It’s a wonder people don’t resort to shoving their hard-earned money underneath their mattresses these days. Predatory lending practices and ever-rising fees have tarnished how people feel about big banks and many who had entrusted “experts” with their nest eggs have ended up in financial ruins.
In the early 19th century, banks in immigrant communities offered essential connections between its customers and their homelands. One hundred years ago, the Jarmulowsky Bank Building was erected at the intersection of Canal and Orchard Streets. Orphaned at an early age and groomed to become a rabbi, Alexander “Sender” Jarmulowsky married the daughter of a wealthy merchant and started a trans-Atlantic shipping business in Hamburg, Germany. Sender later immigrated to New York City in 1873 and established a bank with Russian- and Yiddish-speaking staff.
Although many poor immigrants and small business owners were distrustful of banks, Sender built an honest reputation for himself and was a well-respected community member who gave generously to philanthropic causes; he was one of the founders of Eldridge Street Synagogue and known as the “East Side J.P. Morgan”. During early periods of financial panic and bank runs, account holders at Jarmulowsky’s bank were able to have the full amount of their deposits returned because of Sender’s fiscally conservative banking policies.
The revered Jarmulowsky name quickly became tarnished when bank operations were passed on to his sons after Sender’s death in 1912. Henry, Meyer, and Louis lacked the same level of business acumen as their father. After World War I broke out, bank customers who wanted to send money back to relatives in Europe were shocked upon finding out that their money wasn’t available for withdrawal; it was tied up in speculative real estate investments in East Harlem.
Although Meyer Jarmulowsky stated during a hearing that the bank would be paying back $1.7 million to its nearly 10,000 depositors, the bank lacked the necessary assets to do so and in August of 1914, the state of New York took over Jarmulowsky Bank. Rioters appeared in front of the bank building on Canal Street and marched onto City Hall. Mobs formed in front of Meyer’s apartment building in Washington Heights, forcing him and his family to escape by climbing out of a fourth-story window, skedaddling across an adjacent building’s rooftop, and fleeing in a taxi cab waiting downstairs. Meyer went into hiding but was eventually indicted for fraud; depositors lost all their money. Jarmulowsky’s real estate holdings were auctioned off and the Jarmulowsky Bank building sold for less than half of its building costs.
Today, the Jarmulowsky Building still stands, recently purchased by developers for $36 million. The addition of a dome, now long gone, once made it the tallest building in the Lower East Side. The lower floors were reserved for the bank and garment factories occupied the upper floors. At one point a piano factory resided in the building until the 1960s. Although the name Jarmulowsky may not be recognizable today, their story gives us valuable lessons on how greed can quickly destroy a good name, not to mention the financial futures of thousands of hardworking people.