January 31, 2010
J. M. (100%) Nichols, president and principal stockholder of the First National Bank of Englewood, Chicago, now sits on a two and one-half million dollar hoard of cash, and let the New Deal Lump it!
Business Week, 1936
By Gerry Curran
Reflecting on the current financial crisis it’s interesting to know that long ago a lone Chicago banker set an example on how a bank should function. That banker was John Milton Nichols, president of the long-gone First National Bank of Englewood at Sixty-Third Street and Stewart Avenue.
Nichols was known as "One-Hundred Per Cent John," as that was the level of liquidity he kept to pay depositors in the event they all closed their accounts at the same time. To maintain that degree of liquidity, he was very conservative. His interest rates were low and the bank’s investments were nearly risk-free. He looked down his nose at banks that didn’t operate along those same principles. While irresponsible bankers bothered him, he didn’t make a big deal about them. He figured their loose ways would catch up to them and he’d tell everybody ‘I told you so!’
Though Nichols attained a fair amount of recognition for his strong banking principles, it was his battles with the federal government over their banking rules and regulations that garnered headlines. "One-Hundred Per Cent John’s" time to shine came during the 1930s.
The 1932 election brought hope to millions of Americans laid low by the Great Depression when bank failures were a frequent, if not daily, occurrence. During the period of 1930-33, Chicago, of all large U.S. cities, experienced the greatest number of bank failures. Obviously, something had to be done.
Among the remedies tried, few were more successful than the Federal Deposit Insurance Corporation which guaranteed the safety of checking and savings accounts in Federal Reserve System member banks up to $2,500 (now $250,000). To illustrate the impact of the FDIC, consider this: From October 1929 through the end of 1933 more than 9,000 banks failed nationwide—4,004 during waning months of the Hoover administration alone. Then President Roosevelt signed the Glass-Steagall Act (also known as the Banking Act of 1933) creating the FDIC. From 1934 through 1941, there were only 370.
To fund the program, banks were to be assessed one-half of one percent of their assets. Bankers hated it. Francis Sisson, then-president of the American Bankers Association, declared the concept of paying into a fund to insure a bank’s losses "unsound, unscientific, unjust, and dangerous." Even President Roosevelt disliked it but public support of it was too great to ignore. While most bankers merely hated the plan, "One-Hundred Percent John" loathed it.
Nichols continued operating his bank as always: conservatively. He told TIME Magazine in October 1934 “If I were to put any of our 17,000 depositors behind my desk to pass on the type of security (that) borrowers offer these days they wouldn’t make the loans. Then why should I? I haven't been making much money lately, but I've been playing a lot of golf."
On December 26, 1933, Nichols announced that his bank would not participate in the FDIC plan unless absolutely compelled by the federal government. He felt, because of his bank’s liquidity policy, his membership in the FDIC was unnecessary. It was meant for those other guys. The next day, according the Chicago Tribune, “. . . Mr. Nichols has insisted that bankers perform their duties in such a way that it will not be necessary for them to lean on the government.”
The opening week of 1934 began Nichols’s headline-grabbing campaign against the FDIC and anything else related to the New Deal—or as he called it, the "Mis-Deal." He took on the persona of Old Man Potter but with Bugs Bunny’s attitude. On January 6, he restated his refusal to pay First National Bank of Englewood’s premium of $10,500, which established him, at that time, as the nation’s lone holdout of the federal government’s 6,000 reserve member banks. Less than a week later, addressing the Kiwanis at the Hamilton Club, he called the deposit guaranty plan “a farce.” According to the Tribune, he demanded that bankers come out in the open with complete financial statements...telling depositors how their money was being spent. Then, in an eerily prophetic statement, he focused on his central concern over the FDIC: “This deposit insurance scheme will throw open the door for one of the wildest eras of speculation this country has ever known. There would be no incentive for good banking. Why should a banker worry about the kind of loans he makes if he knows that if he gets into difficulty, the government will make good his losses?”
A month later, First National Bank of Englewood announced in a letter to depositors that they had amended its by-laws to allow the bank—in emergencies only—to pay depositors in cash or government securities. There was a proviso, which read: “. . . that the bank had on hand cash and government securities in an amount equal to or in excess of its total deposits.” Nichols ended the letter saying that he “. . . hoped that the day will come when he will be able to cease operating a ‘glorified currency exchange’ and run a bank.”
In May 1934, Nichols told some of his customers—3,000 of them—that accounts of $50 or less must be closed, claiming they were too expensive to maintain and, of course, blamed the whole thing on the New Deal. Hey, "One-Hundred Percent John" was just getting warmed up!
Addressing an Executives Club luncheon at the Sherman House in June that year, Nichols called the administration and Congress ‘a bunch of yes men.’ He charged FDR, whom he called Franklin Deficit Roosevelt, with insincerity and labeled him ‘the greatest socialist of all, not barring even Lenin.’ He was informed there were rumors of him soon being prosecuted for failure to pay the bank’s FDIC assessment. He said he’d welcome an appearance in federal court. While the July 1 payment assessment deadline passed, Nichols stood his ground. By this time, a few other— though much smaller—banks had also refused to pay the assessment but First National Bank of Englewood stood out.
Three weeks later, Nichols read in the Chicago Tribune that the FDIC intended to file suit in the next few days against First National Bank of Englewood to force payment of the assessment. He dashed off an angry letter to FDIC Chairman Leo Crowley that dared Crowley to make good his threat, with the statement “...If you are determined to crucify sound banks, such as ours, go to it. Tearing into sound banking institutions and supporting the weak ones can have but one ending.”
By October, the government increased the pressure on "One-Hundred Percent John." According to the Tribune, the government threatened “to fine (Nichols) $100 for every teller’s window he had open each day, because of his failure to join the (FDIC).” Nichols displayed the Fed’s warning in a poster in the lobby of First National Bank of Englewood and added:
“This Federal Deposit Insurance idea is merely a wolf in sheep’s clothing,” the poster read “...It is in no sense of the word insurance, for with true insurance the premium is based on the risk. Under their plan, a solvent bank such as ours is forced to pay the same premium as the one that couldn’t pay 10 cents on the dollar.” He called the plan “a shakedown ...to protect political favorites.”
Barely a week into 1935, with some banks still collapsing, First National Bank of Englewood declared a six percent dividend. Nichols noted that his bank’s liquid assets in cash and government securities equaled 100.59 percent of its deposits of $6,657,163. ""One-Hundred percent John" was still 100%.
But, who won; John or the FDIC? What happened to the bank? Join us next time for Part Two of One Hundred Percent John Vs the FDIC.
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Gerry Curran is a Southern California based writer who was born in Chicago and raised on the South Side. His work has appeared in Nostalgia Digest. Gerry served in the Marine Corps, and is now happily retired with his wife, Vicki. He spends a lot of time studying Chicago's history.
January 24, 2010
TO MAKE A PERFECT CITY–Take one-half of the culture of Boston and one-half of the energy of Chicago. Mix thoroughly and allow to soak for a while in an atmosphere of civic righteousness. Serve hot or cold, according to taste.– Recipe of John F. Fitzgerald [1863-1950], mayor of Boston, Mass.
“Mayor Fitzgerald of the effete east,” grandfather of John Fitzgerald Kennedy had arrived in “the metropolis of the west” with an entourage to purchase bronze doors for a bridge over the Charles. He further “marveled at [Chicago's] energy and industry, its length breadth and thickness, and its poorly paved streets.” He went on to say:
“We of Boston have the civilization of 250 years behind us,” he said,“while you are a new people and still in your constructive period. If we could give you half of our culture for a similar amount of your industry and energy what a happy combination it would be.”
The above article, titled "Bostonian Gives Ideal City Recipe," comes courtesy of the excellent Looking Backward: A Chronicle of Boston History and references a Chicago Tribune article dated June 12, 1907. What is even more interesting is why Fitzgerald came to Chicago to purchase the bronze doors - the city's skilled immigrants:
"They make good citizens and have much to do with Chicago's success," he declared. "They are skilled workmen and they are employed in places we could not fill with American born youth. The result is they make it possible to obtain here in the United States what it would be necessary to go abroad for were it not for this immigration. Chicago has been blessed with this influx of foreigners, and that is what has made us come here for bronze doors and other similar things which are not obtainable in Boston."
UPDATE: Why Chicago Made Doors and Boston Made Textiles
Photo credit: John Francis Fitzgerald, Biographical Directory of the United States Congress
January 18, 2010
"MOREY" SCHWARTZ DIES
Maurice A. Schwartz, who illustrated the hook and theater pastes of the Chicago Daily News, and whose quaint and amusing stories about people and books were eagerly looked forward to, died suddenly November 18 . He was at his drawing board as usual the day before his death. "Morey" was popular not only among his fellow artists, but among Chicago's literary lights and among members of the theatrical profession with whom his work brought him closely in touch. His kindly humor and whimsical sketches endeared him to every one. Cab drivers, song boosters, and prize fighters were proud to know him as a friend. As for his art education he used to smile when the subject was mentioned. He had been art editor of the Red Book [Magazine] for a time before joining the News' staff in 1911. "Morey" was only twenty-seven years old.
The above information was found in Cartoons Magazine, Vol. 13 by Henry Haven Windsor (1918). I have been unable to find how or why he died, where he was born or when he came to Chicago, if he lived elsewhere. The cartoon below, which takes a swipe at Harriet Monroe and reminds me of Winsor McCay's style, was scanned from Chicago's Public Wits edited by Kenny J. Williams and Bernard Duffey. It is the only example of Morey's work that I have located. What have I missed? If anyone has some additional details about Schwartz, please send them to me. He died at 27. He should be remembered.
January 13, 2010
I love it when a book sends me Googling like mad. Once introduced, I had to look up Zebina Eastman, W. W. Danenhower and Opie Read because I had no idea who they were. Chicago writers, OK, but what had they done? And when did Carl Sandburg refer to the past as merely a "a bucket full of ashes?" All this only three pages into the introduction. I knew I was in for a treat.
Prairie Voices: A Literary History of Chicago from the Frontier to 1893 was written by Dr. Kenny J. Williams and hers was the first name I researched. When I read a book I like to know who is talking to me. To my chagrin, I found very little information about this accomplished scholar.
Kenny Jackson Williams was born in Kentucky in 1927. Her family eventually settled in Chicago where her father, Joseph Harrison Jackson, well-known to civil rights historians, served as minister of the Olivet Baptist church for 50 years. He would later hold the position of President of the Baptist Convention from 1941 to 1990 and was considered by some to, at one time, have been "more influential than [Martin Luther] King" and "America's champion of Negro rights." Dr. King and Dr. Jackson disagreed frequently, it seems.(see The Chicago Tribune, June 18, 1967, "The "Rev. Joseph Jackson: Chicago's Paradoxical Pastor")
Kenny's father believed in education; "a Mississippi farm boy, he had to teach himself arithmetic, spelling and reading while leading cows to pasture or doing other chores (Time Magazine)." One of the articles I read mentioned that Rev. Jackson always made a point of enrolling in school no matter where he was, and he passed on that love of learning to his daughter.
Kenny received her Ph.D. in American Studies from the University of Pennsylvania in 1959, where she had been greeted by surprise that she was both female (the “Kenny” was after “Kentucky,” where she’d been born) and black. Her first advisor said to her, “I’ve never taught colored before. How should I teach you?” Kenny replied, “Why not teach me the way you would teach anyone else?” Her advisor answered, “That's a wonderful idea.” It is typical of everything about Kenny that she ended the narrative, “Within a semester, we were fast friends.” ("In Memoriam: Dr. Kenny J. Williams" by Alan Charles Kors)
In later years, Dr. Williams was selected to received the MidAmerica Award from the Society for the Study of Midwestern Literature (1986), was on the Executive Board of the American Literature Association, and in 1991 was appointed to the National Council on the Humanities by President George H. W. Bush.
Of all her accomplishments, however, I believe my favorite was the one she received in 1976. Kenny, while a professor at Northeastern University, was named the first Scholar In Residence for the Writing in Chicago Program, 1975-1976. At the time it was a new three-year program, sponsored by the Chicago Public Library, dedicated to studying Chicago's cultural and literary heritage. The article states, "Dr. Williams is nationally recognized as a leading authority on Chicago..."(Chicago Tribune, July 18, 1976)
So, you can imagine my disappointment! Here was one of the foremost authorities on Chicago literary history - my favorite topic - and I couldn't even find a decent picture of her - just the grainy photo from the 1976 Tribune. I was even more saddened to discover that the majority of her books are out of print. I have ordered several already and, if you share my interest, you can easily find clean, used copies. Sigh...
Dr. Williams passed away in 2003, but I, for one, am finding her to be a great teacher.
Books by Dr. Kenny L. Williams:
Chicago's Public Wits: A Chapter in the American Comic Spirit (1983 Louisiana State University Press)
A Storyteller and a City: Sherwood Anderson's Chicago(1988 Northern IL University Press)
Prairie voices: a literary history of Chicago from the frontier to 1893 (1980 Townsend Press)
They Also Spoke: An essay on Negro Literature in America, 1787-1930, (1970 Townsend Press)
Sources and recommended reading:
"Joseph H. Jackson: The Meaning of the Cross," Time Magazine, April 6, 1970
"PARTICIPATING IN THE STRUGGLE OF AMERICA" Annual Address By Joseph Jackson, September 10, 1964, National Baptist Convention
January 11, 2010
In 1890, Chicago was a mining camp, five stories high. It was owned by the gamblers. What I seem to remember most clearly of that all-night and wide-open time is that the minor courts were controlled by agents of crime. The poor man, unprotected by an alderman, was helpless when the vultures swooped down on him. No wonder we had anarchists.
George Ade (1866-1944)
Single Blessedness and Other Observations (1922)"Looking Back From Fifty"
My thanks to John A.Farrell
Photo credit: "Our Land, Our Literature," Ball State University
Note: In the weeks to come, I'm going to feature more of George Ade. If you have never read any of his essays or stories, this is a good time to start. He is very funny! Did I mention John T. McCutcheon did the illustrations for many of his books? That got your attention, didn't it!
January 2, 2010
The post "Colonel Robert McCormick: Ax Man" stirred up several emails from readers. One in particular from Larry Reed, author of The Exaggerator, provided some additional information on both "Trees to Tribune" and Colonel McCormick's radio days.
With regards to "Col. Robert McCormick: Ax Man":
"Trees to Tribunes" was originally released as a silent film (with subtitles) in 1931; in 1937, it was reissued with sound and narration, howbeit with substantial editing from the previous such.
I saw the 1937 version, and I think it's infinitely superior in terms of actually having spoken narration explaining all.
Something which may be worth mentioning in future might want to be Col. McCormick's role in radio--not so much his involvement with WGN radio and television as with his hosting the Saturday-evening "Chicago Theatre of the Air" on the Mutual network (of which WGN was a founding affiliate, along with WOR New York and WXYZ Detroit). The Colonel would have a segment during the intermission discussing historical topics or other subjects of timeliness, which would be duly reprinted in the Sunday Tribune the next day.
FYI, "The Chicago Theatre of the Air" originated from "Insull's Throne," a/k/a the Civic Opera House, just off the Loop (nowadays, it's the Lyric Opera House).
For a list of the radio programs, see:
Jerry Haendiges Vintage Radio Logs
"The Great Waltz," was aired May 31, 1947 and you can listen to it here. (Sorry about the commercial.)
For more information on McCormick, see Richard Norton Smith's biography, The Colonel: The Life and Legend of Robert R. McCormick, 1880-1955.