The Bank Crisis Begins

Over the next few days, visitors and phone calls at Feilan's apartment hardly stopped.

They were all the previous owner's drinking buddies, sharp-nosed speculators, or people hoping to use him to climb into the White House.

Feilan had no interest in any of them.

Yet the call he was truly waiting for—from Hyde Park or some temporary office in Washington—never came.

The days passed one by one.

New York grew bitterly cold as winter set in.

Scattered reports began appearing in the newspapers about Midwestern banks facing pressure, but they were drowned out by political gossip about Roosevelt's cabinet picks and the Hoover administration's final days, attracting little notice...

It was now February 1933.

Detroit.

For the first three decades of the twentieth century, this city had been the most arrogant symbol of American industrial power.

Its assembly lines churned out automobiles, and Henry Ford's wild declaration—"Any customer can have a Model T painted any color that he wants so long as it is black"—defined the golden age of mass production.

But now, in the United Guardian Trust Company building, its financial heart, a storm was brewing that would shake the entire nation.

"Gentlemen, we are too deeply tied to the local automobile industry, especially Ford Motor Company. But with car sales plummeting off a cliff, the default rate on loans to related businesses has already exceeded forty percent."

"The quality of the assets we hold has deteriorated severely. If... if we do not receive immediate assistance, then once a bank run begins, not only us, but Michigan's entire financial network may be dragged down. That is the situation..."

Several groups sat around the long mahogany conference table.

President Algernon Crawford, a man with thinning hair and deep bags beneath his eyes, was making his final statement in an almost pleading tone.

Lieutenant Governor Richard Osborne's face was ashen.

Across from him sat Charles Whitney, a special envoy from the Reconstruction Finance Corporation. His brow was tightly furrowed. "Mr. Crawford, RFC assistance has strict requirements. We need to see a more detailed plan for asset divestiture and restructuring, proving that a bailout is viable rather than a bottomless pit."

The RFC was the lender of last resort established by the Hoover administration to address the crisis, but its funds were limited, its procedures cumbersome, and amid the Great Depression, it had long been exhausted by demands from every side.

Everyone's gaze turned toward the far end of the table.

There sat Edsel Ford, Ford Motor Company's representative and Henry Ford's only son.

"Crawford, how did things get this bad?!"

Edsel's voice carried suppressed fury.

Sweat covered Crawford's face as he immediately began explaining the sudden deterioration of the economy, the unpredictability of the chain reaction, and all the rest.

"Enough."

Osborne cut him off roughly. "Tell me honestly—how much longer can your bank hold on?"

Crawford's face went deathly pale. "Sir, given the current financial situation, it could... it could collapse at any moment..."

Osborne threw himself back into his chair as if the word had burned him. He looked at Charles. "Charles, the RFC has to act. We cannot wait for procedure anymore. This is our last chance to stop the disaster from spreading!"

Charles frowned deeply and did not answer at once.

Osborne turned to Edsel again, his tone nearly pleading. "Edsel, you know it. Your company is tied too deeply to this bank. If it falls, your deposits, your notes, even some of the smaller suppliers in your supply chain will be thrown into chaos immediately."

"Right now, only you have enough cash flow to provide an immediate guarantee and steady public confidence. Please give them a hand. You would be giving all of Michigan a hand as well."

Edsel clasped his hands together, his knuckles turning white.

He knew what his father thought of bankers, and he knew his father's temper even better.

But he could also see the outline of the abyss before them. He drew a deep breath. "I need to consult my father."

The meeting temporarily adjourned amid an atmosphere of despair and uncertainty.

Edsel rushed back overnight to the Ford Estate in Dearborn.

"A rescue? With my money? To fill the hole those bloodsucking parasites dug?"

Seventy-one-year-old Henry Ford stood before the fireplace, the muscles in his cheeks twitching. "United Guardian Trust Company—a bunch of idiots in suits who only know how to play games with numbers. They create no real value at all. My workers build automobiles on assembly lines—that is value. I must have been out of my mind to let the company become tied to those vermin!"

"Father, this is not only about saving them. It is about protecting our own business, protecting Detroit..."

"What did Darwin say? Survival of the fittest!"

"A poorly managed bank is like a badly designed automobile. It should be eliminated. If we reach out and save them now, we are telling everyone that failure has no consequences!"

"Edsel, tell them to let it fail and be liquidated. Respect the laws of nature!"

Edsel looked at his father's face, flushed red with agitation, and knew that all persuasion was useless.

In Henry Ford's world, his ideas were unquestionable truth, and his decisions were immutable law.

February 14, Valentine's Day.

Detroit's morning was gray and frigid.

Rumors spread through the city overnight like a plague. Ford had refused to inject funds. United Guardian Trust Company was finished.

At seven in the morning, the first depositors appeared outside the bank.

By eight, the line had wound through two blocks.

"My money! Give me back my money!"

"The bank is going under!"

"Even Ford won't save them!"

Panic was contagious.

People began shoving and pounding on the bank's doors and windows. The police tried to maintain order, but before the tide of people surging in, they seemed utterly powerless.

The news spread like wildfire through telephone calls and telegrams across all of Michigan, and unprecedented bank runs erupted at major banks throughout the state.

That afternoon, under immense political and social pressure, Michigan Governor William Comstock made a bold—or perhaps desperate—decision no state in the United States had ever made before.

Invoking emergency legislation, he announced that all banks, trust companies, and savings and loan associations across the state would close immediately for eight days.

"Bank holiday"—the seemingly calm phrase struck the already fragile financial markets like a massive bomb.

New York.

"So it still happened..."

Feilan tossed The New York Times onto the table.

He walked to the window, looking down at New York's streets, still depressed but not yet gripped by panic, and fell into thought.

It seemed his uncle had not taken what he said at the dinner seriously.

As for that contingency plan, perhaps it had long since been forgotten in some corner of a desk piled high with papers.

Then again, his uncle at the center of power was likely busy assembling a cabinet, dealing with Hoover, and balancing the interests of every faction. How could he spare any attention for the doomsday prophecy of an illegitimate nephew?