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Burke & Herbert Enters 'The American Century'

Business Profile

EDITOR'S NOTE: This is the second in a three-part series commemorating the 150th anniversary of Burke & Herbert Bank and Trust Co. Last week: The first 50 years.

By Chuck Hagee

August 8, 2002

The 1900s have been referred to as “The American Century.” A time when this nation became a world power and leader. When it lost it's innocence and came to terms with its responsibilities. When it moved away from George Washington's admonition, "Have no entangling alliances."

In keeping with that sense of expansionism, Burke and Herbert Bank and Trust Co. staked its claim to 20th-century Alexandria with the construction of its new building in 1903, as the next generation assumed positions of leadership in both the bank and the community with which they had become synonymous.

With the death of John W. Burke on Nov. 8, 1907, the mantle of operating what was evolving as not only an Alexandria but also a Virginia institution fell to his two remaining sons, Julian T. and Harry R. They were joined in the bank by Julian's sons, Charles Sinclair Taylor Burke, Julian T. Burke Jr. and Arthur Herbert, Jr., son of Maj. William Herbert, brother of Arthur, who had founded the bank with Burke.

With the completion of the new building, at its present location, another tradition began at Burke and Herbert - the flying of the Irish flag on St. Patrick's Day. That day, March 17, 1906, was also the day that John Burke wrote his will, which set the stage for the bank's new leadership.

As in the first 50 years, neither the Burke nor Herbert family limited its interests to banking. They played a leading role in the creation of two important Alexandria social welfare institutions — the local Red Cross Chapter and the Anne Lee Memorial Home for the Aged.

As chronicled by Dorothy Holcombe Kabler in her treatise "A History of Burke and Herbert's Century of Service to Alexandria and Virginia," 1914 saw the founding of the Alexandria Red Cross Society "at the home of Mr. and Mrs. Julian T. Burke." Its first official headquarters, in 1917, was in two rooms on the second floor of the bank.

"That was when the officers of the bank sat in the lobby at two partner’s desks and oversaw the daily operations," C.S. Taylor Burke III related. "They would sit with their backs to the window so they faced the tellers.

"They dispatched the bank's runners from there. The runners would pick up big envelopes and deliver the contents to various offices and the courthouse and would even hand-deliver personal bank statements to customers' homes."

IN ADDITION TO founding the Aged Women's Home (which later became the Anne Lee Home, named for Gen. Robert E. Lee's mother), Fanny Maury Burke, daughter of Mr. and Mrs. John Burke, was an accomplished artist. She painted the founders' portraits that hang in the bank today.

Throughout the bank, there are portraits of various members of both families who have guided its growth. One of those is of Charles Sinclair Taylor Burke. But its creation posed a real challenge to the artist, according to his stepdaughter, Marilyn Wharton.

"I went with him to the artist's studio, and he said that he would only sit three times. He also was very annoyed that it cost twice as much if the artist portrayed a subject's hands," Wharton related. "He was very frugal."

Wharton and her mother moved into a Burke and Herbert foreclosure house in the Beverley Hills section of Alexandria in 1938. Her mother, Helen R. Marshall, owned her own real-estate firm. After being a widower for a number of years, Burke and Marshall were married in 1947.

"The house was painted this hideous mustard yellow. We asked him to repaint it, but he refused. He said the paint had come from the fruit-growers’ express and was perfectly good paint. He said he saw no reason to waste the bank's money just to change the color," Wharton recalled.

Taylor Burke III also attested to his grandfather's frugality, but he compared it to the dualism in his personality. "He was full of contradictions. He was a small-town banker that wanted to see the world and would spend money to travel. He loved cars but never learned to drive," he remembered.

One of Taylor Burke's primary requirements for owning a car, which was chauffeur-driven, was that he had to be able to enter and exit it without removing his hat, according to Wharton. "That somewhat limited the selection and was the primary reason he always owned Cadillacs," she explained.

HIS GRANDSON also remembers him as a very strong man "built like a prizefighter, but with a very dry sense of humor." C.S.Taylor Burke Jr. was born when his father was in his 40s, and they didn't talk a lot, according to Taylor Burke III.

"My father related the story that when he was going to get married, he came home all excited and announced to my grandfather that he had great news, he was getting married," he said. "Grandfather was reading the paper, which he lowered, looked at Dad and said, ‘One more damn thing.’"

During World War I, Burke and Herbert sold government bonds for the first time in their history. Then came the boom and eventual bust of the roaring 1920s.

"I don't think the ‘20s were a real boom or bust here. We were tuned into more of an agricultural financial base than an industrial one," Taylor Burke III said.

Kabler agreed with this analysis. "During the 1920s the Burke and Herbert Bank continued to carry out the policies of its founders, taking only first trusts on property and maintaining a conservative position in the handling of securities. ... The management ... adopted its own hedges against inflation during the real-estate boom and bull market of those postwar years."

But not all their transactions were conservative. "After Prohibition was rescinded, we made a pretty substantial loan on a whiskey distillery. The only collateral was the whiskey itself, so my grandfather would check the barrels regularly to verify the investment," Taylor Burke III related.

That basic conservative approach and self-imposed rules proved to be the difference between viability and collapse when the crash occurred in 1929. The bank weathered not only the crash but the Depression that followed.

Yet it was not all easy sledding. David M. Burke, the present chairman of the board, recalled, "In February 1933, my parents decided to drive to Rye, N.Y., to visit my sister. The morning we were to leave, Dad went to the bank for one last check before leaving for our week vacation.

"When he came back, we piled into the car and headed out Russell Road toward Washington. By the time we got to the intersection of Russell and Mount Vernon Avenue, Dad decided he couldn't leave. He turned the car around, took us home and headed back to the bank. He said things were just too bad to leave."

That dedication and concern took its toll. Julian Thompson Burke Jr. died in 1936 at age 49.

Franklin D. Roosevelt was inaugurated on Saturday, March 4, 1933. The next night he issued the order closing all banks for a four-day holiday. By Friday, banks throughout Alexandria were allowing limited withdrawals of no more than $25 so that depositors could purchase necessities.

IN ORDER TO reopen permanently, banks were required to get permission from the U.S. Treasury Department. That's when Burke and Herbert discovered they had a problem.

Taylor Burke Sr. and Albert V. Bryan, the bank's attorney, journeyed across the river to secure the mandatory permission. When they were asked to produce either their state charter or partnership agreement, they stated they had neither, according to E. Hunt Burke.

Treasury officials soon learned the bank had been doing business for 81 years on a handshake. It had been operating without government supervision based on its "tradition of honor, integrity and goodwill that are the hallmark of Burke and Herbert," according to Julia M. Williams in her study titled "A Living Legacy of Commitment and Service."

Throughout the following months, a sea change took place in the nation's economy and particularly in the banking industry. America went off the gold standard, banks had to be either incorporated or chartered, and they could no longer do business as both investment and commercial institutions.

Roosevelt's New Deal was under way, and it would prove to be a dramatic new deal for Burke and Herbert Bank. The Banking Act of 1933, imposing the separation of commercial and investment banking, gave private banks, such as Burke and Herbert, one year to make their decision.

As noted by Kabler, "Those wishing to continue in commercial banking were required to submit to state or federal examination and regulation." Burke and Herbert Bank decided to become a state commercial bank. It was officially incorporated in 1933. Its state charter was issued on Nov. 20, 1933, and recorded in the Alexandria Corporation Court on Jan. 24, 1934, in the name of Burke and Herbert Bank and Trust Co.

The year 1933 also ushered in the bank presidency of Charles Sinclair Taylor Burke Sr., who shepherded it through one of its greatest growth periods until his death in 1951. During his tenure the bank more than doubled in deposits and holdings.

The Washington area, in stark contrast to most of the nation, actually flourished during the Depression. Many came here to work for the expanding government with its new array of "alphabet" agencies.

"In 1934, people began to discover Alexandria as a good place to live. It was a lot easier in those days to get into the District. That's also when our real-estate investments really paid off," Taylor Burke III said.

"My grandfather's frugality also got us through the Depression. He wouldn't even allow people to get note paper. They had to use the back of old envelopes for their notes," he related.

AS THE 1930s drew to a close, America was once again edging closer to another world war, and Alexandria was about to enter another tumultuous period of change. It would become a major production center for the upcoming global conflict.

The front page of the Alexandria Gazette for July 10, 1942, carried a story with the headline "Virginia Banks Show Big Gain through 1941." The subhead read, "Burke and Herbert Among Top Quarter."

The war years presented opportunities in the banking industry. A Burke and Herbert advertisement in the July 17, 1942, Gazette asked, "What will happen to your charge accounts?" It encouraged personal loans at 6-percent interest, with monthly payments as low as $12.

Another Burke and Herbert ad on July 21, 1942, stated, "Uncle Sam urges you to buy next year's coal now. We will help you finance it. We will pay your coal dealer, and you can pay us in small monthly payments."

Taylor Burke III noted, "We were the only bank to make auto loans during the war years. They were all on used cars because automobile production stopped from 1941 to 1947. Of course they were not amortized over five years. More like one year."

World War II changed the American landscape forever — not only in how it interacted with the rest of the world but also in how it was structured. And, most particularly how it did business. The day of the handshake vanished in the onslaught of corporate giants and international conglomerates.

As Kabler notes, "In keeping with its growth, ownership of the stock in the bank is less concentrated among the members of the two founding families and is shared by a larger number of investors." In 1951 this diversification became more pronounced with the naming of the first non-Burke president and executive vice president, Ralph H. Bogle Sr. and Clifford L. Bussells, respectively.

But, true to its maverick roots and the two young men who thought Alexandria could use another bank in 1852, it has been guided through most of the last 50 years by one of the most colorful and memorable members of the Burke family — C. S. Taylor Burke Jr.

His influence, coupled with the "Runyon" factor, has set the modern Burke and Herbert Bank and Trust Co. apart from today's long gray line of financial monoliths. As Taylor Burke III summarized it, "Dad was even more of a contradiction than my grandfather."

That story in Part 3 next week.

Clarification

In the article about Burke & Herbert turning 150 years old this year (Alexandria Life, The Alexandria Gazette Packet, Aug. 1, 2002), the actual site of the present bank since 1871 is the southeast corner of King and Fairfax streets.