One of the main tasks Dana and I have been working on thus far for the Greenfield digital editing project- part of a larger effort funded by the Albert M. Greenfield Foundation- is to try to piece together the history of Bankers Trust Company, the banking institution on which our project is focused. This can at times be rather difficult due to gaps in the historical record. We have looked through several hundred documents from the Albert M. Greenfield Papers (collection 1959), as well as materials from a couple related collections located here at HSP, such as the Philadelphia Clearinghouse Association (collection 1908)- an association that among other things, helped member banks during banking panics- but pieces of the puzzle are still missing.
One part of the story that I am grappling with is why the effort to reorganize the bank, rather than liquidate it, ultimately failed. For many affiliated with the bank, its closure on December 22, 1930 did not spell certain doom. Rather, it was most likely viewed as only a temporary suspension enacted to allow the bank to recover from the run it had been experiencing over the last couple months. The plan was to reorganize Bankers Trust and have it reopen as soon as possible.
Almost immediately after the bank’s closure, efforts for its reorganization were underway, and the possibility of its reopening looked promising. The bank was able to quickly pay off many of its loans. Also, by the end of 1930, Bankers Trust had formed a Depositors’ Committee that drafted a plan for the bank’s reopening by the spring of 1931. Moreover, in March 1931, William D. Gordon replaced Peter Cameron as Secretary of Banking. Gordon seemed to have been on the same page as Greenfield with regards to the rehabilitation plans for Bankers Trust.
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Greenfield and Bankers Trust President, Samuel H. Barker, were involved in reorganization planning as well. As the bank’s principal depositor, Greenfield had plenty of motivation to see Bankers Trust reopen. He himself sent Secretary Gordon an in-depth proposal for reorganization.
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Understandably, the reorganization plans and goals of the bank’s rehabilitation envisioned by its directors, stockholders, and depositors differed. A split amongst the bank’s depositors emerged. Some depositors felt that the Depositors’ Committee was too closely aligned with Bankers Trust stockholders and directors, which they argued was reflected in the reorganization plan. They wanted to preclude any persons from the “old regime,” most notably Greenfield, from having any involvement with the bank’s reorganization. In May 1931 these depositors, under the leadership of Frank S. Dreeben, formed the Minority Depositors’ Committee, or Depositors’ Protective Committee and drafted an alternate reorganization plan.
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By June 1931, the Depositors’ Committee had obtained the signatures of 60% of depositors who supported the reorganization plan it had drafted; however, the state required 80% of depositors to endorse the plan in order for it to go through. After months of going back and forth, on September 24, Secretary Gordon announced his rejection of a reorganization plan for Bankers Trust and his decision to instead proceed with the bank’s liquidation. Gordon denied depositors’ petition to bar stockholders, officers, and directors who may have been depositors from receiving payment from liquidation proceeds. He also denied depositors representation on the liquidation board. The first payment to depositors was issued in early November, almost one year since the bank’s closing.
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On average, liquidations during the Great Depression lasted about six years. Bankers Trust Company’s liquidation process lasted sixteen. The sixth and final payment was not made to depositors until May 1946.