Walkabout: The Fall of the Jenkins Family Financial Empire, Part 2

Read Part 1, Part 3, Part 4, Part 5, and Part 6 of this story.

John G. Jenkins, Senior, and his three sons; John Jr., Frederick, and Frank, were at the head of a lucrative and highly successful financial empire here in Brooklyn at the turn of the 20th century. The early history of the family and their banks was told in Part One of our story.

Dad was president of the First National Bank of Brooklyn, formerly the Williamsburg City Bank. Junior was president of the Jenkins Trust Company, and his brothers were board members and officers of that same Trust.

First National Bank, the Jenkins Trust, and another bank, the Borough Bank of Brooklyn, run by family friend and close business associate, William Maxwell, were tied together by family, shared interest, and intricate financial shenanigans.

The institutions made loans to each other, invested in outside interests together, and were close enough that when one institution went down, the others would follow like a stack of dominos. And that is what happened during the financial disaster called the Panic of 1907.

Also explained in our last chapter, the Panic of ’07 was triggered by stock manipulation, coupled with a loss of cash due to the San Francisco earthquake of the year before, as well as a loss of value of traditionally strong stocks like the Union Pacific Railroad.

These factors combined in a perfect storm of loss of confidence in the market and in banks. Panicked customers, sure that their banks no longer had enough cash, began a run on Manhattan banks, that panic soon spread to banks and financial institutions across the East River. Four out of the five banks that closed in Brooklyn were those run by, or in bed with, the Jenkins family. And that was only the tip of the iceberg.

The Borough Bank of Brooklyn had begun in a room at the Leonard Moody Real Estate Company, in the Phenix Insurance Building at 20 Court Street. That building, like the bank, is now long gone. Leonard Moody was one of the founders of the bank, and was a good friend of its president, William Maxwell.

In 1903, when the bank got too big for its room in the Moody office, Moody moved out of the offices he had held since the building was completed nineteen years before, leaving the entire floor to Maxwell’s bank, which was also growing, and would have two other branches by 1907.

Moody told the papers he needed new offices anyway, but this sort of power illustrates the persuasive personality William Maxwell had. As president of the Borough Bank and the International Trust Company, he was king of his world, and loved the money and power being president of a bank offered.

When John G. Jenkins, Sr., the venerable head of Williamsburg’s First National Bank came to him and told him he wanted to do business. Maxwell was flattered and pleased. He was now a player.

Opening your own bank or trust was not that hard in the late 19th, early 20th century. Wealthy real estate men, stock brokers, lawyers and other prominent professionals and business owners chartered dozens of banks in Brooklyn, in every neighborhood.

You just needed a solid nest egg of pooled money, a board of directors, an office, and then some clients. Just about every prominent man in Brooklyn was asked to be on at least one bank board, and most were stockholders in some kind of bank or trust.

The better financed and better run institutions endured and weathered the financial storms, some still with us today, and the lesser ones failed, or were quietly acquired by the more successful ones. The actual running of the bank was left to professional bankers, and even there, a small bank only needed officers, a cashier who could also be the teller, and a good bookkeeper.

You didn’t need a big fancy building with a row of tellers, most of the banking in these small banks and trusts could be done with an office, in a one on one relationship with the cashier, who was more like a manager, or, depending on how important the customer was, with a bank officer.

So when a big fish like John G. Jenkins, Sr., of the much older, larger, and wealthier First National Bank of Brooklyn came to your little bank to do some deals, people like Borough Bank of Brooklyn president William Maxwell took care of him personally.

In looking at all of the facts that came out of this case, one has to wonder if Jenkins knew more about the inner workings of Borough Bank than Maxwell told him. Perhaps they were really friends, and over a few drinks Maxwell told the older man what his bank was up to.

Perhaps he asked for advice from a mentor, someone who had been in banking since the age of seventeen. We’ll never know. But what becomes quite apparent is that the Borough Bank was a mess, even before the Panic of 1907. That was why it fell.

The bank’s president was William Maxwell, but it had been founded by a group of investors, including a man named Herman Metz, who was president of the small Guardian Savings Bank, and another man named William Gow.

By 1907, the Borough Bank of Brooklyn was a part of Gow’s International Trust Company, and he was Borough Bank’s largest stockholder. There were other stockholders and board members, but these men are the focus of our story, as is the bank’s cashier, a man named Arthur D. Campbell.

When the Panic of 1907 came down hard on the stock market and the world of banking, in the fall of ‘07, the Borough Bank of Brooklyn, as well as all three of the Jenkins banks was hit hard. First some of the Manhattan banks began to fail.

Over on Wall Street, financier J. P. Morgan and a group of wealthy investors were scrambling to get their hands on piles of money in order to shore up their banks, and prevent a total collapse of the financial system. They eventually succeeded, preventing total disaster, and ending the Panic, but for the Brooklyn institutions, the damage was done.

Interviews with the four members of the Jenkins family, William Maxwell, William Gow, Herman Metz, and other Brooklyn banking officials were upbeat, as all assured customers and the general public that their institutions had the cash to pay creditors and depositors alike.

All four banks closed in the face of the panic, but opened again in a few days. But behind the scenes, it was a three-card monte game of move the money. As banking officials sought to find out why these banks were so vulnerable, vast sums were moved from accounts in the Borough Bank to the Jenkins bank, and vice versa.

There were literally bags of gold and money being moved around. State banking officials were not stupid, however. They were looking at the books, and the books were not adding up.

The Panic of 1907 had many repercussions, the best of which was the creation of the Federal Reserve System, but it also ripped the curtain away from some of the shady dealings many banks had enjoyed for years.

Not all of Brooklyn’s many banks suffered during the Panic, not all of the banks had runs on them. But the Jenkins banks and the Borough Bank were particularly vulnerable. Why? What were they up to? They had no connections to the Manhattan shenanigans of the United Copper scandal which had been a major catalyst of the crash.

Officials from the State Banking Department swooped in and began looking at the books from all of the institutions involved, at one time. There was no time or opportunity to move the cash around. When they were finished, indictments came down like a hammer. This was November, 1907.

The first to do the perp walk, to the shock and delight of the press, was Howard Maxwell. Investigators found that the Borough Bank of Brooklyn was riddled like Swiss cheese with impropriety.

William Gow, John Jenkins, Sr. and William Maxwell himself, were among a sizable group of men who had taken out large personal loans at the bank and had never paid them back. Gow owed the bank $118,000, and had no collateral.

Another director of the bank, George Sheldon, had a loan out for $33,650, which amounted to ten percent of the bank’s capital. Investigators found much of the bank’s resources had been greatly exaggerated, and was only worth a fraction of what they said it was.

Even the furniture had been overvalued; listed at $22,000, but only worth $7K. As president of the bank, Maxwell was responsible.

Arrest warrants were issued for Maxwell, Gow, and bank cashier, Arthur Campbell. William Maxwell was arrested at his home at 182 Congress Street, and taken, along with the other two, to the infamous Raymond Street Jail, Brooklyn’s main jail, once located next to Brooklyn Hospital.

Raymond Street was so bad, that when it was finally torn down, the name of the street was changed to Ashland Place, to help people forget about the horrors of that institution.

It was not the kind of jail people like rich bankers, with thoroughbred horses and yachts in the harbor would ever think to find themselves. But there they were.

It’s amazing to see who your friends are when scandal and shame descend upon you. Gow and Campbell made bail, but William Maxwell had no cash. As the investigators honed in on his banking improprieties, he had poured all of his personal money back into the bank to shore it up.

He was broke. His distraught wife had collapsed at his arrest and was under sedation and a doctor’s care. When Maxwell reached out to his friends in the financial and banking community for the $30,000 bail, he was dead to them.

He had been indicted for three counts of felony, with a bail of $10,000 for each charge. No one came to his aid, no one even answered his calls, and he spent two days and nights in the Raymond County Jail.

He even had to borrow $3.00 from another inmate, William Gow, in fact, to buy dinner for himself. During his court appearances, he seemed in a trance, disheveled, despondent, and beaten, a man facing the enormity of the trouble he was in. William Maxwell was a broken man.

He finally made bail, on the third day, and came home a different man. His family and servants told the press that when he got home, he seemed energized, and eager to fight. He called an old friend and arranged to borrow $2,000; he called his lawyer, and told his family he was going to take a bath.

The servants and his wife heard the water running in the tub. A few minutes later, they heard a thud, and the servant ran upstairs to see what had happened. She opened the bathroom door, and saw William Maxwell’s clothed body, bleeding on the floor. There was blood everywhere.

He had taken a penknife and slit one wrist, and then his throat. They tried to stop the bleeding, the doctor was called, and Maxwell was taken to nearby Long Island Hospital where he died. He had cut his wrist to the bone, and then slashed his throat. William Maxwell’s earthy problems and shame were over.

Not so for the Jenkins family, who had not come to his aid, or answered his calls. Maybe that was because they had problems of their own.

On the day William Maxwell’s suicide hit the front pages of papers across New York City, as well as other major cities across the state, John Jenkins, Junior, and his brothers Frederick and Frank were all arrested and arraigned on counts of forgery and felony.

They were doing their own perp walk, sharing the headlines with the Maxwell suicide. Their actions, and the actions of their banks and associates, were just coming to light.

Next time: the story continues.
(1907 Postcard: Court Street, Temple Bar Building and other Court Street buildings)