Knickerbocker Trust Company
| Company type | Trust company |
|---|---|
| Industry | Banking and finance |
| Founded | 1884 |
| Founder | Frederick G. Eldridge |
| Defunct | 1912 |
| Fate | Merged with Columbia Trust Company to form Columbia-Knickerbocker Trust Company |
| Headquarters | New York City , United States |
Key people | Frederick G. Eldridge (founder and president, 1884–1889), John P. Townsend (president, 1889–1894), Robert Maclay (president, 1894–1897), Charles T. Barney (president, 1897–1907), A. Foster Higgins (president, 1907–1908), Charles H. Keep (president, 1908–1912) |
| Products | Banking services, trust services |
The Knickerbocker Trust was a major banking institution based in New York City, recognized as one of the largest financial entities in the United States and notably involved in the events leading to the Panic of 1907.
History
Established in 1884 under the leadership of Frederick G. Eldridge, a close confidant of financier J.P. Morgan, Knickerbocker Trust operated primarily as a trust company catering to individuals, businesses, and estates. Eldridge served as its inaugural president until his passing in 1889. He was succeeded by John P. Townsend, who held the position for five years before stepping down to assume leadership at the Bowery Savings Bank. Following Townsend’s departure, Robert Maclay was unanimously chosen as president, with Charles Tracy Barney appointed vice president. When Maclay retired in 1897, Barney took over as president and steered the institution through a pivotal era of expansion.
Panic of 1907
In 1907, under the presidency of Charles T. Barney, Knickerbocker Trust utilized its capital in an attempt to monopolize the copper market. However, this effort collapsed when substantial quantities of copper were released onto the market to thwart a hostile acquisition elsewhere. After Barney sought financial assistance from J.P. Morgan and was denied, the board requested his resignation due to his engagement in speculative ventures alongside F. Augustus Heinze and Charles W. Morse.
The cessation of check clearing by the National Bank of Commerce triggered a depositor panic that compelled Knickerbocker to halt its operations. Receivers George L. Rives, Henry C. Ide, and Ernst Thalmann were appointed to manage the fallout. The failure of Knickerbocker Trust was a catalyst for the Panic of 1907, exacerbating a stock market downturn during which the Dow Jones Industrial Average declined by 48% between January 1906 and November 1907. This financial turmoil ultimately led Congress to create the Federal Reserve System in 1913.
Following Barney’s suicide in November 1907, A. Foster Higgins from Greenwich, Connecticut became president. At age 77 and known for his candid remarks, Higgins made public statements that embarrassed the Rehabilitation Committee chaired by F.G. Bourne and William A. Tucker, which was responsible for stabilizing the trust. Despite these challenges, Knickerbocker resumed operations within weeks and successfully reimbursed all depositors with accrued interest.
In March 1908, leadership passed to Charles H. Keep, who had previously served as Assistant Secretary of the Treasury from 1903 to 1907 under Secretary L. M. Shaw during President Theodore Roosevelt’s tenure, as well as briefly holding the role of New York State Superintendent of Banks. Keep resigned from the New York Public Service Commission in 1908 to oversee Knickerbocker’s recovery process.
Mergers and acquisitions
In February 1903, Knickerbocker Trust expanded by acquiring Washington Bank, establishing a branch within the seven-story Smith Building located at 148th Street and Third Avenue in the Bronx Financial District. By November 1912, it purchased this Bronx branch building, which was regarded as the borough’s first skyscraper at that time.
The year 1912 saw Columbia Trust Company acquire Knickerbocker’s assets, resulting in the formation of the Columbia-Knickerbocker Trust Company. Among its leading shareholders was Hetty Green, with her son Ned Green serving on the board of directors. At the time of this merger, Columbia held deposits exceeding $21 million while Knickerbocker's deposits were approximately $38 million. Willard V. King, Columbia's president, assumed leadership of the combined entity, whereas Charles H. Keep became chairman. The merger aimed to facilitate Columbia’s entry into uptown markets where Knickerbocker already had an established presence; prior to this, Columbia operated without branches and had outgrown its headquarters at 135 Broadway.
By 1914, the institution reverted to the Columbia Trust Company name before merging with Irving Bank of New York (founded in 1851) in February 1923 to form Irving Bank-Columbia Trust Company. In September 1926, it was renamed Irving Bank and Trust Company and subsequently acquired American Exchange-Pacific Bank, adopting the name American Exchange Irving Trust Company. By 1929, it became known simply as Irving Trust Company.
On October 7, 1988, after enduring a yearlong hostile takeover attempt, Irving Trust consented to merge with Bank of New York. This union created what was then America’s twelfth-largest bank by assets totaling $42 billion. Earlier that year, Irving had pursued a friendly merger with Banca Commerciale Italiana but ultimately merged with Bank of New York following the takeover battle.
Knickerbocker Trust Building
The bank in New York City operated from a structure modeled after a Roman temple, crafted by the architectural firm McKim, Mead, and White and erected between 1902 and 1904 at the northwest intersection of 34th Street and Fifth Avenue. This edifice replaced the marble residence formerly owned by dry-goods tycoon A.T. Stewart. Conceived by Stanford White, the design permitted the addition of nine office floors atop the original building. The Trust also maintained branch locations at 60 Broadway, as well as in Harlem and The Bronx.
In 1921, an extension added ten more stories to the building, and in 1958, its façade underwent a complete transformation that concealed the initial pilasters; the original architectural style is no longer visible.
Presidents of Knickerbocker Trust
- 1884–1889: Frederick G. Eldridge
- 1889–1894: John P. Townsend
- 1894–1897: Robert Maclay
- 1897–1907: Charles T. Barney
- 1907–1908: A. Foster Higgins
- 1908–1912: Charles H. Keep