First State Bank - Milford, MI

Bank Information

Episode Type: Run → Suspension → Reopening
Bank Type: state
Start Date: December 9, 1931
Location: Milford, Michigan (42.594, -83.599)

Metadata

Model: gpt-5-mini
Short Digest: f48e22e5

Response Measures

Partial suspension

Other: Depositors agreed to a uniform percentage moratorium/notice requirement; later court-approved reorganization allowed reopening.

Description

Newspapers from Dec 1931 describe a heavy wave of withdrawal notices and a panicky run on the First State Bank of Milford that was headed toward failure; officials used an open meeting and depositor agreement (60-day notice/moratorium) to stabilize the situation. By Jun 24, 1932 a court approved a reorganization plan and provided for the bank's reopening (89% of depositors in favor). Sequence: run → suspension/reorganization → reopening. Cause of run appears driven by distress of neighboring banks and local panic rather than a specific misinformation episode.

Events (3)

1. December 9, 1931 Run

Cause: Local Banks
Cause Details: Panicky withdrawals triggered by failures/distress of other local banks and spreading panic in the region; many depositors filed 60-day withdrawal notices totaling over $100,000.
Measures: Officials held a packed public meeting (high school auditorium) led by Judge Arthur Lacy; solicited depositor cooperation, implemented/relied on a 60-day notice provision and an agreement limiting proportional withdrawals to prevent runs.
Newspaper Excerpt: its assets had capital $25,000 and surplus sixty days notice before had put into effect. however, and 150 gave totaling than 000. The bank was plainly headed toward failure.
Source: newspapers

2. June 24, 1932 Reopening

Newspaper Excerpt: A decree was to be signed this week providing for the bank's reopening. 89 per cent of the depositors in favor of the plan.
Source: newspapers

3. June 24, 1932 Suspension

Cause: Local Banks
Cause Details: Bank went into reorganization following earlier panic/withdrawals and regional banking distress; court-approved reorganization followed depositor committee actions and signatures (89% approval).
Newspaper Excerpt: Judge Frank L Doty has granted a court order approving the plan for reorganization of the First State Bank, of Milford, following a hearing which showed 89 per cent of the depositors in favor of the plan. A decree was to be signed this week providing for the bank's reopening.
Source: newspapers

Newspaper Articles (4)

1. December 9, 1931 The Kansas City Times Kansas City, MO

Article from The Kansas City Times, December 9, 1931

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Article Text

A DOCTOR WHOSE PATIENTS ARE SICK BANKS USES COMMON SENSE MEDICINE So Far, All of the Treatments Administered for Financial IIIs Such as Lack of Confidence and Frozen Assets Have Resulted in Arthur Lacy of Détroit Gives as His First Prescription an Order for Bankers to Tell Depositors DOCTOR called on his patients one last week and found them doing splendidly and quite happy. This would any but when the patients happen matter more the ordinary: And still astounding, because its the prescription. each bottle printed, not pharmacists but in the plainest the depositors your doctor Judge Arthur Lacy of Detroit. His robust patients indeed, depression dealt industrial Michigan, are the First State Bank of Mich., the First National Rochester Mich., and the FirstPeoples State Traverse City, Mich., which Judge Lacy helped make of the National and the Peoples Savings banks that city And there are more patients coming his office Just here mentioned. give the emphasis that Judge Lacy believes thirds of the banks that failed in United States could have without the loss running hundreds millions ruined The which Judge Lacy the First State Bank Milford unsound, banks around had to slip panicky feeling was abroad. assets had capital $25,000 and surplus sixty days notice before had put into effect. however, and 150 gave totaling than 000. The bank was plainly headed toward failure. Judge Lacy suggested that the officials lay situation before the And their was called the high school and was packed the doors. That meeting was sensational CRISIS IS The Milford bank now doing business First National Bank the latter case, another bank had failed, causing run on the First National 90-day on savings was Notices for totaling more had been filed. crisis was hand. The actually sound, Judge Lacy frank attitude depositors. Again the response was wholly Traverse City First National Bank the Peoples Savings Bank were in distress. Judge Lacy called in. He made careful examination, advised merger, asked stockholders put $150,000 cash then suggested consulting the depositors about the whole thing look into their meeting in the high school auditorium of Traverse with Judge speaking. "Instead pursuing the policy which has the habit among bankers the been said, sitting closed doors into huddle and things going and worrying about what you are thinking, your two banks the thing do would be to talk all over in meeting. 'Probably one in six of the banks in closed should had to The director and did not get together and the same Their not fail Judge Lacy the but felt that merger would make for sounder condition. "Now your banks just like every other this country bank run: bank keeps money hand out all its posits the United States itself could not pay what owes were asked to do so within any limited BANKING IN PRIMER FORM. In the simple techbanking terms, Judge Lacy explained "One the great reasons for the present he say, that there much the actual so that bleeding business from industry white. has exactly the same and effect on industry. business and the employment anemia has an individual and pernicious anemia. into depression and people and taxes high, able money get along, have to our accounts, money and That happening over the United States, and means constant drain the banks. But that not disastrous might because when people money necessities they pay and the people whom they back the banks. There nothing very serious about that part in depressions we worry about wonder would be good that money when we right where and somebody else the same idea. Do realize what are actually They trying get jump other They want theirs Four five the of alany bank, Judge Lacy said, could put that bank very great danger closing. people and the directors and stockholders these banks stick together," vised Judge Lacy, "and that goes for every bank in this part the state, you act tionally and not let anyone get you startled, you can maintain and sustain your bank in perfectly fine Judge asked the depositors to agree not withdraw deposits standing to their credit the two banks September 28 in an amount greater than uniform their respective deposits be by the banking in his time to or. the absence him, then by the directors the merged The he explained, would not apdeposits September "Those after that may be just freely "That would just do You take the the bank, there and draw the next day, WHAT DO YOU WANT FOR? He asked the depositors further to agree that the bank could require notice withdrawal of deposits if the bank elected. This, he was prevent any depositor not agreeing to the moratorium from taking out money the expense the others. Suppose somebody wanted of money than the bankers thought he needed, Judge Lacy asked. would say," he replied to his question, Do you need What for?' go to the hospital. right, free water. We have plenty have some taxes.' suppose says when you ask, 'What do you need "Well, money, have right didn't and want such as this: square the you people here you not going to get that money. There here and the jump the chief examiner the state banking dewas called on Judge Lacy and he the depositors proposal had made sound and workable. Finally vote asked the outlined by Judge Lacy Only one person indicated objection and the objection was promptly met and overcome That September few days Judge Lacy made inquiries how matters progressing with his patients. actual, merger the First National Bank and the Peoples Savings Bank October Kalahar, executive vice-president the new replied. the capital October Ninety per cent the have signed the are living up its public appear very pleased and state of business as We very happy the outcome. Deposits are coming in almost normal fashion." Similar are the reports from other banks where Judge Lacy has taken have the comthe people, Judge Lacy what people know. but what do not know causes the worry But tell them the plain, unvarnished and they will co-operate. is the good spirit."

2. December 13, 1931 Richmond Times-Dispatch Richmond, VA

Article from Richmond Times-Dispatch, December 13, 1931

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DeafDefendant "Sick" Banks Are Successfully Wins Acquittal "Treated" By Detroit Jurist In Joplin Case heard cattle in the yard and had gone out to pasture them. He testified that his uncle's explanation had been made in reply to question from his sister Defense witnesses were used throughout the afternoon in an effort to show that Goodwin Miller was drunk on the night preceding the early morning fire. Gilber: Kincheloe said that he had seen Miller about 10 o'clock at lunchroom several miles from his home that night. He testified that Miller was drunk and quarreled with the proprietor who threatened to kill him. Dr. Stewart McBryde, Manassas physician called by the defense, said Miller and his wife could have been suffocated and then burned to death in their beds. Under cross-examination the doctor admitted it was "not probable' that two persons possessed of their full faculties would have burned to death in their bed. Dr. E. H. Marsteller Prince William County coroner, at the first day of the trial told of viewing the bodies in the Miller home. He said it was his based on their positions side by side the collapsed bedsprings, that both Miller and his wife were killed before the fire The trial is the most sensational in this county in a century. The courtroom has been packed both days by spectators. many of whom have traveled for miles to hear the testimony Hundreds of curiosity seekers have been unable to find seats or standing room in the building They have beenl constantly standing nearby with the hope of gaining entrance receiving news of the progress of the case. Judge Lacy Says "Take Depositors Into Confidence" By E. A. Baumgarth DETROIT. Dec. 12-A doctor called on his patients one day last week and found them doing splendidly and quite happy This would be licitous experience for any physician, but when the patients happen to be sick these times-the matter is more than out of the ordinary It is And still more astounding, because of its simplicity, is the prescription On each bottle it is printed, not in pharmacists' Latin but in the plainest of English Take the depositors into your The doctor is Judge Arthur J. Lacy of Detroit His patients, now very robust patients indeed, despite the blow the economic depression dealt industrial Michigan. the First State Bank of Milford, Mich. the First National Bank Rochester. Mich. and the First Peoples State Bank of City Mich., which Judge Lacy helped out of the First National and the Peoples Sav. ings Banks of that city And there are more patients coming to his office Just here may be mentioned. to give it the emphasis due, that Judge Lacy believes two-thirds or five-sixths the banks that have failed in the United States could have been saved without the into hundreds of millions that has ruined whole The first bank which called on Judge was the First State Bank of Milford. It was not unsound. but banks all around had begun to slip, and panicky feeling was abroad. its assets had "frozen. Both capital of and surplus of $20,000 were clause requiring sixty notice before withdrawal had been put into effect, however, and 150 depositors gave notice of withdrawals totaling more than $100,000. The bank was plainly headed toward failure. Judge Lacy suggested that the officials lay the whole situation before the and ask their co-operation. A meeting was called in the high auditorium and was packed to the doors. That meeting was sensational success. A Crisis Is Overcome. The Milford bank is now doing business as usual, as is the First National Bank of Rochester. In the latter case another bank had failed, causing a run on the First National A ninetyday ban savings withdrawals was put on. Notices for withdrawals totaling more than $160,000 had been filed. was at hand. The bank was actually sound, and again Judge Lacy bold, open, frank attitude to the depositors. Again the response was wholly gratifying. In Traverse City the First National Bank and the Peoples Savings Bank were in distress. Judge Lacy was called in. He made careful examination advised merger, asked the stockholders in put new cash, and then consulting the about the whole thing Let us look into their meeting in the high school auditorium of Traverse City, with Judge Lacy speaking. "Instead of pursuing the policy which has been quite the habit among bankers in the past, he said sitting behind closed doors and going into huddle and thinking things over. and worrying about what you depositors are your two banks have decided the best thing to do would be to talk it all over in open could meeting. "Probably not one in six of the banks in Michigan which have closed should ever have had to do so. The stockholders, director officers and depositors did not get together and work to the same end and purpose. Their banks were not going to fail, Judge Lacy assured the depositors, but it was felt that merger would make for sounder condition. "Now your banks are just like every other bank in this country, he continued. "No bank can stand run: no bank keeps enough money on hand to enable it to out all of its depay posits at one time. Why the United States Government itself could not pay what it owes if it were asked to do so within any limited period.' Banking in Primer Form. In the same simple language, avoiding technical banking terms, Judge Lacy explained bank's business "One of the great reasons for the depression, he went on to say, that there is so much of the actual currency withdrawn from circulation that it is bleeding business and industry white It has exactly the same employment of labor as anemia has upon an individual. and is just as pernicious as anemia. "When we get into depression and people are out work and taxes high. some of us are not able to make enough money to get along, so we have to go our our savings accounts, to draw little now and then. That is happening all over the United States it means constant drain on the banks. But that is not disastrous it might appear. because when people draw money for necessities they pay it out. and the people to whom they pay bring it back to the There nothing very serious about that part "But in depressions we worry about things. We wonder if it would not be good idea to get that money when we know right where it is, and somebody else gets the same idea. Do you realize what such people are actually doing? They are trying to get the jump on every other depositor. They theirs first. Four or per cent of the depositors almost any Judge Lacy put that bank in very great danger of closing. "If you people and the directors and of these banks all stick together," advised Judge Lacy "and that goes for every bank in this part of the State if you act rationally and do not let any one get you startled, you can maintain sustain your bank in perfectly fine way." Judge Lacy asked the depositors to agree withdraw deposits standing to their credit in the two banks September 28 in an amount greater than uniform percentage of their respective deposits "as may be fixed by the Banking Commissioner of Michigan in his discretion from time to time, or, in the absence of determination of such uniform percentage by him, then by the directors of the merged banks." The agreement, he explained. would not apply to deposits after September 28 "Those made after that date may be withdrawn just as freely as can he said. "That would be just as you would do normally. You take the money to the bank, put it there. and draw it the day. you What Do You Want it For? He asked the depositors further to agree that the bank could require notice of withdrawal of deposits if the was to prevent any depositor not agreeing to the from taking out his money at the expense of the others. Suppose somebody wanted more of his money than the bankers thought he needed. Judge Lacy asked. "We would say. he replied to his question. Do you need the money?' Yes. 'What do you need it for?' My wife has got to go to the hos. pital. All right, it is as free as water. We have plenty of money for you. have to pay some taxes.' All right. 'But suppose some one says when you ask. What do you need it for?' Well, it my money have right to it: didn't put it here on time, and want "As said to another audience such as this, 'As square deal to the rest of you people who are co-operating, am here to tell you that man is not going to get that money. There is no living man coming in here and getting the jump on the rest of you." Secure Receipt and Ship Christ. Packages Responsible Way-Railway Express Agency.-Adv

3. March 5, 1932 The Muskegon Chronicle Muskegon, MI

Article from The Muskegon Chronicle, March 5, 1932

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Lacy Prescribes as Physician For Ailing Banks of Michigan Believes Five-Sixths of Failing Concerns Could Have Been Saved by Policy of Frankness. called his patients the doctor and found them doing happy This splendidly happen sick these matter more than out of the And still because its the On not the English the into your fidence. doctor is former Judge Arthur Lacy. Detroit His despite very blow dealt Michigan, are the First bank of Milford, the National and the bank Traverse City Judge First and the Peoples the And patients ing his office door mentioned that Judge that failed in the banks United States have been saved, without millions that has ruined bank which called was the First State Milford was not but had begun slip and panicky feeling Its assets had become Both capital of $25,000 an clause before had effect 150 depositors gave notice totaling than $100,000 The was plainly headed toward failure Judge that the offilay the before cers the depositors ask their in the tion. school auditorium was to the doors meeting packed sensational The Milford the First tional bank the another bank had failed, ter run on the First National causing A 90-day on. Notices for withdrawals was put He Prescribes for State's Sick Banks totaling more than had been bank and Judge Lacy attitude to the the response was wholly gratiTraverse the First National bank and in Judge called careful advised asked the stockholders put $150,000 cash and then suggested consulting the the thing Let us their the auditorium Traverse City, with Judge Lacy speaking Instead pursuing the policy which has been among ting and and things and about what are thinking your two banks decided thing do would be to talk it all over in open of the banks have had to do The should ever officers and depositors together work to the same end and purpose Their banks were going to fail, Judge Lacy assured felt merger would for condition are just like every other he continued bank can stand bank keeps money hand enable pay out all depositors at one time. Why. United any limited period. In the simple technical Judge One the great reasons for the of he there so much the actual currency bleeding business and exactly the effect on and the employment of labor, anemia has and is just as anemia. get into people and taxes high not make enough get our our savaccounts, little and the United banks But disastrous people draw appear, money for necessities they pay out the pay bring nothing very serious about that worry about wonder would be that money where right body else idea. realize people are actually doing? They are get other depositor They jump theirs Four per cent of the depositors any Lacy could put that bank great danger people and the directors and stockholders these banks all advised bank part act and do not anyone get you startled tain your bank in perfectly fine Judge Lacy asked the depositors to standing their credit the two banks percentage of their respective deHe asked the depositors further that bank the bank elected. This, explainany not agreeing moratorium from tak-

4. June 24, 1932 The Ironwood Times Ironwood, MI

Article from The Ironwood Times, June 24, 1932

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MICHIGAN FINANCIAL SITUATION BRIGHTER More Banks Being Reorganized, Less Being Closed Throughout Michigan TWO U. P. BANKS CONSOLIDATE Interest in state banking affairs recently shifted to the Upper Peninsula as the result of a merger in Houghton of two national banks and the suspension of business by two banks at Iron River. The Houghton National Bank and the Citizens Na. tional Bank, of Houghton, were consolidated, the business of both institutions hereafter to be conducted by the Houghton National Bank. All deposit liabilities of the Citizens National have been guaranteed by the remaining institution. Houghton National Bank, headed by A. N. Baudin, was organized in 1865. It has resources in excess of $4,000,000 and deposits of approximately $3,000,000. The Citizens National Bank, organized in 1901, had resources of about $1,000,000 and deposits in excess of $750,000. Its president was A. F. Heidkamp. Merger of the two Houghton national banks, followed several days after the suspension of business by the Miners State Bank, of Iron River, and the Commercial Bank, of Stambaugh. The Iron River bank suspended on June 9. Directors declared the suspension was voted to effect a reorganization. The Commercial Bank, of Stambaugh, a neighbor institution, closed its\ doors the previous day. Two other bank suspensons were reported recently. On June 13 the Sherwood State Bank, Sherwood, organized in 1909, failed to open its doors. The suspension followed recent assessments on the stockholders and other efforts to keep the bank in operation. It is believed that depositors will be paid in full. The private bank of Churchill and Webber, at New Era, failed to open for business on June 14, and will liquidate. The bank was established in 1909 as a branch of the Churchill and Webber bank at Shelby. When the latter institution failed in 1931, the depositors fo the New Era bank agreed not to withdraw their deposts. Resources approximate $113,000. R. E. Reichert, banking commissioner, expresses satisfaction with the progress made in reorganization and reopening activities. He points out that, as a result of the co-operative efforts of depositors and state banking officials, assisted by new legislation, nine banks have been reopened since December 1, 1931. They are at Saline, Ypsilanti, Reading, Romulus, Bessemer, Bridgewater, Petosky, Caledonia and Fenton. Eight more have completed ararngements for reorganization and will reopen shortly. Reichert said that 35 other banks are working toward reorganization and are in various stages of progress, pointing either to their eventual reopening or the establishment of new banks. So far this year, sixteen banks have suspended business, while 13 were closed. Judge Frank L Doty has granted a court order approving the plan for reorganization of the First State Bank, of Milford, following a hearing which showed 89 per cent of the depositors in favor of the plan. A decree was to be signed this week providing for the bank's reopening. The Coloma State Bank, Coloma, was to be reopened late this week following an order by Judge Charles E. White terminating the receivership. A court order also was issued recently at Caro for the reopening of the State Savings Bank of Caro. R. E. Reichert, state banking commissioner, states that the Bay City Bank is in a condition to reopen at any time. This statement followed completion of an analysis and appraisal of the bank's assets. The depositors' committee of the Benton Harbor State Bank is within $100,000 of its goal in securing depositors' signatures to a reorganization plan. Forty per cent of the required amount of $850,000 of the deposits of the closed Clare County Savings Bank, Clare, has been signed to agreements for the bank's reorganization and reopening. Nearly $250,000 was paid out in dividends recently to depositors in three closed Michigan banks. H. R. Botkin, receiver, First National Bank, of Buchanan, closed last October, made a 45 per cent dividend distribution totaling $190,000 to 1,400 depositors. Depositors of the defunct State Bank, of Freeport, are receiving a 15 per cent dividend. W. R. Lobdell is receiver. The payment will total $31,100. A ten per cent dividend was distributed this week to depositors of the defunct Bridgman State Bank, closed in December 1930, by T. F. Gore, receiver. The payment totals about $27,000. The Bridgman bank has thus far paid out 30 per cent. A court hearing will be held befor Circuit Judge E. C. Pugsley, to facilitate liquidation of assets of the defunct Churchill and Webber private bank at Shelby. A plan has been proposed by which creditors would be able to obtain 20 per cent of general claims by actual purchase of notes, mortgages and security assets of the bank or by payments of cash as an alternative. The plan provides for the sale of the bank's assets at public auction. He came back a few days later and before the. officials could single him out again he had gotten on the outside of a few more free meals. Finally the county board agreed to appropriate money for the feeding of the indigent army. After that, it didn't last long. The last straw was reached when the men refused to help the city clear a municipal park. Shortly after the law was laid down. The bums had to go or something unpleasant would happen. Today men are living in jungles near the city. They are seldom seen on the streets. They do not molest anyone. The only time they ever were a nuisance was when the good people of Iron River tried to help them out. Iron River today has resumed its usual trend of life. Today We do not rub elbows with filthy bums. We are not accosted on every corner. The city hall is a clean building once again and the sidewalk in front of it may be walked over dry-shod. Better forget about the soup kitchen and flop house, Menominee.Iron River Reporter.