Column #27 - April 25, 1999
BANK FAILURES
PLAGUED BROWNSVILLE IN THE EARLY DEPRESSION YEARS
by Glenn Tunney
Banks. Can't live with them, can't live
without them. Will the Y2K problem crash your bank's computers? What if you
cannot get your money from the bank when you want it? Banks reassure us that any
Y2K glitches will be quickly worked out and our assets are safe.
Seventy years ago in 1930, similar
reassurances were heard. But there was a nervousness about banks. The October
29, 1929 stock market crash had christened a new decade, the most dismal of the
century. Businesses failed, jobs were lost, repayment of debts became pipe
dreams. Banks unable to collect outstanding debts began running short on funds
themselves. Bank deposits were not insured, and rumors of "trouble at the
bank" could easily spark a run on the bank.
In 1991, I spent an afternoon talking
about local history with the late Donald Edwards at his Catherine Avenue home in
Brownsville. He was nearly ninety at the time, a retired postal official and
very knowledgeable about local history. We spoke of 1930, when Brownsville had
at least five banks. We were discussing the Monongahela National Bank, once
located in the Neck on Market Street opposite the Snowdon Building.
"Did you have any money in that
bank?" I asked.
"No. I was with Sam Taylor in
the old National Deposit Bank. People were making a run on the bank."
"Which one?"
"All of them. You had the
Monongahela Bank and the Brownsville Trust Company. It was in the middle of
town, about where Sidler's used to be. There was the Second National Bank, up
there across from the Flatiron Building.
"I didn't realize there were
that many banks in Brownsville."
"Oh, yes. Jubelirer had one too.
I think he was in the Flatiron Building. They all (except National Deposit)
failed. People were taking their money out. Sam Taylor owned the National
Deposit Bank. He had to put up security to take deposits, and he was putting it
up, he was secure. People would take money out of the Monongahela Bank and
they'd bring it to the South Brownsville Post Office (where Edwards worked) or
they'd take it to the Brownsville Post Office and put it in "Postal
Savings." Postal savings paid 2% simple interest. Would you believe that we
had between us, after consolidation of the two post offices in 1936, over a
million dollars in postal savings!"
"Where did you keep it?"
"Where did we keep it? We took
it back to the National Deposit Bank! Because
that was a secure bank."
"So you not only ran a post office,
you ran a bank."
"Oh, absolutely. I remember one
man who stood out in the post office lobby for quite a while and watched these
people depositing money. Then he came up to me and said quietly, 'You put money
in this place?" I said yes. He pulled out his money. It smelled musty. He'd
had it buried someplace."
In January 1930, all of the
aforementioned banks were operating. The first sign of trouble came in the early
summer.
Jubelirer Brothers operated a private
bank established in 1901 by Oscar Jubelirer. Originally located in the Flatiron
building, the firm was in the Monongahela National Bank building in 1930. It
specialized in general and foreign banking, selling steamship tickets for all
principal lines and even selling insurance. N. Norvin Karpen, who could speak
and write foreign languages, was bank manager.
In early summer of 1930, financial troubles forced the Jubelirer Bank to
close. Prior to the closing, Oscar Jubelirer violated several banking
regulations. He entered guilty pleas to the charges. Because Jubelirer aided
state banking officials in clearing up the bank's business, the prosecution
recommended and Jubelirer received a suspended sentence.
Depositors and creditors waited over a
year to receive any of their money. In early September, 1931, they received a
"dividend" of 41% of their money back. It is unclear if they ever
received any more. The closing of the Jubelirer bank was an omen for Brownsville
that was ignored.
Next to fail two months later was the
Brownsville Trust Company. Located
in the former J. D. Armstrong building in the Neck, it opened for business in
1921. In July 1929, Brownsville Trust boasted in newspaper advertisements that
it had total resources of nearly a million dollars.
On Tuesday morning, August 19, 1930, the
board of directors announced that "for the best interests of all
depositors," Brownsville Trust Company was turning its affairs over to the
state banking department. The
closing, voluntary on the part of bank officials, was necessitated by a
"slow run" of the previous several days, based upon "unfounded
rumors of the institution's condition."
Five days later, depositors of the
institution were requested to present their passbooks at the bank beginning
Monday, August 25, so that an audit of the bank's records could begin. An
inventory and appraisal of the bank was filed on December 31, 1930. By state
law, nearly five months had to pass from that date until the first
"dividend" could be paid to depositors. When it came, ten months after
the bank closed, it amounted to 35% of the amount depositors had in the bank.
The failure of Brownsville Trust
Company on August 18 may have spurred the next strategic move by two of
Brownsville's remaining banks. On August 25, a merger of two of Brownsville's
oldest banks was announced with great fanfare. A Brownsville Telegraph headline
proclaimed, Monongahela and Second National Banks Merge." Below, in smaller
bold type, the paper stated "Action Puts Boroughs in Enviable Position In
State. $7,000,000 Bank Seen in Consolidation Today."
The Second National Bank was
originally organized as the First National Bank of Brownsville in 1863. Due to a
peculiarity in the banking laws, its charter ran slightly less than twenty years
and could not be renewed. A few months before the charter was to expire, the
bank voluntarily liquidated and was reorganized in 1882 as the Second National
Bank of Brownsville. Its home was in the still standing Second National Bank
building across Market Street from the Flatiron Building.
That is where it was headquartered until the dramatic announcement that
it had merged with Brownsville's oldest bank, the Monongahela National Bank.
The announcement proclaimed that as
of 9 a.m. on August 25, all business of the Second National Bank would be
conducted at the Monongahela National Bank building. Second National depositors
were assured that their passbooks and checkbooks could still be used. The
Telegraph characterized the merger as one "linking two of the oldest and
strongest banking institutions in Fayette County, assuring for the Brownsvilles
a new banking house that ranks as one of the strongest in this section of the
state."
The new institution used the name
"Monongahela National Bank." Merger negotiations had been underway for
several months. As the Jubelirer Brothers and Brownsville Trust Company were
sinking, Earl Huston, president of Second National and Charles L. Snowdon,
president of Monongahela National, were negotiating to strengthen their defenses
against a similar fate.
But the inevitable happened anyway.
Eight months later, on April 7, 1931, the Brownsville Telegraph printed a front
page editorial labeling the previous day as "Blue Monday" in
Brownsville. The town had been struck within twenty four hours by two stunning
body blows. Each drew crowds to stand on the sidewalk and stare helplessly at
familiar buildings they could no longer enter. One of those buildings was a
bank. A bank no one thought would fail.
Next week, the story of the collapse
of Brownsville's oldest bank, an event which unbelievably took a back seat on
the front page to another disaster that struck the reeling town on the very same
day.
Readers may telephone me at 724-785-3201, e-mail me at [email protected]
or write me at 6068 National Pike East, Grindstone, PA 15442.