9087. Union Guardian Trust (Detroit, MI)

Bank Information

Episode Type: Run → Suspension → Closure
Bank Type: private
Start Date: February 13, 1933
Location: Detroit, Michigan (42.331, -83.046)

Metadata

Model: gpt-5-mini
Short Digest: 219bc520

Response Measures

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

Other: Statewide 8-day bank holiday proclaimed by Michigan governor to stop withdrawals; RFC negotiations for loans and Ford Motor Company involvement (freezing $7.5M deposit).

Description

Articles describe heavy withdrawals at the Union Guardian Trust in mid-February 1933 leading Governor Comstock to proclaim a statewide eight-day bank holiday (Feb 14, 1933) to stop withdrawals. The bank had large real-estate/loan losses and depleted liquidity (Ford Motor Co. deposit mentioned). Subsequent reporting (Aug 1933) describes investigations and the bank as a closed bank, indicating permanent closure/receivership. Classified as run → suspension → closure.

Events (3)

1. February 13, 1933 Run

Cause: Bank Specific Adverse Info
Cause Details: Heavy withdrawals triggered by the bank's weak assets—large loans in real estate that had shrunk in value—and depletion of liquidity (large corporate deposits including Ford Motor Co.).
Measures: Attempts to obtain large loans (RFC, Ford) and negotiations; public reassurances; led to state-imposed banking holiday to halt withdrawals.
Newspaper Excerpt: Late January withdrawals from the Union Guardian Trust had reduced deposits to 28 million dollars... Late January withdrawals ... had brought liquid close to the vanishing point.
Source: newspapers

2. February 14, 1933 Suspension

Cause: Government Action
Cause Details: State governor proclaimed an eight-day statewide banking holiday (suspension of banking operations) to prevent further withdrawals and allow negotiations/solutions.
Newspaper Excerpt: Governor Comstock... proclaimed an eight-day banking holiday in Michigan... precipitated by an unforeseen and acute situation which had suddenly arisen in the affairs of one of our leading financial institutions, the Union Guardian Trust.
Source: newspapers

3. August 19, 1933 Receivership

Newspaper Excerpt: Senator Couzens charged ... that the Union Guardian Trust, Detroit, had ceased days its officials was the closed bank... investigation ... the closing of the banks ... the closed bank ... the trust fund of which founded investigation ... the closed bank, and through the federal ... the trust fund ... investigation ... (article discusses the Union Guardian Trust as a closed bank under investigation).
Source: newspapers

Newspaper Articles (10)

1. February 14, 1933 North Platte Daily Telegraph North Platte, NE

Article from North Platte Daily Telegraph, February 14, 1933

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Chief Acts To Stop Withdrawals From Big Trust Co. And tect Depositors. Detroit, Feb. dramatic suddenness, Governor Comstock early today claimed eight day banking day in Michigan at the conclusion an all-night conference with bankers from all over the state and with federal and state bankofficials. The extraordinary holiday, precedented in Michigan, effectoday, to continue through February matter of fact, the banks will not reopen until February 23, since February Washington's birthday and legal holiday. Governor Comstock's proclamation said the holiday claimed view the acute financial emergency now existing in the city of Detroit and through the state of Michigan." CALLED TO DETROIT. Governor Comstock explained that he was summoned to Detroit from Lansing yesterday afternoon to conference "precipitated unforeseen and acute situation which had suddenly arisen the affairs of one of our leading financial institutions, the Union Guardian Trust He said was consenafter long conference those present that the difficulties might be ironed out provided time could had for negotlations.' matters stood, the statement said, would have been necessary close the institution involved on the February 14th, which would in its train likely bring disaster other of many banking institutions in Michigan." PROTECTS DEPOSITORS. crisis caused by the inability realize immediately the assets of the institution upon to meet threatened withdrawals. For the protection of smaller positors our institutions and prevent the withdrawal large sums from the state of Michigan was deemed wise banking holiday for sufficiently long to allow uation to cleared supplemental statement from Arthur Ballantine, under secretary of the that he believed Governor Comstock "acted very Ballantine said that been "close contact during some days with phases banking situation existing said that agencies of federal government touching the banking field have been closest attention and fullest port to these state problems. time available proved to short for final solutions but further time and effort should productive constructive sults. The governor's action gives opportunity for BANKERS REQUEST The proclamation issued in response formal request signed by John Hicks, president of the Michigan Bankers' sociation, and Robert Lord, president of the Detroit Clearing House association. Participating in the conference from which emerged the proclamation were Roy Chapin, secretary of commerce, whose home here; under secretary of the treasury Ballantine and representatives of the finance corporation and the federal reserve bank addition men representing the Michigan Bankers' association, the state banking commission and all Detroit clearing house banks. Secretary Chapin, said came to Detroit with Ballantine Saturday to "cooperate with the bankers concurred proving the extraordinary and expressed the belief the holiday would provide time "stabilize the entire banking uation." AFFECTS ALL BANKS. By the terms of proclamation, banks, trust and other financial institutions conducting banking (Continued

2. February 14, 1933 The Buffalo News Buffalo, NY

Article from The Buffalo News, February 14, 1933

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MICHIGAN DECLARES 8-DAY BANK HOLIDAY Continued from Page of Michigan deemed wise declare holiday for period allow the situation to be cleared up Termed Wise Move. from Ballantine. under secretary the Treasury. that he believed Comstock "acted very wisely Ballantine said had contact with existing this said the touching banking giving attention and fullsupport The available proved short for solutions but further time should productive The action opportunity for The proclamation was issued sponse to formal request signed John Hicks, president Michigan Bankers' association. Robert troit With Many. They consultation the after banking national the United States Treasury department. the State Banking Federal Reserve Bank Reconstruction Finance the United States Secretary necessary the formal request the interest and for equal safeguarding preference the rights depositors for the preservation public Participating the conference which the were emerged Roy D. secretary of ComUnder and the ReconFinance of the addition representing Michigan Bankers' association. Bankthe State commission and all Detroit clearhouse banks. Chapin Backs Measure. Secretary Chapin. came Detroit Ballantine Saturday bankers concurred the extraordinary and expressed belief the holiday provide "stabilize the entire banking By the terms of the proclamation, trust financial institutions conducting banking trust within the Michigan not opened the transaction banking trust business But "provided that it shall not affect the tion of writing interfere with judicial procedure." Exchange Also Close. The Union Guardian Trust primary importance in Michigan's other over most of There was clear idea business would during holiday. was all without Governors of the Detroit Stock change at special Tuesday morning decided close the change holiday Comstock.

3. February 14, 1933 The Buffalo News Buffalo, NY

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MICHIGAN DECLARES 8-DAY BANK HOLIDAY (Continued from Page of Michigan was deemed wise to for period long allow the situation to be cleared Termed Wise Move. the Treasury said that he believed Comstock "acted wisely that had during days with phases the situation existing in this He said that the banking field touching giving support these state The final but further for and effort should producconstructive action opportunity for The proclamation issued in formal request signed John president the Michigan Robert president of the Detroit Clearing House Consulted With Many. They request consultation with the Treasury department. the Banking the State Federal Reserve Reconstruction Finance corporation with United States Commerce. deem the formal request said the interest and for the withthe rights all depositors and for the preservation the public welfare Participating the conference which emerged the proclamation Roy D secretary of Commerce. home Under the and ReconFinance and the Bank addition representing Michigan Bankers' the State Banking and all Detroit clearing house banks Chapin Backs Measure. Secretary came Detroit Ballantine Saturday "co-operate the extraordinary expressed belief the provide to the banking By the terms of the proclamation, banks. trust financial institutions conducting banking trust business within the Michigan opened the banking trust also "provided that Lot tion writing interfere with judicial procedure. Exchange Close. The Union Guardian Trust of primary importance in With over most There was clear idea how busicarried on during the holiday. was all without the Detroit Stock exchange special meeting Tuesday morning decided the change the bank holiday proclaimed Comstock.

4. February 15, 1933 The Press Democrat Santa Rosa, CA

Article from The Press Democrat, February 15, 1933

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GET Continued From Page Col. his decision to the of bankers, business men and gov ernment officials. Secretary D. Chapin and der Secretary of Arthur Balantine hurriedly summoned from the action. It they said, the best way out of Michifinancial Without fanfare, Governor Comstock hurried to Lansing office, hours later charged the refusal of the Ford Motor with the Guardian bank had statewide financial paralysis. Later retracted his statehave misunderstood the facts the Union Guardian Trust situa tion. was understood that Ford officials had to the governor's first representations. The automobile industry promised its employees they would either paid cash, for them stores shops, Mayor Frank Murphy told that welfare relief would be maintained. large company scheme Detroit dairy. that milk would to each home regardless the financial situation. Rep. George Creen, Democrat. of Saginaw said tonight he would the house tomorrow bill to restrict withdrawals to of deposiwith the object preventing bank runs upon resumption of business next Wed-

5. February 17, 1933 Statesville Record and Landmark Statesville, NC

Article from Statesville Record and Landmark, February 17, 1933

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Action Taken Because of Acute Financial Emergency STOCK EXCHANGE CLOSES Detroit, Feb. dramatic suddenness Governor Comstock today proclaimed an banking holiday Michigan the conclusion of an federal and state banking cials. The extraordinary unprecedented in Michigan, effective The said the holiday was view the emergency now existing the city Detroit, and throughout state of The statement from Ballantine, of the treasury, said believed very wisely." Governors of the Detroit Stock Exchange special morning decided close change for the period this The governor explained he ference "precipitated by seen and acute which suddenly arisen in the affairs our the Union Guardian Trust

6. February 17, 1933 Statesville Record and Landmark Statesville, NC

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MICHIGAN Action Taken Because of Acute Financial Emergency STOCK EXCHANGE CLOSES Detroit, Feb. dramatic Governor Comstock today proclaimed an eight-day banking holiday Michigan at the of an all-night with federal and state banking cials. The holiday, unprecedented in Michigan, effective proclamation said the holiday The view the acute now the city of Detroit, and throughout state Michigan.' The statement from Ballanof the tine, said "acted very wisely. Governors of Detroit Stock Exchange special meeting this morning decided change for the period this The governor explained he here ference by an unforeacute situation which suddenly arisen in the one leading financial institutions, Union Guardian Trust

7. February 20, 1933 The Springfield Daily Republican Springfield, MA

Article from The Springfield Daily Republican, February 20, 1933

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The Business Michigan Bank Trouble sharp currency single single the governor suspension all banks the This prolonged "bank holiday" precedent, but usual drastic. immediate fect necessary step prevent further particular bank which would undoubtedly involved banks group affiliated banks Detroit and possible effect will apprehension regarding bank deposits adjacent distant sections the country. Happily, acute pubapprehension produced by bank troubles the years for confined immediately tributary areas. There still tendency think banks state and tendency vantage crisis, the system banking control may entail. suspension banking functions sufficiently frequent startling signifiespecially when enforced important like aspect the public the people Michigan, and Detroit, tation closing weeks' extension the bank holithe payment funds. withdrawal up the per the Protecting Depositors Yet difficulties reopening probably serious than the difficulties which would have arisen the Union Guardian Trust bank directly had been forced to close. Weakness this bank due heavy loans real which had shrunk value. Other banks in city declared unquestioned soundness. bank did mainly mercial business, the withdrawal funds by depositors who sumably knew the condition assets apparent that short time stood would most their accounts. This situation which develops against which threatened liquidation. common out depositors demand during tends haste depositors refuse sound cash likely small depossatisfied, paying funds during may the by affording onstration Something kind happened when the Cents strongest the state, stood after day and vited the people come and get their money. soon knew that the money was there, ceased want the case bank with impaired where for the public the order meet the depositors' demands. Moreover, may found preferable protect the banks community when there that will lead the promptness the Michigan action must therefore considered tion, though necessarily for that feasible adopt uation sufficient seriousness should develop. Demand for Currency The Michigan bank sponsible for amount money carrying the total peak. Along has decline stock monetary gold, mainly the demands foreign central the Bank England, acts the gold debt United States. assassination resulted the foreign changes, the changes from likely may the important report the mittee. The suggestion single rected the based what theoretical spects the report scaling bill Congress which course receiverships. noted that business before the Senate's committee have condemned corporation loans which up burden railroad which interest charges must While suggestions have leaders the tone the Senate criticized, Street that both business and among ruled the sharp from Detroit bonds selling, though busiand commodity price indexes little changed.

8. February 23, 1933 Springfield Weekly Republican Springfield, MA

Article from Springfield Weekly Republican, February 23, 1933

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FINANCIAL NEWS The Business Trend Michigan Bank Trouble foreshadowed by sharp crease currency circulation the previous banking crisis extent. though confined to state and single came public attention when the governor Michigan proclaimed an suspension for all banks the state. This prolonged "bank holiday" precedent, but unusual drastic. Its immediate effect beneficial; indeed. it step further particular bank which would undoubtedly have involved othbanks in the same group and unin Detroit the The possible 111 effect will be regarding bank deposits adjacent sections country. Happily, acute public apprehension produced by bank in the past two years has for the part confined to immediately or tributary areas. There still tendency to think of banks on state lines. and this psychological adcrisis, whatever practical maladjustments the system of dual banking control may entail. A statewide suspension of banking functions is, however, sufficiently Infrequent to have startling significance, especially when enforced by important industrial state like Michigan. The most favorable aspect situation. 80 far as public that the people of Michigan. particularly Detroit, have shown little excitement irritation result the temporary closing of the banks. This fortunate the probable weeks' extension bank hollday. with provision for the payment per cent depositors who dewithdraw funds. wideapread withdrawal the 10 per cent limit would complicate the probof reopening. Protecting Depositors Yet difficulties reopening probably be than the difficulties would have arisen the Union Guardian Trust combank directly concerned— had been forced close Weakness in this bank due to heavy loans real estate which shrunk in value. Other banks the city are declared unquestioned soundness. bank did mainly commercial and the funds depositors presumably knew the condition of the bank's assets made it apparent that short time depositors who stood bank would only the most depreciated against their accounts. This situation which develops the case any against bank which is threatened with liquidation. The common practice of out cash to depositors who demand during tends to put premium on and aggressive and penalize depositors who refuse to become and try to preserve bank's case where bank sound and cash plentiful and likely die the small depositors satisfied. the paying out of funds during run strengthens pub. and may benefit the bank affording demonstration of its Something of the kind happened in Boston about when the Five Cents bank, of the banks the state, stood run day after day and invited the people come and get their money as knew that the money was there, people ceased to want it. In the case bank with seriously impaired where run may to eventual liquidation, be desirable for the public officials step in before the better asdisposed of order meet depositors' demands. Moreover. may be found preferable to act on wide scale protect the assets other banks in community when there threat runs that lead trouble. The drastic extent as the promptness of the Michigan governor's action must therefore be considered as suggestion, though not necessarily as pattern. for policies that it might be feasible adopt elsewhere situation sufficient seriousness should develop. Demand for Currency The Michigan bank crisis sponsible for rise of in the amount of money in circulationtotal new peak. Along with this increase has gone decline the stock monetary gold, due mainly to the demands foreign central the Bank England, which acts as the agent British government in undertaking to gold December payment the United States. attemptassassination Roosevelt resulted in weakenof the dollar in the foreign changes, but disturbance the changes this cause likely short-lived. What inflation promay is matter. The week the publication of important report on the railroads national committee. The suggestion of developing ultimately single railroad system was not made very clear, little of the directed against the report has been based disapproval of this somewhat theoretical In most respects the report regarded constructive. The for scaling debt the in Congress which would facilitate reorganizations recourse Also may be noted that number of business men appearing before the Senate's finance committee condemned Finance corporation loans which pile up the burden of railroad debt which charges must be paid. While weighty suggestions have been made by business leaders to the Senate committee, the tone of the proceedings has been criticized. the Wall Street Journal seeing fit to say that among both business men politicians impatience prejudice ruled The stock market registered sharp shock from the Detroit bank trouble, and gov. ernment bonds by selling, though the Federal Reserve banks buying. The business and price indexes were little changed.

9. August 19, 1933 The State Columbia, SC

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COUZENS SPEAKS BLUNTLY Senator Declares in De- troit Bank Inquiry Sus- pensions Preceded by 'Orgy of Consolidations Based Fictitious on Held Staved Off Merely by Waiting Policy of Washington. Detroit, Aug. States Senator Couzens charged before the jury investigating bank closings today that the suspensions preceded by an "orgy of consolidation based on fictitious values" the would have closed long before they did but for the government attitude of "waiting for prosperity to come around the corner. Speaking bluntly and with emphatic poundings of the witness table. senior senator from Michigan said the government preferred prosperity "enforce the close the banks.' Senator Couzens' second day before the weeks had investigating the closing largest charged that the Union Guardian Trust Detroit, had cepted days its officials was the closed bank, and through federal the trust fund of which founded investigation company declared that Mills, former chair man the First National had "wrecked" the plans Henry Ford establish banks here Policy Censured. The Ford taken National and the Guardian Bank Commerce under federal their closings the subject the grand Federal had perthe Detroit banks remain open despite their knowledge that the unsound that prosperity was just around "Public officials said, had permitted Detroit banks open despite their knowledge that institutions were unsound the

10. October 31, 1934 Detroit Free Press Detroit, MI

Article from Detroit Free Press, October 31, 1934

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Simple Statement by Outsider Lays Closing of Banks to Senator Couzens Failure to Rescue Detroit Held Cause of Dilemma Collapse Could Have Been Prevented and Nearly Was Prevented, Says Writer Continued from Page One stage listening for cues. The leading characters Detroit's citizen and his son, Henry and Edsel Ford; James Couzens, multimillionaire and former partner of Mr. whom he had who had gotten out of busiinto politics member the United States Senate the time drama enacted; President of the United States, Herbert C. Hoover and the President-elect, Franklin Roosevelt; the acting Comptroller of the Currency, Awalt, and the president the Reconstruction Finance Corp., Charles Miller. Incidental characters Detroit bankers, York bankers, Chicago bankbank examinators, receivand Gov. Comstock of MichiNew Year's day of 1933, which precedes found the banks of Detroit in strong healthy outside and inside the banks knew. believed that their institutions had shown and were vised to that effect by the bank examiners. their superior the Comptroller the Currency, however, the national bank were telling There that faith the soundness of Detroit's banks not confined overtrustful Detroiters. Senator Carter Glass, the Nation's outstanding financial authorities made the following statement about the Detroit groups six weeks before the banks glad testify from the thorough the and Currency Committee group banking system of the State Michigan been thoroughly effectively managed is possible of chain banking system and has been great the commercial, requirements the State are capitalized upon and honest basis. They not gone the managers of some such systems have done, and stripped their victims watering their stock in shameful Withdrawals Leave Liquidity Detroit banks had been subject heavy withdrawals, banks everywhere else, but liquidity was shown in the year-end was adequate any ordinary As result series of mergers, Detroit banking was concentrated two each subordinate to large holding company. The larger the two banks, First National, with 175 branches Detroit deposits exceeding 400 million dollars, was owned by the Detroit Bankers Co. That company also owned string of banks over ond bank was the Guardian tional Bank of with about 50 Its capital stock was owned the Guardian Detroit Union Group, of which the largest stockholder was Edsel Both groups attempted supply complete banking service and for this investment affillates and subsidiary trust compan- The bank which brought things to head Detroit the company the Guardian trust group. The Union Trust did general deposit banking business, although ations, ceived deposits largely from corpormunicipalities, and wealthy individuals. for which issued certificates deposit. Late January withdrawals from the Union Guardian Trust had duced deposits to 28 million dollars. this amount the deposit the Ford Motor Co. alone was $7,500,000. The had brought liquid close to the vanishing point. Not First Appeal to Fords In this extremity the Fords, and Edsel Ford were lookto for assistance. But this not the first appeal made by the trust company. The Ford Motor had lent 3½ million dollars to take up 3½ million trust company rated by the state bank Michigan. In addition, Edsel Ford indorsed note for 2½ million dollars the Continental Illinois Bank Chicago to provide funds for the group company. also had lent the group five dollars in municipal bonds, and amounting to million dollars Other assistance to the Guardian group by the total advances up to 16 according statement Edsel Ford at the Senate Beyond that the trust company had borrowed 15 million dollars from the Reconstruction Finance Corp. the security assets with face value of million dollars. in which A. P. Leyof the district, taken leading part developed that the of the matter procure from the Reconstruction Finance Corp. sufficient money pay off the deposits the trust company And while they were borrowing seemed advisable of any other banks the group which were not sure of their footing. plan was taken to Washington calling for loan of the necessary funds from Finance Corp. and the freezing 7½ deposits by the Ford Motor Co. After negotiation was that 41 would turn the trick. This to the million already lent to the trust company. RFC Offers Loan on Conditions The RFC sent Detroit, critically the assets which had been offered as collateral. They placed valuation of 37 million dollars tendered upon assets, the RFC thereupon offered advanced not the 41 milwhich required, but only 37 millions, the liquidating its arrived the smaller conditions: The Ford Motor should freeze 7½-milliondollar deposit. additional funds required, amounting to four million dollars, should be raised locally. million dollars should be subscribed locally as capital for liquidthe mortgages put up with the collateral. Since the bank was the Ford group, and the Fords already had put up million dollars take care the requirements that group, and since, further, there had some suggestions representatives Henry that he would the dollar deposit the bank, the RFC had in mind that Fords should the dollars. carrying the thing too far. When Mr. Ford was what was expected of him the warpath. Having played Santa Claus big way, and having offered tinue to the long white whiskers attempt his He drew his allow the 71/2-mildeposit frozen. through. others Government could save the banks, but count Ford's Ultimatum Feb. 11 was Saturday. The next day being Lincoln's birthday, Monthe 13th, became legal When, during that period following the closing of the bank at attempt was made to pressure bear upon Ford farther, go his ultimatum. He would do more, be whom he should the Union Guardian Trust his deposit in