Chase Manhattan Bank

Chase Manhattan Bank was a titan of American finance for much of the 20th century. Formed from the 1955 merger of the Rockefeller-controlled Chase National Bank and the Bank of the Manhattan Company, it became a powerhouse in both domestic and international banking. Under the leadership of figures like David Rockefeller, the bank expanded its global footprint, becoming a symbol of American financial influence. While the “Chase Manhattan” name is now a piece of history, its legacy lives on as a core component of one of the world's largest financial institutions, JPMorgan Chase & Co., following a landmark merger in 2000. For investors, understanding Chase Manhattan's story is to understand the evolution of modern banking—a tale of ambition, strategic mergers, global power, and the enduring importance of brand and leadership in the financial world.

The story of Chase Manhattan is a classic tale of two historic banks, each with a legendary founder, coming together to create something even greater.

• The Bank of the Manhattan Company: This institution has a surprisingly dramatic origin. It was founded in 1799 by none other than Aaron Burr, the famous political rival of Alexander Hamilton. Burr cleverly chartered it as a water company for New York City, with a clause allowing it to use surplus capital for banking. This backdoor maneuver created one of America's oldest banks.
• The Chase National Bank: Founded in 1877 by John Thompson, it was named after Salmon P. Chase, Abraham Lincoln's Treasury Secretary. However, its destiny was sealed when it came under the control of the Rockefeller family's interests in the 1930s, becoming their flagship financial institution.

The 1955 merger of these two entities was a marriage of equals. Chase brought its massive corporate client list and international prestige, while the Bank of the Manhattan Company contributed its extensive retail branch network in New York City, creating a full-service banking behemoth.

For decades, Chase Manhattan and J.P. Morgan & Co. were fierce competitors. Chase was a commercial banking giant, while J.P. Morgan was a blue-blooded investment banking and asset management powerhouse. The financial world was stunned when, in 2000, they announced a “merger of equals” to form JPMorgan Chase & Co. This move was a direct response to the repeal of the Glass-Steagall Act, which had previously separated commercial and investment banking. The merger created a “universal bank” capable of offering every financial service imaginable, from a simple checking account to advising on multi-billion dollar corporate takeovers. The Chase brand was retained for the firm's retail and commercial banking operations, a testament to its powerful name recognition with the general public.

From a value investing standpoint, the history of Chase Manhattan offers timeless lessons. Banks are fundamentally cyclical businesses whose fortunes are tied to the health of the broader economy. They make money on the net interest margin—the spread between the interest they earn on loans and the interest they pay on deposits. A value investor analyzing a bank like the modern JPMorgan Chase would look beyond the headlines and dig into the fundamentals:

• Book Value: What are the bank's assets worth? A low price-to-book (P/B) ratio can sometimes signal a buying opportunity, but you must ensure the assets are not impaired (i.e., full of bad loans).
• Return on Equity: How efficiently is the bank using shareholders' money to generate profits? A consistently high return on equity (ROE) is a sign of a quality business.
• Management Quality: Is the leadership team prudent, shareholder-friendly, and good at managing risk? The legacy of David Rockefeller at Chase shows how visionary leadership can create immense long-term value.

The creation of JPMorgan Chase, born from the Chase Manhattan legacy, cemented its status as a systemically important financial institution, often labeled as “too big to fail.” This status can be a double-edged sword for investors. On one hand, it implies a certain level of government backstop during a crisis, reducing the risk of a complete wipeout. On the other hand, it comes with much stricter regulatory oversight, which can cap profitability and growth. A value investor must weigh the stability and market power of a giant like JPMorgan Chase against the potential for higher growth at smaller, more nimble competitors. When evaluating giants like JPMorgan Chase, Bank of America, or Citigroup, one must consider not just their valuation (e.g., P/E ratio and dividend yield) but also the complex regulatory environment they operate in.