The article described the failure of the Jarmulowsky bank in 1914, and how it brought about changes in the way commercial banks did business. The bank was founded by Sender Jarmulowsky, a learned and philanthropic Orthodox Jew who made his fortune by speculating on the price of steamship passage. Jarmulowsky bought tickets in bulk during the winter when prices were low, and then sell them in the summer when prices were higher. He then developed the practice of allowing people to pay for their tickets over time.
According the Yiddish papers of the day the name Sender Jarmulowsky was known to "every Jew in both the old and new worlds." While the large bank building which he built on the corner of Orchard and Canal Street is still there, the Jarmulowskys are gone. The bank failed because of his sons speculation on Manhattan real estate. They used bank deposits to buy 37 buildings in Harlem, driving real estate prices through the roof, but when WWI broke, many of the bank's depositors (mostly Jewish immigrants) tried to withdraw money to send to their beleaguered relatives in Europe. The bank could not cover the withdrawals and it had to close its doors. The judge handling the bankruptcy, Learned Hand, wrote a decision which led to legislation establishing new regulation on banks to prevent such failures from happening in the future.
Real estate speculation... unregulated banking practices, financial disaster ... the whole story sounds like it comes out of today's newspapers! Which makes me wonder: Does history repeat itself? Do we learn from the past? The answers are: yes and yes. Yes, history does have a way of repeating itself. And, yes, we keep learning from our past mistakes so that we might make the future more secure.
The story of the Jarmulowsky Bank and the story of today's economic woes are similar, and there are two important lessons that we can draw. First, after every economic crisis that we have had, our country has made changes and come back even stronger. If history repeats itself, that means that we are going to come back from today's economic woes. Secondly, just like in the realm of economic matters, so in our personal lives. We are bound to make mistakes in life, but we can also make corrections for the future.
The true mark of living well is not just minimizing failure; just as important, perhaps more important, is how we come back after failure.
