Destructive Creators: Sender Jarmulowsky and Financial Failure in the Annals of American Jewish History

On August 30, 1914, a riot erupted on the corner of Orchard and Canal Streets in front of Sender Jarmulowsky's Bank, one of the most revered immigrant 'banks' on New York City's Lower East Side. Fears of a protracted war had prodded thousands of immigrant Jews living in New York City to run to their bankn [literally, "banks"], the Yiddish moniker for businesses that were not officially chartered banks regulated by State authorities but took deposits, made loans, transferred funds overseas and sold ship tickets. With thousands seeking to withdraw their savings in order to send to relatives still in Europe, the uncharted 'banks' of Meyer and Louis Jarmulowsky, Max Kobre and Adolf Mandel were unable to return depositors' funds. As a result, Eugene Lamb, New York State's Banking Superintendent closed these businesses on August 3, 1914.¹ This was far from the first time the New York State banking authorities had forced an unchartered private bank to suspend business.² But while the clients of other closed private banks wrote letters or brought legal action, the enraged Jewish immigrant depositors organized a protest to make all aware of their "struggle" and to bring to justice those who had cheated them out of their savings.³

On August 30, the New York Times reported, "a mob of 5,000" demonstrated "against the bankers, the State Banking Department, and the District Attorney, who, they thought, should get their money back for them."⁴ Carrying Yiddish banners proclaiming that "the 60,000 unfortunate depositors of the East Side banks will not be quiet" until the Governor of New York State saw that they were restored their money, the mob marched to New York City Hall. There, they attacked clerks. Reserve policemen were called in as the crowd grew wild, forcing "clubs to be swung."⁵ The riot ended with police arresting nine men and women. But these arrests could not avert a wave of fear from spreading through the city as municipal and banking elites pondered the implications of such a riot occurring in New York City, the financial capital of the United States.⁶ Unlike other immigrant riots in nineteenth-century New York, this violent outburst did not just raise concern about the volatile nature of the Jewish immigrant life; it raised questions about the viability of New York's banking system as war was brewing on the other side of the Atlantic.

Order was only temporarily restored. angry depositors surrounded Sender Jarmulowsky's son, Meyer's, apartment building and one desperate depositor tried to kill him at a mass meeting set up to discuss repayment.⁷ Meyer Jarmulowsky escaped unharmed both times, but these events forced New York City's authorities not only to shutter the bank's doors for good but also to appoint the state's most revered judge, Learned Hand, to handle its bankruptcy.⁸ In his investigation, Hand uncovered the fact that much of this institution's missing assets were tied up in real estate investments that could not be quickly liquidated. So Hand set up a receivership and wrote precedent-setting judicial decisions that altered the business practices of private immigrant 'banks' in New York City.

Rarely discussed by scholars, immigrant 'banks' played a central role in early-twentieth-century America through their sale of ship tickets and their provision of loans to immigrants who had few other credit options.⁹ These institutions flourished in the years leading up to 1914 not only as a result of immigrants' demand for ship tickets and credit, but also because there was a general absence of any oversight by state authorities. When the New York State Banking Department crafted new legislation in 1915 requiring the regulation of all private immigrant 'banks,' these institutions found it more difficult to make a profit. Within a few years, dozens of immigrant 'banks' were forced to shutter their doors, drastically limiting the places where immigrant entrepreneurs could find access to credit. But such dramatic measures was deemed necessary by New York officials, who believed that regulation...