New York Consortium

Thirty years ago Harvey Dow Gibson came out of Maine, like Rudy Vallee, with an orchestra of college boys behind him. Unlike Rudy Vallee he did not become a nation-famed crooner, but last week he waved a baton for a band composed of all the great New York banking houses. And sweet was his music to the ears of depositors in seven small broken banks in and around the city. The tune said they would get an immediate payment of 50 per cent of their $42,000,000 total deposits, more later. Maestro Gibson's once precarious, now potent Manufacturers Trust Co., backed with $20,000,000 provided by itself and the city's other big banks and banking firms, was going to liquidate the seven defunct banks.

The move was a frank, concerted effort to restore depositor confidence in New York banks, and to prevent further withdrawal of deposits. It was designed as the solution of a problem about which State Superintendent of Banks Joseph Broderick, Governor George Leslie Harrison of the New York Federal Reserve Bank. Chairman Mortimer Norton Buckner of the New York Clearing House Committee and Governor Franklin Delano Roosevelt of the State have talked long, often and seriously. The conversations have extended to 22 great banks, including Speyer & Co. and J. P. Morgan & Co. The conversations ended with promises of a million dollars from each bank and the choice of Mr. Gibson as the man to handle the money.

When bankers gathered in Manhattan last month to choose a chairman for the New York Unemployment Relief Committee under National Chairman Walter Sherman Gifford, they picked Banker Gibson. Last week, besides leading his big band of banks, he was busy getting ready an organization to help his city face the Winter. He was easily Wall Street's man of the week.

Not yet 50, Harvey Dow Gibson was born in North Conway. N. H. Now he lives on a great estate at Locust Valley. He rides after hounds with the Meadowbrook and wears on his chin the scar of a fall. Every morning his sleek cruiser Mystery awaits him in his own yacht basin to take him to Manhattan. Not always has he sped to work on a yacht. First, without much delight, he swept out the offices of American Express Co. in Boston. He turned out to be quite a broom. In a few years he had swept himself into place as financial manager of the company's business in Canada. He became part owner and vice president of Raymond & Whitcomb Co.. travel agents, and then assistant to President Seward Prosser in Liberty National Bank. At 34 he was president of Liberty National. In the War he served under Morgan Partner Henry Pomeroy Davison as general manager of the American Red Cross in 1917 and Red Cross Commissioner for France in 1918, for Europe in 1919. When Liberty National consolidated in 1921 with New York Trust Co., Mr. Gibson became president. When he left this Morgan bank at the end of 1930 to resuscitate Manufacturers Trust Co.. he was chairman of its executive committee. In financial circles, he has an almost sacerdotal distinction. He is one of six men upon whom the present John Pierpont Morgan has called in their offices.

The story of Manufacturers Trust Co. is not so serene as the story of Mr. Gibson. Founded in Brooklyn in 1905 as Citizens Trust Co. by the Jewish Nathan S. Jonas, it was the first Brooklyn bank to invade Manhattan. By June 1930 it had 45 units in Greater New York, with over 350 millions in deposits. Large stock ownership in the bank had gone to the banking house of Goldman. Sachs & Co. Goldman. Sachs and others planned a huge bank merger: International Trust plus Manufacturers Trust plus Bank of United States plus Public National, to equal one bank with deposits totalling $760,000,000. This was in October. In December, following runs, Bank of U. S. closed with depositors wailing for $160,000,000 in deposits. Manufacturers Trust Co. was not directly involved. But psycho logically it was. Between September 1930 and January 1931 its deposits shrank $109.000,000 (to $219,000.000). Manufacturers had great and potent friends. So did Banker Gibson. For $7,300,000 ($26.35 a share, once it sold for $1.250) Mr. Gibson & friends bought control from Goldman. Sachs. Not quite clear, never elucidated by Mr. Gibson, was the source of the capital behind him. Under his rule, Manufactur ers stock has regained high reputation, though the bank has not yet recovered the deposits it lost in 1930. Up $26,000,000 since Mr. Gibson took charge, deposits are still down $153.000,000 from the quar ter before Bank of U. S. failed. In July Banker Gibson began a series of mergers and liquidations by Manufacturers. Two banks it took to itself by mergers (Midwood Trust of Brooklyn and Brooklyn National Bank of New York). Three (Midtown Bank, Lebanon National Bank, Bryant Park Bank) it held at arm's length "solely as liquidating agent," the same basis as that on which the seven other banks were taken over by the Gibson-headed group last week.

Head of a bank that had felt depositor timidity to the extent of over $100,000,000. Mr. Gibson has been interested vitally in improving depositors' courage. While other bankers have held aloof from the efforts of Bank Superintendent Broderick, Mr. Gibson has listened to his problems, given him his aid. Significance of last week's consortium was that the banking fraternity had decided they were all concerned with depositors' courage and that Banker Gibson was on the right track to do something constructive about it. When the banks were ready Superintendent Broderick, already dealing with Mr. Gibson, saw him as the man to head the great operation.

Banker Gibson and Manufacturers Trust will make no money directly out of the liquidations. But in return for their arduous public service they will be well-paid in goodwill. Manufacturers, wishing to expand, will be in a position to take for its own such of the defunct flock as it wishes. A reason that Manufacturers is in a position to clean up so much scattered wreckage is that it has 52 widely scattered branches. As the wreckage is cleared, as the broken banks' depositors happily get back much of their $42,000,000, Manufacturers' branch managers will be in fine position to persuade them to deposit again, safely this time, instead of locking up money in office vaults or the old family sock.

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