Is it ever good news if a business associate sends you a telegram at 4 a.m.?
This one, part of the Albert M. Greenfield papers (collection 1959), announced an emergency meeting of the board of directors for Bankers Trust Company, which within hours became the first large Philadelphia bank to fail during the Great Depression.
Next week marks the 80th anniversary of the closure of Bankers Trust. Now largely forgotten, its failure to open on December 22, 1930 affected at least 100,000 depositors and made headlines for years to follow.
My colleague Faith Charlton and I are investigating the Bankers Trust story as we continue developing our new Greenfield digital history project, part of a larger effort funded by the Albert M. Greenfield Foundation. At the moment, we are working on untangling what happened in the bank’s final days.
Albert M. Greenfield (1887-1967) had been instrumental in the creation of the bank and served on its board of directors. Bankers Trust grew by leaps and bounds in its four-year history, acquiring nine other banks and growing to include 11 branches and $50 million in deposits (the equivalent of about $628 million today).
However, within months of its July 1930 acquisition of the struggling Bank of Philadelphia and Trust Company, Bankers Trust was experiencing a run on its deposits. Greenfield and other Bankers Trust officials believed it was healthy enough to survive the short-term distress, and two large Philadelphia banks loaned about $7 million to cover withdrawals. In mid-December, with Bankers Trust still in distress, a group of local bank presidents reassured the state Department of Banking that Philadelphia banks would support Bankers Trust.
According to several accounts, the local bank presidents changed their minds at a private meeting in the days before December 22 and decided to let Bankers Trust fail.
In a last desperate attempt to save the bank, one of Greenfield's friends (and investor) William Fox claimed to have called President Herbert Hoover the morning of December 22 to urge him to step in and keep Bankers Trust's doors open. We haven't found evidence of that conversation in the Greenfield papers, but we do know that two days after Bankers Trust failed, Greenfield and the bank's president Samuel Barker had an appointment with President Hoover in Washington, D.C. (Thanks to the Herbert Hoover Presidential Library and Museum, you can see their December 24, 1930 appointment listing here.)
For many Philadelphians, the Bankers Trust failure brought the Great Depression painfully close to home, perhaps for the first time.
Over the next few years, the Pennsylvania Department of Banking oversaw a lengthy legal process that returned to Bankers Trust customers about 59 cents on every dollar on deposit.
But that repayment was likely of little consolation to the thousands of small depositors whose savings were largely out of reach during the multi-year process and were never completely replaced.
In response to this and thousands of other bank crises around the country, in 1933 the federal government enacted sweeping banking reforms that included the creation of the FDIC.