Bank of New York history

Founded in 1784, the bank is the oldest existing banking institution in the country. The bank’s charter was written by Alexander HAMILTON, who practiced law in New York City at the time. When he became the first Treasury secretary under George Washington, he began a series of borrowings for the government, and the bank was used as an intermediary. The bank did the borrowing, and the government issued warrants on the bank. The technique helped establish the credit of the United States at a time when few foreign investors were interested in doing business with the new government.

From its inception, the bank was capitalized “in specie only,” meaning that its capital was money coined in silver or gold rather than land. Its first shareholders were New York businessmen who intended that the bank be founded on a reputation for prudent management so the notes it issued would be backed by specific proportions of specie. The bank issued stock, one of the first companies in the United States to do so, and it was traded on the New York stock market, which was conducted out-of-doors along Wall Street. In 1792, it began loaning money to the Society for Establishing Useful Manufactures, which planned a group of factories to be built in Paterson, New Jersey. It was also a lender to the two major canal projects, the Morris Canal in New Jersey and the ERIE CANAL in New York. Many of the steamship companies operating around New York also received loans from the bank. Most of the loans it originally made were short-terms, maturing in months rather than years. Its stock remains listed on the NEW YORK STOCK EXCHANGE today.

Before the Civil War, the bank was a major clearing institution for gold trading and settlements. After the war, the bank provided loans to a host of infrastructure investments, including the RAILROADS and utility companies. Of crucial importance to New York City, the bank also provided funds for its subway system, which opened in 1904. Before the BANKING ACT OF 1933 was passed, the bank merged with the New York Life Insurance & Trust Co. in 1922. It later merged with Fifth Avenue Bank in 1948 and with the Empire Trust Co., also in 1948, enabling it to strengthen its trust services even further. As COMMERCIAL BANKING began to expand in the post– World War II years, especially in the late 1950s and 1960s, the bank established a HOLDING COMPANY in 1969 and began to open branches around the New York metropolitan area. It also added an international office in London at the same time.

The bank’s major acquisition was the Irving Bank Corporation in 1988, one of New York’s best-known banking institutions. In the 1980s, the bank became one of the largest clearers of federal funds in the country and a major factor in the funds clearance system. Its business remains primarily wholesale although it does maintain a retail banking operation and branches.

Further reading

Domett, Henry W. A History of the Bank of New York 1784–1884. New York: Bank of New York, 1884.
Nevins, Allan, ed. History of the Bank of New York & Trust Co. New York: privately published, 1934.