Third National Bank - Chicago, IL

Bank Information

Episode Type: Suspension → Closure
Bank Type: national
Bank ID: 236
Charter Number: 236
Start Date: January 1, 1879*
Location: Chicago, Illinois (41.850, -87.650)

Metadata

Model: gpt-5-mini
Short Digest: 49b8055c

Response Measures

None

Receivership Details

Depositor recovery rate: 100.0%
Date receivership started: 1877-11-24
Date receivership terminated: 1907-12-31
OCC cause of failure: Losses
Share of assets assessed as good: 58.0%
Share of assets assessed as doubtful: 27.6%
Share of assets assessed as worthless: 14.4%

Description

Articles (1896–1899) describe the Third National Bank of Chicago formally closing more than 20 years earlier with a receiver appointed; depositors were paid and the bank remained in receivership (defunct) while later asset realizations allowed dividends to shareholders. Date of suspension is approximate (~1878–1881) based on more than twenty years ago phrasing; I use 1879 as an approximate year. No bank run is described; cause was imprudent/unwarranted loans and impaired capital (bank-specific adverse information).

Events (4)

1. February 5, 1864 Chartered

Source: historical_nic

2. November 24, 1877 Receivership

Source: historical_nic

3. January 1, 1879* Receivership

Newspaper Excerpt: a receiver was appointed to satisfy the depositors. By the process known as 'squeezing' and the sacrifice of choicer pieces of real estate the receiver managed to pay ... the depositors the face value of their claims. The receiver later paid dividends to stockholders (1893, 1895).
Source: newspapers

4. January 1, 1879* Suspension

Cause: Bank Specific Adverse Info
Cause Details: Unwarrantable and injudicious loans left capital and surplus seriously imperiled, prompting the bank to close and a receiver to be appointed.
Newspaper Excerpt: More than twenty years ago the Third National Bank of Chicago formally closed its doors and a receiver was appointed to satisfy the depositors.
Source: newspapers

Newspaper Articles (3)

1. December 31, 1896 The Stark County Democrat Canton, OH

Article from The Stark County Democrat, December 31, 1896

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Article Text

ECONOMY IS NECESSARY. The business community of Chicago learned with surprise that by reason of unwarrantable and injudiciousloans, the capital and surplus of the National bank of Illinois were so seriously imperiled that the clearing-house would not continue it as a member, and as a result the bank has closed its doors. The failure of so large an institution, no matter what the explanation, is such as to create lively comment. It does not appear at present that the failure will be a bad one-that is, the appearances are that the depositors will be paid in full and that, while there will be loss of the capital stock, the share owners will probably not be called upon to make good their responsibility, which extends to twice the amount of their holding. Older residents of Chicago will remember, nearly twenty years ago, the suspension of the Third national, which slowly but surely worked out in the hands of a receiver, not only its indebtedness to its stockholders, but actually owes a large profit to such of its share. holders held on. There does not appear, at the present writing, reason to apprehend that there will be widespread disaster or that any other banking institution of real character and vigilantly managed will be embarr ssed. But the failure merely emphasizes a need of the time. Sooner or later everyone will be compelled to admit through the logic of hard facts a that he must live more economically. a Ever since the war period the people of the United States have been living too e rapidly. Their first warning came in 1873. The made some resolution of e amendment, but with return of prosperity in 1881 the lesson was forgotten. n Eleven years later came another check. e The canditions that have existed in the y business world since then draw attent tion to the extravagance of the Amerie can people as a whole. There was time S in the history of the country when, there h being no great fortunes in the land, there S was abundance everywhere and not a tramp was seen between the oceans. Aly most every household is now called e upon to support more than the people n its roof covers. Tramps are everywhere. y The wealth in the country has been slowly concentrating in the hands of a few, and the poorer people, struggling to maintain appearances, are endeavoring to live as showily as people with suby stantial incomes. The new generation, es since the war, has been raised in an Cenvironment of luxury and has not comprehended that what wealth it iny herited has gradually shrunk until pracre tically its fortunes disappeared. t There is no probability of a return to a solid basis of competence and prosy perity until all the people of the United e States learn what Polonius long ago etaught, that borrowing dulls the edge of husbandry, and live entirely within their incomes. The age even in this es period of distress is much too rapid. y It is likely that credits will be more closely scanned and that mere speculay tors will have no standing as borrowers. re -Chicago Chronicle. C=

2. July 17, 1899 The Times Washington, DC

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Article Text

# A ROMANCE OF BANKING. Luck of Chicago Stockholders Twenty Years After a Failure. Chicago, July 16. More than twenty years ago the Third National Bank of Chicago formally closed its doors and a receiver was appointed to satisfy the depositors. Some of the stockholders feared an immediate assessment for the payment of liabilities and offered to give their stock to anyone who would assume its obligations. Today this stock is held at nearly double its par value, and it is regarded as gilt edged security. Within five years, although the bank has received no deposits, made no loans, issued no currency, sold no drafts, it has paid two dividends to its stockholders and promises many more. The very name of the bank has been forgotten, except by a few grey-haired men who are personally interested in its affairs. Moreover, it is unique in being a corporation having large assets and no liabilities beyond the obligation to its stockholders. The earliest report on the condition of the bank, made by the receiver, Col. Huntington W. Jackson, showed that the nominal assets were about $1,800,000, and the debts were nearly $1,000,000, leaving a nominal $800,000 to pay the stock liability of $750,000. On paper this looked most encouraging, but a close examination showed that many of the loans of the bank, made in flush times, were secured by collaterals of uncertain value, and real estate scheduled at boom prices and taken as the only available payment for money loaned. There was too much "slow" paper and not enough "short" paper. Of the real estate, one tract of 100 acres lay on a barren sand ridge near the lake shore and nearly ten miles southeast of the City Hall, in a wholly unsettled part of a suburb. Another tract of forty-five acres was nearly as far to the west of the city on the bare, flat prairie, where there was little prospect of its ever being anything more than a cabbage patch. Still another piece of property lay far out in the southwestern portion of the city, in a region as yet almost wholly undeveloped and promising little immediate growth, except in taxes and special assessments. There was a score of other lots and parcels of land, some in New York city, and a great quantity of paper, much of it more or less doubtful or worthless. In fact, it seemed to some of the ninety stockholders that it would hardly pay the bank to retain its property and meet the expenses of management. By the process known as "squeezing," and the sacrifice of some of the choicer pieces of real estate the receiver managed to pay before the close of 1881, the depositors the face value of their claims. A year later they received their interest in full, and the stockholders were left, nearly five years after the close of the bank, with a score of pieces of expensive real estate, most of which had comparatively little present cash value, and a quantity of doubtful claims and lawsuits, the legacy of the panic. But Chicago was growing. The suburb in which the hundred-acre tract was located became a part of the city. A cable line reached down and almost touched it; an electric line dropped passengers immediately in front of it; an elevated railroad approached it within half a dozen blocks. Early in the '90's the World's Fair found root in Jackson Park, which adjoined the tract immediately on the north. A city of great hotels, apartment houses, and residences, sprang suddenly into existence around it, and Chicago was a city far out beyond the park. In July, 1891, the receiver called the stockholders together and laid before them an offer of $1,000,000 for the despised 100 acres of land, and the stockholders, upon mature deliberation, rejected it, feeling that it would be worth much more a few years later. If the offer had been accepted it would have paid off not only the entire capital stock of $750,000, but it would have left a comfortable $250,000 to be divided among the stockholders for their patience. In a manner hardly less remarkable the forty-five acre cabbage patch became valuable. Car lines passed it, the suburb of Oak Park, itself a considerable city, grew out around it, and every year has added thousands of dollars to its value. And so it happened that in 1893 the receiver was able to pay a dividend of 10 per cent to the stockholders, and he followed it in 1895 with a second dividend of 5 per cent. And thus, by a combination of good fortune, shrewd management and patience, the Third National Bank now presents the spectacle, probably unequaled in finance, of a business institution for twenty years defunct, and yet paying dividends on stock worth nearly twice its par value.

3. December 9, 1899 Daily Press Newport News, VA

Article from Daily Press, December 9, 1899

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Article Text

# A ROMANCE OF BANKING. Rare Good Fortune of Chicago Stocks Holders Twenty Years After a Failure. More than 20 years ago the Third National bank of Chicago formally closed its doors and a receiver was ap- pointed to satisfy the depositors. Some of the stockholders feared an immedi- ate assessment for the payment of lia- bilities and offered to give their stock to anyone who would assume its obliga- tions. To-day this stock is held at near- ly double its par value, and it is re- garded as gild-edged security. Within five years, although the bank has re- ceived no deposits, made no loans, is- sued no currency, sold no drafts, it has paid two dividends to its stockhold- ers and promises many more. The very name of the bank has been for- gotten, except by a few gray-headed men who are personally interested in its affairs. Moreover, it is unique in being a corporation having large assets and no liabilities beyond the obligation to its stockholders. The earliest report on the condition of the bank, made by the receiver, Col. Huntington W. Jackson, showed that the nominal assets were about $1,800,- 000 and the debts were nearly $1,000,- 000, leaving a nominal $800,000 to pay the stock liability of $750,000. On paper this looked most encouraging, but a close examination showed that many of the loans of the bank, made in flush times, were secured by collaterals of uncertain value, and real estate sched- uled at boom prices and taken as the only available payment for money loaned. There was too much "slow" paper and not enough "short" paper. Of the real estate, one tract of 100 acres lay on a barren sand ridge near the lake shore and nearly ten miles southeast of the city hall, in a wholly unsettled part of a suburb. Another tract of 45 acres was nearly as far to the west of the city on the bare flat prairie, where there was little prospect of its ever being anything more than a cabbage plant. Still another piece of property lay far out in the southwest- ern portion of the city, in a region as yet almost wholly undeveloped and promising little immediate growth, ex- cept in taxes and special assessments. There was a score of other lots and parcels of land, some in New York city, and a great quantity of paper, much of it more or less doubtful or worthless. In fact, it seemed to some of the 90 stockholders that it would hardly pay the bank to retain its property and meet the expenses of management. By the process known as "squeez- ing" and the sacrifice of some of the choicer pieces of real estate the re- ceiver managed to pay before the close of 1881 the depositors the face value of their claims. A year later they re- ceived their interest in full, and the stockholders were left, nearly five years after the close of the bank, with a score of pieces of expensive real estate, most of which had comparatively little pres- ent cash value, and a quantity of doubt- ful claims and lawsuits, the legacy of the panic. But Chicago was growing. The sub- urb in which the hundred-acre tract was located became a part of the city. A cable line reached down and almost touched it; an electric line dropped passengers immediately in front of it; an elevated railroad approached it within half a dozen blocks. Early in the nineties the world's fair found root in Jackson park, which adjoined the tract immediately on the north. A city of great hotels, apartment houses and residences sprang suddenly into ex- istence around it, and Chicago was a city far out beyond the park. In July, 1891, the receiver called the stockholders together and laid before them an offer of $1,000,000 for the de- spised 100 acres of land, and the stock- holders, upon mature deliberation, re- jected it, feeling that it would be worth much more a few years later. If the offer had been accepted it would have paid off not only the entire capital stock of $750,000, but it would have left a comfortable $250,000 to be divided among the stockholders for their pa- tience. In a manner hardly less re- markable the 45-acre cabbage patch be- came valuable. Car lines passed it, the suburb of Oak Park, itself a consider- able city, grew out around it, and every year has added thousands of dollars to its value. And so it happened that in 1893 the receiver was able to pay a dividend of ten per cent. to the stockholders, and he followed it in 1895 with a second div- idend of five per cent. And thus, by a combination of good fortune, shrewd management and pa- tience, the Third national bank now presents the spectacle, probably un- equalled in finance, of a business insti- tution for 20 years defunct, and yet paying dividends on stock worth near- ly twice its par value. - Chicago Even- ing News.