Ford Bank

Four years ago Chicago had her St. Valentine's Day gang massacre. Sadder by far was this year's St. Valentine's Day bank massacre in Detroit--a massacre which closed both of Detroit's big banks, tying up $560,000,000 of deposits.

Detroit's massacre not only destroyed the Guardian National and First National Banks. It apparently destroyed Detroit's capacity to give birth to new banks. No less than three promising bank reopening plans miscarried. Not until March 24 was National Bank of Detroit successfully born with $25,000,000 in capital, half put up by General Motors, half by R. F. C. Last week with $317,000,000 of their deposits still tied up, Detroiters waited hopefully for the birth of a second bank, the Manufacturers National, fathered by Ford.

For weeks a judge acting (according to Michigan law) as a "one-man grand jury" had been investigating the causes of the old banks closing, of their staying closed, of the reasons why three bank plans collapsed. Result was a potpourri of charges and counter-charges--that the old banks never should have been closed, that they were and still are solvent, that Manhattan bankers, Senator Couzens, the R. F. C. or rival motor makers had stupidly if not maliciously kept Detroit from getting back her banks. Three weeks ago the one-man grand jury recessed to give Edsel Ford a chance to negotiate in peace for formation of a new bank. Last week it recessed again with news that he had virtually succeeded.

Second of the three bank plans that fizzled was Ford-sponsored. The Fords were then to have put up $8,250,000 and with the aid of bank loans from Manhattan and R. F. C. replaced closed First National and Guardian with two new banks. That plan failed because Manhattan refused to do its part. Last week's plan was less ambitious. Edsel Ford and associates raised capital with which to merge four suburban banks (Highland Park State Bank, Peoples Wayne County Bank, Guardian Bank of Dearborn, Dearborn State Bank). The R. F. C. agreed to lend $17,000,000 on the assets of the four banks, also to lend $25,000,000 on the assets of the big Guardian bank permitting payment to its depositors of 20% (in addition to 40% already paid) through the new bank.

Last week the $5,250,000 capital and surplus of the new bank, to be known as the Manufacturers National, had already been raised. Only one thing was still needed: a charter from the Comptroller of the Currency. John Ballantyne, one-time chairman of the First National, was selected as president. The board of directors included Alex Dow, president of Detroit Edison Co., George R. Fink, president of National Steel (maker of much automobile steel), Murray W. Sales, Wesson Seyburn, Clifford B. Longley (Ford attorney) and Edsel Ford. Many a time in the past has Henry Ford, dissatisfied with purchasing this material or that, undertaken to manufacture it himself. Often has he expressed his dissatisfaction with bankers--as tyrants over business, as reckless wasters of their depositors' money. On the new bank board Henry Ford's son & heir will have a chance to turn his father's precepts into practice.*

Waiting their turn until Edsel Ford should get his charter from the Comptroller of the Currency, Emory W. Clark and Col. Frederick M. Alger stood prepared to offer a plan for reorganizing the First National with a loan of $30,000,000 from the R. F. C. and subscriptions to common stock by depositors. The reorganized First National would pay an additional 25% dividend to depositors of the old bank, would eventually merge with National Bank of Detroit.

Last week Cleveland's two big closed banks, Union Trust and Guardian Trust, paid their depositors dividends of 35% and 20% respectively (in addition to 5% previously). The distribution amounted to $53,000,000. Small depositors received checks by mail, others called for theirs. Among the depositors were some 5,000 wandering gypsies who in the boom days of 1929 made Union Trust their tribal depository. The gypsies, not understanding the convenience of checks, were taken directly to the bank's underground vaults, paid in cash.

*Excerpts from Father Ford's dicta on banking:

"We must get rid of the idea of making money out of money. ... A million dollars in gold by itself will not produce one copper penny. Put a hen on it and it will not hatch. Water it and it will not grow.

"Too many depositors have put their money in banks for safe-keeping and then have not been able to get it out. . . . It's just as if I put my car into a garage and when I came to get it out, found that somebody else had borrowed it and run it into a tree. . . .

"I believe that there should be a type of bank that is purely for savings. ... On this money no interest should be paid. ... On the contrary the banker should receive a small fee for handling the fund."

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