Brotherhood of Railway Clerks National Bank, Cincinnati, OH (Charter 12446)
The Brotherhood of Railway Clerks National Bank of Cincinnati, OH (1923 - 1930) was a relatively short lived experiment by a national labor organization to offer banking services to its members directly. It was modeled after the Brotherhood of Locomotive Engineers Cooperative National Bank in Cleveland, among other labor-owned institutions. Despite being fiscally sound a run on the bank caused by indictments of its president, vice-president and cashier force the bank to close after only 7 years of operation.
Early History
The Brotherhood of Railway Clerks National Bank, or Brotherhood Bank as it is commonly known, was founded as a labor union bank at the 1922 annual meeting of the Brotherhood of Railway and Steamship Clerks, Freight Handlers, Express and Station Employees. The purpose was to provide discounted banking services and ownership opportunities to the members of the labor union. The headquarters of the labor union was also to be moved from the Second National Bank of Cincinnati to a newly developed building that would also serve as headquarters for the Brotherhood of Railway Clerks National Bank.[1]
Development of the bank was based on other labor union banks such as Mount Vernon Savings Bank in Washington, D.C., People's Cooperative State Bank of Hammond, IN, and the Amalgamated Trust and Savings Bank of Chicago, IL. However, most notable of the bunch was the Brotherhood of Locomotive Engineers National Bank of Cleveland, OH, the general manager of which gave a speech at the aforementioned 1922 meeting touting the benefits of that bank to its respective union.
The Brotherhood Bank took extensive direction from Brotherhood of Locomotive Engineers National Bank in its setup. Walter McCaleb, former Vice-President and Manager of the B.L.E. National Bank worked closely with the B.R.C.'s banking committee to get the new bank established. McCaleb had 16 years of banking experience at this time including headship of a bank in San Antonio, TX and the Federal Reserve Bank in Dallas, TX.
J.C. Cardwell from the Brotherhood of Locomotive Engineers Bank and Lyman E. Norris, a local Cincinnati banker were selected to run the Brotherhood Bank in the positions of Vice-President and Assistant Cashier, respectively.
Bank History
- Organized July 16, 1923
- Chartered September 29, 1923
- Receivership June 26, 1930
- Restored to solvency July 2, 1930
- Liquidated August 22, 1930
- Absorbed by The Central Trust Company, Cincinnati
The assets and deposits of the Brotherhood Bank grew quickly from $200,000 in capital stock at founding to a capital stock of $400,000 and deposits of $4,740,281 on the day of closure, June 26, 1930. [2] Largely, this was because the union actively encouraged all of its members to become shareholders of the institution because they intended to pay out larger dividends and deposit interest than traditional banking institutions. Dividends would be capped at a maximum of 10% and surplus profits would be distributed to depositors. Stocks were even offered to members on a payment plan. Stock would only be sold to members of the union and the union itself would retain a 51% stake in the bank.[3]
The Brotherhood Bank was intended to be run by professional bankers. While officers of the labor union could serve as directors of the Brotherhood Bank, they were not permitted to serve as officers of the bank, though this rule appears to have been waived for the first year of operation. E.H. Fitzgerald, President of the Brotherhood Bank was "Grand President" of the union and George S. Levi, Cashier of the Brotherhood Bank was "Grand Secretary-Treasurer" of the union. Any work done by the labor union officers would be uncompensated by the bank and considered part of their labor union duties.
Bank Closure
On June 26, 1930, the Brotherhood Bank was closed permanently after a run on the bank resulted in $1,000,000 in deposits being withdrawn in a three day period. The closure of the Brotherhood Bank was related to the closing of the Cosmopolitan Bank and Trust Company of Cincinnati earlier in June, 1930. This institution closed as a result of stock speculations of the discharged manager of the Henry L. Doherty Company, A. W. Shaefer. Shaefer was kiting checks between the Cosmopolitan Bank and the Brotherhood Bank and his Cosmopolitan account was found to be overdrawn by $623,000. A district attorney investigating the closure of the Cosmopolitan Bank indicated that Shaefer's collateral with the Brotherhood Bank consisted of stock certificates with forged endorsements. All of the top officers of the Brotherhood Bank were removed as a result including President J. J. Castellini, Vice-President Lyman Norris and Cashier Harry Rosenblum. [4]
At the time of closure, the Brotherhood Bank was actually solvent. The directors of the bank determined that even if all of Shaefer's stock certificates were found to be forged, the total liabilities would not have exceeded $517,000 and the bank had more than double the funds available to meet the liability. The closure of the bank was a direct result of hundreds of depositors withdrawing their deposits due to rumors surrounding the bank's solvency. Bank officials expected to pay 100 cents on the dollar for all of the bank's liabilities once the liquidation was complete.[5]
United States District Attorney Harveth Mau swore out warrants against Norris and Rosenblum who were later arrested by US Marshals on charges of conspiracy in misapplying funds of a national bank. Norris and Rosenblum admitted to conspiring with Shaefer in which they made $60,000 in personal profits in a few months via Shaefer's stock transactions through the Brotherhood Bank. Norris and Rosenblum pledged a combined $100,000 against any losses by the bank and President Castellini pledged an additional $100,000.
While not initially charged with any crime, J. J. Castellini was indicted in October, 1930 as principal defendant in three of the five indictments brought against the Brotherhood Bank officers. For his part, Castellini was charged with having made 26 false entries on the "bonds and securities" ledger of the bank. Other indictments set out 19 specific overt acts committed to further the conspiracy, as well as misapplication of funds. [6]
On May 3, 1931, Castellini was sentenced to three years in the federal penitentiary in Atlanta, GA and a $5,000 fine to cover the costs of his trial. Norris and Rosenblum were each sentenced on the misapplication of funds and making false entries charges to two and a half years at the federal reformatory in Chilicothe, OH. They were not required to pay any fines as they had pled guilty and no trial was held.[7]
Bank Notes Issued
A total of $1,550,280 in National Bank Notes was issued by this bank between 1923 and 1930. This consisted of a total of 310,056 notes (262,848 large size and 47,208 small size notes).
This bank issued the following Types and Denominations of bank notes:
Series/Type Sheet/Denoms Serial#s Sheet Comments 1902 Plain Back 4x5 1 - 65712 1929 Type 1 6x5 1 - 7868
Official Bank Title(s)
- The Brotherhood of Railway Clerks National Bank of Cincinnati, OH
Bank Presidents and Cashiers
Brotherhood of Railway Clerks National Bank Presidents and Cashiers during the National Bank Note Era (1923 - 1930):
Presidents:
- Edward Henry Fitzgerald, 1924
- George Silas Levi, 1924
- Joseph John Castellini, 1925 – 1929 Note: a featured biography is available
Cashiers:
- Grover Cleveland Milam, 1924
- Lyman Edgar Norris, 1925 – 1928 Note: a featured biography is available
- Harry Rosenblum, 1929
Other Bank Note Signers
- There are currently no known Vice President or Assistant Cashier bank note signers for this bank.
Wiki Links
- Ohio Bank Note History
- General information on Cincinnati (Wikipedia)
- General information on Hamilton County (Wikipedia)
- General information on Ohio (Wikipedia)
References
- Don C. Kelly, National Bank Notes, A Guide with Prices. 6th Edition (Oxford, OH: The Paper Money Institute, 2008).
- Dean Oakes and John Hickman, Standard Catalog of National Bank Notes. 2nd Edition (Iola, WI: Krause Publications, 1990).
- Banks & Bankers Historical Database (1782-1935), https://bbdata.banknotehistory.com