust Company has caused a slight run on some of the New York City banks, and a curious state of affairs has developed. Depositors in three of the banks whose officers were interested in the Carnegie Trust Company have stood in line waiting to withdraw
12.March 27, 1911The SunNew York, NY
Click image to open full size in new tab
Article Text
loan in city bonds obtained from the Northern Bank. The Grand Jury doesn't want to deal harshly with the official in question. Many persons have come forward to speak as to his good character and to say that he was used by others. Furthermore. the District Attorney believes that the official will not be unwilling to clear up certain points that the Grand Jury considers essential. Bank Superintendent O. H. Cheney will return to-morrow from Colorado. While he has been away Receiver Egbert and Lawyer Hartfield. in charge of the collection of money due the Carnegie and of liquidating assets, have made considerable progress. It is understood now that the deficit will be under $2,000,000. The receiver is negotiating for the sale of the South Shore Traction franchise and the Morris Park property held by the Fidelity Development Company.
13.March 31, 1911The CitizenHonesdale, PA
Click image to open full size in new tab
Article Text
by the Grand Jury or falsifying a institution monthly report of dated August 31, 19 He pleaded for trial unnot guilty and was e bond was der $10,000 bail. furnished by a sur company. Like his associa William J. Cummins, Reichma through his attorney, Stephen Baldwin, took ht to withdraw advantage of his the plea of guilty. The date for the final pleading was set for April 10. It is understood that in the meantime a motion will be made to the court for permission to inspect the minutes of the Grand Jury which step will be vigorously contested by District Attorney Whitman. This indictment charges a misdemeanor. In asking that bail be fixed at $10,000 the District Attorney stated in open court that the present charge was but a fore runner of further action that might be expected from the Grand Jury against Reichmann. The Reichmann indictment was only an incident in the day's developments, which now not only involve a high city official and officers of the Carnegie Trust Company, not yet named, but the State Banking Department as well. The name of Andrew Carnegie, the iron master, was again brought into prominent, notice by a formal demand from George L. Dyer for the return of 8,000 shares of the capital stock of the Platt Iron Works, of Dayton, Ohio, a Cummins enterprise, of which Joseph R. Reichmann was President. This stock Mr. Carnegie received from the trust company in January, 1910, for a loan of $2,100,000. The loan was made to save the Carnegie Trust Company after the run that followed the collapse of the Hocking Valley pool. Mr. Dyer claims that Independent Fertilizer stock was substituted for Platt Iron stock. Subsequently the Platt Iron stock was turned over to Mr. Carnegie as collateral for his loan. At a late hour last night Mr. Whitman was in conference with Former Governor Frank Black with a view to making final arrangements for assisting in the prosecution of the Reichmann-Cummins crowd. Up to the time of the conference Mr. Black had not given his consent to enter the case.
14.April 10, 1911New-York TribuneNew York, NY
Click image to open full size in new tab
Article Text
Says City Has Lost Nothing. Perhaps the first thing the public would like to know is that, notwithstanding all the talk, not a dollar of the city's money has been lost and not a dollar is in jeopardy. The first of the many statements that have been fed to the public to connect me with alleged improper transactions is a fair sample of all or most of it. In that statement the press bureau which has been busily engaged in endeavoring to poison the public mind spread out far and wide the story that 1 Kent a balance in the Northern Bank of over $1,000,000. From this it was implied or insinuated that there must have been a corrupt understanding with some one. This fairly illustrates the sort of "evidence" upon which I am being assailed. The facts are as follows: The designation of the Northern Bank as a city depository was made long before my term of office began. The selection of the Bronx branch of that bank as the depository to receive Bronx revenues was made at the request of Controller Prendergast, who had been a director of that bank until shortly before he took office. Mr. Wolfe. the chief auditor in the Controller's office. was also vice-president until he took office, Janary 1. 1910. The circumstances of this selection have already been publicly stated and are well known. It is true that on October 31. 1910. late at night, the receiver of taxes (an appointee of the Controller) deposited the tax receipts for that day, amounting to about $887,000. in the Northern Bank, but it is also true that $900,000 was withdrawn by my deputy the next morning, leaving the bank's balance at the normal amount about $188,000. Yet the public is wilfully led to believe that I kent $1,000,000 there. to be loaned to friends. Could anything be any more diabolical? Coming then to a discussion of the relations of his office with the Cummins syndicate, which was in control of the Carnegie Trust Company before that institution went into the hands of the State Banking Department Mr. Hyde says in effect that the only basis for any question was the story of Robin. The coincidence of loans by some nineteen banks and trust companies to the Cummins syndicate at or very near the time when those nineteen institutions received augmented deposits of city money is "suddenly discovered," says Mr. Hyde. and this syndicate was composed of men "who were supposed to have my friendship." His statement continues With Robin's story as a basis, it is suddenly discovered that a syndicate or assoContinued on second Daza.
15.April 15, 1911Evening StarWashington, DC
Click image to open full size in new tab
Article Text
# Moore Leaves Rome for North.
ROME, April 15.-Charles Arthur Moore, jr., director of the suspended Carnegie Trust Company of New York, and against whom an involuntary petition in bankruptcy was filed recently, left here last Thursday for the north of Italy. It is believed he is on his way to America.
16.April 16, 1911New-York TribuneNew York, NY
Click image to open full size in new tab
Article Text
Another overheard snatch-merely a hint-refers to the eighty-six mahogany desks, the million-odd envelopes and the 25,263 lead pencils, which were counted in by the receivers among the assets of the trust company. Figuring on forbearance loans uses up pencils fast.
Those "forbearance loans" made an interesting fragment in themselves. A forbearance loan is made in this manner: A man or a concern who is friendly with the officers of a banking institution (if such another banking institution as the Carnegie still exists), makes a draft on some firm or individual in a city at a considerable distance from New York. There is no intention of collecting the draft from the person on whom it is drawn, so there is no need that he should owe any of the parties a cent, and usually, it is said, he does not.
The draft goes to the bank and passes through the regular course of all well behaved drafts, until it has been entered on the books of the bank to the credit of the needy firm or individual who made it, so that its amount may be drawn out by check. Then the draft itself-the written paper-is taken in and laid on the desk of one of the friendly officers of the bank. He slips it into an envelope and, instead of sending it West for collection, drops it into a pigeon hole. When the man or the firm who made it is ready to return the money, the need for "forbearance" being safely past, he takes the money to the friendly official, who uses it to pay the draft.
17.April 16, 1911New-York TribuneNew York, NY
Click image to open full size in new tab
Article Text
# C. A. MOORE. JR., LEAVES ROME.
Rome, April 15. - Charles Arthur Moore, jr., a director of the suspended Carnegie Trust Company, of New York, and against whom an involuntary petition in bankruptcy was filed recently, left here last Thursday for the north of Italy. It is believed he is on his way to America.
18.June 17, 1911Omaha Daily BeeOmaha, NE
Click image to open full size in new tab
Article Text
# LESSONS IN CROOKED BANKING
System by Which a New York Financier Got Away with the Money.
The strange ins and outs of high finance as they are displayed in the narrative of the collapse of the Carnegie Trust company of New York are detailed in an article in Hampton's by Frank Parker Stockbridge. Equally interesting are the life stories of some of the men concerned in that huge failure. Of Robin, the immigrant who became a powerful banker, Mr. Stockbridge says:
Deposits accumulated in Robin's Northwestern bank, where he was chairman of the executive committee, until more than $8,000,000, mostly the funds of small tradesmen doing business in Harlem and the Bronx, were in its coffers. His Riverside bank was prosperous. People were flocking to put their money into his Washington Savings bank and he began to look around for other ways of getting the money.
He got into the Fidelity Development company, a real estate concern which owned the old Morris Park race track, and soon controlled it. He acquired control of the Bankers' Realty and Surety company. To carry out his schemes he needed a title insurance company. The Aetna Indemnity company of Hartford, which had formerly been one of Fritz Heinze's concerns, owned the Title and Guaranty company of Rochester. Robin bought control of the Aetna and from it purchased the Rochester concern.
The savings bank could lend money on the real estate owned by the realty companies. The Title and Guaranty company could guarantee the mortgages to satisfy the bank examiners, and the two commercial banks could lend money on the capital stock of any of the other companies or of each other. With all these institutions under his control Robin could take money out as fast as the public put it in.
His personal tastes were luxurious, even oriental. He established himself in luxurious apartments, gorgeously furnished, in an expensive house in Gramercy park. Like other players in the big game, he wanted a country place. He built a magnificent mansion at Wading River, Long Island. One of the important details of "Driftwood Manor," as called his place, was its well-stocked wine cellar.
Robin entertained house parties of kindred spirits, men and women. The residents of the little village of Wading River talk of the things that went on at these house parties. They tell stories of the "Snow Waltz," in which, after a night of revelry, the dancers would whirl out through the open door and, regardless of low necks and thin slippers, would finish their dance on the snow-covered verandas. Other tales are of a summer sport of a somewhat similar nature in which the pond near the house took the place of the veranda.
No matter how fast the money came in, Robin always needed more. There was no end to his schemes and for the most part they were good and perfectly legitimate schemes. He conceived the idea, for example, of running a trolley line across the new Queensborough bridge and through Long Island City to Jamaica. Such a line would tap a large, undeveloped section of Long Island and be of real public service. He obtained a franchise for this line, including the only available route to Jamaica. He organized the South Shore Railroad
19.November 24, 1911The Hattiesburg NewsHattiesburg, MS
Click image to open full size in new tab
Article Text
CUMMINS SENTENCED 4 TO 8 YEARS. (By Associated Press.) New York, Nov. 24.-William J. Cummins, the Nashville banker and head of the Suspended Carnegie Trust Co., of this city, recently convicted of the theft of $140,000 from trust funds held by that company, was today sentenced by Judge Davis to an indeterminate sentence in the state prison of four years and eight months to eight years and eight months.
BANKER IS SENTENCED TO TERM IN PRISON NEW YORK, Nov. 25.- William J. Cummins, a Nashville banker, head of the suspended Carnegie Trust company, recently convicted of the theft of $140,000 from the trust fund; was sentenced to an indeterminate terms in the state prison from four years and eight months to eight years and eight months.
Prison Term For Cummins.
William J. Cummins, the Nashville banker and the head of the suspended Carnegie Trust company of New York, convicted of the theft of $140,000 from a trust fund held by the Carnegie company, was sentenced to an indeterminable term in the state prison of four years and eight months to eight years and eight months.
22.December 1, 1911Milford ChronicleMilford, DE
Click image to open full size in new tab
Article Text
Prison Term For Cummins. William J. Cummins, the Nashville banker and the head of the suspended Carnegie Trust company of New York, convicted of the theft of $140,000 from a trust fund held by the Carnegie company, was sentenced to an indeterminable term in the state prison of four years and eight months to eight years and eight months.
THIEVING BANKER PROMISES TO PAY DOLLAR-FOR-DOLLAR CONVICTED OFFICIAL OF DEFUNCT COMPANY ISSUES A STATEMENT. NASHVILLE, Tenn., Jan. 10.William J. Cummins, convicted in New York of grand larceny in connection with the failure of the Carnegie Trust company, but now in Nashville, trying to clear up some of his financial matters, yesterday gave out a statement in which he said the Carnegie Trust company would pay out dollar for dollar. "I never intend to quit until my friends and the public know that I was the victim of circumstances, controlled entirely by two elemen - Wall street and politics," he declared. Cummins was accompanied here by E. Wright Wilson, a New York lawyer. "We owned over $5,000,000 bank stocks which cost us that amount of money," said Cummins, "and in addition owned $5,000,000 industrial stocks. The statement that my real 0 estate in Tennessee was mortgaged for $29,000 is false. There never was but $15,000 mortgage, and this has been paid by the receiver in charge, so there is now no mor gage at all." He said the schedule showing $4.000,000 liabilities did not state tha over half of that amount was ow to Andrew Carnegie and that Mr. Carnegie was secured by the st held as collateral.
TRIAL OF HYDE FOR FORCING BANK LOANS BEGINS New York, Nov. 20-After a delay of more than a year. the trial of Charles Hiram Hyde, former city chamberlain, charged with having used his office to force loans from the Northern bank to the Carnegie Trust Co., before the latter concern went into the hands of a receiver, began before Jastice Goff in the supreme court, today. The indictment alleges that Hyde compelled Joseph D. Robin, then president of the Northern bank, to loan $100,000 to the Carnegie Trust Co., on Aug. 22, 1910. In return for this, Hyde made the Northern a depository. As soon as the trial was moved by District Attorney Whitman, John B. Stanchfield, of counsel for Hyde, moved that the indictment be dismissed on the ground that the court had no jurisdiction. The motion was promptly deniea and the selection of a jury from the special panel of 30 was begun. Hyde is being defended by Stanchfield and Max D. Steur, while Diatrict Attorney# Whitman, Chief Amistant Frank Moss and John K Clark a in charge of the prosecution,
Bank runs are almost always and everywhere a deterioration of bank fundamentals.
But not for you.
You are the measure-zero exception: great fundamentals, solid bank, and yet the Diamond Dybvig fairy spread its rumor. Depositors woke up. Your collateral was not prepositioned. The Clearinghouse had it for you.
Do not pass Go. Do not collect $200. Go directly to jail… or worse.
