Too Big to Fail in 1930: The Bank of the United States and the Failed Immigrant “Bank” That Reshaped America

Founded in 1913 by a Russian-Jewish immigrant entrepreneur, the Bank of the United States, despite its grandiose name, was actually a retail bank, advertising mainly in the Yiddish press of New York. By 1930, it also grew to be the largest commercial bank in New York, with over 440,000 depositors and $300 million in assets. During the 1920s, the bank’s president, Bernard Marcus and vice-president Saul Singer, depleted the bank’s assets through heavy speculation in stock and risky real estate investments.  When the banking establishment refused to help save the bank, the bank failed. Analysis of the harm done by the failure of the Bank of United States has consumed economists for the past eighty years. Scholars like Milton Friedman and Ben Bernanke debated the role its closure played in propelling the United States from the recession of 1929 into “the great contraction.” Who were the ‘untrustworthy’ depositors in the Bank of United States that banking elites refused to help?  Economists have virtually erase in their discussions of this historic bank failure its ‘Jewishness:’ at the time, the bank’s directors and clientele’s religious background were well-known; indeed, some journalists argued it was issues of religious prejudice that prodded no one financial institution to step up to save the bank. This paper will use court records and other archival materials to explore how ‘Jewishness’ shaped the rise and fall of this bank. Through analysis of a database of all depositors who made claims with the New York State Supreme Court, the paper will explore how the bonds of ethnicity shaped banking in early-twentieth century New York and it demonstrate why scholars must pay closer attention to the ranks of East European immigrant entrepreneurs whose business practices, “Jewishness” and failures reshaped the contours of finance in America.