United States Steel: A Corporation with a Soul

by Arundel Cotter

Thus did the panic storm break. Rumors of trouble in connection with other institutions then came thick and fast, and one concern, the Trust Co. of America, was especially talked of. This institution had a capital of $2,000,000 and resources of $74,000,000, including $12,000,000 cash in its vaults at the time. Under normal conditions it was perfectly solvent and able to meet its depositors’ claims, but that it was not in a position to withstand a prolonged run was proved by subsequent events. Realizing that the failure of the Trust Co. of America would make the crisis far more acute Mr. Morgan and his associates resolved to come to its assistance, provided it could prove that its statements of condition were correct.

Meanwhile, George Cortelyou, Secretary of the United States Treasury, had hurried on to New York from Washington and on the night of the 22nd he held a conference at the Hotel Manhattan with Morgan, George W. Perkins, one of his partners, James Stillman, and Henry P. Davison of the National City Bank, and others. After the conference, which lasted over the greater part of the evening, Perkins and Davison adjourned to the Union League Club, where they were met by Oakleigh Thorne, president of the Trust Co. of America, who had been summoned by telephone.

These were strenuous days for bankers. No coming downtown late and leaving early. The confab at the club started at nearly midnight and lasted until long after. Thorne made a statement of the financial condition of his company and the others promised that, if the facts were as represented, he would be assisted. No time was to be lost. Perkins immediately arranged for the examination and Thorne was at his desk at half-past six on the morning of the 23rd. By seven the examiners were at work.

But the newspapers were on the watch, and the fact that the Trust Co. of America was in need of assistance was known and discussed over the breakfast tables of New York, and, in fact, of the country. By the time the company opened its doors that day there was a clamorous mob outside, each individual seeking to save himself before the crash came, and the crowd surged through the doors and up to the paying teller’s window, demanding its money.

In vain did the officers of the company put seven tellers to work instead of the usual one, in vain were all deposits paid promptly and unhesitatingly. Denser and denser grew the crowd of depositors, and it became obvious that the millions that had been passed over the counters in the morning hours would not suffice to stem the tide. Thorne hurried over to the Morgan offices and there succeeded in obtaining $2,500,000 immediately. This loan was subsequently augmented by another of $10,000,000 made a few days later, and a third of $15,000,000 made early in November.

On this one day, October 23rd, $13,500,000 was paid out over the trust company’s counters! But this was not enough to stem the run which continued for more than a week and did not abate until, so far as can be estimated, something between $30,000,000 and $35,000,000 was paid to depositors.

But the Trust Co. of America was saved. It has been claimed that the price of its salvation was the surrender by its president of some 5,500 shares of Tennessee Coal, Iron & Railroad stock which he owned. It seems plain, however, that the suggestion that the Steel Corporation should take over the control of the Tennessee company came first from the people who had the majority stock of the company and after the beginning of November, before which time the bankers, headed by Morgan, had loaned the trust company $12,500,000 without any mention of or question regarding the stock. It also appears that the transfer of Thorne’s stock to the Corporation had no connection whatsoever with the trust company’s difficulties and its extrication therefrom, but was part of a separate and distinct transaction.

Particular attention has been given here to the affairs of the Trust Co. of America, because of the allegations connecting the help rendered the company with the Tennessee purchase. But it really constituted only a small part of the situation with which Morgan and his fellow-bankers were faced. There were many others that needed help, banking institutions, investment houses, brokers, and so on. The whole financial community had turned to Morgan as its Joshua to lead it out of the desert. Upon his shoulders fell the burden of saving the country from financial ruin.

The Morgan library became as the headquarters of an army. Here were congregated at all hours of the day and night bankers, brokers, business men of all kinds, both those who needed help and those who could assist the banker in the work he had thrust upon him and the arduous duties which he had assumed. Men rushed in and out of that library, pleaded for help, begged for information and, awaiting their turn, slept in its luxurious chairs.

The task that Morgan and his associates had undertaken was one of exceedingly great difficulty. Despite all that had been done to dam the torrent of financial disruption and the fact that each weak spot was strengthened as soon as discovered, the banker knew that his herculean efforts might be brought to nothing by one big failure which would let loose the panic fears it was sought to allay. Hence it may be imagined with what consternation the financier received the news, brought to him by Lewis Cass Ledyard, a prominent lawyer and a close friend of his, that Moore & Schley, one of the leading brokerage firms in the “Street,” was in serious difficulties and needed several millions of dollars to save it from disaster.