Skip to main content
×
Home

Trust Company Failures and Institutional Change in New York, 1875–1925

  • BRADLEY A. HANSEN (a1)
Abstract

In the late nineteenth and early twentieth centuries, New York State trust companies were successful, grew quickly, and failed rarely. The few failures, however, played a leading role in shaping the rules that governed trust companies. Because trust company failures were consistently interpreted as isolated departures from the norm of conservative management, trust companies were able to continue to participate in the rule-making process. The institutions that evolved promoted financial stability by imposing the costs of failure on decision makers and discouraging risky behavior. These failures shed new light on the treatment of failure and the development of corporate governance and financial regulation in the United States

Copyright
References
Hide All
Balleisen Edward. Navigating Failure: Bankruptcy and Commercial Society in Antebellum America. Chapel Hill: University of North Carolina Press, 2001.
Barnett George E. State Banks and Trust Companies Since the Passage of the National-Bank Act. Washington, DC: US Government Printing Office, 1911.
Berle Adolf A., and Means Gardiner C.. The Modern Corporation and Private Property. New York: Macmillan, 1932.
Brewer H. Peers. The Emergence of the Trust Company in New York City, 1870–1900. New York: Garland, 1986.
Bruner Robert F., and Carr Sean. The Panic of 1907: Lessons Learned from the Market’s Perfect Storm. Hoboken, NJ: Wiley, 2007.
Chernow Ron. The House of Morgan: An American Banking Dynasty and the Rise of Modern Finance. New York: Simon and Schuster, 1990.
Calomiris Charles W., and Haber Stephen H.. Fragile by Design: The Political Origins of Banking Crises and Scarce Credit. Princeton, NJ: Princeton University Press, 2014.
Coleman Peter J. Debtors and Creditors in America: Insolvency, Imprisonment for Debt, and Bankruptcy, 1607–1900. Madison: State Historical Society of Wisconsin, 1974.
Haeger John D. The Investment Frontier: New York Businessmen and the Economic Development of the Old Northwest. Albany: State University of New York Press, 1981.
Hansen Bradley A. Institutions, Entrepreneurs, and American Economic History: How the Farmers’ Loan and Trust Company Shaped the Laws of Business, 1822–1929. New York: Palgrave Macmillan, 2009.
Herrick Clay. Trust Companies: Their Organization, Growth and Management. New York: Bankers Publishing Company, 1909.
Higgs Robert. Crisis and Leviathan: Critical Episodes in the Growth of American Government. New York: Oxford University Press, 1987.
Markham Jerry W. A Financial History of the United States, vol. II. Armonk, NY: M. E. Sharpe, 2002.
Mc Culley Richard T. Banks and Politics during the Progressive Era: The Origins of the Federal Reserve System, 1897–1913. New York: Garland, 1992.
Murphy Sharon Ann. Investing in Life: Insurance in Antebellum America. Baltimore, MD: Johns Hopkins University Press, 2010.
Perine Edward T. B. The Story of the Trust Companies. New York: GP Putnam’s Sons, 1916.
Sandage Scott A. Born Losers: A History of Failure in America. Cambridge, MA: Harvard University, 2005.
Scranton Philip, and Fridenson Patrick. Reimagining Business History. Baltimore, MD: Johns Hopkins University Press, 2013.
Skeel David. Debt’s Dominion: A History of Bankruptcy Law in America. Princeton, NJ: Princeton University Press, 2001.
Sprague O. M. W. History of Crises Under the National Banking System. Washington, DC: Government Printing Office, 1910.
Strouse Jean. Morgan: American Financier. New York: Random House, 1999.
White G. T. A History of the Massachusetts Hospital Life Insurance Company. Cambridge, MA: Harvard University Press, 1955.
Wicker Elmus. Banking Panics of the Gilded Age. Cambridge: Cambridge University Press, 2000.
Birkland Thomas A. “Focusing Events, Mobilization, and Agenda Setting.” Journal of Public Policy 18, no. 1 (1998): 5374.
Bodenhorn Howard. Double Liability at Early American Banks. NBER Working Paper No. 21494. Cambridge, MA: National Bureau of Economic Research, 2015.
Fridenson Patrick. “Business Failure and the Agenda of Business History.” Enterprise and Society 5, no. 4 (December 2004): 562582.
Frydman Carola, Hilt Eric, and Zhou Lily Y.. “Economic Effects of Runs on Early ‘Shadow Banks’: Trust Companies and the Impact of the Panic of 1907.” Journal of Political Economy 123, no. 4 (2015): 902940.
Goodman Paul. “The Emergence of Homestead Exemption in the United States: Accommodation and Resistance to the Market Revolution, 1840–1880.” Journal of American History 80, no. 2 (1993): 470498.
Grossman Richard S. “The Macroeconomic Consequences of Bank Failures under the National Banking System.” Explorations in Economic History 30, no. 3 (1993): 294320.
Grossman Richard S. “Fear and Greed: The Evolution of Double Liability in American Banking, 1865–1930.” Explorations in Economic History 44, no. 1 (2007): 5980.
Hansen Bradley A. “Commercial Associations and the Creation of a National Economy: The Demand for Federal Bankruptcy Law.” Business History Review 72 (Spring 1998): 86113.
Hansen Bradley A. “The People’s Welfare and the Origins of Corporate Reorganization: The Wabash Receivership Reconsidered.” Business History Review 74, (Autumn 2000): 377405.
Hansen Bradley A. “A Failure of Regulation? Reinterpreting the Panic of 1907.” Business History Review 88, (Autumn 2014): 545569.
Hansen Bradley A., and Hansen Mary Eschelbach. “The Role of Path Dependence in the Development of US Bankruptcy law, 1880–1938.” Journal of Institutional Economics 3, no. 2 (2007): 203225.
Hansen Mary Eschelbach. “Sources of Credit and the Extent of the Credit Market: A View from Bankruptcy Records, Mississippi, 1929–1936.” In Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, edited by Collins William J. and Margo Robert A., 179212. Chicago: University of Chicago Press, 2014.
Hansen Mary Eschelbach, and Hansen Bradley A.. “Religion, Social Capital and Business Bankruptcy in the United States, 1921–1932.” Business History 50, (November 2008): 714727.
Hickson Charles R., and Turner John D.. “Shareholder Liability Regimes in Nineteenth-Century English Banking: The Impact upon the Market for Shares.” European Review of Economic History 7, no. 1 (2003): 99125.
Hickson Charles R., and Turner John D.. “The Trading of Unlimited Liability Bank Shares in Nineteenth-Century Ireland: The Bagehot Hypothesis.” Journal of Economic History 63, no. 4 (2003): 931958.
Hilt Eric. Wall Street’s First Corporate Governance Crisis: The Panic of 1826. NBER Working Paper No. 14892. Cambridge, MA: National Bureau of Economic Research, 2009.
Hilt Eric. “History of American Corporate Governance: Law, Institutions, and Politics.” Annual Review Financial Economics 6, no. 1 (2014): 121.
Hudson Peter James. “The National City Bank of New York and Haiti, 1909–1922.” Radical History Review, no. 115 (2013): 91114.
Jacobson Margaret M., and Tallman Ellis W.. “Liquidity Provision during the Crisis of 1914: Private and Public Sources.” Journal of Financial Stability 17, (2015): 2234.
King Robert G., and Levine Ross. “Finance and Growth: Schumpeter Might be Right.” Quarterly Journal of Economics 1993: 717737.
Kupiec Paul H., and Ramirez Carlos D.. “Bank Failures and the Cost of Systemic Risk: Evidence from 1900 to 1930.” Journal of Financial Intermediation 22, no. 3 (2013): 285307.
Lamoreaux Naomi R. “Revisiting American Exceptionalism: Democracy and the Regulation of Corporate Governance.” In Enterprising America: Businesses, Banks, and Credit Markets in Historical Perspective, special issue, edited by Collins J. and Margo R. A., 324 (2015): 2571.
Lamoreaux Naomi R. “Scylla or Charybdis? Historical Reflections on Two Basic Problems of Corporate Governance.” Business History Review 83, no. 1 (2009): 934.
Lamoreaux Naomi R, and Rosenthal Jean-Laurent. “Corporate Governance and the Plight of Minority Shareholders in the United States before the Great Depression.” In Corruption and Reform: Lessons from America’s Economic History , edited by Glaeser Edward and Goldin Claudia, 125152. Chicago: University of Chicago Press, 2006.
Lamoreaux Naomi R, and Wallis John Joseph. States, Not Nation: The Sources of Political and Economic Development in the Early United States. American Capitalism Working Paper No. 1. Baltimore, MD: Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise, 2015.
La Porta Rafael, Lopez-de-Silanes Florencio, Shleifer Andrei, and Vishny Robert W.. “Law and Finance.” Journal of Political Economy 106, no. 6 (1998): 11131154.
La Porta Rafael, Lopez-de-Silanes Florencio, and Shleifer Andrei. “The Economic Consequences of Legal Origins.” Journal of Economic Literature 46, no. 2 (2008): 285332.
Levitt Albert. “The Trust Powers of National Banks.” University of Pennsylvania Law Review 77, no. 7 (May 1929): 835861.
Moen Jon R., and Tallman Ellis W.. “The Bank Panic of 1907: The Role of the Trust Companies.” Journal of Economic History 52 (September 1992): 611630.
Moen Jon R., and Tallman Ellis W.. “Clearinghouse Membership and Deposit Contraction during the Panic of 1907.” Journal of Economic History 60, (March 2000): 145163.
Musacchio Aldo, and Turner John D.. “Does the Law and Finance Hypothesis Pass the Test of History?” Business History 55, no. 4 (2013): 524542.
Neal Larry. “Trust Companies and Financial Innovation, 1897–1914.” Business History Review 45, no. 1 (1971): 3551.
Ollerenshaw Philip. “Innovation and Corporate Failure: Cyril Lord in U.K. Textiles, 1945–1968.” Enterprise and Society 7, no. 4 (December 2006): 777811.
O’Sullivan Mary. “A Fine Failure: Relationship Lending, Moses Taylor, and the Joliet Iron & Steel Company, 1869–1888.” Business History Review 88, no. 4 (2014): 647679.
Ramirez Carlos D., and Shively Philip A.. “The Effect of Bank Failures on Economic Activity: Evidence from US States in the Early 20th Century.” Journal of Money, Credit and Banking 44, no. 2–3 (2012): 433455.
Rhoads C. Brewster. “Personal Liability of Directors for Corporate Mismanagement.” University of Pennsylvania Law Review and American Law Register 65, no. 2 (December 1916): 128144.
Richardson Gary, and Van Horn Patrick. “Intensified Regulatory Scrutiny and Bank Distress in New York City during the Great Depression.” Journal of Economic History 69, no. 2 (2009): 446465.
Sammis L. Walter. “The Relation of Trust Companies to Industrial Combinations, as Illustrated by the United States Shipbuilding Company.” ANNALS of the American Academy of Political and Social Science 24, (1904): 241270.
Temin Peter. “Government Actions in Times of Crisis: Lessons from the History of Drug Regulation.” Journal of Social History 18, no. 3 (1985): 433438.
Van Rooij Arjan. “Sisyphus in Business: Success, Failure and the Different Types of Failure.” Business History 57, no. 2 (2015): 203223.
Wheelock David C. “Regulation, Market Structure and the Bank Failures of the Great Depression.” Federal Reserve Bank of St. Louis Review 77, (1995): 2738.
White Eugene N. “To Establish a More Effective Supervision of Banking.” In The Origins, History, and Future of the Federal Reserve: A Return to Jekyll Island, edited by Bordo Michael and Roberds William, 754. Cambridge: Cambridge University Press, 2013.
Weible Christopher M., Sabatier Paul A., and McQueen Kelly. “Themes and Variations: Taking Stock of the Advocacy Coalition Framework.” Policy Studies Journal 37, no. 1 (2009): 121140.
Bankers’ Magazine
Commercial and Financial Chronicle
Fort Covington Sun
The Independent ,
The New York Evening World
The New York Times
The Sun (New York)
New York State, Annual Report of the Superintendent of Banks for the Year …. Albany, NY: J. B. Lyon Co., various years.
New York State, Annual Report of the Superintendent of Banks Relative to Savings Banks, Trust Companies, Safe Deposit Companies and Miscellaneous Corporations. Albany, NY: J. B. Lyon Co., various years.
New York (State), General Banking Law of the State of New York. Albany: J. B. Lyons, 1892.
New York (State), Report of the Special Commission on Banks. Albany, NY: J. B. Lyon Co., state printers, 1907.
New York (State), Supreme Court, Appellate Division-Third Department, Kavanaugh v. Satterlee and Gould, Case on Appeal, Vol. III, Plaintiff’s Exhibit No. 108, 2000. Saratoga Springs, NY: Saratogian Book and Job Print, 1910.
New York (State). Senate Document No. 41, March 9, 1883, Report of Sub-Committee Appointed to Investigate Receiverships. Documents of the Senate of the State of New York, One Hundred and Sixth Session, Vol. III. Albany, NY: Weed, Parsons and Company, 1883.
New York (State). Calhoun v. Commonwealth Trust Co. Court of Appeals of the State of New York, Case on Appeal, 1913.
New York (State). New York Court of Appeals: Records and Briefs 223 NY 103 Kavanaugh v. Gould, 1915.
National Archives Kansas City, Missouri
Pierpont Morgan Library Archives, New York, NY
Davids et al. v. Bauer 140 N.Y.S. 55 (1913).
Gregory v. Binghamton Trust Co. 154 N.Y.S. 376 (1915).
Hanna v. Lyon 179 N.Y. 107, 110 (1904).
Hun v. Cary 82 N.Y. 65 (1880).
Kavanaugh v. Commonwealth Trust Company, 64 Misc. 303 (1906).
People v. Merchant’s Trust Company, 116 N.Y. App. Div. 41 (1906).
Richards v. Schwab 101 Misc. 128 (N.Y. Misc. 1917).
Spering’s Appeal 71 Pa. 11 (1872).
Recommend this journal

Email your librarian or administrator to recommend adding this journal to your organisation's collection.

Enterprise & Society
  • ISSN: 1467-2227
  • EISSN: 1467-2235
  • URL: /core/journals/enterprise-and-society
Please enter your name
Please enter a valid email address
Who would you like to send this to? *
×

Metrics

Full text views

Total number of HTML views: 2
Total number of PDF views: 17 *
Loading metrics...

Abstract views

Total abstract views: 227 *
Loading metrics...

* Views captured on Cambridge Core between 7th August 2017 - 11th December 2017. This data will be updated every 24 hours.