7976. Old South Trust Company (Boston, MA)

Bank Information

Episode Type
Run → Suspension → Closure
Bank Type
trust company
Start Date
December 18, 1919
Location
Boston, Massachusetts (42.358, -71.060)

Metadata

Model
gpt-5-mini
Short Digest
ffe442dc

Response Measures

Borrowed from banks or large institutions, Capital injected, Full suspension, Books examined

Other: State Bank Commissioner took the bank into custody and negotiated potential advances; reopening occurred after rehabilitation (~Sept 1920). Significant OCR fixes: none beyond normal punctuation/spacing corrections in excerpts provided.

Description

Multiple contemporary articles (Dec 18–19, 1919) report a run on Old South Trust Co. that precipitated its closing under orders of State Bank Commissioner Augustus L. Thorndike. The immediate trigger cited is inability to maintain clearing house/clearing arrangements (Webster & Atlas National Bank declined to continue clearing), so the cause is classified as correspondent-related. The commissioner took the institution over under state law; articles discuss liquidation prospects and negotiations to have other bankers take over or to reopen, but contemporaneous reports emphasize the commissioner takeover and likely liquidation. Later (Sep 1920) reporting notes the bank had been closed a year earlier and was reopened recently after rehabilitation, but the main episode described here is the Dec 1919 run and ensuing suspension/closure by the commissioner.

Events (3)
1. December 18, 1919 Receivership
Newspaper Excerpt
The bank commissioner took over the institution under the state law by which he is authorized to act when he regards conditions as 'unsafe.' He will remain in charge of its affairs until they are settled, Deputy Commissioner Charles W. Levi acting as his representative at the offices of the trust company. (Dec. 18–19 reports).
Source
newspapers
2. December 18, 1919 Run
Cause
Correspondent
Cause Details
Run precipitated after Old South's clearing arrangements through Webster & Atlas National Bank were discontinued when its balance fell below stipulated figure, causing checks to be paid over the counter and publicizing the difficulty.
Measures
Public statements by commissioner and bank president; attempts to negotiate with other bankers; commissioner takeover to conserve assets.
Newspaper Excerpt
The closing followed a run on the bank. Failure of the bank to make clearing house connections was said by the Bank Commissioner to have precipitated the run.
Source
newspapers
3. December 18, 1919 Suspension
Cause
Correspondent
Cause Details
Closed by state bank commissioner after run triggered by failure to maintain clearing house connections; commissioner took charge under state law as institution regarded as 'unsafe'.
Newspaper Excerpt
The Old South Trust Company ... closed its doors to-day under orders from State Bank Commissioner Augustus L. Thorndike.
Source
newspapers

Newspaper Articles (15)
1. December 18, 1919 Harrisburg Telegraph Harrisburg, PA
Article from Harrisburg Telegraph, December 18, 1919

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Article Text

BANK CLOSES AFTER RUN By Associated Press Boston, Dec. 18.-The Old South Trust Company, one of the smaller banking institutions here, closed its doors to-day under orders from State Bank Commissioner Augustus L. Thorndike. The closing followed a run on the bank. Failure of the bank to "make clearing house connections" was said by the Bank Commissioner to have precipitated the run. The company's troubles, he said, were due to the fact that it held a lot of "slow paper" and had made loans that were "not readily collectable." "I believe the bank will liquidate in full. and leave a substantial amount over for stockholders," Bank Commissioner Thorndike declared.

2. December 18, 1919 Evening Public Ledger Philadelphia, PA
Article from Evening Public Ledger, December 18, 1919

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Bank in Boston Forced to Suspend Boston, Dec. 18.-(By A. P.)The Old South Trust Co., one of the smaller banks here, closed its doors today under orders from the state bank commissioner, following a run on the institution.

3. December 18, 1919 New Britain Herald New Britain, CT
Article from New Britain Herald, December 18, 1919

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BOSTON BANK CLOSED: INVESTORS ARE SAFE Old South Trust Co. in Financial Straits and Commissioner Interferes. Boston, Dec. 18.-The Old South Trust Co., one of the smaller banking institutions here closed its doors today under orders from State Bank Commissioner Augustus L. Thorndike. The closing followed a run on the bank. Failure of the bank to "make clearing house connections" was said by the bank commissioner to have precipitated the 1un. The company's troubles, he said, were due to the fact that it held a lot of "slow paper" and had made loans that were "not readily collectable." "I gelieve the bank will liquidate in full, and leave a substantial amount over for stockholders," Bank Commissioner Thorndike declared. The bank commissioner took over the institution under the state law by which he is authorized to act when he regards conditions as "unsafe." He will remain in charge of its affairs until they are settled, Deputy Commissioner Charles W. Levi acting as his representative at the offices of the trust company. The bank is in the Old South building on Washington street. Many of its depositors are stenographers and other employes of downtown office buildings. They are members, in large numbers, of the company's Xmas club, a plan by which weekly savings are accepted to be paid in one disbursement at Xmas time.

4. December 18, 1919 The Evening World New York, NY
Article from The Evening World, December 18, 1919

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BOSTON BANK FAILS; HAD XMAS CLUB FUNDS Many Stenographers and Clerks Were Depositors of Closed Institution. BOSTON, Dec. Old South Trust Company. one of the smaller banking Institutions here. closed Its doors to-day under orders from State Bank Commissioner Augustus L. Thorndike. The closing followed a run on the bank. Future of the bank to make clearing house connections? was said by the Bank Commissioner to have precipilated the run. The company's troubles, the said. were due to the fact that it held a lot of "slow paper." I believe the Bank will liquidate in full," Bank Commissioner Thorndike declared Many or the depositors are stenosenphiers and other employees of downtown office buildings They are mempers. In large numbers of the company's Christmas Club, in plan by which weekly. savings are accepted to be paid in one disbursement at Christmas time. Whether all the above in payment or Christmas Club members hind good out could not be learned 10-day According to Its dast report. Nov. 17. the bank had amplete of $3,302,175. white its Hibilities. including is amounted to $1,867,010: capital stock, $300,000; worklum fund $40,000. and undi. vided profits, $45,809

5. December 18, 1919 The Barre Daily Times Barre, VT
Article from The Barre Daily Times, December 18, 1919

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RUN ON BOSTON BANK CAUSED IT TO CLOSE Old South Trust Co. Closed Under Orders of the State Bank Commissioner. Boston, Dec. 18.-The Old South Trust company, one of the smaller banking institutions of the city, closed its doors to-day under orders from State Bank Commissioner Augustus L. Thorndike. The closing followed a run on the bank. Failure of the bank to "make clearing house connections" was said by the bank commissioner to have precipitated the run. The company's troubles, he said were due to the fact that it held a lot of "slow paper," and had made loans that were "not readily collectible." "I believe the bank will liquidate in full and leave a substantial amount over for stockholders," Bank Commissioner Thorndike declared. The bank commissioner took over the institution under the state laws, by which he is authorized to act when he regards conditions as "unsafe." He will remain in charge of its affairs until they are settled. Deputy Commissioner Charles W. Levi was installed by the commissioner as his representative at the offices of the trust company. The offices are in the Old South building on Washington street. Many of the depositors of the bank -were stenographers and other employes of downtown office buildings. They are members, in large numbers, of the company's Christmas club, a plan by which weekly savings were accepted, to be had in one disbursement at Christmas time. Whether all the checks in payment of Christmas club members had gone out could not be learned to-day. No statement on this, or any other phase of the situation, was made by bank officials. Only a small number participated in the run on the bank to-day, and it was scarcely noticed in the crowds and exeitement of Christmas shopping. At the noon hour, however, when the stenographers and other depositors out for their luncheons found the doors closed and the bank commissioner's announcement posted, the groups grew, and anxiety was manifested by some.

6. December 18, 1919 Every Evening, Wilmington Daily Commercial Wilmington, DE
Article from Every Evening, Wilmington Daily Commercial, December 18, 1919

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Article Text

CLOSES BOSTON BANK. RUN By Associated Press to Every Evening Boston, Dec. 18. The Old South Trust Company. one of the smaller banking institutions here, closed its doors today under orders from State Bank Commissioner Augustus L. Thorndike. The closing followed a run on the bank. Failure of the bank to "make clearing house connections" was said by the bank commissioner to have precipitated the run. . The company's troubles, hesaid. were due to the fact that it held a lot of "slow paper" and had made loans that were "not readily collectable."

7. December 19, 1919 Daily Kennebec Journal Augusta, ME
Article from Daily Kennebec Journal, December 19, 1919

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HUB BANK CLOSES Action Embarrasses Many Depositors Old South Trust Company Declared Absolutely Solvent and Will Even. tually Pay 100 Cents on DollarTrouble Caused by Inability to Continue Clearances Boston. Dec. 18.-The doors of the Old South Trust Co., a banking and savings institution with about $4,000,000 in deposits, were closed today. causing inconvenience to a small army of persons who had scrimped for a year to have their savings together at Christmas time. State Bank Commissioner Augustus In Thorndike said that the company would be able eventually to pay depositors in full. with a substantial amount left for stockholders. He added that everything possible would be done to make the Christmas money available to its owners. It was estimated that here were about 8000 members of the Christmas Savings Club, many of them stenographers and other employes in downtown office buildings. with aggregate savings of approximately $400.000. Some of these already had received their money. the checks having been sent out a day or two ago, but most of the club members were said to have held their checks for use in last-minute gift purchases. The bank was closed by Commissioner Thorndike at the request of its president. John R. McVey. in a statement Mr. McVey said: "The Old South Trust Company was closed today by the bank examiner at my request. The bank is absolutely solvent, and last night Commissioner Thorndike. after a conference with other bankers. refused to declare the bank unsafe. The fact that the South Trust was forced to discontinue its clearing. although it kept within the legal standing reserve, caused its checks to be paid over the counter. When this fact was bruited abroad a run began. starting yesterday and increasing rapidly today. Being unable to turn loans into cash quickly enough to meet the withdrawals. we deemed it prudent to ask the bank commissioner to step in and conserve the assets. I am absolutely sure that all depositors will receive 100 cents on the dollar. President McVey said that negotiations were under way with local bankers to have them take over the trust company and make possible a resumption of business in a few days. Deputy Bank Commissioner Charies W. Levi said tonight that these negotiations mi ht develop within a day or two. but he had no information as to details of the procosed arrangement The bank's trouble. according to 3 statement by the bank cormissioner were due to its inability to continue its arrangements for clearances. These had been made. not through the Boston Clearing House Association. but through the Webster & Atlas National Bank officers of which said today that the bank had declined to clear the checks af er the Old South's balance fell below 3 figure previously stipulated. Withdrawais of money for the holiday season and inability of the company to realize immediately on loans described by the commissioner as 'good' but rather slow. were said to be the reasons for its inability to maintain the required balance with the Webster & Atlas bank. Commenting on a report that loans made by the company on certificates of whiskey ownership had tied up its funds, the commissioner said that the bank had only a "comparatively small amount" of such loans. as was the case with virtually ail the banking institutions of the city. There were few of the scenes ordinarily accompanying a bank run. Word of the bank's difficulties appa(Continued on Page -Col 8)

8. December 19, 1919 New Britain Herald New Britain, CT
Article from New Britain Herald, December 19, 1919

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MAY REOPEN BANK Efforts Being Made to Have Old South Trust Co. of Boston Resume Business at Early Date. Boston, Dec. 19.-Negotiations looking to re-opening of the Old South Trust Co., the doors of which were closed yesterday when it fell short of ready funds were under way today. At the same time Bank Commissioner Augustus L. Thorndike, who has taken over the institution said he was endeavoring to make arrangements SO that Christmas savings clubs depositors of the bank would be able to obtain their money in season for holiday shopping should the plans for reopening fall through. A group of business men have offered, according to the commissioner, to advance $750,000 to assist the company to meet the demands expected to develop after reopening. The commissioner said he believed this sum would be sufficient but added it was essential the Old South establish satisfactory clearing house connections before he would authorize preopening. It was the failure of its former clearance arrangements which led directly to the run and the subsequent closing.

9. December 19, 1919 Republican Farmer Bridgeport, CT
Article from Republican Farmer, December 19, 1919

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Boston, Dec. 18-The Old South Trust Co., one of the smallest banking institutions here, closed its doors today under orders from State Banking Commissioner Augustus L. Thorn The closing followed a run dike. on

10. December 19, 1919 The Bennington Evening Banner Bennington, VT
Article from The Bennington Evening Banner, December 19, 1919

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RUN ON BOSTON BANK CAUSED IT TO CLOSE Old South Trust Co., Closed Under Order of the State Bank Commissioner. Boston, Dec. 18.-The Old South Trust company, one of the smaller banking institutions of the city, closed its doors today under orders from State Bank Commissioner Augustus L. Thorndike. The closing followed a run on the bank. Failure of the bank to "make clearing house connections" was said by the bank commissioner to have precipitated the run. The company's he said were due to the fact that it held a lot of "slow paper, and had made loans that were "not readily collectible." "I belive the bank will liquidate in ful and leave a substantial amount over for stockholders," Bank Commissioner Thorndike declared. The bank commissioner took over the institution under the state laws, by which he is authorized to act when he regards conditions as "unsafe." He will remain in charge of its affairs until they are settled. Deputy Commissioner Charles W. Levi was installed by the commissioner as his representative at the offices of the trust company. The offices are in the Old South building on Washington street. Many of the depositors of the bank were stenographers and other employes of downtown office buildings. They are members, in large numbers, of the company's Christmas club, a plan by which weekly savings were accepted, to be had in one disbursement at Chritmas time. Whether all the checks in payment of Christmas club members had gone out could not be learned today. No statement on this, or any other phase of the situation, was made by bank officials. Only a small number participated in the run on the bank today, and it was scarcely noticed in the crowds and excitement of Christmas shopping. At the noon hour, however, when the stenographers and other depositors out for their luncheons found the doors closed and the bank commissioner's announcement posted, the groups grew and anxiety was manifested by some.

11. December 19, 1919 Evening Star Washington, DC
Article from Evening Star, December 19, 1919

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SAYS BOSTON BANK WILL PAY DOLLAR FOR DOLLAR BOSTON, December 19.-The troubles of the Old South Trust Company, a banking and savings institution with about $4,000,000 in deposits, which was closed yesterday by State Banking Commissioner Augustus L. Thorndike, were due, according to a statement by the bank commissioner, to its inability to continue its arrangements for clearances. These had been made, not through the Boston Clearing House Association, but through the Webster and Atlas National Bank, officers of which said that the bank had declined to clear the checks after the Old South's balance fell below a figure previously stipulated. Commissioner Thorndike said that the company would be able eventually to pay depositors in full, with a substantial amount left for stockholders. In a statement President McVey said: "The bank is abslutely solvent, and Commissioner Thorndike, after a conference with other bankers, refused to declare the bank unsafe. The fact that the Old South Trust Company was forced to discontinue its clearing, although it kept within the legal standing reserve, caused its checks to be paid over the counter. When this fact was bruited abroad a run began. Being unable to turn loans into cash quickly enough to meet the withdrawals, we deemed it prudent to ask the bank commissioner to step in and conserve the assets. I am absolutely sure that all depositors will receive 100 cents on the dollar." President McVey said that negotiations were under way with local bankers to have them take over the trust company and make possible a resumption of business in a few days.

12. December 19, 1919 Albuquerque Morning Journal Albuquerque, NM
Article from Albuquerque Morning Journal, December 19, 1919

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BANK CLOSES BUT DEPOSITORS WILL BE PAID IN FULL (BY MORNING JOURNAL SPECIAL LEASED WIRE] Boston. Dec. 18.-The doors of the Old South Trust company, a banking and savings institution with about $4,000.000 in deposits, were closed todav by State Banking Commissioner August L. Thorndyke. at the request of its president, John R. McVev. The bank's troubles. according to a statement bv the bank commissioner. were due to its inability to continue its arrangements for clearances. These had been made, not through the Boston clearing house association. but through the Webster & Atlas national bank. officers of which said todav that the bank lhad declined to clear the checks after the Old South's balance fell below a figure previously stipulated. Commissioner Thormdyke said that the company would be able eventually to nav depositors in full, with a substantial amount left for stockholders. In a statement President McVey said: "The bank is absolutely solvent. and last night Commissioner Thorndyke. after a conference with other bankers. refused to declare the bank unsafe. The fact that the Old South Trust was forced to discontinue its clearing. although it kept within the legal standing reserve. caused its: checks to be paid ower the counter. When this fact was bruited abroad a. run began. starting yesterday and increasing rapidly today. "Being unable to turn loans into cash quickly enough to meet the withdrawals, we deemed it prudent to ask the bank commissioner to step in and conserve the assets. I am absolutely sure that all depositors will receive 100 cents on the dollar." President McVey said that negotiations were under way with local bankers to have them take over the trust company and make possible a. resumption of business in a few days Commissioner Thorndyke said everything possible would be done to make Christmas savings available to its owners. It was estimated that there were about 8,000 members of the Christmas savings club, with aggregate savings of approximately $400,000.

13. September 27, 1920 Grand Forks Herald Grand Forks, ND
Article from Grand Forks Herald, September 27, 1920

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MONEY ASKED BY DEPOSITORS Ninety Day Law. Put Into Effect to Protect General Public. Boston, Sept. 27.-Several hundred persons gathered outside the offices of the Tremont Trust company here today when the doors were opened and lines quickly formed before the paying tellers' windows. After steady withdrawals for an hour with the crowds increasing, bank officials announced the law permitting a bank to require ninety days' notice for withdrawls from the sayings departments would be invoked forthwith "for the protection of the depositors. They regulation would be withdrawn "as soon as the public calmed itself. it was announced. 'We have plenty of money to pay everybody,' officials said, "and we are prepared to do so today but the crowd became so large it was impossible to handle and we invoked the law for the protection of depositors, not for our own protection." The Fidelity Trust company today served notice it would take advantage of the law permitting it to require ninety days' notice of withdrawals from the savings department. It was stated this was done upon the direction of Joseph C.- Allen, state bank commissioner. At his office it was said this action was optional with the banks. Several banks opened their doors with large amounts of ready cash as provision against a repetition of the rung which developed Saturday out of the closing of the Cosmopolitan Trust company. Bank officials announced there was no connection between the Cosmopolitan, which was the fifth bank closed here within two months, and their institution, and Bank Commissioner Allen declared no other banking institution was involved in the Cosmopolitan's troubles. More Runs Anticipated. Nevertheless a recurrence of the runs was anticipated, depositors having become alarmed and, in the case of the Tremont Trust company, having made constant withdrawals from early morning to nearly midnight Saturday. The feeling of uncertainty over the banking situation was the subject of discussion by Governor Coolidge and bankers yesterday, but without announced decision of any contemplated action. One effect of the close scrutiny of local banks which Commissioner Allen has been making was an order from him to the Old South Trust company to drop from its payroll former Governor Samuel W. McCall and four other officials. including two vice presidents. As chairman of the board of directors, Mr. McCall, who was appointed recently, is drawing a salary of $8,000 a year. The object of the order is to reduce the bank's expenses, it being the opinion of the bank commissioner that the men asked to have dropped are holding merely nominal positions. In .each instance, they may continue to, serve in their present capacities without salary, according to the order from the bank commissioner. The Old South Trust company was closed a year ago, but reopened recently after having rehabilitated its finances without loss to depositors.

14. September 27, 1920 The Barre Daily Times Barre, VT
Article from The Barre Daily Times, September 27, 1920

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TREMONT TRUST CO., DORCHESTER TRUST FIDELITY TRUST CO. Bank Commissioner Allen Advised Resort to the Law Which Requires 90Day Notice Before Withdrawal of Funds-All Them Are Believed to Be Able to Meet Calls. Boston, Sept. 27 Public unrest over conditions to-day caused a some institutions rerun banking on Trust with the sult that the Tremont company the Fidelity Trust company and the Dorchester Trust company invoked the law which makes it possible to require ninety days notice of withdrawals from the savings departments, in or der to stop the rush of frightened de positors. the Tremont Trust com was in by pany The run participated on crowd hundreds bethe of the so that were called upon to and and came afoot, proportions great police, mounted keep in order! The bank sought for hour to meet the officials announced was the it. and an crowd claims all, there but against the money on hand to pay Vice crush became so great that President Simon Swig announced that the ninety-day notice would be required. At the Fidelity Trust company, which also has offices in the downtown district, the run was in smaller volume, but the law was called upon, to it was stated. "to allow the public recover from the prevailing unrest. There has been a run on the Dorches ter Trust company for several days; and the invocation of the law there stopped the payments. Officials of the institutions in several instances announced by statement or advertisement that there was no connection between the Cosmopolitan, which was the fifth bank to be closed here within two months, and their in stitutions, and Bank Commissioner Joseph C. Allen declared that no other banking institution was involved in the Coemopolitan's troubles. Nevertheless, a recurrence of the runs was an ticipated in some degree. depositors having become alarmed and, in the case of the Tremont Trust company, having made constant hdrawals from morning Saturday almost to midnight, the management having ex a tended the closing hour from noon to accommodate them. The feeling of uncertainty over the banking situation was the subject of discussion by Governor Coolidge and bankers yesterday, but without an nouncement of any contemplated ac tion. One effect of the close scrutiny of the affairs of local banks, which Commissioner Allen has been making, was an order from him to the management of the Old South Trust company to drop M from its payroll former Governor Sam uel W. McCall and four other officials, As M including two ce-presidents chairman of the board of directors of the company, McCall, who was ap pointed recently, is drawing a salary el of $8,000 a year, and the other men involved are said to be receiving sev earal thousand dollars each. a The object of the order is to reduce f the bank's expenses. and it is the opinion of the bank commissioner that D the men whom he asked to have dropped are holding merely nominal positions for which the salaries might to well be saved. In each instance, they may continue to serve in their present capacities without salary, according to the order from the bank commissioner to the Old South management. The Old South Trust company was M closed a year ago and re-opened re to cently after having rehabilitated its finances without loss to the depositors of Several hundred persons had gath ered outside the offices of the Tremont W Trust company when the doors were th opened at 8:45. fifteen minutes before as the usual hour and lines quickly formed tl before the several paying tellers' win dows. After withdrawals had been going on steadily for nearly an hour & with the crowds constantly increasing be the bank officials announced that the m law permitting a bank to require 90 days' notice for withdrawals from the savings department would be invoked forthwith "for the protection of the m depositors. The regulation would be m withdrawn "as soon as the public th calmed itself. it was announced M We have plenty of money to pay everybody. officials said. "and we're prepared to do so this morning, but at he crowd became so large that it was el impossible to handle them and we in is roked the law for the protection of the he depositors, not for our own protec iden. The Fidelity Trust company also served notice on depositors that it f would take advantage of the 90 days ke law. It was stated at the bank that ha this was done upon the direction of the bank commissioner At the office of

15. September 27, 1920 The Bridgeport Times and Evening Farmer Bridgeport, CT
Article from The Bridgeport Times and Evening Farmer, September 27, 1920

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PEOPLE DEMAND SAVINGS FROM BOSTON BANKS Boston, Sept. & 27.-The Tremont Trust company and the Dorchester Trust comapny today established moratoriums, by which depositors will be required to wait 90 days before withdrawing funds. Officials of both companies declared their institutions were sound and that the moratoriums were established to "protect the people from themselves.' Payment of funds was stopped at the Tremont Trust company branch on Warren street, Roxbury, shortly after the opening hour., Crowds of apprehensive depositors had gathered outside the Tremont company's Court street office and the State street headquarters of the Fidelity hours before the opening time. will be greeted by the flower The run on the Tremont Trust Co. started Saturday following the closing by State order of the Cosmopolitan company, the fourth bank to be closed since the bursting of Charles Ponzi's get-rich-quick bubble. A crowd of men and women was lined up outside the Tremont Trust company in Courts treet today. Thirty police were on duty keeping the people in order and protecting them from pickpockets. Mounted police kept a lane through Court St. clear for traffic. The line extended in twos from the bank down Court street and Franklin avenue to Cornhill and in the other direction up Court street to Tremont Row. Smaller and somewhat less demonstrative crowds were gathered outside the Tremont Trust branch in Roxbury and the Fidelity Trust company on Summer street. Thomas J. Boynton former United State's Attorney and an officer of the Tremont Trust addressed the gathering on Court street, assuring them that the 90 day close was invoked for their protection and that all would get their money. Applause greeted soynton's re. marks but the crowd did not move away. Several more "inactive" officials connected with Boston banks are likely to be dropped it was learned today following the order of Bank Commissioner Allen that the Old South Trust company dispense with the services of former Governor Samuel W. McCall recently named on the federal tariff commission. McCall was appointed chairman of the Old South's board of directors shortly before the bank reopened on July. receives a salary of $8,000 for his services.