National City Bank (now Citibank) Stock Price After the 1929 Stock Crash
Citibank was founded in 1812 as the City Bank of New York, Citi’s first century was more successful than the second. By 1912 Citi was the largest U.S. bank with worldwide operations, a top-three underwriting business and one near-death experience, in 1837. Since then it’s had several costly expansions and four more near-fatalities.
At its founding, Citi was a blue-chip operation and its first president, Samuel Osgood, had been in President George Washington’s cabinet — and Citi’s money came from former sponsors of the shuttered First Bank of the United States.
The bank’s first century saw only one major hiccup, when it suspended specie payments on May 10, 1837, but was bailed out by John Jacob Astor, who installed his protégé Moses Taylor as director. Taylor ran the bank from 1856 to 1882 as the financial services arm of his iron, coal and railroad business empire.
James Stillman, who bought effective control of the bank in 1891, was as rich as Taylor, but with an international reach, having financed the 1876 coup that installed Porfirio Diaz as president of Mexico.
By 1912 the bank was America’s largest and was referred to in the “Money Trust” hearings of 1913 as one of its three leading issuing houses. Only foreign branches were lacking — illegal until the 1913 Federal Reserve Act.
But Citi’s second century has been marred by too many near-death experiences as it flirted with insolvency in 1920 after Cuban sugar loans went sour.
Nicknamed “Sunshine Charley”, Mitchell was elected president of National City Bank (now Citibank) in 1921, and in 1929 was appointed chairman. Also in 1921, he was elected president of National City Company, which became the largest security issuing entity in the world. Under his leadership, the bank expanded rapidly and by 1930 had 100 branches in 23 countries outside the United States. His salesmen sold millions of shares in the bank totaling $650 million, much of which would be lost in the Crash of 1929. Indeed, while the Federal Reserve Bank was attempting to curb speculation earlier in 1929, Mitchell flaunted a $25 million advance to traders.
On Friday October 25, 1929 several of the nation’s largest bankers met to decide what they could do about the first wave of selling on Wall Street. Among the attendees were the heads of Morgan Bank, Chase National Bank, and National City Bank. The bankers ultimately decided to purchase a number of U.S. Steel shares above market price. A similar tactic worked to end a previous stock market scare in 1907 when the New York Stock Exchange plummeted, causing many banks and businesses to file bankruptcy. American banker J.P. Morgan and a few other bankers bailed out the banking system using their own money. The bankers who tried to thwart the 1929 stock market crash were unsuccessful. There were positive results, but they were short lived.
By October 27, 1929 National City Bank (now Citibank) was trading at $93.00 per share when the first wave of selling on “Black Monday“, October 28, 1929 brought the shares down ($19.00) to close at $75.00 per share on the day. By November 22, 1929, Citibank was trading at $82.00 per share and went on to lose another 40 percent of its value before finding a bottom.
During the Great Depression Citi’s stock was bailed out by the Reconstruction Finance Corporation. Then, after another exuberant burst of international expansion in 1959-1980, during which chairman Walter Wriston claimed “countries don’t go bust” it was bailed out in 1991 by Prince Al-Waleed bin Talal. In 2008, losses in the U.S. mortgage market necessitated another rescue, this time by U.S. taxpayers.
Tags: 1913 Federal Reserve Act, Chase National Bank, Citi, Citibank, Countries Dont go Bust, Cuban Sugar Loans, Curb Speculation, Federal Reserve Bank, Great Depression, JP Morgan, Money Trust, Money Trust Hearings, Morgan Bank, Mortgage Market, National City Bank, New York Stock Exchange, Prince Al-Waleed bin Talal, Reconstruction Finance Corporation, Sunshine Charley