Evening star., 1933-03-26
NEWDETRO|T BANK
MAYBE us. MODEL
Regarded as Laboratory Ex.
pertinent in Reorganiz.
ing System.
BY FREDERIC WILLIAM VILE.
nps~t.1 Dixpa&eh te The star.

BY FREDERIC WILLIAM VILE.
Special Dispatch to The Star.
DETROIT, March 25-Detroit capital
Of motordom and victim Of depression
to a degree unmatched by any important
community In the country, believes 1t
has been cast by the United States
Treasury for the role Of laboratory ex-
pertinent in the reorganization OF the
American banking system. That Is the
construction widely placed upon the Gre
alton of the new National Bank Of De-
troit, which began operations yesterday
as the joint product of the Reconstruc-
ton Finance Corporation and General
Motors Corporation.
The bank. to the $25,000,000 capital
stock Of which the two corporations
have each contributed half, Is on to q
flying start. It took in more than $10,-
600, 900 in deposits on its first day, dis
tributed among 551 accounts. General
Motors led off with a 81 900, 900 deposit.
The Chrysler company put in $4,000, 900.
The General Electric Co. intrusted
$500,0o0 to the new institution and vari-
Gus local concerns. including Packard
Motors, showed their confidence in 1t by
uldhlllS NOHOo2to AoA62f6 LAWN V4NoyOV0
to $500,00o.
Likely to Become Model.
The laboratory" feature Of the
National Bank Of Detroit is seen in the
novelty Of merging Government and pri-
vate capital for the purpose of salvag-
ing q desperate local banking situation.
II 1t proves successful experiment, De-
troiters hear. on what they believe Is
authentic Washington authority, that
the National Bank OF Detroit Is to be the
model for whole series Of Government
privately capitalized banks in cities as
financially shot to pieces as this, the
fourth city Of the country, has been, ever
since the Nationwide banking cyclone
set in here on February IA. The new
Detroit institution came into being
under the personal supervision Of Secre-
tary Of the Treasury Woodin. Local in
formation Is to the effect that Senator
Carter Glass was its godfather and, in
ferentially, chief author Of the reputed
project to make the Detroit plan as
Nationwide as necessities require. 1t
Is considered, in essence, a form Of Gov
ernment-guaranteed bank deposits.
The National Bank OF Detroit hopes
to become the salvation Of the deposit
tors Of the First National Bank and
the Guardian National Bank of Com
merce, which are now closed and being
administered by Treasury Department
conservators In these two institutions,
the two largest in the city, close to
$500, 0,00o, 900 Of deposits is tied up. Since
they shut their doors on st. Valentines
day, they have been permitted to pay
out only two installments of 5 per cent
each to depositors without loan obli-
cations. Thus $3.50, 200. 900 Of deposits
remains to be accounted for. Some
8oo. 900 people, including every leading
business flrm and corporation in De-
troit, are its claimants. As the fore
most repositories In the city, the seuues-
tration Of their vast holdings has almost
paralyzed the economic life Of this
Midwest metropolis Of nearly two mil
lion souls. Nowhere else, 1t is believed,
DO approximately serious conditions
exist.
Assets to Be Purchased.
After more than a month OF futile
projects OF one kind and another. in
cluding the abortive scheme Of Henry
Ford to take over one of the closed
banks and back 1t with his millions the
National Bank Of Detroit was created
through the cooperation of the R. F. G.
and General Motors. The bank pro-
poses. at the earliest possible moment,
to purchase with cash the more LIQUID
assets Of both the First National and
the Guardian National Banks. It Is
estimated that these may aggregate
100000 900 or something less than
ne-haH OF the deposits now tied up
ana make available a corresponding
distribution Of cash to depositors. The
conservators state that the buyers viii
pay 100 cents on the dollar, plus ac-
crueo interests, TOR the assets they ac-
quire.
Preferred stock In the new bank
which Is held by the r. F. c., will nav
q 6 per cent annual dividend. After
this, the common stock holders. who are
General Motors, may also receive a s
Per cent disbursement. Earnings above
ths ngure. after surplus and undivided
pronts have been provided, may be paid
70 the holders of common stock up to
1ls per cent. General Motors an
nounce that their common stockholders
are available to the Detroit public at
tne rate which the corporation itself
paid for them, namely, $50 a share,
Inc motor concern insists that 1t has
not gone, and does not intend going,
INTO the banking business at Detroit
OF anywhere else. 1t wants to get out
OF tne present venture as soon as it
.~ASSA PtoNA1S 40 OWu IeSOuTCeS ar
tne disposal OF this financially stricken
community.
Public Opinion Divided.
Though the Federal Government is
Q partner in the National Bank of
Detroit and avowedly becomes such
Tor the purpose of relieving the local
banking plight, public opinion here is
strangely and bitterly divided as to
the merits, and even the justice. of
the proposition The feature that
arouses the most criticism is the pro-
posal TO ''liberate" deposits in the First
Natlonal and Guardian National only
IN SO far as depositors are not obligated
10! loans or even for Endorsements on
other peoples notes. BY this system of
so-called Offsets" Detroiters are saw
ing, the generosity and helpfulness
the Treasury Department pretends
70 be extending are curtailed, if not
wholly nullfied. The conservators, act
ing for the controller of the currency,
get the lions share of the blame for
the offset plan. Because 1t provides
Tor forced payment of obligations,
IN full or in part, at a moment
when business men and private bor-
fowers were never in their lives so
incapable OF meeting their debts, the
pioCeoufe Is denounced as almost shy.
lockian in its ruthlessness and con-
trary to the consideration banks grant
70 their creditors even in normal times.
Unless the higher powers at Washing
ton prohibit offsets, many Detroiters
enviston ruin. In their anxiety, they
fear the possibility even of being sued
and having their private property
levied upon to meet bank obligations.
Bitter Controversy.
The birth Of the National Bank Of