Open Detroit

Hundreds of people milled before the closed doors of a big bank in the fourth city of the land one morning last week. It looked like a run. But practically every bank in the city had been shut tight for six long weeks and this crowd was waiting for the doors to open, not to demand their money but to pour checks & cash into National Bank of Detroit.

Housed temporarily in the old First National, National Bank of Detroit was brand-new, 100% liquid, the first bank launched under President Roosevelt's emergency banking measures. Toward its founding the biggest home-town industry, General Motors Corp.. had put up $12,500,000 and the U. S. Government through the R. F. C. had bought $12,500,000 of preferred stock. Its first statement showed: Federal Reserve stock, $675,000; Cash, $24,325,000; Deposits, $0,000,000.

First large deposit was $1,000,000 from General Motors. Later in the day GM sent another $2,000.000. Biggest depositor was Chrysler with $4,000,000. Four guards from Kroger Baking lugged in $250,000 cash. The rush of small depositors kept the bank open 40 minutes after closing time. When the books closed the total inpouring was $11,500,000.

GM's Alfred P. Sloan Jr. made it clear that his company was in no sense embarking on a permanent banking venture. Though all directors and President James McEvoy were drafted from GM executives, GM intends to dispose of its National Bank stock just as soon as the enterprise is fully under way. An offering will be made to depositors and stockholders in the two old banks. Guardian National and First National, and if they do not want it, then to the public. A new board picked from Detroit's leading businessmen will be elected shortly.

For weeks & weeks Detroit's tall towers have resounded with bitter wrangling as plan after plan for bank-opening was proposed, dissected, discarded. But when the final decision was reached early last week, Detroit was in an uproar. Police Commissioner James K. Watkins led the opposition, crying: "Your city is being sold out from under your feet!" At his broadcast appeal, a flood of protest telegrams hit Washington, just as they had at almost every other proposal (TIME, March 27). Secretary of the Treasury Woodin asked Detroit's spellbinding radio priest, Father Charles Coughlin, to defend the plan.* More telegrams hit Washington, bringing the total to some 10,000, divided about equally for & against. Ostensibly the spokesman of 3,500 Detroit policemen whose insurance plan funds were tied up. Commissioner Watkins, a stockholder in the closed banks, voiced the feelings of all stockholders. If the old banks are liquidated they will lose their investment, might be called upon for double liability. Meantime Roman Catholic Bishop Gallagher grumbled: "I have my diocese to run. Cash balances are tied up. Collections . . . are poor. It's a pretty how-do-you-do."

After National Bank of Detroit officially opened, the vociferous police commissioner hurried to Washington to plead his case with Secretary Woodin and the R. F. C. but the conservators of Guardian National and First National steadfastly pushed plans to sell liquid assets to the new bank, hoping thus to release 40%, of six-week-frozen deposits. Meantime stock-holders of the two holding companies controlling Guardian National and First National sued to throw their respective concerns into receivership. The first direct entrance of the U. S. into private banking last week made three things clear about its future policy: 1) that it will not sanction any bank reorganization in which depositors were forced to accept new stock for a part of their old deposits; 2) that it intends to keep a strict eye on its new investments; 3) that what the U. S. Government says about banks must go.

P: Word came to New Orleans, first bank holiday celebrant of the year, that Hibernia Bank & Trust and Canal Bank & Trust must merge. Committees were appointed to arrange terms.

P: In Baltimore, Union Trust Co. and Baltimore Trust Co. hastened to redraw reorganization plans turned down because depositors were compelled to accept stock.

P: Cleveland's Union Trust Co.. drawing heavily on attempted reorganization in other cities, submitted a proposal to the Treasury.

P: In Headrick, Okla. President J. H. Brock of Citizens State Bank shot to death W. E. Ernest, bank examiner, just as he finished telephoning to the bank commissioner: "I have found Brock short." Author of a book Tribulations of a Banker, a Sunday school teacher, aged 36, Banker Brock explained: "I thought I had to."

*Few days later Father Coughlin broadcast an attack on E. D. Stair, publisher of the Detroit Free Press and non-salaried president of Detroit Bankers, holding company for First National, charging that insiders had gutted the bank before it closed. This Banker-Publisher Stair denied, promptly flashed an open telegram to President Roosevelt in protest against Father Coughlin who "presents himself . . . as the spokesman of your Administration."

This file is automatically generated by a robot program, so reader's discretion is required.