Evening star., 1931-12-13

NOOllSAluGO IlOlll TAAoS aStJ
ever and $50 depositors gave notice of
withdrawal, totaling more than 500, 600.
The bank was plainly headed toward
failure
Judge Lacey suggested that the OFF,
cials lay the whole situation before the
depositors and ask their cooperation.
A meeting was called in the high school
auditorium and it was packed TO the
doors. That meeting was sensational
success.
Crisis Is Overcome.
The Milford bank is now doing busi-
ness as usual, as is the First National
Bank of Rochester. In the latter case,
another bank had failed, causing run
on the First National. A 90-day ban
on savings Withdrawals was put on.
Notices for Withdrawals totaling more
than si60,000 had been fled. A crisis
was at hand.
The bank was actually sound, and
again Judge Lacy counseled a bold,
open, frank attitude to the depositors.
Again the response was wholly gratifying
In Traverse City the First National
Bank and the Peoples Savings Bank
were in distress. Judge Lacy was called
in. He made a careful examination,
A1NAcCN q 41lEA BE1s d6hCA lAtE bbOShAFOAdCAc
to put in S15o,000 new cash, and then
suggested consulting the depositors
about the whole thing.
Let us look into their meeting in the
high school auditorium of Traverse City,
with Judge Lacy speaking.
Instead Of pursuing the policy which
have been quite the habit among bank
ers In the past" he said, 'of sitting
behind closed doors and going into
huddle and thinking things over, and
worrying about what you depositors are
thinking, your two banks have decided
the best thing TO do would be TO talk
1t all over in open meeting.
Probably not one in six OF the banks
In Michigan which have closed should
ever have had to do so. The stock
holders, director officers and depositors
did not get together and work to the
same end and purpose"
Their banks were not going to fail,
Judge Lacy assured the depositors, but
It was felt that a merger would make
for q sounder condition.
Now your banks are Just like every
other bank in this country" he con-
tinued. mo bank can stand a run; no
bank keeps enough money on hand to
enable 1t to pay out all of its deposits
at one time Why the United States
Government itself could not pay what
It owes if it were asked to do so within
any limited period"
Banking in Primer Form.
In the same simple language, avoid
ing technical banking terms, Judge Lacy
explained q banks business.
"One Of the great reasons for the de-
preston" he went on to say, "is that
there Is so much Of the actual currency
withdrawn from circulation that 1t is
bleeding business and industry white
It has exactly the same effect on in
dustry, business and the employment of
labor as anemia has upon an individual,
and is just as pernicious as anemia.
When we get into depression and
people are out Of work and taxes high.
some Of us are not able to make enough
money to get along. so we have to go TO
our reserves, to our savings accounts, to
draw little money now and then.
That is happening all over the United
States, and it means a constant drain
on the banks. But that is not so dis
astrous as 1t might appear, because
when people draw money for necessities
they pay 1t out and the people to
whom they pay bring it back TO the
banks. There is nothing very serious
about that part Of It.
But in depreSsions we worry about
things. We wonder If it would not be
q good idea to get that money when we
know right where it is, and somebody
else gets the same idea. Do you realize
what such people are actually doing?
They are trying to get the Jump on
every other depositor. They want theirs
frst"
Four or five per cent Of the depositors
OF almost any bank, Judge Lacy said,
could put that bank in very great dan
ger Of closing
II you people and the directors and
stockholders Of these banks all stick to-
gether," advised Judge Lacy, land that
goes for every bank in this part of the
state; If you act nationally and do not
let any one get you startled, you can
maintain and sustain your bank IN
perfectly fine way"
Judge Lacy asked the depositors to
agree not to withdraw deposits stand
ing to their credit in the two banks
september 28 in an amount greater
than uniform percentage Of their re-
spectiVe deposits, "as may be fixed by
the banking commissioner Of Michigan
In his discretion from time to time or
IN the absence of a deterrninat ION of
such percentage by him, then by the
directors Of the merged banks"
The agreement, he explained, would
not Apply 10 deposits after September
%. Those made after that date may
be withdrawn just as freely as car be-
he said. That would be Just as you
would do normally. You take the money
TO the bank, put it there, and draw it
the next day, If you will"
What Do You Want 1t For?
He asked the depositors further TO
agree that the bank could require notice
of withdrawal Of deposits II the bank
80 elected. This, he explained, was to
prevent any depositor not agreeing to
the moratorium from taking out his
money at the expense of the others.
Suppose somebody wanted more Of his
money than the bankers thought he
needed, Judge Lacy asked
We would say" he replied TO his
question, DO you need this money!
Yes What do you need it for2' My
wife has got to go to the hospital All
right, II Is as free as water. We have
plenty Of money for you I have to
pay soras taxes All right. fine
"But suppose some one says when you