Evening star. [volume] (Washington, D.C.) 1854-1972, 1913-12-10
MUNSEY EXPLAINS
FINANCIAL DEAL
A Personal Statement About
the U. S. Trust Company'S
Absorption.
SAYS HE PROMISED
NO PERSONAL DEPOSIT
Made Two Propositions to Directors.
Ample Security Given to
Treasury.


lowing statement concerning the recent
absorption of the United States Trust
Company of this city by the Munsey
Trust Company:
The absorption of the United States
Trust Company by the Munsey Trust
Company has caused 50 much comment
and discussion here in Washington, and
TO some extent. nationally. that it seems
to me appropriate that I make brief
statement of the facts in the matter Here
they are:
II came to Washington from New York
Friday afternoon. November 81, reach
ing here little before :, o'clock. On my
way from the Enio nStation l saw "A long
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 / had of 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 until
the previous day. and then merely learned
that the bank examiner had found the
capital of the bank impaired
1t was perhaps O'Clock that night when
committee of the board of directors of
the United States Trust Company and
several of the men of the Munsey Trust
Company. including myself met at the
Shoreham Hotel to talk the situation over
and determine what should be done.
Two Propositions.
After a brief general discussion I made
two propositions to the committee of the
directors of the United States Trust Com
pany, which were substantially as fol-
lows:
Proposition No. /: The Munsey Trust
Company will at once take over the
business of the United States Trust
Company. guaranteeing it's depositors
against loss. and pay per cent for its
deposits-all that are with the company
at the end of six months-proyiding the
board of directors 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 it's depositors against loss.
In this case, however, 1t 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 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. It'll
returned at the end of perhaps an hour.
with the statement that the board of di-
rectors had accepted proposition No. 2 of
the Munsey Trust Company.
The offer in proposition No. 1 of ) per
cent for the deposits of the United States
Trust Company, the Munsey Trust Com
pany guaranteed against loss. was very
liberal offer for Understanding deposits
10
the bank was in and the responsibility of
handling so critical a situation.
This would have yielded the United
States Trust Company quarter of mil
would hold five millions out of it's six
and half millions of deposits 1t
might have gone as high as $3OO,OOO, or
dropped to $2O0,OOO.
Munsey Company's Responsibility.
In view of this fact, the acceptance of
proposition No. by the board Of di-
rectors of the United States Trust Com
pany-men who knew all about the as
sets of the company. while I Of my own
knowledge knew nothing of them-ac-
centuated the responsibility l had as
sumed for the Munsey Trust Company
and myself individually.
The negotiations for the taking over of
the United States Trust Company were
DTleI ana without IT1ctlOl OF siTSdilii6
or dickering. They were perfectly salts
factory to the directors of the United
States Trust Company
My decision to step into the breach
rested on an offer from the Treasury
Department of million-dollar loan to
the United States Trust Company If the
Munsey Trust Company effected pur-
chase of this bank and would guarantee
its depositors against loss.
l accepted the offer of the Treasury De-
ma RI mi in acted
1t. l had not sought the loan from the
department or had any negotiations with
it concerning the matter.
The Treasury Department had MADE a
similar proposal several days before to
the Continental Trust Company. and,
think. to at least one other bank.
The loan to the Continental Trust
company and the other bank was to be
made to the United States Trust Com
pany on it's securities precisely as pro-
posed to me If l took over the United
States Trust Company.
No Favoritism by Treasury.
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
ment was not ready to do for any other
bank in Washington, and, indeed. had
proposed doing.
The Treasury Department had an
exact knowledge of the securities Of the
United States Trust Company. SO did not
make it's offer in the dark.
| But the proposition of the Treasury
Department to make this loan with a
view of saving critical situation, was
| not my affair. If no such offer of help
to the United States Trust Company had
| come to me, l certainly should not have,
single handed and alone. obligated the
Munsey Trust Company and myself in
| diyidually to the extent of guaranteeing
So 100000 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.
! The moral force of the governments
| good offices was a big factor in quiet
! ing the alarm and restoring confidence
| 10 the depositors of the United States
i Trust Company as well as to depositors
1 in many other Washington banking in
/ stitutions.
Money to Go Through Banks.
| The details of the plan for making a