The Washington herald. [volume] (Washington, D.C.) 1906-1939, 1913-12-11
'MUNSEY Defends
Merger OF BANK
Financier Explains Taking
Over Of United States
Trust Company.
NO OFFER OF DEPOSIT
Says Needs Of City Would Best Be
Served BY Congressional
Action.

| Trust company Dy the Munsey Trust
Company has caused 3 much comment
and discussion here in Washington, and
to some extent, nationally, that 1t seems
to me appropriate that ! make a brief
statement of the facts in the matter
Here they are:
II came to Washington from New York
Friday afternoon, November q, reach.
ing here a little before 5 O'Clock. On my
way from the Union Station 1 saw a Ions
line of depositors at several of the
branches of the United States Trust Com
pany, waiting to draw their savings. This
was the first knowledge I had of a run
on the United States Trust Company and
of any real danger in the situation. In
deed. had known nothing OF the troubles
OF the United States Trust Company I'M
til the previous day, and then merely
learned that the bank examiner had
found the capital of the bank impaired.
| II was perhaps z o'clock that night
when a committee of the board Of direc-
tors of the United States Trust Company
and several OF the men Of the Munsey
the Shoreham Hotel to talk the situation
over and determine what should be done.
- Made Two OFers.
After a brief general discussion 1 made
two propositions to the committee OF the
directors of the United States Company,
which were substantially as follows:
Proposition No. 1: The Munsey Trust
Company will at once take over the bust
ness of the United States Trust Company.
guaranteeing its depositors against loss.
and pay per cent for its deposits
that are with the company at the end of
six months-providing the board Of direc-
tors Of the United States Trust Company
will individually and as a body guarantee
the Munsey Trust Company against loss.
Proposition No. 2: Without any guar
antee on the part of the directors OF the
United States Trust Company, or any
other guarantee, the Munsey Trust Com
pany will at once take over the business
of the United States Trust Company.
guaranteeing its depositors against loss.
In this case, however, it will pay nothing
for the deposits of the United States Trust
Company.
Each of these proposals provided that
all assets of the United States Trust
Company in excess of the Indebtedness to
depositors should, as a matter Of course
revert to the stockholders of the United
States Trust Company.
The committee at once took these two
propositions to the board Of directors OF
the United States Trust Company. II re-
turned at the end of perhaps an hour with
the statement that the board Of directors
had accepted proposition No. OF the
Munsey Trust Company.
The offer in proposition No. / Of ) per
cent for the deposits Of the United States
Trust Company, the Munsey Trust Com
pany guaranteed against loss, was a very
liberal offer for Understanding deposits.
and the more so because OF the trouble
the bank was in and the responsibility of
handling so critical a situation.
Assumed Full Responsibility.
This would have yielded the United
States Trust Company a quarter of mil
lion dollars on the assumption that 1t
would hold five millions out of its six and
a half millions of deposits. 1t might have
gone as high as $4,000. or dropped to
$4,000.
In view of this fact. the acceptance Of
proposition No by the board of direc-
tors of the United States Trust Company
men who knew all about the assets of
the company, while OF my own knowl-
edge knew nothing of them-accentuated
the responsibility I had assumed for the
Munsey Trust Company and myself in
dividually.
The negotiations for the taking over of
the United States Trust Company /were
brief and without friction or bargaining
or dickering. They were perfectly salts
States Trust Company.
My decision to step into the breach
rested on an offer from the Treasury De-
partment of a million-dollar loan to the
United States Trust Company IL the
Munsey Trust Company effected a pur-
chase Of this bank and would guarantee
its depositors against loss.
1 accepted the ofrer of the Treasury De-
partment in good faith and acted upon
- A.
department or had any negotiations with
1t concerning the matter.
offered to Other Ranks.
The Treasury Department had made
similar proposal several days before to
the Continental Trust Company, and, 1
think. to at least one other bank.
The loan to the Continental Trust Com
rany and the other bank was to be made
to the United States Trust Company on
its securities precisely as proposed to me
II 1 took over ther United States Trust
Company.
There was, therefore, no favoritism
shown to me by the Treasury Depart
ment, and nothing was done for the
Munsey, Trust Company that the depart
nent was not ready to do for any other
bank in Washington, and, indeed, had
doing.
Inc treasury department had an exact
knowledge of the securities Of the United
states Trust Company so did not make
is offer In the dark
But the proposition of the Treasury
Department to make this loan with al
view Of saving a critical situation, was
not my affair. II no such offer of helm
to the United States Trust Company had
come to me, certainly should not have.
and alone, obligated the
Munsey Trust Company and myself in
div1dually to the extent Of guaranteeing
s6r5Oe0Oo of deposits in the midst of an
excited and insistent run on the United
States Trust Company, with its six banks
and Its 5000 depositors to deal with.
Moral Force Was Factor.
The moral force of the governments
good offices was a big factor in quiet |
ing the alarm and restoring confidence
to the depositors of the United States
Trust Company as well as to depositors
in many other Washington banking in |
situations.
The details of the plan for making a |
loan to the United States Trust Conn
pany did not concern me. The PROPOSE
ton that came to me was that the gov
would make this loan to thel
United States Trust Company on its
securities, and that the money would
- ~ Work days remaining in