It seems you can’t read the news without finding out about another banking scandal. From the savings and loan debacles of the 1980s and ‘90s, to Enron, to the Ponzi schemes behind mortgage backed securities, and Bernie Madoff, just to name a few, it seems that the lure of big money just sitting there is too much for some people to resist.
And it has always been thus. As long as there have been banks, there have been people within banking trying to figure out how to illegally profit from their proximity and access to so much money. Greed, of course, is the motivating factor for many, but pride has to be just as strong a vice.
Behind all the stealing and scheming is an overwhelming pride that says, “I’m smarter than everyone else, and I can get away with this because no one else is smart or clever enough to figure out what I’m doing, and no one will ever catch me.” Unfortunately for them, that same pride is usually what brings them down.
Our story is about that same pride and greed that built, and then destroyed, a family financial empire here in Brooklyn. It took place in the last years of the 19th century and continued well into the 20th.
Our story has all the requisites of a top rate scandal; the mastermind and his cronies, the crime, the arrests, the trials, and the collateral damage, which includes suicide, madness, and the loss of savings for countless innocent investors.
As we go about our business in Brooklyn, we unknowingly pass by the homes and institutions that were created by the family, at the time, a source of pride; later, architectural monuments to hubris and defeat. This is the story of the Jenkins family banking business.
John G. Jenkins, Senior, was the patriarch of the family. He was born in Brooklyn in 1838, and in 1855, at the age of seventeen, began working for the Williamsburg City Bank, where he would work for the next 36 years.
The bank was only three years old, and both man and institution would grow up together. During that time, he married, and as his family grew, so too did his position at the bank.
He worked his way up from clerk to cashier, which was a prime management position, on the fast track up. By 1883, he was president of the bank, which had changed its name to First National Bank of Brooklyn. By 1891, an interviewer at the Eagle noted that he held the record for the “eldest bank official holding the position of president in the country today, although he is only 53 years old.”
The Jenkins family was a large one, with five sons and four daughters. At least three of the sons worked with their father in the banking industry; John G. Jr., Frank, and Frederick.
By the 1890s, the family lived at 830 Lafayette Avenue, in a large mansion on the corner of Sumner Avenue, now Marcus Garvey Avenue, in Bedford. That house is no longer standing. John G, Sr., like many bankers, had his fingers in a lot of pots, as money always calls to money.
He was a Director of the Brooklyn Rapid Transit Company, an officer of the New York and Brooklyn Ferry Company, and a large stockholder in the Broadway, Grand Street and Crosstown trolley lines. He also dabbled in real estate, and was the owner of at least one Williamsburg theater.
In 1899, John G. Jenkins had reached the top of the banking empire: he organized his own bank, the Williamsburg Trust Company, and held the position of president. The Trust started in the basement of the First National Bank, on the corner of Kent Avenue and Broadway, which just happened to be the bank Jenkins was already president of.
It stayed there, gradually taking up more room, until its new building was completed in 1906, a beautiful Classical temple of money located on the Williamsburg Bridge Plaza. The Trust joined the many other financial institutions in the Broadway/Bridge area, creating a financial center in Brooklyn second only to Downtown, in size and wealth.
Jenkins’ three sons founded the Jenkins Trust Company in 1905. It soon grew in strength and assets, strong enough to establish six branches. The main office was at in an impressive building on the corner of Gates and Nostrand Avenue.
It, like the Williamsburg Trust building, was designed by Frank J. Helmle, and was a massive tower to money and power, with the banking offices on the first floors, and storage facilities above. The building had a tall tower that made it the tallest building in Bedford, and could be seen for miles around. It still stands, minus the tower.
Everything was going well for the Jenkins family. John G. Jr. took over the leadership of the Williamsburg Trust, leaving his father to still run the First National Bank of Brooklyn. Junior and his two brothers, Fred and Frank ran the Jenkins Trust.
In February of 1906, a group of prominent bankers met to celebrate the successful career of their colleague, John G. Jenkins, Senior. Present were the Jenkins sons, high ranking officers in all of the Jenkins banking concerns, officers and high ranking bankers of other Brooklyn banks, and friends in high places. Jenkins was honored for his success, as well as lauded for his generosity, his donations to charity and his church, and for being an all-around good guy.
One of the men present was William Maxwell, the president of the Borough Bank of Brooklyn. He and the Jenkins’ had a close relationship, both personally and professionally. Assets were traded, and loans were made between the institutions with frequency, as was pretty common practice then.
Maxwell was a familiar face in Brooklyn banking, as well as in society. Both he and John Jenkins, Sr. had homes out on Long Island, and Maxwell was a well-known lover of good horses and fast yachts.
The party for John Jenkins would be the last party for anyone in banking for a few years. Unbeknownst to most of them, financial disaster was on the horizon, a Panic that would take down banks, and expose the dirty linen of the Jenkins family to the world.
The Panic of 1907 was triggered by an event far away from Brooklyn or Wall Street. The United States did not have a central bank in those days, so the money supply of New York City fluctuated with seasonal spending, and was influenced by national and international events.
Several events occurred prior to the Panic that led up to the crash. One of those was the San Francisco earthquake of 1906, which nearly destroyed that city. Millions of dollars left New York banks to aid in the rebuilding of the city.
On top of that, the stock market was not doing well, with stock prices falling steadily due, in part, to the passage of the Hepburn Act in 1906, which allowed the Interstate Commerce Commission to set railroad rates. This caused the stock in Union Pacific and other large railroads to fall.
Union Pacific stock was one of the most profitable and stable stocks in the market, and had been used as collateral for other sales, when its price fell, it triggered repercussions on other markets. In a perfect storm of financial mishaps, the copper market also collapsed, and Standard Oil, the largest oil concern in the country, was fined $29 million for Anti-trust violations.
Stocks took a steep tumble, so that by 1907, the market was ripe for total meltdown. It took copper to do the trick.
F. Augustus Heinze was the head of United Copper. As the market began to fall, he and his brother Otto, and a Wall St. banker named Charles Morse cooked up an elaborate scheme to corner the copper market.
Augustus Heinze and Morse also owned, or sat on the boards of six national banks, ten state banks, five trust companies and four insurance companies. Otto tried to corner the copper market by selling United Copper short.
To condense a long story, he failed, but the loss of the stock’s value undermined some of the banks involved, and the massive payback needed when the scheme failed took down the largest of the banks and trusts controlled by Heinze and Morse. These banks now had limited funds, and everyone knew it, and the panic began.
Banks, trusts and insurance companies began to fall, first in Manhattan, and then in Brooklyn. Depositors began withdrawing their money from the banks, and a run on banks began. Without any central banking entity to lend money to shore up the failing institutions, banks began trying to borrow from each other, and one by one, the weaker ones, the ones more involved with the machinations of Morse, Heinze and others, and the operations that were highly leveraged, with not much cash, began to close.
In Brooklyn, that meant First National Bank of Brooklyn, Williamsburg Trust Company of Brooklyn, Borough Bank of Brooklyn, and Jenkins Trust Company of Brooklyn. Uh oh.
Next time: Why did all of the Jenkins family’s banks fail? As well as the bank run by their friend, William Maxwell? What were they doing with their money? Where was the money? That’s what the law, the courts and the depositors wanted to know, and we’ll find out next time as we continue the story of the Jenkins family and their financial empire.
(1908 Postcard of the Jenkins Trust and Warehouse, on corner of Gates and Nostrand Avenues, Bedford Stuyvesant)