Frederick Dobbs Tappen

Background

Tappen was born in New York City on January 29, 1829. He was one of eleven children of Charles Barclay and Elizabeth (Dobbs) Tappen. His father was a veteran of the War of 1812 and a colonel of the New York state militia.

Education

Tappen received his early education at the Columbia College Grammar School.

Career

For a year he was engaged as civil engineer on the Erie Railroad. In 1850 he became "specie clerk" at the National Bank of New York, whose title was subsequently changed to that of Gallatin National Bank. With this institution he was identified during the rest of his life, being chosen as its cashier in 1857 and serving as its president, 1868-1902.

His part in the American finance of his day was of distinctive and notable character. He became known as the "banking dictator" who, in days before the creation of the Federal Reserve system and in the absence of any central banking institution in America, was invariably chosen by the New York banks, at times of financial panic, to prescribe and direct their united policy. Tappen's view of the manner in which a formidable financial crisis should be met was based on close-range personal observation of the panic of 1857 and the Wall Street gold-market crisis of "Black Friday" 1869. The New York Clearing House Association, otherwise known as the New York Associated Banks, an organization originally formed merely to facilitate exchange of checks, had already come to exercise partial supervision over credit policies. On the outbreak of panic in 1873, Tappen was chairman of the clearing-house committee, and was at once made chairman of its special "loan committee. " His first expedient was the adoption of "clearing-house certificates, " a device whereby hard-pressed banks in the clearing house, instead of being required to pay their mutual debit balances in cash at a moment of panicky money-hoarding, were authorized to make such inter-bank payments in bills of credit bearing high interest rates, secured by banking collateral approved and accepted by the loan committee. This machinery was not wholly new, but 1873 was the first occasion on which it was applied in a financial panic of the traditional character.

The powers exercised by Tappen in 1873 and afterward were, however, much larger than this. The emergency of that year was so critical, and general insolvency seemed so imminent, that virtual dictatorship was granted him. The principles on which he based his program, as afterward enunciated by him, were that the banks act together under dictatorial powers of the central committee; that no solvent bank be allowed to fail because of depletion of its cash reserve; that the money market be relieved, but in such a way and on such terms that the genuineness of an applicant's need for credit would be proved by his readiness to accept them. Exercising his special powers, Tappen met the panic emergency of 1873, when $26, 265, 000 clearing-house certificates were issued, and general suspension by banks and banking houses was averted; of 1884, when the issue was $24, 915, 000; of 1890, when it was $16, 645, 000; and of 1893, when it reached $41, 490, 000. On some of these occasions he was not even on the managing committee, yet was at once appointed head of a special loan committee which superseded all others.

In each of these formidable crises, he determined personally the manner in which the "pooled" credit resources should be applied. This remarkable uniformity of recourse to Tappen as dictator in a panic emergency was partly ascribed to his presidency of a relatively small New York bank, whereby he escaped professional jealousies. But it was far more directly a tribute to his promptness of decision, financial insight, courage, and unquestioned fairness and integrity.

He was also a director in several hospitals and charities.

He died in Lakewood, N. J.

Achievements

• Tappen had the rare gift of knowing when to act, how to act, and of persuading others to act with him; he was of being able to "detect bad banking almost through the leather of a portfolio, " and of being ready, if circumstances required, to "close a bank, under his power from this body, with less concern than he would show to give help where it is deserved. "

Religion

He was an active churchman.

Personality

He was a man of great individual popularity, of frank and winning personality, so readily accessible that the office in which he did his work was visible at once to any one entering the front door of the bank. He spoke French fluently.

Interests

• He was fond of literature and music, and was an expert fisherman.

Connections

He married Sarah A. B. Littell about 1859, and had a daughter.

Spouse:

Sarah A. B. Littell