{"id":785,"date":"2022-03-02T23:20:50","date_gmt":"2022-03-03T04:20:50","guid":{"rendered":"https:\/\/researchbdev.wpengine.com\/zorina-khan\/?p=785"},"modified":"2022-03-21T18:47:53","modified_gmt":"2022-03-21T22:47:53","slug":"banking-on-women","status":"publish","type":"post","link":"https:\/\/research.bowdoin.edu\/zorina-khan\/life-on-the-margin\/banking-on-women\/","title":{"rendered":"Banking on Women"},"content":{"rendered":"

(Yet another) First Women\u2019s Bank:-<\/strong><\/span><\/em><\/p>\n

The First\u00a0Women’s Bank<\/a>, opened in 2021, claims to be the\u00a0\u201cnation’s first women-founded<\/a>, women-owned, and women-led bank dedicated to closing the gender equity gap in access to capital.\u201d \u00a0But it is easy to demonstrate that the First Women\u2019s Bank is\u00a0 far from first on each and all of these counts, and in fact is not even the first in Chicago. Suffragists like Susan B. Anthony felt that financial votes for women were as potent as political votes, so it would be rather odd if no such institution had existed over the course of American history.<\/p>\n

As my comprehensive database<\/a> of over 40,000 antebellum investors shows, American women shareholders provided funding for the industrial revolution in all areas of the economy, especially in banks and other financial institutions.\u00a0 Martha F Trask of Portland, Maine was the largest investor in Manufacturers\u2019 and Traders\u2019 Bank (incorporated in 1831); and women were also the majority shareholders in the Medomak Bank of Waldboro, and the Exchange Bank of Bangor.\u00a0 The number of female executives and bank owners increased markedly towards the end of the nineteenth century.<\/p>\n

The Frequency of Unique<\/em> Women’s Banks<\/span><\/strong><\/p>\n

Many female-oriented businesses, each claiming to be the first of its kind in the country, attempted to motivate women to exercise their economic power and governance.\u00a0 More than a hundred years ago, a Chicago bank \u201ccontrolled by women and for women exclusively\u201d was chartered in 1910 with a capitalization of around $25,000.\u00a0 The founder was Miss Kate F. O\u2019 Connor, a wealthy self-made entrepreneur in Rockford, Illinois, along with Mrs. Antoinette Funk, an attorney.<\/p>\n

<\/p>\n

The New York Times<\/em> notified their readers of the founding of \u201cA Bank for Women All to Themselves,” in September 1906.\u00a0 In 1919, \u201ca\u201d (rather than \u201cthe\u201d) First Woman’s Bank was established in Clarksville, Tennessee, with Mrs. Brenda V. Runyon as president, and the stock offering sold above par. The Bank was located in the Montgomery Hotel Building, which was also owned by a woman, and billed as \u201cthe first of its kind in the whole world to be organized and controlled entirely by women, all of its officers and directors being women.\u201d<\/p>\n

In 1922, Flora Andrews was elected President of the Women\u2019s Savings Bank & Loan Co. of Cleveland, optimistically claiming capitalization of $1 million, \u201ccatering especially to women, with women alone to guide its policies and its employees from teller to janitress and all officers women.\u201d The Indianapolis Times<\/em> reported yet another \u201cWoman\u2019s Bank Unique in U.S.,\u201d in\u00a0 October 1920.\u00a0 In 1925, Woman Today<\/a> featured the entry into the market of \u201cAN ALL-WOMAN BANK: Cleveland has a new mortgage company, organized and managed by women – Ohio Mutual Mortgage Company. Satisfied with the success of the Women’s Savings and Loan Company, the first women’s saving company in the country, Miss Lillian Westropp, president, and Miss Clara Westropp, secretary, decided to open a mortgage company,\u201d whose employees and customers were women.<\/p>\n

Many such institutions were chartered in other countries.\u00a0 A modest women\u2019s bank was founded in China in 1910, but a decade later the Chinese Women\u2019s Commercial and Savings Bank \u00a0was capitalized at $500,000.\u00a0 The Berlin Mutual Bank for Independent Women (1910), operated as a female cooperative, with 5,000 GBP in capital and offering small loans limited to 25 GBP only to women.\u00a0 The bank was \u201cpresided over exclusively by women,\u201d so the \u201cfeminine touch\u201d was evident in the presence of cut flowers, lace curtains, and \u201ca counter redolent of marguerites and lilac.\u201d\u00a0 The Woman\u2019s Savings Bank of Toronto notably varied from this model, by instead offering \u201cthe subtle odor of violets and attar of roses.\u201d<\/p>\n

\"\"<\/strong><\/span><\/p>\n

The famous\/notorious Tennessee Claflin, with her sister Victoria Woodhull, had launched the first women-owned brokerage on Wall Street in 1870.\u00a0 After her marriage and ascension to the peerage as Lady Cook, she was the head of a private stock brokerage, Lady Cook & Co, in the 1890s in London.\u00a0 She declared the intention to fund a women\u2019s bank in 1910, but it is not known whether the project succeeded.\u00a0 However, in the same year, London newspapers proclaimed \u201ca novel departure in British Banking,\u201d in the form of \u201ca woman\u2019s bank, officered and conducted exclusively by women and catering only to women customers.”\u00a0 They noted that \u201cpeople who wear whiskers will be shooed away,\u201d by the sole male employee, hired for that purpose.<\/p>\n

Women-only businesses existed in many other sectors, including manufacturing, legal services and publishing. For instance, in 1892, the Women\u2019s Publishing Company of Minneapolis was organized with an all-women cast of executives and employees, and the shares were tendered to women alone.\u00a0 Similar enterprises included The Business Women\u2019s Publishing Company, Denver in 1903, with a capitalization of $50,000; and the New York\u00a0Women’s Publishing Company, incorporated in May, 1918.<\/p>\n

<\/p>\n

Equal Opportunity Fraud <\/strong><\/span><\/p>\n

The very first all-women\u2019s bank should perhaps not be celebrated — it was founded in 1878 through the criminal initiative<\/a> of Sarah Emily Howe (1826-1892).\u00a0 Her enterprise specifically targeted women, and got off the ground without an official charter in Boston.\u00a0 As President of the women\u2019s bank, Howe promised her clients they would receive the staggering return of 8 percent interest per MONTH on their deposits.\u00a0 The motivation of the bank was not mere profit, she assured prospective depositors who voiced qualms, but rather Quaker philanthropy and a keen appreciation of the difficulties that suppressed women in a male-oriented world. Attracted by these tempting returns, around 1200 women rushed to hand over a total of $350,000 to the bank.<\/p>\n

<\/p>\n

Howe was an inveterate perpetrator of the classic financial fraud, where the assets of newcomers were used to make payouts to earlier claimants. An enterprising male journalist uncovered the scheme by disguising himself as a woman to gain entry to the bank.\u00a0 His articles exposed the con and undermined the credibility of the venture, which led to a run on the bank.\u00a0 Howe was jailed, but on her release from prison immediately returned to the financial scene of the crime, founding another Women\u2019s Bank that offered unsustainably high rates and attracting yet more gullible clients who would go on to lose all their savings.<\/p>\n

Qui Bono, Argentaria Mulierum?<\/span><\/strong><\/p>\n

(Which can be translated as, What’s the good of five years of Latin, if you can’t randomly insert a cryptic phrase in your writing?<\/em>)<\/p>\n

The world of finance is competitive, and market efficiency implies that transactions should be independent of the identities of the parties on either side of the exchange.\u00a0 Why then would there be a need for a \u201cwomen\u2019s bank\u201d in the modern economy of the 21st<\/sup> century, beyond a marketing gimmick?\u00a0 If capital market imperfections lead to systematic mispricing by gender, perhaps owing to irrational bias or to asymmetric information that is revealed only to other women, it is possible that a women\u2019s bank might generate greater profit than an \u201copen bank.\u201d If not, such institutions will only be able to persist through subsidies from the state or private philanthropy, and perhaps would do better to register as a nonprofit enterprise.<\/p>\n

The historical evidence shows that women\u2019s institutions were typically undercapitalized, and most did not outlast their founders.\u00a0 For instance, the First Woman\u2019s Bank of Tennessee had a capital stock of $15,000, and was liquidated after its president resigned in 1926.\u00a0 In 1900, Mary Elizabeth Miller (1842-1921) founded the Lafayette Bank and served as its elected President, with the intention of helping other women and workers.\u00a0 During the not infrequent strikes, she would introduce a moratorium on workers\u2019 outstanding mortgage payments.\u00a0 Among her \u201cmost important and unsung accomplishments<\/a> was helping women achieve financial independence.\u201d She favoured women in banking and real estate transactions, often selling them land at below-market prices.\u00a0 Not unexpectedly, the bank failed in 1914.<\/p>\n

The Women\u2019s National Bank, which was founded in 1978, became an \u201copen bank\u201d eight years later and changed its name to The Adams (surely The Eves would be more appropriate?) Bank. According to its CEO, the change occurred because the women\u2019s movement was \u201cready to enter the mainstream.\u201d<\/p>\n

All of this suggests that the \u201cFirst Women\u2019s Banks\u201d of the 21st century will be able to make history by simply surviving.<\/p>\n","protected":false},"excerpt":{"rendered":"

(Yet another) First Women\u2019s Bank opened in 2021, claiming to be the \u201cnation\u2019s first women-founded, women-owned, and women-led bank dedicated to closing the gender equity gap in access to capital.\u201d But it is easy to demonstrate that the current First Women\u2019s Bank is far from first on each and all of these counts.<\/p>\n","protected":false},"author":140,"featured_media":790,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_genesis_hide_title":false,"_genesis_hide_breadcrumbs":false,"_genesis_hide_singular_image":false,"_genesis_hide_footer_widgets":false,"_genesis_custom_body_class":"","_genesis_custom_post_class":"","_genesis_layout":"","footnotes":""},"categories":[1,6],"tags":[28,31,36,22],"class_list":{"0":"post-785","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-life-on-the-margin","8":"category-women-in-the-republic-of-enterprise","9":"tag-diversity","10":"tag-economics","11":"tag-finance","12":"tag-women","13":"entry"},"_links":{"self":[{"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/posts\/785","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/users\/140"}],"replies":[{"embeddable":true,"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/comments?post=785"}],"version-history":[{"count":0,"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/posts\/785\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/media\/790"}],"wp:attachment":[{"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/media?parent=785"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/categories?post=785"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/research.bowdoin.edu\/zorina-khan\/wp-json\/wp\/v2\/tags?post=785"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}