9052. Guardian Trust Company (Detroit, MI)

Bank Information

Episode Type
Run → Suspension → Reopening
Bank Type
trust company
Start Date
February 13, 1933
Location
Detroit, Michigan (42.331, -83.046)

Metadata

Model
gpt-5-mini
Short Digest
7bfe7ff0

Response Measures

Borrowed from banks or large institutions, Capital injected, Full suspension

Other: Clearing house and auto companies negotiations, RFC involvement and state-ordered statewide bank holiday (Michigan banking holiday) to stop runs and permit reorganization.

Description

Newspaper articles (Feb 14-16, 1933 and later commentary) describe a depositor run on the Guardian Trust Co., which prompted Governor Comstock to close Michigan banks (bank holiday). Articles discuss plans/negotiations and reopening plans developed by federal agencies and clearing house; reopening is discussed though exact reopening date not given in these excerpts. Classified as run → suspension → reopening.

Events (3)

1. February 13, 1933 Run
Cause
Bank Specific Adverse Info
Cause Details
Depositors withdrew after knowledge of the institution's poor condition (large slow assets, heavy loans on affiliated stock, big concentrated deposits by auto companies); solvency concerns precipitated withdrawals.
Measures
Efforts by Reconstruction Finance Corporation, Federal Reserve and local banks to arrange outside help and reorganization; Clearing House arranged limited withdrawals; discussions with major depositors (auto companies) to subordinate deposits.
Newspaper Excerpt
the Guardian Trust Co. of Detroit was undergoing a run by its depositors
Source
newspapers
2. February 14, 1933 Suspension
Cause
Government Action
Cause Details
Governor ordered a statewide banking holiday (closure of Michigan banks) to prevent wider panic after the run on Guardian Trust and to permit orderly reorganization and reopening.
Newspaper Excerpt
it was wise to close the whole of the Michigan banks; banking holiday
Source
newspapers
3. * Other
Newspaper Excerpt
plans ... for reopening of the Michigan banks; negotiations and reorganization efforts continued by RFC, Federal Reserve and Treasury
Source
newspapers

Newspaper Articles (8)

Article from The Indianapolis Times, February 14, 1933

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would have permitted the R. F. C. to cover its loan and the smaller depositors would have been paid off in cash. The motor concerns would have taken over the remain $2,000,000 in unliquidated assets. "The suspension of banking was ordered to give this company and other banks opportunity to effect orderly reorganization. "Unless it had been declared, the larger depositors, who were informed in advance of the condition of the institution, would have withdrawn their money and left the smaller ones 'Holding the bag.' "I understand that the deposit of the Ford company in the Guardian Trust company was about $7,500,000. "That is the real inside story of the affair and I want the public to know it. I do not think that it would be given out by the bankers." The governor, who spent the night in conference with Detroit banking officials and who slept only three hours this morning, will confer this afternoon with R. E. Reichert, state's banking commissioner, in an effort to formulate emergency plans. Governor Comstock added later that "pressure" had been brought on him by "certain Detroit banking interests" to make him retract his Ford statement. "I am not going to retract," the quiet Governor said, with finality. "The truth might as well be told now, and I insist that it shall be told now."


Article from Lincoln Journal Star, February 14, 1933

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MERE MENTION Sale of fresh eggs. Grand Grocery, 1000 P St.-Adv. Special at True's Wed.: Hot baked ham sandwiches, 10c; fresh strawberry tarts with whipped Fancy dinner steaks (sirloin) from baby beef. Raisin bread, delicious, try it toasted, Florida oranges, balls sweet juice, 12 lbs., 39c. Freadrich Postoffice Inspector J. E. Bradley will address group of postal officials Tuesday evening in Postmaster Gillaspie's office on 'What the Postoffice Department Expects of Its Supervisors." Fire destroyed portion of the roof the residence of E. Hedge, 343 So. 9th, about noon Tuesday. The building is owned by H. Gohde. The loss, which was slight, is.covered by insurance. Firemen used chemicals to extinguish the blaze. dividend of $10,163.52, the first paid to depositors of the FarLiers and Merchants bank of Deshler. being 5 percent, has been declared ry Secretary Luikart, department of trade and commerce, receiver. The district court ordered the payment Feb. 4. Red Cross Examiners' club will meet Tuesday evening at 7:30 at the high school pool. Senior Red Cross life savers interested in becoming examiners are being asked o attend. John Turner will tell of the life saving program he conducted last summer at Auburn. Coal was stolen from the school house in District No. 81 eight and nalf miles north of Havelock Monday night, it was reported to the sheriff's office T. H. Robertson, director of the school. In addition, damage was done to the teacher's desk when it was pried open. Suit for $25,000 damages was filed in district court by Gertrude Sampson against Edward Beaghler. is claimed by the plaintiff that she was struck by car driven by Beaghler at 13th and O on Feb. 10, and badly injured. The suit was filed by Attorney R. F. Stout. A. W. Duffy appealed to the supreme court Tuesday from an order of the district court in denying his application, as stockholder, to be named receiver for the Omaha Merchants Express Transfer company. He lists number of charges against officers of the association, claiming mismanagement. The regular meeting of the Central Lancaster County Farmers club been postponed from Wednesday until Feb. 22, on account of farmers institute being -held at Havelock Tuesday and Wednesday of this week, County Agent Purbaugh announced Tuesday. The meeting on Feb. 22 will be held at St. Patrick's hall in Havelock. Miss Margaret Swandt, Corn'husker hotel, suffered shock Tuesday morning when the cab in which she was riding collided at 12th and with another car. Miss Swandt was taken back to the hotel Castle, Roper & Matthews ambulance. She was not seriously injured and soon regained consciousness. She was on her way to work when the accident occurred. District Judge Frost issued notice to attorneys Tuesday that many motions, demurrers, etc., on the equity motion docket now being prepared by District Court Clerk Baer will be dropped SO as not to encumber the new docket, unless attorneys having such motions, etc., call the court's attention to them within twenty-four hours. Many of these motions were brought forward from the docket of the April term last year. The conference of the National Vocational Guidance association to be held Feb. 23 to 25 at Minneapolis, will attract several Lincoln people. Among those who have made reservations to date are Miss Harriet Towne of the Lincoln school system and Dr. Charles Fordyce of the University of Nebraska. Miss Towne will attend tea given by Minneapolis Altrusa club the Sunday after the conference. Nebraska m who hatched chicks early in 1932, fed them well and had them laying in the fall months, profited the most for their foresight and efforts. Early hatched chicks began laying in the early fall months in time to hit the seasonal high mark, which starts usually late in August and continues thru December records of co-operators with the Nebraska college of agriculture extension service show. The damage suit brought and won in Lancaster county begun on behalf of Jimmie Wise, infant, against Grainger Bros. company, was dismissed by the supreme court. The occurred while the driver was on his way home to dinner, and when he was not engaged in any duty for his employer. The says the defendant have been given an instructed verdict, and that it was error to instruct the jury that if the employe's use of the truck for his private purposes was with the employer's and consent, the defendant was liable for damages caused by its negligent operation. Nebraska fed lambs are becoming a prized in high class of the country. H. Gramlich, of the college of agriculture has received from famous New Orleans hotel featuring "Nebraska Special Lamb,' and "Broiled Nebraska Lamb Chops." Feeding of lambs in Nebraska is growing rapidly, Gramlich sald, especially in the Scottsbluff section where 109 double deck carloads of lambs were shipped for the week ending Feb. The receiver of the Farmers' State bank of Overton lost out in supreme court Tuesday in an attempt to have the receiver in mortgage foreclosure action held to have acted without authority of law in paying interest on the first mortgage, not in foreclosure, and for seed, lumber and grasshopper poison. The suit was brought by W. A. Wells, who held the second mortgage, and the court, in former hearing, ordered the receiver discharged as the bank receiver could just as well act. The question was whether the depositors had prior lien on what the receiver collected from the premises. The eourt says that as he acted in obedience to court order, and that this relieves him of any personal liability. Another suit involving other-lands was decided at the same time. The social service exchange, confidential clearing house maintained at the office of the Lincoln chest to equitable of relief to needy persons and avoid duplication, experienced the heaviest month in its history when 2,563 cases were cleared thru its files. Comparative figures show 1,380 cases for January 1932 and 1,861 in April of last year, the previous peak month. The emergency bureau which is joint setup of Social Welfare society and county relief facilities, registered 1,543 cases last month. The city mission, welfare department of the American Legion and Social Welfare society were included among the agencies showing the most activity for the month in handling relief cases. Cases cleared by the social service exchange jumped from 1,833 in 1924 to 16,789 in 1932. over the assets and were prepared to loan an additional $23,000,000. This loan, however, would have still left the Guardian company about $2,000,000 short of paying all depositors. "The largest depositors of the company were the General Motors corporation, Chrysler corporation and the Ford Motor Both G. M. C. and Chrysler had agreed to subordinate their deposits to the R. F. C., which was to have taken over the "quick" assets, and smaller "The Ford company refused to make such an agreement and the result was necessity of a moratorium. "Had the agreement gone thru the three automobile manufacturers would have permitted the R. F. C. to cover its loan and the smaller would have been paid off in cash. The motor concerns would have taken over the remaining $2,000,000 in unliquidated assets. "The of banking was ordered to give this company and other banks opportunity to effect an orderly reorganization. 'Unless it had been declared the larger depositors who were informed advance of the condition of the institution have withdrawn their money and left the smaller ones 'holding the bag. understand that the deposit of the Ford company in the Guardian Trust company was about 7,500,000." DETROIT. (AP). Governors of the Detroit stock exchange decided to close exchange for the period of the bank holiday Choice of all Ben Simon & Sons' Women's Winter Coats, values to $59.50 at $5, $8 and


Article from The Philadelphia Inquirer, February 15, 1933

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RELIEF DEPOSITORS IS SEEN Clearing House Acts in 8Day Banking Holiday Ordered by Governor DETROIT, Feb. (A. Temporary whose are the bank. arranged the Detroit Clearing House with that would be reon Thursday plan will permit withdraw tide lifting the torium before day by Governor William A. ComWhile the Clearing House Association's was that plans. The reference industrial payrolls, but most of the metroalready arrang payrolls from State hours after the belief the with 000 reposing in Michigan financial institutions, on the way. Issues Statement At the same the Governor which he coran given an earlier between Henry and peting figurfailure efforts avert the his He that he inthat the Guardian Trust situation condition financial difficulGovernor said that Mr Ford had refused large Chrysler General Motors porations, agreement subordinate their smaller and the Reconstruction Finance Corporation General Motors are not the Governor's statement Ford had no agreement with the trust with Motors said was suggested the Ford Company put substantial part" the the company decided they could further already put approximately $20,000,000 into company Other Phases Plan The plan of its officers and association provided. in addition the per cent. are only by ments also would be made with the larger life accept checks for order policies may not Other phases the plan included of change the hours of safe deposit departments. Among the industrial concerns which plans meeting payrolls in cash Motors the tor the Chrysler Corporation. Closing of the banks for the February February up nearly billion dollars State's nearly financial Although banks the peninsula institutions in the upper peninsula, which


Article from Chattanooga Daily Times, February 16, 1933

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ion Guardian Trust company whose precipitated the closing der would outstate banks the Detroit Clearing House association plan permit limited withdrawals tomorrow de Lansing Representatives several outstate banks urged that banks including those in remain tightly closed that limited mitted closing order be rescinded altogether In the governor replied "In towns where banks feel interfere others where would be inadvisable they closed The holiday gives the protection they need they may pursue either Wages hundreds of and inin almost case some arrangement was made for the employes receive at least part the amounts in cash Principal concerns among General Motors corporation. the Ford Motor company Packard and the cash the of employes The General Motors set up eleven disbursing stations near factories five Michigan cities serving 65,000 personal checks the extension of credit and the acceptance small checks eries and gasoline dealers today made foodstuffs transportation available those found themselves Michigan public utilities commoratorium on bills due for gas. electric power tele. phone and similar public utilities while the state insurance fied companies that all checks for ment insurance during the holiday payment provided they are honored when the banks reopen


Article from Evening Star, August 23, 1933

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ATHER DENOUNCES BANKS Judge Rules Today on Further Efforts for Hoover Testimony. (Continued From First Page.) tell the truth. Coughlin continued 'Actually the bank had but $99,302,808 in cash and Government bonds was 14 per cent liquid and its fund to meet general deposit withdrawals was not more than $49,000,000 Declaring that 'the banks were wrecked before Roosevelt took office, Father Coughlin exclaimed They were wrecked by the philosophy that money in the hands of the masses was a menace Hoover Replies. In a 600-word telegram to Prosecutor Harry S. Toy late yesterday, the former President said he would be able to fur nish the investigators only with general and 'mostly second-hand' information which. he said he believed was insuffi cient to justify trip to Detroit. He assured Prosecutor Toy that he had no objection to furnishing any information which he properly could. Mr. Hoover's message arrived a few hours after Prosecutor Toy had df. patched an 'earnest request' that he come to Detroit as soon as possible to testify Immediately thereafter, Prosecutor Toy and Judge Keidan went into conference the latter saying he would announce his plans today Tuesday saw the final appearance of United States Senator James Couzens Republican, of Michigan, at whose sug. gestion Mr Hoover was asked to appear. The Senator wound up his four days of testimony with a reiteration of his charge that 'an attempt to make millions without really earning them by consolidation and pyramiding of banks without the depositors consent. was the specific cause for the closing of the two big national banks The Nation-wide depression he said, was the general cause of the shrinkage of assets, but he insisted the two banks would not have closed had they been "as sound and well managed as they should have been Charges Bad Loans. The Senator also charged that so much money had been loaned by the two banks on Detroit Bankers Co and Guardian-Detroit union group stock that the banks dared not sell the collateral when the loans fell due He charged such loans constituted viola. tion of the banking laws in that the banks were in effect loaning depositors money on the banks own stock, since the two banks were owned by holding companies. As a result of Senator Couzens' testi mony the jury has decided to call at least 40 additional witnesses. necessi tating an extension of the inquiry for at least three more weeks The information sought from Mr Hoover by the Detroit investigator concerned the attitude of administrative agencies of the Federal Government toward to two closed Detroit banks pre vious to March 4, 1933, during the Hoover incumbency. Text of Hoover Reply. The text of Mr Hoover's telegram to Prosecutor Toy follows 'I have received from the press a copy of a letter addressed to me by yourself requesting that I should come to Detroit as a witness in the inquiry you are conducting in respect to the closing of the Michigan banks last Feb ruary Detailed and competent information as to the relation of Federal authori ties to the events leading to the closing of these banks can be obtained only from the former officials of the Re construction Finance Corporation the Federal Reserve Board. the then con troller of the currency and from the record 'My recollection of my own connection is that on a Thursday evening in February the officials infor med me that the Guardian Trust Co. of De troit was in difficulties was undergoing a run by its depositors and that should it close it would precipitate a panic run on other. Detroit and Michigan banks. The impression I received from them was that the other leading banks of Detroit had not been subject to runs and were able to meet their deposit responsibilities if there was no general panic in the city although they necessarily had a number of slow assets in Detroit real estate mortgages. "Informed of Situation." "I was informed the Guardian Trust situation was such that even with the utmost of Government assistance possible under the law it would be insufficient without outside help and reorganization internally. The request of these gentlemen and I understood of leading men in Detroit was that I should endeavor to bring about co-operation of outside banks. private interests, and leading depositors to reorganize the a trust company and thus prevent crisis in that city We had successfully secured such action on similar occasions in other cities and prevented enormous losses 'I and the other officials devoted our selves unceasingly during the following 48 hours in many directions to building up the co-operation necessary to save the situation, and it was contin until it was brought to a halt by the determination of the Governor that it was wise to close the whole of the Michigan banks As I have said. the details of these 3 plans and negotiations and those subsequently developed by officials of the Reconstruction Finance Corporation the Federal Reserve. and the Treasury for reopening of the Michigan banks can only be had from the then officials of those organizations. have no objection to furnishing any information which I properly can but such information as I can give is only general and is mostly second-hand, and is insufficient to warrant a journey to Detroit and can be more effectively given by the officials mentioned I am sure it is fully available to you.' TO PROBE CLEVELAND BANK. U. S. District Attorney Says Federal


Article from The Waterbury Democrat, August 23, 1933

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Former President Refuses Testimony (Continued from Page 1.) Mr Hoover and to get their testimony," Toy said. "We have not yet ceased our efforts to have Mr Hoover testify." Toy said there was no legal means by which he could force the former president to testify. A grand jury subpoena is a command only in Michigan. Father Charles E. Coughlin crusading priest and bitter critic of local personalities involved in the closing of Detroit banks, was to be today's witness before the grand jury. Senator James Cousins (rep, Mich), whose criticism of the Hoover administration's banking policies, caused Prósecutor Toy to invite Mr Hoover's testimony, finished his testimony yesterday. Mr Hoover's telegram suggested various officials of his administration were the only ones qualified to give "detailed and competent information as to the relations of federal authorities to the events leading to the closing of these banks." He named former officials of their Reconstruction Finance Corporation, the federal reserve board, and the former controller of currency. "I have no objection to furnishing any information which I properly can, but such information as I can give is only general and is mostly second hand," his telegram said, "and is insufficient to warrant a journey to Detroit and can be more effectively given by the offcials mentioned. I am sure it is fully available to you." Mr Hoover sketched his own part in the Detroit crisis. Officials of the R. F. C. and the federal reserve board informed him in February, he said, that the Guardian Trust company of Detroit was undergoing a run and its closing would cause panic runs on other banks. The Guardian Trust situation was such that the utmost government assistance cou. have have helped and to bring He without was asked help reorganization. about banks the co-operation of other Detroit and other interests to reorganize the Trust company and "thus prevent a crisis in that city." "I and the other officials devoted ourselves unceasingly during the following 48 hours in many directions to building up the co-operation necessary to save the situation and it was continued until it was brought to a halt by the determination of the governor that it was wise to close the whole of the Michigan banks."


Article from Pittsburgh Sun-Telegraph, August 23, 1933

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Text of Hoover's Reply To Detroit Bank Probers PALO Cal., Aug. text of former President Hoover's telegram today Harry Toy. prosecutor at Detroit. follows: have received from the press copy of letter ad- dressed to me by yourself questing that should come Detroit witness in the in- quiry you are conducting in spect to the closing of the Michigan banks last February. 'Detailed and competent information as to the relation of federal authorities to the events leading to the closing of these obtained only from the former officials the Reconstruction Finance Corporation. the Federal Reserve Board, the comptroller the Currency, and from the record. RUN ON BANK "My recollection of my own connection that on Thursevening February, the officials informed that the Guardian Trust Company of Dein was undergoing run by its depositors and that should it close would precipitate panic run other Detroit and Michigan banks. The impression received from that the other leading banks Detroit had not been subject to able meet their deposit there was no general panic the although had number of slow assets in Detroit mortgages. informed the Guardian Trust was such that with the utmost government assistance possible under the law would be insufficient without outside help and reorganization internally. The of these gentlemen, and understood, leading men in Detroit that should endeavor bring about ation outside banks, private and leading depositors to the company and thus erisis We had successfully such action occasions in other cities and losses. UNCEASING EFFORT and the other officials de. voted ourselves unceasingly dur- ing the following 48 hours in many directions to building up the co-operation necessary to save the situation and it continued until was brought to halt by the determination of the Governor that it was wise close the whole of the Michigan banks. have said, the details of these plans and negotiations and those subsequently developed by officials of the Reconstruction Finance the Federal Reserve and the Treasury for reopening the Michigan banks only be had from the then officials those organizations. have no objection to furnishing any which properly can. but such information give general and mostly second hand. and is insufficient warrant journey to Detroit. and can be effectively given by the ficials mentioned. am sure is fully available to


Article from Jackson Citizen Patriot, August 25, 1933

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GOVERNMENT ERRED, VANDENBERG AVERS 'One Great Mistake Was Insistence on Liquidity Instead of Solvency,' Senator Tells Bank Jury. 'HOOVER MUCH DISTURBED,' ASSERTION Detroit, States Sen. Arthur H. Aug. Vandenberg (R. Mich.) declared before the one-man bank grand here today that "the one great mistake of the jury Federal government in its bank-opening policy following the national bank holiday was its "insistence on liquidity instead of solvency. Testifying as to his knowledge of Washington events preceding the famous Michigan banking holiday before the jury the closing of two local national banks, the junior senator declared the government had forced be made the appraisals to on wrecked values of an utterly conflagration in order to prevent depressed market. The whole emphasis of the government policy was on spelled banks. doom And. the per cent liquid only for is not bank. cannot function as Sharp Contrast. In sharp the fiery that Charles from Coughlin, crusading priest and banking of quiet said end which defeated by its insistence on liquidHe related conference at the White Feb. before the cerning the Union Guardian Trust DeHerbert then dent. the Detroit and to out the Detroit tion forest The comnot mitted by indicated the Vandenberg that study of the nation's situation March found the Sevtering in Detroit, any of the 11 districts. On he there were closed and this imately in Seventh district. survey May there closed deposits, Seventh district Michigan declared opinion that possible make "anything like intelligent appraisal" assets. Says Hoover the jury that before "greatly disturbed" banking affairs could easily become the start must be ence White House on night Clifford Longley, president of the Guardian of James Walsh, office afternoon he advise attempting bolster company witness appeared of the Recorporation had senior Michigan senator, that Walsh Longley not know about junior Michigan senator White House evening, where he in conference tended den Mills, He the jury, which is inof National troit the Guardian National Bank the ble Michigan from the which said, Union Trust company to be provided capital which was provided han dle He that after relating the had received to effect Sen. know the Michigan explained their "They there was no reason for secrecy and in the loan. They were greatly this said he believed obtained their information the R. from ous Summoned White House. Later that he he White House, others mentioned, for conference. "The subject of the discussion was the Detroit greatly the Detroit He indicated felt collapse of Detroit banks might precipitate national calamrecall exactly what Harry in detail," replied Vandenberg. that the felt out the potential Detroit The said as he recalled of which Guardian Trust comGuardian stated only immediate crisis said. the White discuson the trust company testimony had been to the effect the closing of its failure the had brought the Michigan hollday Several witnesses chargCouzens blocked loan, Couzens, from the testified that one House and director, had expressed of the because insufficient security offered.) Vandenberg figures the to show that the assets liquidating only as posit liability don't know the figures that presented about the said. ture assets. All present agreed the trust company would have supported by voluntary merit There this on outspoken point, but heard suggest should without restoration of values in the trust Had Little to Say. He Hoover had discussion, carried Couzens President Miller the was opposed theory entire assist trust He vigorousopposed pointing out that would conwould denounce the Senate made an he declared the same attitude. universal opinion the company would eligible financial status before loan initial White House concluded confersaid that from Thursday to the Monday Michiholiday there Washington conferences looking to that Henry Ford his to left the trust comlooking toward the left of about we were the Hudson General Motors agreed appeared that settlement on the that the the Guardian and other Michigan banks put satisfactory He said did not ask the the figure the got value of the trust "Should Have Asked." should ficers the Federal Reserve and the values the degree later disthan discussed length mistake flowed much needless the banking disby on liquidity insolvency. declared banks closed by mitted which should comptroller been said he knew to per liquid Grand Rapids bank which opened which open the first week liquid, That to cash the rest is will which government He declared his belief that of bank posits viewed for the The deposit insurance, said the senator because they are typical American banks in they wealth of collateral; cause money banks eliminates depositors' severe problem, because deposit surance place all banks, and basis." prayerfully submit," he said, standardized deposit surance absolutely guarantee protection his statethe pounded deposits in the country in closed banks the Seventh Reserve district, which lay to this apparexisted. said that LaFollette of Sen. 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