The biggest bank merger in U.S. history was set up last week. Directors for the Chase National Bank (No. 3 in the U.S.) and the Bank of the Manhattan Co. (No. 15) agreed on terms to combine their total deposits of $6.9 billion, create the nation’s second biggest bank (after California’s Bank of America, with $8.3 billion in deposits). Name of the new bank: The Chase Manhattan Bank.
Once before, in 1951, Chase and the Bank of the Manhattan Co. tried to join, with Chase taking over Manhattan. But Manhattan’s 156-year-old state charter was so drawn that a single dissenting stockholder could block the sale. This time, Chase, which has no such charter provision, will technically merge into Manhattan and give up its own national charter. If a majority of the 102,000 stockholders of both banks approve the merger, each of Chase’s 7,400,000 shares outstanding (now selling at about $60) will be exchanged for 1½ Chase Manhattan shares. Manhattan stock (about $48 a share) will be exchanged share-for-share for Chase Manhattan stock.
Chase Chairman John J. McCloy is to be the new bank’s chairman, the Bank of the Manhattan Co.’s Chairman J. Stewart Baker president and head of the executive committee. The merger will not only give the new bank more branches (87 in New York, 17 abroad) but it will enable Chase Manhattan to make bigger loans than either bank could make separately.
A Million Pocketed. The oldest bank in the U.S. operating under its original charter, the Bank of the Manhattan Co. was the offshoot of a firm chartered, with the aid of Alexander Hamilton and Aaron Burr, to build Manhattan’s first waterworks, use any excess capital in “moneyed transactions.” To break the Federalist Party’s monopoly on New York banking, the water merchants bought (for $30,000) a house at 40 Wall Street (still the bank’s address), opened for business.
For 50 years Manhattan operated without a safe, keeping its cash in drawers. The unarmed guard who patrolled the Wall Street entrance carried the bank’s huge key in his pocket. Once an absconding bookkeeper walked out at lunchtime with $1,000,000 in his pockets and got as far as Battery Park. There, while feeding pigeons, he changed his mind and took the money back. He was fired. Bank of the Manhattan Co.’s loans once kept New York State from defaulting on its credit when the legislature adjourned without appropriating funds to pay current interest charges.
Sound Money. The Bank of the Manhattan Co. was one of the city’s biggest when Chase was founded in a one-room Broadway office in 1877 by John Thompson, a Wall Streeter with such an abiding admiration for Sound-Moneyman Salmon P. Chase. Lincoln’s Secretary of the Treasury, that he named the bank for him. While the Manhattan Co.’s bank grew slowly, Chase grew rapidly. It took over so many other banks that it once had 84 directors.
At week’s end, most bankers thought stockholders and New York state banking officials would approve the merger. But Brooklyn’s Fair Dealing Representative Emanuel Ce’ller demanded that the state block the deal, or “an all-powerful oligarchy [will have] a stranglehold on New York banking.”
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