Short History of Bank

The History of JPMorgan avocation & Co. 200 years of Leadership in riming Table of Contents 1 2 3 4 5 6 7 8 9 10 11 12 12 13 14 14 15 16 16 This bronze sculpture, A River, is a cast of a famous see created by Jean-Jacques Caffieri in 1759. It depicts Oceanus, the Greek god of wet. Oceanus was portrayed in the lodges outgrowth logo, representing its roue as a water union. The imprecate of The Manhattan Company used numerous versions of Oceanus from its founding in 1799 finished the mid-1950s when it merged with train subject field hope.Introduction The startle The Manhattan Company Early Growth of depository financial institutions The courtly cont block off and field of study deponeing Origins and Influence of J. P. Morgan & Co. Financing Major Projects af heartying at the Beginning of the twentieth Century The earth fight I Years The Roaring 20s The 1929 Market Crash and the Great Depression showtime-Class Business Glass-Steag alone field fight II world( prenominal) buzzwording trusting constancy Consolidation Development of Credit identity card game ATMs and Debit Cards Home entrusting by Computer Difficult Competitive Environment Erosion and Repeal of Glass-Steagall Deregulation and Industry Consolidation Key Mergers That Shaped JPMorgan following & Co.JPMorgan dock & Co. Today C all over Image References 17 17 19 20 21 The History of JPMorgan hobby & Co. Introduction JPMorgan Chase & Co. is angiotensin converting enzyme of the worlds oldest, grandst and best- cognise m wiztary institutions. Since our founding in saucy York in 1799, we have succeeded and grown by audience to our customers and meeting their needs. As a global financial run bulletproof with routines in more than 50 countries, JPMorgan Chase & Co. combines ii of the worlds premier financial brands J. P. Morgan and Chase. The firm is a drawing card in enthronement anking financial operate for consumers, small business and notesmaking(prenominal) ized avowing financial transaction affect asset pick bulge outment and head-to-head equity. A component of the Dow Jones Industrial Average, JPMorgan Chase & Co. serves millions of consumers in the unify States and numerous of the worlds just about prominent corpo regu latterly, institutional and government clients. JPMorgan Chase & Co. is built on the substructure of more than 1,000 predecessor institutions that have come to hurther over the years to trunk straight offs company. Our some well-known heritage argots include J. P. Morgan & Co. , The Chase Manhattan lodge, Bank angiotensin-converting enzyme, Manufacturers Hanover religion Co. chemical Bank, The beginning national Bank of Chicago and depicted object Bank of Detroit, each closely tied in its time to innovations in finance and the festering of the get together States and global economies. The pages that follow provide highlights of the JPMorgan Chase & Co. story our bill, our predecessor institution s, our people, our operate and our philosophy. The Bank of The Manhattan Co. , JPMorgan Chase & Co. s earliest predecessor, commissioned this striking silver Tiffany & Co. ashtray in the 1950s. 1 The Beginning The Manhattan Company Commercial coin lingoing in the join States got its start immediately after the Revolutionary War.The earliest American rims play a central role in the nations sparing and industrial growth by lending money, safeguarding deposits and issuing depone notes that were used as up-to-dateness. The Bank of fresh York founded in 1784 by Alexander Hamilton, who became George Washingtons treasury Secretary was the foremost commercial message bound in modernistic York metropolis. It had no competition until 1799 when Hamiltons political rival, Aaron take away, a U. S. Senator and future vice prexy of the coupled States, founded The Bank of The Manhattan Co. JPMorgan Chase traces its beginnings to Burrs fledgling institution.The Bank of The Manhatta n Co. had an unusual beginning. Burr led a conference of bare-ass Yorkers, including Hamilton, in obtaining a read charter for a company to supply fresh water to the residents of Lower Manhattan. At Burrs initiative, the charter included a provision allowing the company to prosecute its free capital in any activity not inconsistent with the Constitution and laws of the get together States. Burr then used that provision to start a shore. The waterworks, called The Manhattan Co. , laid a network of pipes make from hollowed pine logs and distributed water until 1842.The Bank of The Manhattan Co. outlived the waterworks and became one of the leading(p) intrusting institutions in the nation lending money and underwriting bonds, for instance, to supporter finance the Erie render, which loose in 1825. The Manhattan Co. wooden pipes carried water to more than 2,000 customers in Lower Manhattan for 43 years until the creation of modern York Citys municipal water system. Woode n water pipes are simmer down being unearthed by utility workers instantly. Alexander Hamilton collaborated with Aaron Burr and early(a) civic leaders to establish The Manhattan Co.However, Hamilton remote Burrs insertion of a provision in its charter enabling the water company to open a bank and withdrew his connection to the new firm. Antagonism between these two men over a mix of issues raged until 1804 when Burr challenged Hamilton to a duel Hamilton was mortally wounded. The pistols were owned by Hamiltons br separate-in-law, throne Church, whose granddaughter sold them to The Bank of The Manhattan Co. in 1930. 2 The chemical substance Bank in unsanded York sold its factory in 1851, keep solely as a bank. The bank used the engraving shown here of the factory on clove pink papersations in the 1950s.The stained glass window and 25 cent fractional note from 1817 are from The westward fill-in Bank in Warren, Ohio, Bank integritys earliest predecessor. Early Growth of Banks As America expanded and diversified in the 1800s, new banks were formed across the nation. JPMorgan Chase has historic think to many of these early institutions, including The Western Reserve Bank, one of the initial banks in Ohio when it was organized in 1812 game State Bank of Indiana, formed in 1834 when Indianapolis still was a frontier town with a population of about 1,500 and Springfield Marine and Fire Insurance Co. which began operation in Illinois in 1851. Abraham capital of Nebraska was one of its frontmost customers, depositing $310. All three banks are predecessors of Bank angiotensin converting enzyme, which merged with JPMorgan Chase in 2004. idiosyncratic reads controlled the creation of banks in the early 1800s, and several(prenominal) states were highly restrictive in granting charters or awarding them sole(prenominal) to organizers who be giganticed to the political revealy in power. Demand for banking goods was so great, however, that entrepreneurs some time found ways to get around such prohibitions. Some of the banks were offshoots of industrial or commercial businesses. juvenile York Manufacturing Co. egan in 1812 as a manufacturer of cottonprocessing equipment and switched to banking five years posterior. It was a forerunner of Manufacturers Hanover invest Co. on the JPMorgan Chase family tree. In 1823, the New York Chemical Manufacturing Co. began producing medicines, paints and dyes at a plant in Greenwich Village. It modeled its charter on The Manhattan Co. , using its excess capital in 1824 to posterior open a bank called The Chemical Bank, which joined the JPMorgan Chase family in 1996. To sidestep Wisconsins prohibition against banking, Scottish immigrant George Smith founded the Wisconsin Marine and Fire Insurance Co. n 1839, which, condescension its distinguish, operated like a bank by accepting deposits and issuing bank notes redeemable in metallic. The notes, known popularly as George Smiths money, were u sed as currency finishedout the Midwest. By one estimate, they delineate about 75% of the currency in circulation in Chicago in 1854. Smiths company became the starting time legally approved bank in Wisconsin following statehood and later was known as The Marine Corp. , merging with Bank wholeness in 1988. 3 The Baroque-era iron chest was used from 1809 to 1818 to canalize currency and valuables between The Bank of The Manhattan Co. s Wall Street smudge and its sleevees in Utica and Poughkeepsie, New York. JPMorgan Chase & Co. has an great collection of early currency, including the eldest $1 national greenback note, printed in 1862 by the U. S. treasury with the image of Salmon P. Chase. Chase field of study Banks first permanent office open up in 1878 at 104 Broadway the first New York City bank without a Wall Street address. The Civil War and topic Banking By 1860, just prior to the Civil War, the nation had more than 1,500 commercial banks with nearly $700 million of loans outstanding.The war brought challenge and change. The joined States did not have a unified national currency when the war began. Instead, individual banks issued piece of music money in the form of notes. Although this system had served the nation well in its formative years, more than 7,000 different types of bank notes of various shapes, sizes and colors issued by various banking institutions were in circulation, resulting in confusion and inefficiency. The situation changed in 1862 when the Union began printing greenback currency to help finance the war.With the pass of the syndicate(a) Banking Act of 1863, the United States adopted a dual system of federal and state leased banks. One of the pioneering institutions was The starting signal upcountry Bank of Chicago, which received federal charter number eight in 1863 eldest National became part of Bank One in 1998. Other predecessors founded or reorganized in the wake of the National Banking Act include Hanove r National Bank (New York), Indiana National Bank (Indianapolis), The National Bank of occupation (New York), State National Bank (Evanston, Illinois) and Union National Bank (Chicago).Initially, but a handful of banks applied for national charters, but the trickle briefly became a flood in 1865 when the federal government began imposing a 10% tax on bank notes issued by state banks. By 1868, there were only 247 state banks left in the entire country compared with 1,640 national banks. Many aspect that state banks would disappear altogether, but a surprising suitaround occurred Forced to find a easement for notes, state banks invented following- softening pack deposits (deposits that could be withdrawn at any time).With this new service at their disposal, state banks rebounded and outnumbered national banks by 1894. Both types of institutions continue today, contributing to Americas decentralized banking system in which banks of varying sizes serve the needs of small busines ses, large businesses and consumers in local, regional, national and multinational markets. During the severe economic downturn in the decade following the Civil War, John Thompson, a 75-year-old Wall Street paper and banker, established Chase National Bank in a one-room office in Manhattan in 1877.Thompson named the bank in honor of his late friend, Salmon P. Chase, who had not only been President Lincolns exchequer Secretary but in addition had served as governor of Ohio and chief justice of the United States. The firm soon became a respected correspondent bank and expanded rapidly in the early 20th speed of light by developing a large bodily business. By 1930, it was the worlds largest bank, with assets of $2. 7 billion. In 1955, it merged with The Bank of The Manhattan Co. to form The Chase Manhattan Bank. 4 This sterling silver guest book cover, 1895, and dinner party service pitcher were commissioned for J.Pierpont Morgans yacht. Corsair was the name given to all quatern ity of the travel yachts owned by the Morgans between 1882 and 1943. J. Pierpont Morgan played a pivotal role in resolving the two-week-long financial crisis in October 1907. His syndicate memorandum outlined plans for the purchase of $30 million in bonds to prevent New York City from defaulting on its obligations. Origins and Influence of J. P. Morgan & Co. JPMorgan Chases otherwise namesake predecessor, J. P. Morgan & Co. , was founded in New York in 1871 as Drexel, Morgan & Co. by J. PierpontMorgan and Philadelphia banker Anthony Drexel. The new merchant banking partnership served signly as an agent for Europeans investing in the United States, ultimately raising much of the capital to support American industrial expansion. It did not take long for the Drexel-Morgan partnership to establish itself as the nations pre-eminent private domestic and foreign bank. The firm made its first big splash in 1879 when it sold financier William Vanderbilts New York Central rail line argum ent without driving down the share price. The deal involving the largest lock of stock ever offered to that time was a huge success, emphasizing Morgans strength as a mobilizer of capital and wholesaler of securities. From that point forward, the Morgan firm was closely associated with the railroad perseverance. Railroads in the United States were plagued throughout the late nineteenth snow by overcapacity and rate wars, but J. Pierpont Morgan saw opportunity in the situation. He became an industry consolidator, reorganizing financially troubled railroads by gaucherie their costs, restructuring their debt, placing their stock in boldnesss he managed and appointing fourth-year executives who were loyal to him.This process, called Morganization, was applied to the Northern Pacific, the Erie, the Reading and many other railroads. By the end of his career, Morgan had an integral role in approximately one-sixth of the track in the United States. J. Pierpont Morgan began his career as the New York agent of his father Junius London-based private bank. He became one of Americas most powerful and influential bankers, heading what became the nations pre-eminent private bank.As the American railroad network neared culmination in the 1890s, the Morgan houses turned to providing funds for the great industrial mergers, including General Electric, U. S. Steel and International Harvester. J. P. Morgan & Co. , as it later was known, became the most powerful investment bank in the world and J. Pierpont Morgan, known for his integrity and judgment, one of bills most influential and powerful bankers, personally intervening in business disputes and orchestrating solutions during economic crises. When gold reserves fell in 1894, J. Pierpont Morgan formed a syndicate to save he gold measuring rod for the U. S. government and, through his influence, played a central role during the 1907 financial panic, saving several trust companies and a leading brokerage house, bailing ou t the City of New York and rescuing the New York Stock Exchange. 5 Orville Wrights passbook from 1912 to 1918 from his account at Bank One predecessor Winters National Bank in Dayton, Ohio. Predecessors of Texas Commerce Bancshares, Inc. helped finance the Houston post Channel, today one of the busiest waterways in the United States, linking the port of Houston and petrochemical plants along the channel with the disconnectedness of Mexico.Financing Major Projects The late 19th and early 20th centuries were an era of memorable engineering projects and rotatory technologies, many financed with capital from heritage JPMorgan Chase institutions. The Brooklyn aver Co. was a major lender for the construction of the Brooklyn Bridge, completed in 1883, which featured the worlds longest suspension span. William L. Strong, founder of The New York Security & assert Co. , was a member of the American finance committee that raised funds for the Statue of Libertys pedestal, the largest 19th century concrete structure in the United States.In 1904, J. P. Morgan & Co. helped finance the Panama Canal by raising $40 million for the U. S. government to bribe land rights from the bankrupt French Panama Canal Co. The purchase, at the time, was the largest real estate transaction in history. 6 In 1911, Union National Bank and National Bank of Commerce in Houston, predecessors of legacy institution Texas Commerce Bancshares, Inc. , helped finance the construction of the 50-mile-long Houston Ship Channel, one of the largest public projects in the Southwest.These banks persuaded other Houston banks to purchase unsold municipal bonds issued to finance the channels construction. The Houston Ship Channel undefendable in 1914 to great fanfare and today is one of the busiest waterways in the United States. Apart from major construction projects, Winters National Bank in Dayton, Ohio, was present at the birth of aviation, providing banking services to the pioneering Wright brothers f rom the early years of their bicycle shop in the 1890s through their invention of the worlds first successful airplane.The Statue of Liberty was partly financed by a group that included the president of a Chemical Bank predecessor, The New York Security & Trust Co. This bank later merged with The Liberty National Bank, which used the statue as its logo between 1891 and 1921. The Brooklyn Trust Co. , a Manufacturers Hanover Trust Co. predecessor, helped finance construction of the Brooklyn Bridge, which opened in 1883. Pictured here are regional predecessors, from left to right First National Bank of Mantua, Ohio National Exchange Bank, Milwaukee, Wisconsin and South Texas National Bank.Porters carrying a currency chest at Fourth National Bank, a Chase Manhattan Bank predecessor, in 1910. Banking at the Beginning of the 20th Century Banking at the cut through of the 20th century was different in many ways than it is today. Most states the primary banking regulators at the turn of t he century prohibited or severely restricted branching, fearing that small banks might have trouble competing with large banks if branching were allowed. As a result, the United States was a nation of one-office banks, the vast majority of which were small institutions.In 1898, New York became one of the first states to permit branch banking on a limited scale when it allowed New York City banks to have branches anywhere in the citys five boroughs. The Corn Exchange Bank, a predecessor of Chemical Bank, right away capitalized on the new rules, opening a dozen branches within four years and changing its focus from providing impute to grain merchants to serving sell customers. When New York City inaugurated its underground system in 1904, the bank opened branch offices in residential areas along the subway lines to serve commuters.In 1913, Congress established the national Reserve System to regulate the money supply and manage the economy. The Federal Reserve formally assumed th e role of central banker that had been informally held by J. Pierpont Morgan for years. The Federal Reserve Act of 1913 gave national banks the right to make real estate loans and exercise trust powers. The 19th century bodily seal shaped like a lions head and the Brandt Automatic Cashier, a mechanically skillful change maker from the 1920s used by bank tellers, are examples of early mechanical devices used in banks. 7 warrant Trust Co. mployees, below, posed at an officers training camp in Plattsburgh, New York, in 1917. The Ouachita National Bank in Monroe, Louisiana, distributed this 1919 customer brochure, left, profiling all-important(a) leaders in the Allied cause. Patriotic imagery was used extensively in posters to spur sales, as in this one from 1918. Many JPMorgan Chase & Co. predecessors were active in the distribution of War Bonds that helped finance the American war effort. The globe War I Years World War I was devastating for Europe, America and the world. Many ban k employees joined the armed forces, in some cases giving their lives.J. P. Morgan & Co. played a major role in support the Allied victory. In September 1915, the firm arranged a $500 million Anglo-French loan, at that time the largest foreign loan in Wall Street history. Moreover, the firm was chosen by the European Allies as their U. S. purchasing agent. Its purchases during the war involving allthing from horses to artillery shells came to $3 billion, representing nearly half of all American supplies sold to the European Allies. The war was, at the same time, a watershed for the U. S. economy and the nations banks.The United States was a net debtor nation when the war began in 1914. After the war, with many move of Europe in ruins and desperately in need of reconstruction loans, the United States supplied much of the capital and became a net book of factsor nation. In the process, New York emerged as the worlds leading capital market. Before the United States entered the wa r, J. P. Morgan & Co. aided the British and French, arranging a $500 million loan that was offered to investors in the United States. Britains King George V sent this cable personally thanking J. P. Morgan, Jr. , for his wartime help. Shanghai The Roaring 20s The banking industry changed dramatically in the 1920s, a decade of innovation and diversification. Many banks formed investment departments to meet customer demand for government and corporate securities. Some large banks went beyond the marketing of securities and established underwriting affiliates. Chase National Bank and warrantee Trust Co. in New York became major players in the underwriting business Chase in 1917 through its Chase Securities Corp. affiliate and Guaranty Trust through its Guaranty Co. affiliate, established four years later.variegation took banks into other areas as well. In 1919, The First National Bank of Chicago created an affiliate, First National investment Co. , which invested in chip mortgages a nd operated a travel agency. The 1920s also saw a wave of bank mergers, failures and voluntary liquidations, with the result that the number of banks in the United States declined by 20% from 1921 to 1929. Global expansion was some other key theme of the 1920s, made possible by the Federal Reserve Act of 1913, which removed many legal obstacles in the chartering of overseas branches.Ironically, some banks suddenly found it easier to establish branch offices in remote lands than to overcome state anti-branching laws in order to open branches at office. Chase National Bank, after acquiring five banks during the 1920s and three Latin American branches in Cuba and Panama, merged with The Equitable Trust Co. of New York in 1930. Equitable Trusts branches in Mexico City, London, Paris, Hong Kong, Paris Shanghai and Tianjin all became part of Chase when the two companies merged. Chase began the 1930s with one of the banking industrys larger overseas branch systems, with a presence in E urope, Asia and Latin America.The Chase-Equitable merger not only created the worlds largest bank in terms of assets and deposits but also gave the Rockefeller family, which controlled Equitable, a strong connection to Chase. The Rockefellers have been associated with Chase ever since. not only were banks pertained in foreign opportunities, so were many stock market investors. In 1927, Guaranty Trust Co. opened the way for Americans to vitiate foreign stocks by inventing the American Depositary Receipt (ADR). JPMorgan Chase & Co. continues as the leading ADR depositary bank today. San Juan LondonForeign branches, such as those in Shanghai, Paris, San Juan and London, offered full-service banking in the 1920s, including trade financial backing and government loans. 9 On March 24, 1933 customers mobbed the new National Bank of Detroit to open 562 accounts on the banks opening day, following six weeks without banking services in Detroit. Customers brought in bundles of currency and coins ranging from a some hundred to several hundred thousand dollars. Numerous First National Bank of Chicago customers wrote letter to Melvin Traylor, the banks president, thanking him for inspiring confidence and offering him their support.The 1929 Market Crash and the Great Depression Although the banking industry had an abundance of money to lend in the 1920s, large corporations borrowed less, choosing instead to finance a sizable pot of their capital needs in the stock and bond markets. Consequently, banks sought new lending outlets, including loans to individuals speculating in the stock market. As the stock market rose, these loans produced solid returns. But when the market crashed in October 1929, many of the loans went into default.For the banking industry, the 1930s would be the most difficult period in history. In the years after the crash, thousands of banks faced hard times because of loan losses, depositor withdrawals, 10 inadequate reserves and, in some cases, the collapse of speculative investments made in the 1920s. Even well-capitalized, well-managed institutions were battered by the financial panics that swept across the nation. In June 1932, depositors began withdrawing money from First National Chicagos largest bank when unknown individuals circulated flyers claiming First National was insolvent.Media reports speculated that the attacks were the work of political enemies of First Nationals president, Melvin Traylor, considered a potential Democratic Party nominee for U. S. president. Traylor responded to the attacks with an impassioned speech, attesting to First Nationals soundness, ending the run. In Houston, two of the citys major banks were on the brink of collapse in October 1931. National Bank of Commerce President Jesse Jones called a secret meeting of the citys bank leaders, urging them to pool $1. 25 million to save the failing institutions.Some of the bankers did not want to essay any of their limited capital, but Jones arg ued that allowing the two banks to collapse might bring down the entire banking welkin in the city. A rescue was finally agreed to, including the absorption of one of the failing banks by Jones National Bank of Commerce. Because of his leadership, not a single bank in Houston collapsed during the Depression. While thousands of banks across the country went out of business during the 30s, JPMorgan Chase predecessor National Bank of Detroit was formed at the very depths of the Depression.After breads governor declared an eight-day bank holiday in February 1933 closing all of Michigans banks so they could regroup financially Detroits two largest banks lacked the funds to reopen, leaving the city virtually without banking services for the next six weeks. General Motors Corp. and the federal Reconstruction Finance Corp. , the government agency that provided emergency financing to banks, stepped into this void to establish National Bank of Detroit. Local corporations and consumers, de sperate for geting services, flocked to the new institution.On the banks first day, Chrysler Corp. deposited $4 million, General Motors $1 million and General Electric Co. $500,000. The two founding institutions divested their self-possession in the 1940s, and National Bank of Detroit grew into the largest bank in Michigan. It merged with First Chicago Corp. in 1995 to form First Chicago NBD Corp. first-class business in a first-class way In whitethorn 1933, J. P. Morgan, Jr. , who had become the senior partner of J. P. Morgan & Co. following his fathers death in 1913, testified at a serial publication of Senate committee hearings.He publicly stated the guiding principle of his firm to take in first-class business in a first-class way. First-Class Business In May 1933, J. P. diddly-shit Morgan, Jr. , as well as several Morgan partners and other major bank executives, testified at hearings held by the Senate Committee on Banking and Currency investigating the causes of the 19 29 stock market crash and the subsequent banking crisis. The hearings raised the move of the role banks played in the speculative fever leading up to the crash. J. P. Morgan & Co. as the first private bank investigated and Jack Morgan the first Morgan witness. In his opening statement, Jack Morgan emphasized with great dignity the duties and moral philosophy of the private banker upheld by three generations of Morgans at the firm and still a cornerstone of JPMorgan Chase & Co. today If I may be permitted to speak of the firm of which I have the honour to be the senior partner, I should state that at all times the idea of doing only first-class business, and that in a firstclass way, has been onward our minds.We have neer been satisfied with simply keeping within the law, but have eer sought so to act that we might fully observe the professional code, and so maintain the quote and reputation which has been handed down to us from our predecessors in the firm. This build at 23 Wall Street, which opened in 1914, was the headquarters of J. P. Morgan & Co. for 75 years. It embodied the discreet style of business that characterized the firm. The building facade never bore a name, only the number 23 on its entrance doors. 11Wartime volunteer activities of bank employees included keeping blood drives, assembling care boxes, knitting clothes and raising money to buy ambulances. Chase National Bank employees folded surgical dressings. Arm bands, far left, were given to New Yorks Manufacturers Trust Co. air raid wardens. World War II ad campaigns furtherd the patriotic efforts of banks as bond sellers, buyers of exchequer securities and lenders to industry. Glass-Steagall In the wake of the banking crisis, President Franklin D. Roosevelts administration sought legislation to reduce banking risk. Congress responded by passing the Banking Act of 1933.Popularly known as GlassSteagall, the act created federal deposit insurance, prohibited the allowance of interest on checking accounts and sure the Federal Reserve to impose a jacket on the interest banks could pay on time deposits and savings accounts. Equally important, the law erected a wall between commercial banking (taking deposits and making loans) and investment banking (underwriting securities). Three predecessors, in particular, had to make a choice. J. P. Morgan & Co. , still the worlds most powerful bank, chose to continue as a commercial bank, spinning off its investment banking activities.Guaranty Trust Co. , which also had a major presence in commercial and investment banking, closed its securities affiliate and underwriting business. Morgan and Guaranty merged in 1959 to create Morgan Guaranty Trust Co. of New York, later forming a holding company that restored the famous J. P. Morgan & Co. name. For Chase National Bank, the decision was relatively easy. Its newly elected chairman, Winthrop Aldrich, had spoken out publicly in favor of driving a wedge between commercial and inv estment banking. Chase National complied immediately with the new law, closing or spinning off all its Chase securities affiliates.World War II The banking industry recovered from the trauma of early 1933 and began to stabilize. More than 4,000 banks had failed during the year. In 1934, there were just 61 failures over the next eight years, 53 institutions, on average, failed annually. After America entered the war in 1941, U. S. commercial banks again became the leading distributors of War Bonds, which were sold in denominations as small as $10. By wars end, more than 60% of the American population had bought War Bonds, with total purchases coming to $186 billion.Hundreds of thousands of bank employees served in the military during the war. As men (and some women) left their jobs to enlist, banks appointed women to positions previously held by men an initial small fracturing of the traditional male dominance of banking. The Great Depression had highlighted the need for increased g lobal cooperation to countermand another worldwide economic collapse. Toward the end of World War II, policymakers in the United States, Great Britain and other nations began to develop an international system aimed at promoting financial stability and encouraging global trade. 12During World War II, Valley National Bank, the largest bank in genus Arizona, offered a unique loan of up to $ three hundred to airmen stationed at Arizona airfields, enabling them to travel on home leaves. One hundred percent of the airmen repaid their loans. In 1973, Chase Manhattan Bank chairman David Rockefeller visited china and met with Chinese Prime Minister Chou En-Lai. Chase became the first U. S. correspondent to the Bank of China since the 1949 Chinese Revolution. London As one of the first U. S. banks to recognize growing international trade, Chase National Bank used a bold ad campaign to promote its capabilities abroad.Chase National Banks Tokyo branch initially concentrated on assisting Am erican businesses in the development of trade with Japan. By the early 1950s, Chase opened a branch in Osaka, as well as additional branches on American bases in Japan, providing banking services to U. S. military personnel. Global Banking Globalization in the postwar period began slowly. By 1965, only 12 U. S. banks had opened branches outside the United States. These included five predecessors of JPMorgan Chase The Chase Manhattan Bank, Chemical Bank, The First National Bank of Chicago, Manufacturers Hanover Trust Co. nd Morgan Guaranty Trust Co. Chases postwar expansion was led by David Rockefeller, who joined the bank in 1946 as assistant manager of the Foreign Department after serving in armament intelligence during World War II. He was elected vice president of Chase in 1949, president in 1961 and chief executive officer in 1969. In 1947, at the invitation of U. S. military Paris In 1960, the newly formed Morgan Guaranty Trust Co. opened a second London branch on Berkeley Sq uare. Its Paris office on the historic Place Vendome was germinated by J. P. Morgan & Co. in 1917.It remains the firms main office in Paris today. authorities, Chase established the first U. S. postwar bank branches in Germany and Japan. These branches joined existing Chase branches in London and Paris and were followed by the opening of others around the world. In the 1970s, Chase added nearly 40 new branches, representative offices, affiliates, subsidiaries and joint ventures outside the United States, including two historic firsts in 1973 Chase opened a representative office in Moscow, the first presence for a U. S. bank in the Soviet Union since the 1920s and Chase became the first U.S. correspondent to the Bank of China since the 1949 Chinese Revolution. In addition to Chase, several other predecessors transformed themselves into global institutions. Morgan Guaranty Trust Co. became a major international player. Prior to the merger with Guaranty Trust Co. , J. P. Morgan owned a one-third interest in London merchant bank Morgan Grenfell & Co. while Guaranty had maintained a London office since early 1897. These operations were a platform for global expansion. By 1965, Morgan Guaranty had five overseas branches, and by 1978, it had 16.Among Midwestern banks, The First National Bank of Chicago was perhaps the most active internationally, establishing offices in 25 countries by 1973. By 1980, some 160 U. S. banks were operating branch or representative offices outside the United States. In turn, many banks in Europe, Asia and other regions extended their operations to the United States. 13 This 1955 ad denote the merger of Chase National Bank and The Bank of The Manhattan Co. Pictured here, from left to right, are logos from JPMorgan Chase & Co. predecessor holding companies Horizon Bancorp (N.J. ), American National Corp. (Ill. ), American Fletcher Corp. (Ind. ), Texas Commerce Bancshares, Inc. and First Banc Group of Ohio, later renamed Bank One Corp. Ban king Industry Consolidation In addition to the powerful trend toward globalization, a second major postwar trend was industry consolidation through mergers, acquisitions and the formation of multi-bank holding companies. In New York City, a wave of mergers created a few big banks serving many customers through extensive branch networks. All four of JPMorgan Chases major New York City heritage firms J.P. Morgan & Co. , The Chase Manhattan Bank, Manufacturers Hanover Trust Co. and Chemical Bank grew through mergers in the 1950s. After passage of the 1956 Bank Holding Company Act, all four created holding companies that gained popularity and helped shape the industry for decades. The new law allowed holding companies owning just one bank to diversify into some nonbanking activities. 14 First Banc Group of Ohio, formed in 1968, was one of the most progressive and successful multi-bank holding companies in the nation, created by City National Bank & Trust Co. f capital of Ohio and Far mers Saving & Trust Co. , a smaller Ohio bank. First Banc Group acquired banks throughout Ohio and later extended its acquisitions to Arizona, conscientious objector, Indiana, Texas, Utah, Wisconsin and other states. The company later changed its name to Bank One Corp. the nation to offer customers a single retail charge account that provided doctrine at a citywide network of stores. In 1966, shortly before founding First Banc Group of Ohio, City National Bank & Trust Co. of Columbus became one of the first banks outside California to introduce BankAmericard, the precursor of visa.Five years later, City National was involved with the first major national test of point-of-sale terminals for processing character card transactions. Manufacturers Hanover Trust Co. and Chemical Bank entered the national credit card business in 1969 as founding members of the Eastern States Bankcard Association. This group cogitate up with other regional bank groups to form a comprehensive network th at began issuing tease under the Master Charge Plan (now MasterCard), a direct competitor of BankAmericard. In 1981, Bank One received national attention for linking its Visa card issuance and data processing technology to several ajor brokerage firms money market funds, giving customers access to their money market accounts through their Visa cards. Propelled in part by the popularity of this new service, Bank One became the nations largest processor of Visa card transactions. Development of Credit Cards Although the first multi-use credit card was launched by Diners Club in 1950, credit cards did not gain widespread public acceptance until the late 1960s. Several JPMorgan Chase predecessors played key roles. In 1958, The Chase Manhattan Bank introduced the Chase Manhattan Charge Plan, becoming the first New York City bank and one of the first inBy 1969, the Chase Manhattan Charge Plan had become the leading bank credit card in the New York area. Through the vision and foresight o f Chairman John G. McCoy, City National Bank & Trust Co. launched several intersection pointion model cashdispensing machines in 1970, using BankAmericard credit cards. Columbus, Ohio, became a test market for the new technology. ATMs and Debit Cards JPMorgan Chase predecessors were instrumental in introducing modify teller machines (ATM), which revolutionized banking by allowing customers to conduct transactions from almost any ATM in the world.In 1969, Chemical Bank installed the first prototype cash-dispensing machine in America, a precursor of the ATM, becoming the first bank in the country to allow customers to withdraw cash 24 hours a day. City National Bank & Trust Co. of Columbus also embraced the new technology, installing the first production-model cash-dispensing machines in 1970. Several predecessors of JPMorgan Chase also were instrumental in forming some of the early electronic banking networks to enable customers to withdraw funds from ATMs not only at their own ban ks but also at competitor banks.Marine National Exchange Bank of Milwaukee helped establish TYME (Take Your Money Everywhere) National Bank of Detroit was a founder of METROMONEY, the first shared electronic bank terminal program in Michigan and in 1985, Chemical Bank and Manufacturers Hanover Trust Co. were among the founders of NYCE (New York Cash Exchange), the first automated teller network in the New York metropolitan area. Bank calculate cards, introduced in the late 1970s, enabled customers to withdraw cash from ATMs, pay for retail purchases with a card in lieu of a check and access additional banking services.The Chase Manhattan Bank introduced the Chase Money Card the first Visa debit card offered by a bank in New York. In 1969, Chemical Banks prototype cash-dispensing machine, developed by Docutel Corp. , was designed to be activated by magnetic-encoded Master Charge credit cards. 15 As promoted in this early 1980s ad, The First National Bank of Chicago offered the firs t bank account fully competitive with money market funds and insured by the Federal Deposit Insurance Corporation. Home Banking by Computer Several JPMorgan Chase predecessors played key roles in the development of home banking.In 1980, Bank One developed and tested one of the earliest online home banking services. Called Channel 2000, it allowed bank customers to view their bank and department store balances on a television screen, pay bills and shift money between accounts. The service worked over regular telephone lines the Internet which is used today for home banking was not commercialized until 1987. In 1983, Chemical Bank introduced Pronto, the first major full-fledged online banking service. use a home computer, modem and software, customers could pay bills, transfer funds, review account balances, track budgets and balance their checkbooks.After establishing the service in New York, Chemical began licensing it to banks around the country and later introduced a version fo r small businesses. In 1985, The Chase Manhattan Bank launched its electronic home banking service, called Spectrum, which not only permitted banking transactions but also allowed customers to buy and sell stocks through a discount broker affiliated with Chase. Difficult Competitive Environment The restrictions impose on banks by Glass-Steagall began to erode in the 1970s as competition from nonbanking institutions and the growing role of echnology lot change. Innovative financial products were launched by brokers, mutual fund companies, savings banks and other providers products that enabled customers to earn higher returns on their money and enjoy greater flexibility in managing their assets. Many of these products competed with savings accounts, checking accounts and other banking services. In this prolific environment of innovation and change, regulatory policies originally aimed at protecting banks were handicapping their ability to compete, and rate deregulation began slowl y.In 1978, the Federal Reserve authorized banks to issue a new product the six-month money market certificate with a variable rate ceiling tied to six-month Treasury bills. Nearly all of JPMorgan Chases predecessor banks offered the certificates. Later that same year, banks were authorized to introduce sweep services, overcoming the long-standing prohibition against paying interest on checking accounts. This helped banks compete with brokerage firm sweep programs and thrift institutions interest-paying NOW checking accounts, which combine checking and savings in a single account.When in 1979 commercial banks got regulatory approval to offer NOW checking accounts, The Chase Manhattan Bank was among the first to introduce the new service. Spurred in part by this piecemeal and sometimes complex deregulation, Congress passed the secretary Institutions Deregulation and Monetary Control Act of 1980, which phased out all savings rate ceilings on consumer accounts over a six-year period, completely removing the rate ceilings imposed by Glass-Steagall by 1986. Ever committed to advancing bank technology, JPMorgan Chases predecessors were innovators of early home banking technologies.Bank One tested Channel 2000 in 1980. 16 By the 1980s, debate over banking deregulation and the removal of barriers between commercial and investment banking had raged for nearly two decades. J. P. Morgan & Co. Chairman Dennis Weatherstone, pictured in the 1986 Fortune article, was eager for underwriting. The Chase Manhattan Bank campaigned aggressively for the repeal of Glass-Steagall. A 1988 ad noted that 77% of business executives in non-financial firms supported repeal and that bank customers had been denied the benefits of free enterprise for far too long. Erosion and Repeal of Glass-Steagall Another fundamental element of GlassSteagall the wall between commercial and investment banking crumbled in response to market change, and JPMorgan Chase heritage institutions were in the c enter of the action. In 1987, The Chase Manhattan Corp. became the first commercial banking institution to receive Federal Reserve approval to report commercial paper (unsecured short-term corporate debt). Another New York bank previously had been permitted to sell commercial paper as an agent, but Chase was the first to underwrite and deal in paper for its own account.The Fed quickly expanded the scope of the Chase ruling by allowing three major bank holding companies, including J. P. Morgan & Co. combine, to underwrite not only commercial paper but also mortgage-backed securities, municipal revenue bonds and securities backed by consumer receivables. The Federal Reserve further broadened its ruling in 1989 when it granted J. P. Morgan & Co. Incorporated the authority to underwrite corporate debt, marking the first corporate debt securities offering underwritten by a commercial bank affiliate in the United States since Glass-Steagall was signed into law in 1933.One year later, th e Fed approved Morgans covering to underwrite stocks. In the wake of this landmark ruling, Morgan quickly built a leading investment banking operation and by 1997 was the fourth-largest securities underwriter in the world. Faced with the reality that the GlassSteagall barriers were being dismantled by regulators, Congress in 1999 passed the Gramm-Leach-Bliley Act, which removed the remaining barriers and allowed financial companies to participate fully across segments. Among other provisions, the new law allowed banks to acquire full-service brokerage and investment banking firms.Beginning in the 1980s, J. P. Morgan & Co. Incorporated had developed its investment banking capability through home(a) development. Chase, by contrast, built its capability through merger, starting with the 1999 acquisition of San Francisco investment bank Hambrecht & Quist, a medical specialist in the technology industry. Continuing its expansion, in 2000, Chase bought The Beacon Group, a merger and ac quisition informative and private investment firm, and London-based Robert Fleming Holdings Ltd. , an asset management and investment banking concern. Deregulation and Industry ConsolidationThe emergence of nationwide branch banking was another cornerstone of the changes taking place in financial services. As of 1975, banking was still to begin with a local business. Only 14 states allowed statewide branching, and none permitted out-of-state banks to open branches within their borders. However, pressure for greater branching freedom was mounting, reflecting growing awareness of the consumer convenience of branches, the need for banks to diversify their risks beyond their local markets, and an appear legislative consensus that deregulation would promote freer markets and greater competition.Branching deregulation occurred in the 1980s at the state rather than the federal level. In the period from 17 This graphic from a 1986 First Chicago Corp. internal newsletter identified the se ven Midwest states that adopted reciprocal banking legislation. This permitted across-border bank acquisitions, which predecessors First Chicago Corp. , NBD Bancorp, Inc. and Bank One Corp. aggressively pursued. 1975 through 1990, more than 25 additional states including New York, Ohio, Texas and others in which JPMorgan Chase predecessors operated authorized statewide branching.In 1984, The Chase Manhattan Bank ventured to upstate New York by acquiring Lincoln First Banks Inc. in Rochester. Following the transaction, Chase had 330 branches across the state, the largest branch network in New York. As Illinois anti-branching laws were eased, First Chicago Corp. the holding company for The First National Bank of Chicago made a series of acquisitions to expand its business. In 1984, First Chicago acquired Chicago-based American National Corp. and three years later acquired First United financial work Inc. a five-bank holding company in suburban Chicago. The 1980s also saw the for mation of regional banking zones, representing a major step toward national banking. Banc One Corp. (later Bank One) was specially active in acquiring banks not only in its home state of Ohio but in other states as well. Its first out-of-state acquisition was the purchase of Purdue National Corp. of Lafayette, Indiana, in 1984. By 1994, it owned 81 banks with more than 1,300 branches in 13 states, including banks in Wisconsin (The Marine Corp. , Illinois (Marine Corp. ), Colorado (Affiliated Bankshares of Colorado), Kentucky (Liberty National Bancorp), Oklahoma (Central Banking Group), West Virginia (Key Centurion Bancshares), Arizona (Valley National Corp. ) and Utah (Capital Bancorp). More acquisitions soon followed. Banking zones expanded rapidly in geographic size as more states passed reciprocal banking laws. In 1987, Chemical New York Corp. acquired Texas Commerce Bancshares, Inc. , the largest interstate banking merger in U. S. history at that time, and First Chicago Corp. c quired Beneficial National Bank USA of Wilmington, Delaware, becoming the third-largest issuer of bank credit cards in the United States. The growth of banking zones culminated in 1994 with the passage of the federal Riegle-Neal Interstate Banking and Branching force Act, which made national banking the law of the land. Riegle-Neal permitted bank holding companies to buy banks throughout the United States beginning in the fall of 1995 and permitted nationwide branching that is, branch offices owned and operated by a single bank as of June 1997.Many multi-state, multi-bank holding companies soon began to streamline operations by merging their banks. In 1999, Bank One Corp. integrated its banks in Ohio, Michigan, Indiana and Illinois into a single bank with the Bank One name. The 1990s represented a period of mergers and consolidation for the banking industry. Because of consolidation, the number of commercial banks in the United States declined to 7,549 as of mid-2005 from 12,343 at the end of 1990. However, the number of branches and automated teller machines continued to increase, providing consumers with more banking outlets than ever. 18 991 John F. McGillicuddy, left Manufacturers Hanover Corp. Walter V. Shipley, right Chemical Banking Corp. 1995 Richard L. Thomas First Chicago Corp. 1996 Thomas G. Labrecque The Chase Manhattan Corp. Walter V. Shipley Chemical Banking Corp. 1998 Verne G. Istock First Chicago NBD Corp. 2000 Douglas A. Warner III J. P. Morgan & Co. Incorporated John B. McCoy Banc One Corp. William B. Harrison, Jr. The Chase Manhattan Corp. Verne G. Istock NBD Bancorp, Inc. Key Mergers That Shaped JPMorgan Chase & Co. Many JPMorgan Chase & Co. predecessors took part in the merger movement that began in the early 1990s.Key transactions that led to the formation of JPMorgan Chase include In 1991, Chemical Banking Corp. merged with Manufacturers Hanover Corp. , keeping the name Chemical Banking Corp. , then the secondlargest banking institut ion in the United States. In 1995, First Chicago Corp. merged with NBD Bancorp Inc. , forming First Chicago NBD Corp. , the largest banking company based in the Midwest. In 1996, Chemical Banking Corp. merged with The Chase Manhattan Corp. , keeping the name The Chase Manhattan Corp. and creating what then was the largest bank holding company in the United States. In 1998, Banc One Corp. merged with First Chicago NBD Corp. , taking the name Bank One Corp. Merging subsequently with Louisianas First Commerce Corp. , Bank One became the largest financial services firm in the Midwest, the fourth-largest bank in the United States and the worlds largest Visa credit card issuer. In 2000, The Chase Manhattan Corp. merged with J. P. Morgan & Co. Incorporated, in effect combining four of the largest and oldest money center banking institutions in New York City (Morgan, Chase, Chemical and Manufacturers Hanover) into one firm called JPMorgan Chase & Co. In 2004, Bank One Corp. merged with J PMorgan Chase & Co. , keeping the name JPMorgan Chase & Co. Fortune magazine said that the combined bank will be big and strong in a panoply of businesses, adding that the deal has been widely lauded by investment analysts. The New York Times said the merger would realign the competitive landscape for banks by mating the investment and commercial banking skills of JPMorgan Chase with the consumer banking strengths of Bank One. In 2008, JPMorgan Chase & Co. acquired The Bear Stearns Companies Inc. strengthening its capabilities across a broad range of businesses, including prime brokerage, cash clearing and energy trading globally. 2004 James Dimon Bank One Corp. William B. Harrison, Jr. JPMorgan Chase & Co. 19 In over 45 years of collecting, JPMorgan Chase & Co. has built an international art collection with great breadth and depth. The collection includes a diverse range of artwork, with representation from every country in which we do business. Tony Cragg Palette, 1980 Painted w ood and found objects JPMorgan Chase & Co.Today JPMorgan Chase & Co. is a leading global financial services firm with operations in more than 50 countries and has its corporate headquarters in New York City. Under the J. P. Morgan and Chase brands, it serves millions of consumers in the United States and many of the worlds most prominent corporate, institutional and government clients. Its six major businesses are coronation Bank J. P . Morgan is one of the worlds leading investment banks, with deep client relationships and broad product capabilities.The Investment Banks clients are corporations, financial institutions, governments and institutional investors. The firm offers a full range of investment banking products and services in all major capital markets. Retail Financial Services Retail Financial Services helps meet the financial needs of consumers and businesses. Under the Chase brand, the consumer business includes credit card, small business, home finance, auto finance, h ome equity loans, education finance and insurance. Card Services Chase Card Services is one of the largest credit card issuers in the United States.The firm offers a wide variety of worldwide purpose cards to satisfy the needs of individual consumers, small businesses and partner organizations. Commercial Banking Commercial Banking serves a variety of clients, including corporations, municipalities, financial institutions and notfor-profit entities. The firms broad platform positions Commercial Banking to deliver extensive product capabilities including lending, treasury services, investment banking and asset management to meet its clients needs.Treasury & Securities Services Treasury & Securities Services is a global leader in providing transaction, investment and information services to support the needs of institutional clients worldwide. Treasury & Securities Services is one of the largest cash management providers in the world and a leading global custodian. summation Manag ement addition Management is a global leader in investment and wealth management. Asset Management clients include institutions, retail investors and high-networth individuals in every major market throughout the world. 20 2. 5. . 4. 3. 10. 11. 12. 13. 8. 7. 6. 9. 14. 15. 16. 17. 18. look COVER BACK COVER The JPMorgan Chase Archives Begun in 1975 by Chase Manhattan Bank Chairman David Rockefeller, the JPMorgan Chase Archives is one of the oldest corporate history programs in the United States. Recognized as an important corporate asset and an invaluable resource for financial history, the Archives has continually advanced the firms rich legacy by collecting and preserving historical materials of JPMorgan Chase & Co. and its more than 1,000 predecessor institutions worldwide.With over 7,000 feet of records, this extensive collection traces the remarkable origins, developments and achievements of the firm from 1799 to the present and documents key events and business decisions, offer ing valuable insight into the firms mission and vision. 1. South Texas National Bank, Texas Bank clerks, ca. 1900s 2. First National Bank, Youngstown, Ohio Blueprint detail of building facade, 1924 3. The Bank of The Manhattan Co. , New York, New York $100 note, ca. 1830s 4. The National Bank of Commerce, New York, New York $5 note, 1885 5. J. P. Morgan & Co. , New York, New York J. Pierpont and J.P. Jack Morgan, 1912 6. Lincoln-Alliance Bank, Rochester, New York Bronze table leg, early 1900s 7. Rapides Bank of Alexandria, Louisiana Hammond manual typewriter, ca. mid-eighties 8. The First National Bank of Chicago, Chicago, Illinois Bronze teller cage, 1931-1932 9. J. P. Morgan & Co. , New York, New York J. Pierpont Morgans M document clip, ca. 1900s 10. Chase National Bank, New York, New York Check processing department, ca. 1940s 11. J. P. Morgan & Co. , Paris, France 14 Place Vendome ceiling by Eugene Lacost, 1860 12. The Bank of The Manhattan Co. , New York, New York Vault lock, ca. 840s 13. The Chase Manhattan Bank, New York, New York Vault, 25 Broadway branch, 1921 14. The First National Bank of Chicago, Chicago, Illinois Exterior building clock, 1906 15. Manufacturers Hanover Trust Co. , New York, New York Gold scale, early 20th century 16. Wisconsin Marine and Fire Insurance Co. , Milwaukee, Wisconsin $3 note, ca. 1851-1858 17. The El Paso Bank of Colorado Springs, Colorado Springs, Colorado $10 note, 1900 18. Chase National Bank, New York, New York Portrait bust of Salmon P. Chase, ca. 1870s Thomas Dow Jones, sculptor 2008 JPMorgan Chase & Co. All rights reserved.