Evening star., 1933-02-14
BILLION |MPOUNDED'
BY BANK HOLIDAY
Michigan Governor BIames
Henry Ford Indirectly
for Drastic Action. ~
~ the Associated Press.

1ythe Associated Press.
DETROIT, February IA total of
l,5l0, 0,385, ,767, held in Michigan's $50
banks and trust companies, was tied up
today by q sudden eisht-day State bank
holiday decreed by Gov william A.
Comstock, who declared an acute
financial emergency" existed in the
State. The action was unprecedented
In the States history.
In his proclamation the Governor
said the closing of all the States banks
evolved around conditions in the Union
Guardian Trust Co., owned by the
Guardian Detroit Union group, which
operates some 20 Michigan banks and
trust companies. He said he believed
1t would have been necessary to close
the trust company this morning and
decided on the boldest stroke a Michi-
gan Governor has made-the closing of
Ill the States financial institutions.
Henry Ford's name was prominent in
statements from the Governor, follow
ing his issuance Of the proclamation.
He declared that II Ford had consented
to subordinate his $500, 900 deposit in
the Union Guardian Trust Co. the af-
fairs OF that institution might have
been settled without delay.
Ford Refused Request.
In the meeting at Detroit last night
(attended by bankers. State officials
and others 1t was believed two or three
times that a settlement could be
reached" the Governor said today.
THE company had been assured of q
$23 100000 Reconstruction Finance
lpofN L.
depositors to subordinate their deposits
70 the claims Of the r. F. c. and the
small depoSitors. Other large deposi-
tors agreed to do this, but Mr.. Ford
refused I .have been criticized for
making this public, but it Is true and L
stand by it."
direct communication with Henry Ford.
He said all he knew about the matter
was what he was told by trust company
officials.
Edsel Ford is q stockholder in the
Guardian Union group, which owns the
Union Guardian Trust Co.
The Governor declared he believed a
plan Will be completed within the next
"a hours to permit sufficient with
drawals from banks to provide for meet
ing pay rolls and providing living ex-
Pensess for depositors. He also said it
Is probable that the holiday may be
cancelled before 1t runs its full course.
The period was set for February IA to
February 81, but actually the banks
under the proclamation would not re-
open until February 23, due to the
Washington's birthday holiday.
Gold Shipment Received.
Steps were taken Immediately by
hnancial and business organizations to
meet the crisis in the States business
activity. Between SIS 900 900 and $40
100000 in gold, consigned to the De-
troit branch of the Federal Reserve
Bank from the Federal Reserve Bank
OF Chicago, arrived early today under
an escort Of Is detectives It was trans
ferred to the vaults of Detroit banks.
Government officials took imme-
diate steps to halt the spread OF un-
founded rumors regarding the stability
OF banks in the State. william H.
Moran, chief Of the United States
secret service, said he had dispatched
$50 secret service operatives throughout
Michigan to keep q close observance on
"scandal-mongers, and others who
might spread unfounded rumors."
The Governor said he had beer, given
definite assurance that the banks most
certainly will reopen at the end of
the eight-day holiday, II not earlier.
Meanwhile. business in the State con-
tinued as usual this morning. while
heads OF practically every concern con-
ferred on methods Of procedure. Several
concerns announced they would pay
their employees in cash. since the CASH
ing OF checks was practically suspended,
except in small amounts.
Stock Exch.nts Closed.
The ratrost5~
closed, although brokers were accepting
selling orders to be made on exchanges
outside Detroit. Bankers and financial
leaders from the State came to Detroit
today FOR conference on procedure
and several said they expected to pre-
sent q definite plan for carrying over"
the citizens during the emergency.
Most Of the banks in the upper penin-
sula Of Michigan remained open, but
their situation was described as differ
ent from others because they are in
the Minneapolis Federal Reserve dis
trict; Gov. Comstock said they would
not be asked to close. .-
Gov. ComStock explained that he
was summoned to Detroit from Lansing
Yesterday afternoon to q conference
precipitated by an unforeseen and
acute situation which had suddenly
arisen In the affairs OF one of our lead
ing financial institutions, the Union
Guardian Trust Co"
He said 1t was the consensus after
long conference of those present that
the difficulties might be ironed out
provided time could be had for nego-
tiations."
AS matters STOOD" the Governors
statement said, lit would have been
necessary to close the doors OF the in
stitution involved on the morning OF
Feoruary IA, which would likely bring
In us train disaster to many other Of
our banking institutions in Michigan.
The crisis was caused by the inabil-
hy to realize Immediately upon the
assets OF the institution to meet threat
ened Withdrawals. For the protection
OF smaller depositors in our institutions
and TO prevent the withdrawal of large
sums from the State of Michigan 1t was
deemed wise to declare a banking hol-
iday for period sufficiently long to
allow the situation to be cleared up."
BaIlantine LAuds Action.
A supplemental statement from Ar
ehur A. Ballantine, Undersecretarv OF
the Treasury. said that he believed Gov.
Comstock acted very wisely"
Ballantine said that he had been in
close contact during some days with
phases OF the banking situation exist
ing IN this State" He said that all
agencies OF the Federal Government
touching the banking field have been
giving closest attention and fullest sup
port to these State problems. The time
available proved to be too short for
nnal solutions, but further time and
enort should be productive Of construc-
i've results. The Governors action
gives opportunity for this"
Inc proclamation was issued In re-
eponse TO formal request signed by
Jonn G. Hicks. president OF the Michi.
gan Bankers Association, and Robert
.. Lord, president Of the Detroit Clear
ing House Association
participating in the conference from
Ehlch emerged the proclamation were
Roy ID, ChaOin Secrefar,, -