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 would protect New York State from other failures caused by speculative real estate investments--a common profit strategy among immigrant 'bankers'--that many believed was destructive to American economic life. (10)
Few people today recognize the name Jarmulowsky, or can identify the bank's main branch--nicknamed "the Temple of Capitalism "which still looms over the tenements of the Lower East Side. (11) But the nexus of real estate investment, bank failure and the resultant debates over regulation sounds eerily familiar to the ears of readers in the early twenty-first century. It may be too early for scholars to assess the overall ramifications of the downfall of Lehman Brothers, which, in 2008, was the oldest Jewish-immigrant-investment bank still functioning on Wall Street. But it is surprising that until now, scholars have not discussed its significance for the annals of American Jewish history, perhaps fearing the unavoidable anti-Semitic overtones. (12) Such a deafening silence is echoed in the virtual erasure of the Jarmulowsky family and their businesses from the narrative of American Jewish history, even though as the Tageblat newspaper reported, Sender Jarmulowsky and his sons were known to "every Jew in both the Old and New World" on account of Sender Jarmulowsky's wealth, philanthropy and business dealings that, "brought him into contact with thousands of immigrants." (13) The rise of Sender Jarmulowsky's bank was directly related to the business of mass migration as he provided thousands of ship tickets to Jews who saw according to the Tageblat, "the name Jarmulowsky as a guarantee of honesty." (14) Using his wealth to establish important religious, cultural and philanthropic institutions for East European Jews living in New York City, Sender Jarmulowsky left a deep imprint on Jewish immigrant life in New York. His bank's closure, the rioting of Jewish depositors, the response of Jewish communal leaders and the assumption of responsibility by New York City's municipal authorities all bring into sharp focus the ways in which immigrant Jews' missteps as much as their successes transformed not only New York's Jewish communal life, but also New York City's business world, in particular, its banking industry.
The Jarmulowsky Bank provides an apt window through which to ponder the economic dimensions of the Jewish immigrant experience in turn-of-the-century New York, as well as the virtual erasure of failure in the writing of the American Jewish history. In general, business practices and economic strategies are rarely discussed in the annals of American Jewish history, with only German Jewish businessmen, such as Jacob Schiff or Felix Warburg, garnering the lion's share of scholars' attention. (15) Sender Jarmulowsky, I contend, is one of many critical "destructive creators"--individuals whose financial failures reshaped the landscape of American capitalism--in American history. I draw the term "destructive creator" from the thought of economist Joseph Schumpeter (1883-1950) who coined the seemingly paradoxical term "creative destruction" to describe capitalism's messy way of delivering economic progress. (16) Schumpeter argued in his Capitalism, Socialism and Democracy:
The opening up of new markets, foreign or domestic ... illustrate[s] the same process of industrial mutation ... that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one. This process of Creative Destruction is the essential fact about capitalism. (17) While Schumpeter's depiction of capitalism as "the perennial gale of creative destruction" has become the centerpiece for modern thinking on how economies evolve, few scholars of Jewish history (or American economic history) consider at which moments and in which ways failure played an instrumental role in reshaping the American economy or American Jewish life. Indeed, the Jarmulowsky Bank failure of 1914 raised concern not only among Jewish immigrants about the promise of America, but also among New York City's banking officials about the stability of New York's banking system. Since 1863, New York had served as the backbone of the United States' expanding banking system. (18) While the rumblings in Europe in the summer of 1914 had caused several European stock markets to suspend business, American banking officials believed that New York's banks would remain strong and stable. (19) To be sure, New York was not the only city in which immigrant banks failed or Jewish commercial banks closed their doors. (20) But the fact that New York City could claim in 1914 to be both the center of American finance as well as the Jewish immigrant capital of the world forced the matter of Jewish immigrant financial failure to be addressed in ways that would alter Jewish immigrant life in New York and the intricate development of New York City's system of banking regulation. (21)
Economics and Failure in the Writing of American Jewish History
The almost complete absence of Sender Jarmulowsky and his family's business ventures from the historical narrative of the American Jewish past exemplifies, as David Hollinger writes, "the general failure" of American Jewish historians to conduct a straightforward historical and social-scientific study" of the types of business practices that enabled immigrant Jews to economically succeed in the United States. (22) As in the larger field of modern Jewish history, as historian Jonathan Karp points out, American Jewish history appears "like a head without a body," with an overemphasis on Jewish "intellectual and spiritual life" and the neglect of more mundane economic activities that enabled Jews to put food on the table. (23) This emphasis on the life of the mind, as American Jewish historian Eli Lederhendler argues, can be seen in historians' emphasis on...