Evening star., 1932-02-06
10000 j. s. BANKS
SERVING PUBLIC
How Institutions Met Odds in
1881 Is Explained by Bank
ers' Monthly.

1t can hardly be called anything but
a triumph when you realize that the
banks Of America had almost insur-
mountable difficulties to work against
in 1881, says the Bankers Monthly,
published by Rand McNally & Co.
1t was not enough that We should
have had to suffer from the greatest
stock market crash in history. We
have also had to deal with the greatest
world depression on record.
True, more banks closed than In any
other year, but still we have bank
for every 6,173 people. That is more
banks per 1000 population than We
had in 1890, when we had l bank for
every 9,808 people.
1t seems quite possible that one bank
for every 10000 people is enough TO
give adequate banking service today,
particularly since banks are now equip
ped to handle more business than IN
1890.
Banks Handle More Depositors.
We have better roads, which have
already taken thousands Of people away
from their smaller local communities
to the larger centerS for trading and
banking.
we nave larger DdllhS anu DtIGtI
transportation in the cities where bank
can care for more than 100000 de-
poSitors.
If our banking system had not been
well organized it could not have so
nObly Withstood the failure in 1881 Of
the largest number of businesses in any
year-28,275, the magazine asserts.
The loss of confidence among de-
poSitors was greater than at any other
time in cur history. The result was
steady withdrawal of bank deposits
over a period of months and an aston
ishing increase in the boarding OF
money.
In spite of all this, the year closed
with nearly 10000 banks Q9,923) oper-
ating approximately $4,000 banking
Offices.
Only about 2 per cent CT total bank
resources were tied up in closings. The
expected recovery of these temporarily
frozen deposits amounts to sl,326,0OO,-
900. The expected recovery from
business failures amounts to only
S37, $50, ,0O0 This is due to the fact
that recovery to dcpositors in banks Is
far higher than recovery to creditors OF
failed businesses, says the magazine.
S8.4 Per Cent Average Recovery.
1t is estimated that business bank
ruptcies are returning only about per
cent. whereas bank CIo5ipgS are even
tually lquidating 68.4 pei Utn.> us
estimate is based upon figures supplied
in the 1881 annual report OF the con-
troller of the currency in which l,OI3
national banks are tabulated as having
been completely llquidated in the past
65 yers. Eighty-four of these were
liquidated 10 0per cent or more. The
average recovery was 804 per cent.
The realization that many banks had
to close because of unWarranted with
draWals made by depositorS caused To-
cal committees to be formed to get the
cooperation of deposltorS. This
brought about the reopening OF l82
banks.
In many cases. the depoSitors signed
agreements not to withdraw the depoS-
its credited to their balances at the
time the bank was closed for period
sufficiently long to enable the bank to
liquidate its loans.
This figure of 1872 reopened banks
compares very favorably with only 81
reopened in 1880.
The strength of our banking system
is further emphasized by comparing the
number of new banks organized in 1880
and 1881. The number was 158 for
the first year, and 275 for the past
year, the magazine reports.
In addition to this, many banks i'm
proved their position by merging or
otherwise combining more than one in
Stitution. This process resulted IN the
elimination of 733 organizations. This,
of course, brings about operating econo-
mics as well as strengthened personnel.