Olde News

February, 2015.

Despite being basically vacant since 1997, the First State Bank (aka, Olde Building) at 751 Griswold is one of those rare ones that has managed to escape my pryings and proddings. But it wasn't for a lack of trying; I considered this to be one of the juicier little nuggets of exploring goodness that downtown Detroit had to dangle in front of my nose, and as such I always kept an eye on it or gave its doorhandles the occasional tug.

When I got into the Security Trust Company Building next-door at 735 Griswold, for some reason I thought it would lend access to this old bank as well, but that was not to be.

The National Historic Register says that the First State Bank was built in 1924-1925 and designed by Albert Kahn, featuring exquisite stone carving by Corrado Parducci on its facade. According to an article on modeldmedia.com, it was for this commission and the Security Trust Co. next-door that Albert Kahn first brought Parducci to America to work under him.

It was by total chance that my girlfriend happened to be walking by on lunch break one day and saw the doors propped open. She went in. The building had just started undergoing renovation into lofts, and sadly she didn't get far up the stairs before the workers inside stopped her and sent her back out, which is why I only have these few photos of the lobby.

Naturally the fancy coffered plaster ceiling is the number-one most arresting feature of the lobby, so that's what she photographed. As it so happens another acquaintance of mine seems to have also made it into the Olde Building around that time, detroit-ish.com, who (as always) got some much better photos.

Photo by a friend.

The c.1922 Sanborn map of the spot where this bank stands shows that the spot was previously occupied by the McGraw Building, which also contained a bank. According to Clarence Burton's History of Wayne County, the First State Bank was located in the McGraw Building, and was the outgrowth of the German-American Bank founded in 1871 (which in turn had its genesis in the private bank started in 1853 by Edward Kanter).

Ren Farley says that the president of the German-American Bank in 1902 was Mr. John S. Gray, whose nephew was Alexander Y. Malcomson, a Detroit coal dealer—and acquaintance of the young Henry Ford. In 1902 they partnered and formed the Ford Motor Co., and Malcomson convinced his uncle Mr. Gray to put up $10,500 for a 10.5 percent share in its stock and become its president, with Henry Ford as vice president. So in a convoluted sort of way, this building housed the financial institution that had bankrolled the birth of Ford Motor Co.

The John S. Gray Branch Library was also named for him.

Photo by a friend.

Burton went on to write that by 1920 the First State Bank had a capital stock of $1 million, and George H. Kirchner was its president. A 1927 volume of the Investment Bankers Association of America Bulletin lists it as the "Griswold-First State Company," and a later directory shows the "Guardian Depositors Corporation" in the building in 1941. It is likely that the First State Bank didn't live past the 1933 "bank holiday" (when all Michigan banks were closed by order of the governor in order to avoid a second panic during the Great Depression), and was subsequently eaten by a bigger fish.

Photo by a friend.

In 1970 this building was occupied (and renamed) by a very different financial institution—the controversial Olde Discount Corporation (pronounced OL-dee). According to a 2008 article in Forbes by William P. Barrett,

Ernest J. (Ernie) Olde made The Forbes 400 list four times during the 1990s from the fabulous profit margins of his Detroit-headquartered Olde Discount, then the nation’s fourth-largest cut-rate brokerage. Big factors in the firm’s prosperity: lying to clients and pressuring them to buy unsuitable stocks, regulators said in 1998. The secretive Ernie (who had lost a libel lawsuit he filed against this writer), two aides and the business paid $7 million in penalties. Yet in late 1999 H&R Block bought the whole show for $887 million. Ernie’s timing was perfect; stock markets soon swooned. That–plus, perhaps, the need to follow the law–helped the rebranded H&R Block Financial Advisors post close to $400 million in pretax losses over the next nine years. (Ernie gave up his U.S. citizenship for that of the Cayman Islands; he died of cancer in 2002 at age 64.) Last month H&R Block finally gave up, too, announcing the unit’s sale to Ameriprise Financial. Price: $315 million, barely one-third what Ernie got. 

Photo by a friend.

If I'm not mistaken it was around 2002 that this building was last occupied. A 2013 article in the Detroit Free Press says that Ernie Olde pioneered the "discount brokerage" concept in the 1970s, accurately predicting that small investors would soon be a big part of the stock market. But a U.S. Securities and Exchange Commission investigation in 1998 showed that Olde brokers "received significant financial incentives for selling stocks on that commission-free list." Though they were fined $7 million in penalties, neither the firm nor its executives ever admitted malfeasance.

Photo by a friend.

A New York Times article from 1995 also reveals that Olde's slimy practices were not limited to paper—formal complaints were filed with the Federal Equal Employment Opportunity Commission by employees describing a workplace climate "in which women have been publicly demeaned for having menstrual cycles," that managers had "openly referred to blacks" using racial epithets such as "monkeys," and that the company did not hire African-Americans. Olde officially denied the allegations but declined to provide evidence to the contrary.

"You can sue a corporation and go to court and get a jury that finds in your favor and the company has to change," said Linda D. Friedman, a lawyer at Leng Stowell. "But that's not the way it is in the securities industry. The records are all secret, so nothing changes."

And, as a private company, Olde faces no legal requirements to disclose lawsuits or arbitrations that affect its finances. Olde does not have Federal contracts, so it is not required to file employment data with the Government.

According to detroit.curbed.com this building sold to a developer in May 2013 for just shy of $1 million, and actual renovation work began in August 2015.

References:
Sanborn map for Detroit, Vol. 1 Sheet 2 (1922)
History of Wayne County, Vol. II, by Clarence Burton, p. 1254
Investment Bankers Association of America Bulletin, Vols. 16-17 (1927), p. 42
The Michigan Alumnus, Vol. 47 (May 10, 1941), p. 419
http://www.nps.gov/nr/feature/weekly_features/2009/DetroitFinancial.pdf
http://detroit1701.org/First%20State%20Bank%20Building.html#.VmZAEVbv0pE
http://archive.freep.com/article/20131222/COL07/312220032/Wolf-on-Wall-Street-stock-fraud-Susan-Tompor
http://www.nytimes.com/1995/04/26/business/three-women-vs-a-broker-olde-is-accused-of-blatant-job-discrimination.html?pagewanted=all
http://www.forbes.com/forbes/2008/0915/032.html
ttp://www.modeldmedia.com/features/corradoparduccidowntowndetroit.aspx
http://detroit.curbed.com/tags/olde-building