(3 of 5)
Immediately after 1929's crash, Mr. Mitchell's resignation was discussed. Owen Young and Seymour Parker Gilbert were mentioned as successors. Months passed; nothing happened. Why? Directors had their reasons:
First, some of them were devoted to Charlie Mitchell and all of them had reason to be grateful to him. He had taken charge of the bank after two presidents had been scrapped in quick succession: Frank A. Vanderlip who backed Russia's Kerensky and James Alexander Stillman, who had inherited a large share of the bank's stock but who was overwhelmed by personal scandal soon after assuming the presidency. Charlie Mitchell almost immediately restored the bank's morale and soon made it the best in Wall Street. A man's man, strong and courageous, his record was clear ever since that day when, a junior at Amherst, he learned that his father's business had failed and he must make his own way. And with all this, the directors (most famed of whom were Percy Avery Rockefeller, James A. Stillman, the late John D. Ryan) knew that Banker Mitchell had not acted without their consent. Thus they permitted considerations of sportsmanship to prevail over the consideration of public responsibility.
Second, while directors were heartily sorry for his and their mistakes (especially stock-selling) they did not admit that his or their acts were culpable. For every evil-looking act listed above they had an explanation which gave the lie to the headlines. Example: all loans made to officers were secured by collateral which was ample at the time. None of the officers have been forgiven their debts. They still owe the money and their collateral is still pledged to the National City Company. The "write-off" consisted merely in getting these frozen loans off the books of the bank and on to the books of the security company. And this was done in the interest of depositors in accordance with a vigorous and highly successful attempt to make the bank safe for depositors. If the loans are never paid back, the bank's stockholders will suffer, not the depositors. Example: whether to "close out" a frozen loan at a loss or to attempt to quicken it back to life is a banker's daily problem. On Cuban Sugar, the bank decided wrongly. But again, no depositor suffered, for the very reason that the risk was transferred from the bank to security affiliate. And as for stockholders: the bank stock they secured in 1927 in exchange for $25,000,000 was selling higher than the price they paid.*
But thirdly, the chief reason advanced for not jettisoning "Billion Dollar Charlie" was that neither the directors nor any other Manhattan banker knew anyone who, they believed, could do an equally good job of carrying the bank safely through storm & strife. That he has done the job, Ferdinand Pecora would be the last to deny. The statement of National City Bank was, on Dec. 31, 1932, the envy of nearly every bank in the U. S.