Evening public ledger. [volume] (Philadelphia [Pa.]) 1914-1942, 1921-12-09
BANK DISASTERS
MENACE GERMANY
Big Palatinate Institution Goes
Down and Five Others Are
Reported on Rocks
ASK PUBLIC TO BE CALM

Berlin ,FDec 9.--The failure OF the
Palatinate Bank--an important South
German institution with an extensive
network Of branches scattered through
out Bavaria-in consequence OF losses
of $40, ,000, 900 marks, or about 81 I0O,-
600. in exchange transactions is only
curtain raiser. according TO reports
in Berlin financial circles of num-
hcr of other bank crashes. a West
German institution whose directors re-
sently assumed losses or I20, 900 600
marks in exchange dealings and now
have lost another 100000 marks
through the defalcation Of trusted
employe will, It Is stated, declare In
solvency.
Four Berlin banking institutions Of
the middle caliber are reported on the
rocks and about to SUSPEND payments
because OF losses due partly to failure to
cover engagements in foreign exchange.
which had a sudden sensational re-
versal in the course of the German
mark and partly to commitments In
German securities in behalf Of them =
selves and customers which became
fatal when this reversal knocked the
bottom out Of the German stock mar =
ket and wiped out from half to a
third of the paper value of even the
most seasoned securities.
The precedent of the bank crash OF
1901, when the failure Of a Leipzig bank
was followed by a series Of other bank
insolvencies, loomed up like the pro-
phetic writing on the wall In German
financial circles yesterday. A feeling OF
great nervousness and insecurity pre-
vailed. The newspapers in their tinan :
cial columns seek to counteract any
panic sentiment among the general pub
lie. They handle the Palatinate failure,
colossal as it is. with an absence OF
any sensationalism, but conservative
and responsible financial organs. such
as the Tagcblatt, and Roersen Zeitung
along with the Deutsche Tageszeitung,
TaeglChe RundsChau and other news
papers prepare their readers for further
collapses.
The Taegliche Rundschau warns the
public against starting a run on Berlin
banks on the strength of the South
German failure. 1t states that the
Berlin banks have made preparations
for withstanding such run.
The tremendous losses of the two
provincial banks we're due to the absence
Of proper control over exchange trans
actions Of subordinates by the directors
An employe Of the Palatinate Bank, ir
charge Of the exchange department al
Munich. accepted foreign drafts far IL
excess Of the amount of the ultimate loss
without taking the precaution to pur-
chase the necessary amount to cover
in marks, acting apparently. upon the
confident assumption that the fall ol
the mark would not halt at the point
OF three hundred to the dollar. Ever
greater losses were avoided by the can
collation. of other transactions ut the
last moment.
A catastrophe of far greater proper
tiops was avoided by the action OF the
Deutsche Bank, one Of the four power
ful Big D banks and another institution
closely allied with the Palatinate Bank
The two life savers, it Is announced
will take over the business and current
liabilities to depositors of the Palattnatt
Bank, whose stock and reserve capital
were entirely wiped out by the unfor.
tunate exchange operations and which
| incurs losses of about hundred anC
forty million marks in addition.
The German banking laws do not IN
clude the double liability Of bank stock
holders which prevails in America. Tht
Palatinate stockholders therefore escap,
with the loss OF their investment alone
The standing of the bank and thu
unexpcctedness Of the collapse are tes
| tilted by the circumstance that Its stool
! in the latest transactions Monday wa!
quoted ut 40. Despite the reinsurance
that the Deutschc Bank and It's sub.
sidiary would assume liability for de-
| positors, q run started yesterday on thu
Munich and other branches Of the Pala
tinate and business was suspended.