Evening star., 1930-12-12
CLOSING OF BANK
D|STURBS STREET
New Workers Startled by
News, Although Event Had
Been Forecast.
BY JOHN F. SINCLAIR.

BY JOHN F. SINCLAIR.
Special Dispatch to The Star.
NEW YORK, December 12.-Notwith-
standing the rumors that have been
current for some time, New York was
startled yesterday by the announce
ment that the Bank of the United
States, with its SO branches, had been
closed.
A meeting of business and banking
leaders was called Immediately at the
Federal Reserve Bank. It was a distin-
guished party that gathered there.
The Federal Reserve Bank officers pres
ent included: j. Herbert Case, chairman
of the board; George L. Harrison, COVER
nor, and w. Randolph Burgess, deputy
governor. In addition there were present
Owen D. Young, Albert H. Wiggin, Nor
timer N. Buckner, Charles E. Mitchell,
jackson E. Reynolds Thomas w. La
mont, Charles H. Sabin, Lieut.. Gov. H.
H. Leman, E. Chester Gersten, president
of the Public National Bank; B. K.
Marcus, president of the Bank of the
United States; Saul Singer, Nathan S.
Jonas and Ralph Jonas of the Manu-
facturerS' Trust Co., and F. E. Hasler
OF the international Trust Co.
Bank Grew Rapidly.
Although a member of the Federal
Reserve System, the Bank of the United
States has no connection with the
United States Government. 1t is State
bank and started in 1913. It grew rap
idly into metropolitan bank with a
capital of $25, ,25O, 900 and $I7,156,00
surplus and undivided profits, with
gross deposits of $202, 1872, 900 on Sep
tember "a last. A big bank in any city
even New York.
Its branches were scattered through
out the entire city, especially in the
working mems residential sections. II
had 400 900 depositors, most of whom
have small savings accounts; $4,000
stockholders, and 1884 persons, ex-
cluding officers, employed in the main
ofhce and the various branches.
The bankers and business men
worked desperately until dawn yeSter-
day. A score of suggestions were put
forward, but none was found salts
factory. Just one thing remained-to
turn over the institution to the New
York State Banking Department.
Yesterday morning little typewrit-
of each Of the SO branches, stated that
the bank had been closed and taken
over by the State authorities.
AOdnS WcFc impaired
The closing of the bank is an after
math of the bull market. Many of its
big depoSitors had invested heavily in
stocks. When the stock market broke
in the Fail Of 1929 a number of its
loans were impaired by too thin col
lateral.
So thousands of depositors now find
all their funds tied up In the closed
bank. What can be done to relieve
the distress?
The New York clearing house an
nounced yesterday that it is prepared
TO loan against the net claims Of de-
positors of the bank up to SO per cent
of such claims. This helps to take
the bitter edge OF the situation.
For example: II a depositor owes
the bank 1000 and carries $4,000 on
deposit, his net claim against the bank
will be $1,000. Under the plan an
nounced by the clearing house he viii
be allowed to borrow $500 and assign
the 81 900 claim as collateral.
This viii help somewhat to meet
the situation But q great many OF
the banks deposits are based on loans
given, so that, while deposits on the
last call are more than 5000, 900 900,
probably the net loans possible under
such o plan will not exceed $4,000, 900,
Marcus Career.
3. K. Marcus, president of the Bank
Of the United States, Is one of the
youngest of big bank presidents Of the
United States. He has just passed 40.
Elected to the presidency Of the bank
In July, 1927, when he succeeded his
father, who founded the institution
In New York City.
TU11aTR faa honk moQ in0Orr0TafcH III
years ago. Marcus was made cashier al
%. He has been with the bank ever
since, and is well known throughout
the country. He is a graduate Of Co
lumbia University. Two years ago he
was given q testimonial dinner at the
Commodore Hotel, attended by more
than 2,o00 distinguished men and
women Of Greater New York. The
speakers on that occasion were Mayor
Walker, DR.. John H. Finley, Felix NJ
Warburg, George v, Mclaughlin and
G. Stanley Mitchell.
Name Was Confusing.
The name Of the closed bank is most
unfortunate. Many people-especia
abroad-believe that because It was
called the Bank Of United States, 1t is
part Of the banking system Of the Fed
Grad Government, just like the Bank OF
France Is in France, or the Bank OF
England in Great Britain.
The State of New York, very un-
wisely, allowed the incorporators to use
the words THE Bank Of United States
as its title. Such a distinguished name
should never have been given to any
corporation. The name Is very likely
70 cause, in many quarters, endless con-
fusion and fear. The State has already
recognized this and has adopted meas
ures to prevent repetition of this mis-
take.
The officers and the board of direc-
tors doubtless viii be severely criticized
for the crash. But, the New York
Clearing House, composed of % of the
largest banks in the city. cannot en-
ttrely escape responsibility. It never
should have allowed such q large insti-
tuition TO get into such a jam.
The clearing house officials may say
that the closed bank didn't meet their
requirements, and hence they had no
responsibility in the matter But they
have, just the same, for the people look
TO the New York clearing house, more
than to any other body, to see that
such a situation as this one does not
occur. The people who deposit money
In banks expect the responsible banking
leaders to meet such problems, so that
every unhealthy banking condition will
be quickly taken in hand, and before
1t is too late.
No, the New York clearing house can
not eliminate its share of the response
bility IN this financial crash.
And this debacle. too, should put a
quietus on the mad scramble for State
and national bank charters, the cause
of much trouble in many States in re-
cent years. Here, too, the clearing
house can be Of inestimable value II II
joins the opposition TO the granting OF
too many banking charters.
New York bankers whom I talked to
yesterday, however, felt that the situa-
ton Is now well under control and that
the worst Is over.
Copyright. 1880. by North American News
paper Ailiance.l