Lavender & Old Legacies

The oldest name in American banking --five years older than the U.S.--will soon be changed. The Bank of New York, founded in 1784, announced last week that it will merge with the Fifth Avenue Bank of New York, a comparative newcomer only 73 years old. The new bank will be called the Bank of New York and Fifth Avenue. The deal, still to be approved by stockholders, caused a wild jump in the Fifth Avenue Bank's stock--and brought fat paper profits to its holders.

Though Bank of New York stock was selling at $360, slightly more than one-third the value of Fifth Avenue stock ($960), the merger calls for four shares of New York stock for every one of Fifth. Result: in a day, Fifth Avenue stock jumped to $1,350. The Bank of New York was willing to offer this $2,300,060 windfall to Fifth Avenue stockholders because it wanted to get its uptown locations.

Panics & Pestilence. The excitement of the stock flurry was mild compared to some that the rockbound, conservative Bank of New York has had since it was founded by Alexander Hamilton. It was the first bank in the then small (pop. 23,000) city of New York. Its immediate success brought two more banks--and worries--for Banker Hamilton. "'Tis impossible," he wrote in 1791, "but that three great banks in one city must raise such a mass of artificial credit as must endanger every one of them, and do harm in every view."

The Bank of New York survived the great danger. When a yellow fever epidemic struck the city in 1799, it moved from its Wall Street offices to temporary quarters in the open country (now Greenwich Village), then back to Wall Street. During the depression of 1907, a new customer rushed in with cash withdrawn from other banks and nervously asked if his money would be safe. The cashier merely nodded towards the plaque of Hamilton on the wall. "I judge you've been through several panics," said the customer--and deposited more than $1,000,000. The trust was well placed; the bank has paid a dividend every year except in panic-stricken 1837 when dividends were banned by law. (It paid double the following year.)

Parlors & Bonbons. The Fifth Avenue Bank has done as well. It started at Fifth Avenue and 44th Street and soon pioneered a great banking change. At the time, women avoided banks, wrote a contemporary, because banks were usually crowded with men "among whom it is not agreeable for a lady to penetrate."

The bank built an elegant parlor for women, where they could "cut coupons and eat bonbons with equal relish." Off the parlor was a room with scissors, threaded needles, hairpins, violet water, lavender salts, scented soaps. This leisurely atmosphere paid off in accounts from prim matrons and black-bonneted dowagers. Women still flock to the bank's Victorian quarters with their paneling, candelabra and the fireplace whose log fire glows cheerily in winter.

The merger of the banks, said John C. Traphagen, Bank of New York president who will be chairman and chief executive of the new bank, was prompted by the "remarkably similar character" of their business (i.e., largely trust fund management for wealthy individuals). By combining their offices and assets (totaling some $470,000,000), the banks hope to expand commercial loan operations.

This file is automatically generated by a robot program, so reader's discretion is required.