Emergency's End

With the announcement that it was offering its 509,550 common shares of National Bank of Detroit stock for sale to the public, General Motors Corp. last week wrote an end to one of the strangest careers in banking history.

General Motors jumped into the banking business in March 1933. Virtually every bank in Detroit had been closed for six weeks. All business was at a near standstill. Even rich G.M., which had had some $19,000,000 of its cash impounded, was in a fix. Finally, to the $12,500,000 which the Reconstruction Finance Corp. subscribed to start a new bank, G.M. added a like amount (to buy all the common stock at $25 a share). Together they helped break Detroit's financial paralysis.

Success Story. G.M.'s National Bank was a success from the start. Big & little depositors, some of whom had taken their money from other banks and hoarded it, flocked in to establish accounts amounting to $11,538,339 on the first day of business. By the end of 1933, National had a respectable total of $189,693,074 in deposits.

But G.M., which had firmly announced that it would play town banker for the emergency only, was still reluctant. Promptly after the March 24 opening, the auto makers had offered all their shares to the public at cost. They sold only 111,186 shares.

Obviously G.M. was in the banking business for a good long stay; fortunately it had called in a topflight banker to nurse the depression baby.

As president, G.M. installed calm, hefty Walter Scott McLucas, then 57, whose banking record in New York and Kansas City glittered with successes. (He is now chairman of National's board.)

Bailing Out. Among the Detroit banks that had closed for good & all were the giant First National and the Guardian. Banker McLucas helped them to return to strapped customers some 30% of their $600 million in frozen deposits.

Slowly but steadily, the RFC money was repaid until, at the outbreak of World War II, the Government held but $8,750,000 of its original $12,500,000 preferred stock in G.M.'s bank. As deposits doubled & redoubled, somewhat surprised General Motors executives found that their bank, which they still planned to abandon at the end of the emergency, had become the keystone of Detroit's financial structure.

Last week, G.M.'s National was the 13th largest bank in the U.S., with total deposits of over a billion dollars. But G.M., still anxious to get back to its mechanical last, nevertheless unloaded the biggest controlling block of bank common stock ever to be offered publicly in a single transaction. It found eager buyers, since even at $42 National stock was a good deal. Nobody minded G.M.'s profit of over 100%. The emergency was over.

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