Fourth $1,000,000,000 Bank

There was more perturbation in the Manhattan offices of the Guaranty Trust Co. last spring when two $50,000 kegs of gold fell into the Hudson River than there was exaltation last week when Chairman Sabin and President Potter announced that the bank's resources were $1,052,211,198. The keg accident was unusual for the Guaranty. Reaching the billion dollar class and thereby joining the National City and Chase National of Manhattan and the Continental Illinois Bank & Trust Co. of Chicago in distinction was something that Guaranty officers, clerks, bond salesmen and janitors had expected. It was something they had striven for since last September when their resources were $838,129,668. Last week deposits alone were $842,358,215. Capital of $40,000,000, surplus of $50,000,000, undivided profits of $13,377,018 and other items (notably $96,819,425 in trade acceptances) made up the $1,052,211,198. Fewer than that number of dollars have been the number of minutes elapsed since Jesus was born or modern time calculated.

The late Henry Pomeroy Davison initiated the renaissance of the Guaranty Trust Co.* The bank had been founded (1864) during the crooked financial period of the Civil War. It was then called the New York Guarantee & Indemnity Co. The late Samuel D. Babcock kept its financing reputable through the dishonest '70s. Thereafter its honesty was no longer necessary, for it ceased to exist except as a name and the title owner of a piece of Long Island real estate.

In 1891 Babcock, then chairman of the Mutual Life Insurance Co., was shown that the bank's old charter was very broad, and hence useful. Quickly he reorganized the guaranty & indemnity company as a guaranty trust company. Its capital then (1891) was $100,000, its surplus $720, its undivided profits nil, its deposits nil. Six months later capital was $2,000,000, deposits more than $1,000,000. Thereafter (the corporate name was changed to Guaranty Trust Co. in 1895) growth was sedate, based on insurance policy loans and railroads trusteeships. That is, until Morgan Partner Davison took hold in 1909. He increased capitalization to $5,000,000, absorbed four small banks, attracted great accounts. Next year the bank paid a 32% dividend to stockholders, the year after 40%, the third year 38%. The 1927 rate was 16% on the vastly increased capitalization.

Associated with Davison was the late Levi P. Morton, chairman, and the late Alexander J. Hemphill, president. Among their vice presidents was swarthy Charles Hamilton Sabin, Massachusetts farmer's son who in youth had been a flour dealer's clerk, and blond William Chapman Potter, Chicago-born mining engineer. The two were brothers-in-law, their wives the daughters of the late Paul Morton, variously President of the Burlington Railroad, Secretary of the Navy under Roosevelt. President of the Equitable. Mr. Potter still fondly calls himself a mining engineer, rather than a banker. He was long associated with the Guggenheims. For a period he even gave up his office with the rich bank to become a member of the (perhaps) richer Guggenheim Bros. firm. The Guaranty's resources then were just about a half-billion. But the War was on in Europe. Morton died; Hemphill had become chairman, Mr. Sabin president. Under President Sabin the Guaranty sold vast bond issues for the Allies, later vaster ones for the U. S. The War over, he organized his bond department as the Guaranty Co., owned wholly by bank stockholders. The bank was yearly becoming bigger & bigger, richer & richer.

Eight years ago Chairman Hemphill died. Davison, the stimulator, was already dead. Arose the question of successor. President Sabin recommended and the directors recalled Mr. Potter (still a Guaranty director) from Guggenheim Bros. ^

*The founding of the Bankers Trust Co. was also his work.