Author’s note: Today’s historical retrospective was meant for publication on Feb. 24. Any mix-up is solely the fault of the author. For a look back at events that took place on February 25, please click here.
On this day in economic and financial history…
Did you know that half of JPMorgan Chase & Co. (NYSE:JPM) began its life as a manufacturing concern? The Chase half of JPMorgan was originally known as the New York Chemical Manufacturing Company, which was established on Feb. 24, 1823. This company was ostensibly created to produce dyes, paints, drugs, and other chemicals, but from its earliest days it was clear that the company’s founders had intended to gain a banking charter. Within a year, they secured that charter from the state of New York, and the Chemical Bank was born as a division of a manufacturing company.
Chemical Bank was one of only 13 banks in New York City at the time, with several others operating under similar business structures. Conservative management saw the bank successfully through the devastating Panic of 1837 and the depression that followed. When New York State changed its banking rules in 1938 to promote independent banks that held government bonds rather than asset-backed merchant banks, Chemical’s management saw its opportunity to strike out without a manufacturing arm. Chemical liquidated its manufacturing operations when its original banking charter expired in 1844 and reincorporated solely as a bank. From then on it would slowly grow into one of the largest banks in the world.
Chemical’s conservatism guided it through the many booms and busts of the 19th century, and it became a nationally chartered bank at the end of the Civil War. By then it had already earned the nickname “Old Bullion” for its rare consistency in redeeming banknotes in gold and silver when its peers suspended this practice during times of crisis.
The early 20th century was a time of transformation as Chemical finally began opening branches. The Great Depression didn’t harm the bank, as its long-standing reputation drew in depositors that felt secure in its care even as thousands of other banks failed. A series of mergers and acquisitions after the Second World War greatly expanded Chemical’s size and reach until it ultimately acquired Chase Manhattan in 1996, creating what was then the largest financial institution in the country. After acquiring J. P. Morgan in 2000, the bank became the now-familiar JPMorgan Chase, earning that bank’s component status on the Dow Jones Industrial Average — held since 1991 — in the process. Although none of the Chemical branding remains, the bank now run by Jamie Dimon is more closely aligned in spirit to that bank than it is to either Chase Manhattan or to J. P. Morgan.