Genealogy of American Finance

Genealogy of American Finance

Robert E. Wright
Richard Sylla
Copyright Date: 2015
Pages: 336
https://www.jstor.org/stable/10.7312/wrig17026
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  • Book Info
    Genealogy of American Finance
    Book Description:

    In this unique, well-illustrated book, readers learn how fifty financial corporations came to dominate the U.S. banking system and their impact on the nation's political, social, and economic growth. A story that spans more than two centuries of war, crisis, and opportunity, this account reminds readers that American banking was never a fixed enterprise but has evolved in tandem with the country.

    More than 225 years have passed since Alexander Hamilton created one of the nation's first commercial banks. Over time, these institutions have changed hands, names, and locations, reflecting a wave of mergers, acquisitions, and other restructuring efforts that echo changes in American finance. Some names, such as Bank of America and Wells Fargo, will be familiar to readers. The origins of others, including Zions Bancorporation, founded by Brigham Young and owned by the Mormon Church until 1960, are surprising. Exploring why some banks failed and others thrived, this book wonders, in light of the 2008 financial crisis, whether recent consolidations have reached or even exceeded economically rational limits. A key text for navigating the complex terrain of American finance, this volume draws a fascinating family tree for projecting the financial future of a nation.

    eISBN: 978-0-231-53921-0
    Subjects: Business, Economics, Finance

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-vii)
    Charles M. Royce

    I was introduced to the leadership of the Museum of American Finance through my friend and television personality, Consuelo Mack, who serves on the Museum’s Board of Trustees. During the course of my initial conversation with President David Cowen, I brought up an idea I have had for years, which is to trace the genealogies—or family trees—of the major American financial firms. I have been working in finance for more than 50 years and have witnessed first-hand many dramatic changes in the industry. So many firms that existed when I first began investing are no longer around.

    Given...

  4. Overview of the Big 50
    (pp. viii-xi)
  5. Introduction: A Brief History of Banking in America
    (pp. 1-3)

    These words are part of a remarkable letter that Alexander Hamilton, future Secretary of the Treasury, wrote to Robert Morris, the nation’s foremost financial expert soon to be appointed Superintendent of Finance for the Continental Congress. The Revolutionary War was raging, and later that year Morris would create the first bank ever to exist on these shores, the Bank of North America, to assist in financing the war effort.

    Both of these gentlemen understood the power and value of finance; it was the horse to the economy’s cart. And within the financial system, the banks were central to the ability...

  6. Banks, Holding Companies and Corporate Genealogies: Necessary Technical Talk
    (pp. 4-8)

    In standard American usage, a “bank” is a depository institution, or a business run for the profit of its stockholders and/or customers, that accepts deposits and makes loans. Traditionally, depository institutions came in three main varieties: commercial (always joint-stock, i.e., owned by stockholders; lent to large businesses); community (typically joint-stock; lent to small businesses/consumers); and thrifts, including savings banks (traditionally mutual, i.e., owned by depositors; lent to businesses and homeowners), building and loans/savings and loans (typically mutual until the 1980s; lent to homeowners) and credit unions (invariably mutual; lent to small businesses, consumers and homeowners).

    Nondepository institutions also commonly referred...

  7. The Big 50

    • Ally Financial
      (pp. 10-15)

      If Ally Financial doesn’t sound familiar, think GMAC, as in General Motors Acceptance Corporation, which automobile manufacturer General Motors (GM) created in 1919 to finance the sale of its cars and trucks. Mass production techniques had driven down prices, but not enough for most Americans to purchase their new-fangled horseless carriages outright. At first, most banks were hesitant to get into the market, new as they were to consumer credit and new as the automobile industry then was. Many bankers saw automobiles as luxuries, not as a revolution in transportation, and worried that default rates would be unprofitably high. So...

    • American Express
      (pp. 16-23)

      American Express possesses a brand identity for integrity forged over its long, varied history. It was formed out of a meeting of the owners of several small express companies—businesses that quickly shipped mail and other goods—that took place in Buffalo in 1850. Established by experienced express men, including Henry Wells and William G. Fargo, American Express concentrated first and foremost on providing quality service (“courtesy,” as Wells put it) and strict punctuality. The company’s founders also realized that a large network was more valuable to their potential customers than a small one, so soon after their agglomeration into...

    • American International Group
      (pp. 24-27)

      The headlines on September 16, 2008, shocked most Americans. The US government had seized control of American International Group (AIG), one the world’s largest insurance companies. AIG became symbolic of the financial crisis—incredible amounts of risk-taking without proper controls, a staggering $182 billion government bailout and corporate bonuses that led to public outrage and protest. Yet under the leadership of Robert Benmosche, who took the helm in August 2009, the firm not only paid back the $182 billion but returned another $22 billion to the government as well. This story of one of the most remarkable turnarounds in American...

    • BancWest
      (pp. 28-35)

      BancWest Corporation is the US holding company of BNP Paribas, the French giant created by the 2000 merger of Paribas and Banque Nationale de Paris (BNP). Paribas began operations in 1872 as Banque de Paris et des Pays-Bas (Bank of Paris and the Netherlands). That bank was the result of the merger of two French investment banks, Banque de Crédit et de Dépôt des Pays-Bas, which was formed in 1863 at the impetus of the Bischoffsheimhaute banque(elite merchant bank specializing in financing international trade), and the Banque de Paris, which was founded in 1869 in opposition to the...

    • Bank of America
      (pp. 36-45)

      Today’s Bank of America (BoA) was formed when a North Carolina bank called NationsBank acquired the old Bank of America (B of A), a California bank, in 1998. NationsBank assumed the Bank of America name (and ticker symbol), presumably because it had more cachet. But the old Bank of America certainly has a more interesting history.

      When the founder of the Bank of America, Amadeo P. Giannini, died in 1949, employees in all 520 or so of B of A’s branches mourned while they continued to service customers. After all, Giannini’s son, Mario, had been running the bank day-to-day since...

    • Bank of New York Mellon
      (pp. 46-53)

      Not many banks can claim they were founded by Alexander Hamilton, America’s first Treasury Secretary, but The Bank of New York Mellon (BONY) is one of them. In 1784 the great financial statesman drafted the bank’s original articles of association and skillfully guided William Seton, its cashier, through the nation’s first financial panic in 1792. After finally receiving a charter from the state in 1791, BONY, which was originally capitalized at $900,000, thrived by discounting the commercial paper of Manhattan merchants and other businesses.

      While banks broke all around it in the 1810s through the 1930s, the BONY stood not...

    • BB&T
      (pp. 54-61)

      Justice, integrity and stewardship are so ingrained in the corporate culture of this BHC that longtime CEO John A. Allison said his mission, and that of his executive team, was to help clients, employees, communities and shareholders to achieve their goals and thus “make the world a better place to live.” His team believed they deserved to earn only in proportion to their ability to help others achieve their goals and not simply by virtue of running a large, complex organization.

      BB&T arose from the ashes of Old Dixie. The Civil War did more than destroy physical and human capital;...

    • BBVA Compass Bancshares
      (pp. 62-69)

      BBVA Compass is the holding company of Banco Bilbao Vizcaya Argentaria (BBVA), Spain’s second largest bank behind Santander (#32). It was formed from the mergers of Argentaria, Banco Bilbao, Banco de Vizcaya, Banco Exterior de España, Caja Postal de Ahorros and some minor entities in the late 1980s and 1990s, as part of a wave of mergers triggered by deregulation of the Spanish banking system. From that period emerged only the biggest and/or most profitable banks. Each new acquisition brought with it numerous problems and leadership clashes, but rapid growth was seen as essential to continued existence, so buying continued....

    • BMO Financial
      (pp. 70-75)

      BMO Financial is the American wing of Canada’s storied Bank of Montreal, the core of BMO Financial Group, now headquartered in Toronto. Nine Montreal merchants formed the Bank of Montreal in 1817 to supply Canadians with credit, but also cash (bank notes and deposits) that would not flee the country as readily as gold and silver coins. Initially capitalized at $1 million (£CA250,000) and staffed by seven employees, the bank was owned and operated not by French-speaking Quebecois but by Scots, who had quite the reputation for banking prowess back then.

      The bank, which received a royal charter in 1822,...

    • BOK Financial
      (pp. 76-79)

      While it may sound like a Southeast Asian bank, BOK is actually the BHC of the Bank of Oklahoma. The bank, which came into being in 1910 as the Exchange National Bank of Tulsa, was initially forged from the remnants of the failed Farmers National Bank. It thrived as the “leading oil bank” in the country, but one of its early investors and president, Harry F. Sinclair, was implicated in the Teapot Dome Scandal and served six months for jury tampering. During the Great Depression, the bank needed a cash infusion from several Tulsa oil magnates to stay afloat, but...

    • Capital One Financial
      (pp. 80-87)

      Capital One is a credit card issuer most famous for a series of television advertisements in which sundry barbarians behaving poorly ask, “What’s in your wallet?” In Capital One’s wallet were some tremendous assets: 50 million credit cardholders, mortgage services, auto and healthcare finance, some consumer banking and a short but solid history of innovation. In addition to its disconcertingly unique TV commercials, over the years Capital One’s diverse, hardworking, creative employees have identified and exploited many new market niches for plastic credit, including prepaid cards, subprime cards and cards for people with special interests and affiliations. Its stock price...

    • Charles Schwab
      (pp. 88-91)

      At the time of writing, inveterate entrepreneur Charles “Chuck” Schwab, the person (hereafter simply Schwab), owned 13% of Charles Schwab, the corporation, making this big BHC one of the few with a founder still playing an owner’s role. The firm’s origins date back to 1971, when it was called First Commander Corp. and Schwab shared ownership with a number of partners. In 1973, with those partners bought out, Schwab renamed the company Charles Schwab & Co., Inc. and at age 36 began to build the business on the belief that investors should make their own financial decisions on the basis...

    • CIT Group
      (pp. 92-97)

      Cit Group traces its roots to 1908. Initially chartered in St. Louis and the brainchild of 36-year-old merchant Henry Ittleson, Commercial Credit and Investment Company, immediately called CCI Co. for short, purchased business accounts receivable at a discount. CCI did not have a banking charter because it did not need one, as it did not accept deposits. Instead it loaned its own capital, as well as money it borrowed from investors and banks. Its first clients were companies like Providence Jewelry Company, Mound City Chair Company, Delmar Manufacturing, Shumate Razor, Big Muddy River Construction Coal Company and Monsanto Chemical Works....

    • Citigroup
      (pp. 98-103)

      Citi began life in Manhattan in 1812 as the City Bank of New York. Capitalized at $2 million with shares of $50 par value, the bank paid a $120,000 bonus into New York State’s common school fund in exchange for its charter. Its stock nevertheless traded above par by the end of its first year, in part no doubt because of the outbreak of the War of 1812 and the high yields on government bonds the war engendered. The bank’s stock price plummeted after the war, allowing merchant Charles Lawton to purchase a majority of the shares in 1825, which...

    • City National
      (pp. 104-107)

      City National has been called the “bank to the stars” because it was established by a small group of Beverly Hills entrepreneurs and initially catered to the entertainment and real estate industries. It was headquartered in Beverly Hills, a small but uber posh community, until 2009, when it relocated to Los Angeles (which entirely surrounds Beverly Hills). The bank also established branches in Manhattan and Nashville so it could cater to the stars of Broadway theatre and the Grand Ole Opry. Nevertheless, despite some high-profile customers like actor and entrepreneur Paul Newman, most of its business was middle market and...

    • Comerica
      (pp. 108-113)

      Comerica began its corporate existence in Michigan in 1849 as the Detroit Savings Fund Institute (DSFI), a mutual savings bank. Headed by Elon Farnsworth, who one contemporary described as “clear-headed, prudent, of sound judgment, inflexible in the discharge of his duties, straightforward and above reproach,” the DSFI was charged with restoring confidence in Michigan’s financial system, which had recently been racked by the failure of multiple banks.

      Managed by conservative trustees bent on providing interest-bearing savings accounts for the city’s poor, the institute grew slowly, escaping the clutches of the Panic of 1857 only through Farnsworth’s diligence. At the outbreak...

    • Deutsche Bank
      (pp. 114-117)

      Deutsche Bank AG, the top-tier holding company of the US-based BHC featured here, is one of the largest banks in the world. Deutsche, as it has been known in the English-speaking world, was formed in 1870, just before Germany unified for the first time. Initially headquartered in Berlin, it soon established branches in major port cities including Bremen, Hamburg and London. During the financial crisis of the mid-1870s, it bought up weaker institutions and established itself as one of Germany’s leading banks.

      Starting in the 1880s, it opened branches in Frankfurt, Munich, Dresden and Leipzig. As a universal bank, Deutsche...

    • Discover Financial
      (pp. 118-121)

      Discover began life as a subsidiary of the retail department store giant Sears, Roebuck and Company. From humble beginnings as a mail order catalog company in 1893, Sears grew quickly and soon expanded into lending and insurance. In 1911 it began sending goods to customers on credit. Sears Finance Corporation began lending money for home modernization in 1934. The following year, Sears launched a merchandise and services charge card that was honored at its growing network of stores. By 1956 installment and credit sales accounted for 41% of all sales.

      By the mid-1970s some three-quarters of credit sales were made...

    • E*Trade
      (pp. 122-125)

      E*Trade is probably most famous for its talking baby capitalist commercials, which debuted during Super Bowl XLII in 2008. That “baby” eventually accumulated 12,000 Facebook fans and 3,000 Twitter followers. E*Trade is itself young, but as the major success of its branding effort has shown, the online discount brokerage is far from immature. This is probably because it was the brainchild of World War II hero and Colorado rancher-turned-inventor Bill Porter.

      Porter developed the E*Trade software that a Silicon Valley firm named TradePlus Inc. launched in the early days of the World Wide Web. It entered the market aggressively by...

    • Fifth Third Bancorp
      (pp. 126-133)

      Fifth Third Bank has three major lineages: that of the Bank of the Ohio Valley, which formed in 1858 and was purchased by the Third National Bank of Cincinnati in 1871; that of the Fifth National Bank (née Queen City Bank) formed in 1888; and that of the Union Savings Bank and Trust formed in 1890. By 1927 the three were united under the name Fifth Third Union Trust, which changed its name to Fifth Third Bank in 1969. Although Third National was lauded in the 1870s as one of the nation’s best-managed banks (a recognition it received again in...

    • First Niagara
      (pp. 134-137)

      First Niagara began its corporate existence as Farmers and Mechanics’ Savings Bank, a mutual savings bank chartered in Lockport, New York, about 30 miles northeast of Buffalo, on May 11, 1870. Little is known of its early years because there are no publicly available copies of its published history,On the Eve of a New Half-Century Commemorating the Fiftieth Anniversary of an Institution:1870–1920 , although the bank clearly weathered the Great Depression despite suffering mortgage defaults in Brooklyn. Its president during those hard years, Charles H. Wendell, began with the bank as a bookkeeper in 1889. After that,...

    • General Electric Capital
      (pp. 138-141)

      General Electric Capital Corporation (GE Capital) is a subsidiary of the industrial conglomerate General Electric (GE), which formed from a merger of Edison General Electric and Thomson-Houston in 1892. GE soon became an industrial giant in a dizzying array of businesses in both the United States and abroad. GE formed the subsidiary as General Electric Credit Corporation (GE Credit) in 1932 and for decades operated it much like GM ran GMAC (now Ally Financial [#20]), except it helped customers to finance GE refrigerators instead of GM automobiles. Only later did the subsidiary expand into automobile financing, aircraft leasing, pet insurance,...

    • Goldman Sachs
      (pp. 142-147)

      Goldman Sachs traces its roots to 1869, when founder Marcus Goldman began arbitraging the promissory notes of leather merchants and jewelers along Maiden Lane in Manhattan. In 1884 Goldman asked his son-in-law, Sam Sachs, to join him in partnership, essentially jilting his own son Henry, who had been clerking since dropping out of Harvard, ostensibly owing to his poor eyesight. As M. Goldman & Sachs expanded, Henry took a job as a traveling salesman. He finally became a partner in the company, by then called Goldman Sachs & Co., in 1894.

      In its first half-century, all of the company’s partners...

    • HSBC North America
      (pp. 148-153)

      As its name suggests, this entity is the holding company for the US operations of a foreign bank, HSBC, headquartered in London. The bank began its existence in 1865 as a joint-stock corporation styled The Hongkong and Shanghai Banking Company (later, Corporation). Established by a broad spectrum of Hong Kong interests, including American and Indian trading houses as well as European and British firms, it offered from its inception a full range of banking products supported by the directors’ numerous business connections. Incorporated and headquartered in Hong Kong, it lent to businesses and also the Chinese government, at interest rates...

    • Hudson City Bancorp
      (pp. 154-157)

      Hudson City Bancorp began operations as a mutual savings bank in the city of Hudson, New Jersey, in 1868. The Hudson City Savings Bank, as it was styled, lasted longer than the town of Hudson, which in 1870 merged with Bergen and Jersey to form Jersey City. The bank grew along with northern New Jersey, offering 5% to its depositors. Assets exceeded $1 million by 1899, when its long-serving first (and third) president, Garret D. Van Reipen, retired. The bank sailed through the Panic of 1907 and by 1909 boasted assets of almost $2 million. The Great War also had...

    • Huntington Bancshares
      (pp. 158-163)

      If a major bank in Columbus, Ohio, sounds far-fetched, you must not know much about Columbus, which has long fostered a thriving financial community. Pelatiah Webster Huntington was named after early American political economist Pelatiah Webster (1726–1795). The son of a banker and born in Norwich, Connecticut, in 1836, Huntington moved to Columbus in 1853 after a stint on a whaler. He married and in 1866 joined his father-in-law, David W. Deshler, to form P. W. Huntington and Company, an unincorporated private banking house. After Deshler died, Huntington became the sole owner until 1892, when he began admitting his...

    • John Deere Capital
      (pp. 164-167)

      John Deere Capital Corporation is the spawn of John Deere Credit Company, which itself came from Deere & Company, the famous manufacturer of tractors and other agricultural equipment based in the quad city region of Illinois. The manufacturing component of the company began operations in 1837 as a sole proprietorship owned by blacksmith-turned-manufacturer John Deere, who invented a steel plow tough enough to cut clean furrows through virgin prairie. He built 10 plows in 1839, and 100 by 1842. The following year, he took Leonard Andrus into partnership. By 1849 the company’s 16 workers were manufacturing more than 2,100 plows...

    • JPMorgan Chase
      (pp. 168-179)

      Like many of the other companies at the top of the BHC asset list, JPMorgan Chase (JPMC) is a new institution forged from merger after merger over the last few decades. It is essentially three storied megabanks combined: investment bank-cum-commercial bank JP Morgan and commercial banks Chase Manhattan and Bank One.

      The oldest of the three lineages was Chase Manhattan, itself the result of the merger of Chase National and the Manhattan Company. The latter began life as a water utility with banking powers formed by Aaron Burr and many other prominent New York merchants, politicians and military heroes in...

    • KeyCorp
      (pp. 180-187)

      KeyCorp traces its lineage to the Commercial Bank of Albany, which received a commercial banking charter from the state of New York in April 1825, after the political minions of future US President Martin Van Buren rejected its initial charter application in 1824. Incorporated by more than a dozen prominent men and authorized to raise up to $300,000 in capital, in shares of $20 par each, the bank held an IPO that was a rousing success with over $1.5 million subscribed. The ensuing, highly politicized squabble over who was entitled to own stock delayed the bank’s opening for over a...

    • M&T Bank
      (pp. 188-193)

      Buffalo, New York, in 1856 was a bustling commercial port, home to about 75,000 souls whose livelihoods were tied closely to Erie—the lake, the canal and the railroad. There were, and still are, farmers in the vicinity, and their custom was important to the city. But were it not for manufacturing and trading activities, Buffalo would have been a mere small town, and not an important city. That year, more than 8,000 vessels cleared her port, and Buffalo’s 2,000 or so shipbuilders launched 47 vessels of a total tonnage over 20,000. Almost $181 million worth of goods moved through...

    • Morgan Stanley
      (pp. 194-197)

      Morgan Stanley emerged during the Great Depression as a result of the passage of Glass-Steagall, which forced J. P. Morgan to choose between commercial and investment banking. Most partners chose the former and formed one the cores of the modern JPMorgan Chase (#1). Partners Henry Morgan and Harold Stanley demurred and formed a new, eponymous securities firm independent of J. P. Morgan, but still embodying its credo. According to Jack Morgan in 1933, that was to do “only first class business, and that in a first class way.” Morgan Stanley remained psychologically close to J. P. Morgan in part because...

    • New York Community Bancorp
      (pp. 198-201)

      Sandwiched between Garden City, Levittown, Mineola and Hicksville on Long Island is Westbury, New York, home of New York Community Bancorp. The bank began its existence in Flushing, Queens, in April 1859 as the Queens County Savings Bank. Chartered as a mutual, it had 40 trustees, all of whom had to be, by the terms of its charter, Queens County residents. Out of their number, the trustees elected a president and two vice presidents to manage the institution’s daily affairs. Trustees were unpaid and could not borrow from the bank.

      Like other antebellum savings institutions, the bank’s main purpose was...

    • Northern Trust
      (pp. 202-205)

      Byron L. Smith founded the Northern Trust because he believed Chicago area residents needed a safe savings bank and trust—an institution that would treat even the poorest widows and the most unfortunate orphans like clients instead of like mere depositors. As its first advertisement indicated, the trust transacted “a general banking business . . . under the new banking law” of the state. It made “loans on collateral security” and paid “interest on deposits,” including the “daily balances . . . of corporations, merchants, individuals and others.” It also did a trust business and kept “all investments of trust...

    • People’s United Financial
      (pp. 206-211)

      The bank at the core of this BHC began operations as the Bridgeport Savings Bank, chartered by Connecticut as a mutual savings bank in May 1842; Southport Savings Bank, chartered in the same fashion in May 1854; and the People’s Savings Bank of Bridgeport, chartered in May 1860. All three banks were established by important businessmen and community leaders to help poor folks and professionals safeguard their savings and earn a little interest on them from pooled investments in mortgages, commercial bank stocks and railroad securities.

      All three banks had a one vote per depositor rule in corporate elections, and...

    • PNC Financial Services
      (pp. 212-219)

      PNC arose out of the merger of Pittsburgh National Corp. and Provident National Corp. in 1983, the largest US bank merger in history to that time. Pittsburgh National traced its roots to the formation of Pittsburgh Trust and Savings in 1852. It became the First National Bank of Pittsburgh in 1863 and the Peoples First National Bank and Trust in 1946, when it merged with the Peoples Pittsburgh Trust Company. The combined entity had $28 million in capital and about 275,000 customers. In 1959 it merged with Fidelity Trust to create Pittsburgh National, which had assets of $81 million and...

    • Popular
      (pp. 220-223)

      Headquartered on the island of Puerto Rico, a US territory in the northeastern Caribbean, Popular traces its roots to 1893. That year, a group of businessmen led by Manuel Ferdandez Juncos formed La Caja de Economías y Prestamos Banco Popular in response to the global financial crisis that manifested itself in Spain (which controlled the island until 1898) as a monetary crisis and inflationary episode.

      Born in Spain but raised in Puerto Rico, Juncos, with help from well-connected attorney Manuel F. Rossy Calderón and military leader Manuel Muñoz Barrios, wanted to develop a spirit of economy in all social classes,...

    • Principal Financial Group
      (pp. 224-227)

      Throughout most of its existence, Principal Financial Group was principally an insurance company called Bankers Life. Established in 1879 in Des Moines, which at 22,408 people had just become the most populous place in Iowa, Bankers Life, as its name implied, provided life insurance for bank employees.

      The brainchild of small town banker Edward Temple, the association used basic actuarial knowledge to improve upon the professional assessment plan whereby members paid benefits whenever a member died. Financed by refundable deposits, unrefundable initiation fees and quarterly assessments, the association could provide insurance even more cheaply than the best-run mutual company if...

    • RBS-Citizens Financial
      (pp. 228-233)

      The Royal Bank of Scotland, the RBS side of this BHC , received a charter from King George in 1727. It arose from the ashes of an international financial fiasco, the ill-fated Darien Scheme. In 1695 William Paterson and some 2,000 other Scots formed the Company of Scotland in an attempt to improve their own fortunes and those of their homeland. Three years later the company tried to colonize the Isthmus of Panama and, hence, monopolize the growing trade between the nations of the Atlantic and Pacific Oceans. The expedition had failed by early 1700, a victim of hubris, disease,...

    • Regions Financial
      (pp. 234-241)

      Regions Financial has a long and winding history that begins with the chartering of the Bank of the State of Alabama in 1820. That bank, which had an authorized capitalization of $2 million, had difficulty raising capital. In late 1823 the state government amended the charter and became the sole subscriber by selling its bonds in New York for cash. Thus, the bank did not begin operations until 1824.

      Initially headquartered in Cahaba, it moved to the new state capital of Tuscaloosa two years later. The bank, which was staffed solely by political appointees, was doomed from the beginning, but...

    • Santander Holdings USA
      (pp. 242-247)

      Santander Holdings is the US subsidiary of Santander Group, one of the world’s largest and most sophisticated banks with more than 180,000 employees and 102 million customers served by more than 14,000 branches worldwide, as of 2013. Just two decades ago, Banco Santander, the original entity of the group, was a second-tier retail bank in Spain. It has been controlled by the same family, which owns a 2.5% stake in the bank, for three generations. It succeeded because it gained international experience in Latin America before going head-to-head with top-rate European banks, first at home in Spain and then on...

    • State Street
      (pp. 248-251)

      State Street Corporation weathered the 2008 financial crisis, and by June 2009 the company had a robust $16.4 trillion in assets under custody and administration and another $1.6 trillion under management. These numbers were up from $6.1 trillion and $.7 trillion, respectively, at the end of 2000, when it employed 17,600 workers in 23 countries and 90 markets. By 2009 it operated in 27 countries and more than 100 markets globally, making it the world’s leading provider of financial services to institutional investors, including mutual funds, pension funds and sovereign wealth funds (SWFs), or huge pools of capital owned by...

    • SunTrust Banks
      (pp. 252-259)

      SunTrust formed in 1985 from the merger of Sun Banks of Florida and Trust Company of Georgia. Trust Company of Georgia began business in Atlanta in 1891 under the name Commercial Travelers’ Saving Bank. It changed its name and business model the following year to fulfill its goal—as one of the company’s chroniclers asserted—of making the New South a reality. With New England transplant Ernest Woodruff at the helm, the Trust Company of Georgia helped to do just that by financing companies like Atlantic Ice and Coal, Atlantic Steel, Continental Gin and Coca-Cola.

      Some deals brought immediate fees,...

    • Synovus Financial
      (pp. 260-267)

      According to Michael Novosel, a retired Army officer and Congressional Medal of Honor recipient, “seeing the Synovus sign is like seeing the international Red Cross symbol—you know that behind it is an organization of dedicated people who are there to help.” How many other big banks have been favorably compared to the Red Cross recently? Probably none. The difference is that Synovus is not led by people per se; it is led by values. Not stock market valuations, but core beliefs about right and wrong.

      At Synovus, the Golden Rule mixes with market sensibility: do unto others as they...

    • TD Bank US Holding
      (pp. 268-275)

      TD Bank, which stands for Toronto-Dominion, was formed in 1955 out of the merger of the Bank of Toronto and the Dominion Bank. It is aptly named, as it has been spreading its dominion over the United States, via its Maine-based BHC, since 2003.

      The Bank of Toronto was established in 1855 by a group of Ontario millers who needed liquidity loans to run their capital-intensive businesses efficiently. Its charter mandated that £CA 200,000 be subscribed before business could commence, and at first the bank’s subscription agent collected more vague promises than actual signatures and earnest payments on shares. The...

    • U.S. Bancorp
      (pp. 276-283)

      The U.S. Bancorp BHC was formed when Firstar acquired U.S. Bancorp in 2001. It offers a wide range of financial services to businesses and consumers and also provides payment processing via its Elavon subsidiary. U.S. Bancorp—the original bank—began its existence in Oregon in 1891 styled as the United States National Bank of Portland. Headed by Donald Macleay, a Scot well-versed in business and banking, and other influential businessmen, the U.S. National started small but was able to survive the bank runs that ruined half of Portland’s other banks during the Panic of 1893. It did so thanks to...

    • UnionBanCal
      (pp. 284-291)

      UnionBanCal is a member of Mitsubishi UFJ Financial Group, which is part of the Mitsubishi keiretsu and the only significant Japanese presence in America’s “Big 50.” Headquartered in Tokyo, the giant financial holding company formed from the merger of Mitsubishi Bank and the Bank of Tokyo in 1999, and the merger of that entity with UFJ Bank in 2006. It held assets of about $2.5 trillion in early 2013, making it the second largest BHC in the world. Its American presence, however, was limited to UnionBanCal, the BHC of Union Bank, N.A., which was formerly known as the Union Bank...

    • USAA
      (pp. 292-295)

      USAA’s current tag line, “We know what it means to serve,” is a double entendre: the organization serves its members and most of its members serve the nation, in the armed forces.

      USAA is not listed on a stock exchange because it is not a joint-stock corporation. Rather, it is a “reciprocal-type interinsurance exchange,” an entity akin to a mutual corporation. According to a handwritten note scratched onto the frontispiece of the author’s copy of its most recent history, a note to “Aldo” penned by author Paul Ringenbach in August 1997, “USAA has been successful because all of us do...

    • Utrecht-America Holdings
      (pp. 296-299)

      This unlisted entity is part of the Rabobank Group, the BHC of the Netherlands’s largest cooperative bank, Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A., which is headquartered in the ancient city of Utrecht about a half hour southeast of Amsterdam by rail. Its primary US holding is Rabobank, N.A. , composed of several California financial institutions, including Valley Independent Bank (acquired in 2002); Lend Lease Agribusiness and Ag Services of America (acquired in 2003); Community Bank of Central California (acquired in 2006); Mid-State Bank and Trust (acquired in 2007); and Butte Community Bank, Napa Community Bank and the failed Pacific State Bank (all...

    • Wells Fargo
      (pp. 300-307)

      Wells Fargo began life in California during the infamous gold rush and was named for its founders, Henry Wells and William G. Fargo, who were seasoned express men and partners in American Express (#19). The company made money by delivering mail, packages and people to mining camps and hauling away gold, which gave it entree into banking.

      People in California who needed to make payments in distant cities paid Wells, Fargo and Company in gold in California in exchange for a piece of paper, called a bill of exchange, that entitled the holder of the bill to draw gold (or...

    • Zions Bancorporation
      (pp. 308-315)

      Mormon leader Brigham Young established Zion’s Savings Bank and Trust Company in Salt Lake City in 1873 and capitalized it at $200,000. The Mormon Church owned the bank until 1960, when business interests purchased it. It may sound strange for a religious organization to own a bank, but Mormons were unafraid of Mammon. Young himself believed that savings and investment were next to Godliness. “If you wish to get rich, save what you get,” he beseeched his co-religionists. “A fool can earn money, but it takes a wise man to save and dispose of it to his own advantage.”

      Due...

  8. Conclusion
    (pp. 316-317)

    This study focuses on the genealogies of the nation’s 50 largest financial institutions as of the early 21stcentury. A quick look at the family trees of these institutions indicates an explosive growth in American banking. From just three banks in the 1780s, the American banking system expanded to nearly 30,000 independent banks at the peak in numbers in the early 1920s. Almost all of those banks were so-called unit banks, or banks with only one office. Such a system is prone to bank failures and financial crises, as it makes it difficult for banks to diversify their assets and...

  9. Illustration Credits
    (pp. 318-319)
  10. Index
    (pp. 320-324)
  11. Acknowledgments
    (pp. 324-324)