Closed for Business

The Story of Bankers Trust Company During the Great Depression

The Rise and Fall of Bankers Trust Company

Dana Dorman and Faith Charlton

When Bankers Trust Company opened its doors in the late 1920s, the future looked bright indeed. Over a four-year period, the bank absorbed eight other institutions, grew from $2.5 million to $50 million in deposits, and had 21 offices around the city. However, its size could not protect it from failure. On December 22, 1930, after suffering through several months of heavy customer withdrawals, Bankers Trust Company voluntarily turned its affairs over to the Pennsylvania Department of Banking. Despite bank leaders’ optimism that it would quickly reorganize its affairs, the bank never reopened.

Of course, in the early 1930s, when a bank failed, no governmental safety net protected the individuals and institutions whose money had been invested in that bank. When Bankers Trust failed to open its doors on December 22, 1930, approximately 100,000 depositors faced financial ruin. Philadelphians raced to the bank’s branches to attempt to withdraw their money, but found no relief.

Instead, the Pennsylvania Department of Banking oversaw a lengthy legal process that returned to Bankers Trust customers 59 cents on every dollar on deposit. That repayment was likely of little consolation to the thousands of small depositors whose savings were largely out of reach during the multiyear process and were never completely replaced.

For many Philadelphians, the Bankers Trust failure brought the Great Depression painfully close to home, perhaps for the first time. It also presaged the chaos and despair that followed each of the dozens of subsequent bank closures in the city during the early years of the Depression

A Rising Star

Bankers Trust Company was incorporated in December 1926 by a small group of investors, including prominent businessman Albert M. Greenfield, who had already expanded from investing in real estate to mortgages by the time he entered banking. He and his co-investors purchased a controlling interest in a small West Philadelphia bank, Bank and Trust Company of West Philadelphia, and expanded to Center City. With financial expert Samuel H. Barker at the helm as president, the bank grew rapidly. In just four years, Bankers Trust Company increased its deposits of $2.5 million to more than $50 million, largely by absorbing other banks. It acquired four banks in 1929 alone:

Bank and Trust Company of West Philadelphia (1926)
National Bank of Commerce (1927)
Logan Bank and Trust Company (1928)
Federal Trust Company (1929)
Empire Title and Trust Company (1929)
Tioga Trust Company (1929)
Drovers and Merchants National Bank of Philadelphia (1929)
Metropolitan Trust Company (1930)
Bank of Philadelphia and Trust Company (1930)