It was the fall and winter of 1907. The country, especially New York, was still reeling from a financial crisis called the Panic of 1907, which in October, had wreaked havoc on the stock market and banking communities of Wall Street.
While many banks and trusts got through the Panic without losing funds, or their customer’s confidence, some lost everything and collapsed like a house of cards. For these institutions, the Panic was like a tornado that tore the façade from the buildings, revealing that the institution was riddled with corruption that had eaten away the foundations, like termites in a house. It only took a little push to have it all collapse.
Here in Brooklyn, the Borough Bank of Brooklyn and its subsidiary, the International Trust Company, and the banks and trusts run by the Jenkins family; the First National Bank of Brooklyn, the Williamsburg Trust Company and the Jenkins Trust Company, all fell during the collapse.
They did not have the cash to survive a run on their banks by scared customers, and they closed their doors until the Panic subsided. They should have had enough money; all of them were large enough to have several branches each, throughout Brooklyn.
When State banking investigators took a look at the books, they discovered that these institutions were all connected, and all had been looted from within, with enough financial impropriety to send the top tier of management to prison for years. They had been using the banks as their own personal vaults, but the party was now over.
The senior man in this debacle was John G. Jenkins, the patriarch of a family of bankers, a man who had been in banking for over fifty years. He had been president of the First National Bank of Brooklyn for over thirty of those years, and had started the Williamsburg Trust in the basement of First National.
His three sons, John Jr., Frank and Frederick, were bankers, too. John Jr. and Frank ran the Williamsburg Trust and the Jenkins Trust, respectively. Over at the Borough Bank, President William Maxwell ran his bank with his board chairman, William Gow, who also owned the International Trust. They did a lot of business with the Jenkins, and vice versa, and all of them were thick as thieves.
Maxwell and Gow had been playing fast and loose with their bank’s money for so long, they got careless, and the Panic caught them with far too little cash in the vault; too much of their funds had been lent out in large, no-collateral loans to themselves and others, including John G. Jenkins, Sr.
Very public arrests and indictments followed. William Maxwell, after three horrible days in Brooklyn’s main jail, finally made bail, came home, and killed himself. The news of his suicide came the same day the Jenkins sons found themselves also under arrest and indictment. The newspapers were having a field day.
The charges against John Jr., Frank and Frederick were initially forgery, grand larceny and overdrawing of accounts. They had allegedly made large loans to themselves, and then covered them up by making up and entering into the ledgers, fake loans to non-existent people and companies.
That was in November. A month later, after more investigations, more charges followed. Frank, Frederick and John Junior were charged with conspiracy. So was old man Jenkins, pulled into this ugliness at last, in spite of his exalted station as the stately patriarch of a financial dynasty.
The charges against him were serious, as it was alleged that he had been the mastermind behind the whole thing. John Sr., John Jr. and Frank were also charged with perjury, the Grand Jury believed they had lied through their teeth in previous testimony.
When the second round of charges was filed, all four of the Jenkins men, along with their lawyers, wives, and other family members, crowded into the courthouse. The papers said that none of the men seemed overly concerned, and took the whole procedure in stride.
They pleaded not guilty, filled out papers in the clerk’s office, handed over their bail money, gathered their families, and went home. The whole thing was over in half an hour.
There was no perp walk, and they didn’t answer reporters’ questions. One reporter noted it looked more like a family gathering than a criminal court date, with people laughing and conversing with each other, like they went to court every day. John Junior seemed the most jovial and unconcerned.
He may not have seemed concerned, but State banking investigators and the District Attorney’s office were. They were finding not only impropriety, but faults in the entire system. In these days before Federal banking regulations, it was pretty easy to start and run a bank.
All banks had boards of directors who were supposed to act as an oversight committee, protecting the depositor’s interests, but in reality, most boards were filled with men who were there because they were large depositors or stock holders, or were well-known in their communities, or well-connected.
Many prominent men were on the boards of several banks and trusts, in all of Brooklyn’s communities. They were there to convince customers to bank in those institutions, and they were ego trip positions.
Consequently, as John Jenkins, Sr, contemptuously told one board member once, “You are all chair warmers.” One of the reasons Gow, Maxwell and the Jenkins family had been able to get away with all of the impropriety was that no one was really paying attention, and they knew it.
The State Banking committee was so appalled by the irresponsibility of the banks’ boards, they issued the following statement: “We have found that most of these directors have regarded their positions as a mere formality; that many of them seldom attend the meetings of the boards, and when they do attend such meetings, they discharge their duties in a perfunctory manner, showing little regard for the safety and security of the funds of the depositors.
The powers and duties as directors in many institutions are surrendered and delegated to some dominating members of the board, and the board simply ratifies his acts, without thorough investigation or objection. These careless methods on the part of directors have given opportunity for crime, fraud, and gross mismanagement.”
The investigators also recommended that the banking laws be changed so that in the future, board members have legally defined duties and obligations, and that any board member who did not live up to those expectations could expect to be prosecuted, if something like this happened again.
In the meantime, the indictments against the Jenkins family were only the beginning of the investigations. The banking men found that large loans in excess of the lawful 10% of the banks’ assets were made to Jenkins family members and others.
In order to hide this, dummy loans were created on the books, and when audits took place, stock, collateral and cash would be withdrawn from one institution and placed in another, and then moved around accordingly.
The perjury charges against them came from statements they had signed stating that their institutions were complying with regulations. As an example, John Jr. had sworn before a notary public that he had received no loans from his bank to himself, when in fact; he had made a $271,000 loan to himself.
John Jenkins, Sr. had signed a similar statement, before a notary, saying that he knew of no personal loans, when it turned up that he had authorized John Jr’s loan. All of them resigned their positions with their banks, on the insistence of banking officials, and their banks went into receivership; they were all in deep poo.
John Jenkins, Senior, no longer needed every day at his First National Bank of Brooklyn, took to his Sea Cliff, Long Island summer home. Although he seemed unconcerned about the turmoil around him, he was scared. His long, distinguished career was ending in disgrace, and he could possibly lose everything he had worked for his entire life, and he, and his three sons, could end up in prison. He even had let down his church.
He was a devout churchman, although he seemed to have not been around for the “thou shalt not steal” lessons. He devoted a lot of time and money to the Sumner Avenue Baptist Church, in Bedford, where he was one of the oldest members of the church, in terms of years of membership.
He was highly respected and revered at the church, and was still fondly remembered for his generosity. When the church was arrears in its mortgage, he had donated $40,000 to pay it off.
When the fall of his empire became known, the church leadership rallied behind him, and the congregation sent letters of support to him and his family.
On March 12, 1908, Jenkins was in Sea Cliff, having just returned there from a day in Brooklyn, where he had met with lawyers and with his family. He had even dropped by the church to pray with his minister.
Family said that he seemed in fine spirits when he got home, and was looking forward to clearing his name. They said that the unpleasantness had weighed on John Sr.’s spirit, and although he was seventy years old, he had been in good health, and expected to live many more years.
That evening he had watched his grandchildren play checkers, and then he went to bed. In the middle of the night he had a seizure; a blood vessel burst in his brain, and he was dead by 6:30 in the morning. The doctor had rushed to his side, but could do nothing.
John Jr. had a vacation home next door to his father, and he was there, along with his family, but by the time the others got there, their father was dead. John Jenkins had nine children, and it took time for all of them to gather with their families at the Sea Cliff home.
The funeral was planned for Sea Cliff, away from Brooklyn and its noisy and nosy reporters and curious onlookers. The people of Sea Cliff were only vaguely aware of what was going on in Brooklyn, and there, the Jenkins family was well known for their generosity to the town.
The minister from Sumner Avenue Baptist officiated, and the funeral was held at the Methodist Church that Jenkins attended while in Sea Cliff. He was buried in Sea Cliff. His case had been bumped up to a higher authority.
The court case was now in disarray. The lawyers for the Jenkins family had already requested a change of venue, and Jenkins had died before that issue had been resolved.
Jenkins had been considered the mastermind, and now prosecutors were scrambling to get their cases together and perhaps revise charges against John Junior, Frank and Frederick. It was do, or die time.
Next: The end of our story. The trials and consequences, the winners and losers.
(Postcard: One of the branches of the Williamsburg Trust Co. early 1900s)