Evening star., 1932-11-05

money to quiet unreasonable fear ard
give absolute assurance that funds were
available to pay every depositor In full
without question.
Had Ample Security.
In the course of inquiry into the
condition Of the bank 1t was found that
they had ample securities. which in
normal times could have paid out their
depositors, leaving large margin. But
the securities could not be instantly
sold at any price, or at least at a price
which would produce sufficient to pay
all depositors, and they could not collect
instantly from the notes. In the inquiry
into the condition of the bank it de-.
veloped they had 122,900 depositors, OF
whom 100000 were savings depositors;
that the average of the savings de-
posits was only $140 each: many OF
them working women and children. !.
that the safety of these depositors could
not be separated from the other de-
positors of the bank.
It was found that there were 1900
commercial depositors, most of whom
were men and women engaged in small
businesses, whose deposits represented
the money necessary to meet their pay
rolls, the purchasing Of their materials
and the discharge Of obligations to
others incurred in the course OF busl-
ness. Jeopardy to them meant that
many thousands Of men and women IN
factories and stores would be discharged
into untold hardships.
But these were not all who were de-
pendent upon the maintenance OF this
bank 1t was found that among the
1900 commercial deposits 755 were
country banks, the great majority OF
them in towns of less than 5000 peo--
pie. II this bank should fail, many OF
these country banks must fall.
In the complex system OF our eco
nomic life things that on the surface
seem unrelated are, in fact, under the
surface inextricably tied together. A
farmer in a small town in an agricul-
tural State might feel no concern for
the safety of this important bank In
great city. The widow with small de.
post in a small bank OF a town OF
another State might know OF no rela-
tionship between her bank and the city
bank. But the farmer in one State and
the widow in another, even though they
did not know it, had direct financial
stake in the fate Of this city bank. For
the country banks must conduct busi-
ness with the city banks In the ordinary
conduct Of trade, and must carry their
reserves with the city banks in order
that they may draw interest upon them,
which they In turn pay to their de-
positors.
Now, 1t was found on examination
that these 755 depositing banks had
6.5OO,OOO depositors, scattered over Is
States. But that is not all. There were
81 900 other banks scattered throughout
the country which had deposits in the
755 banks depositing with this par
ticular city bank; and in these Il GOO
banks were more than 20000,000 de-
positors; and they involved widows, or
phans. workers. insurance companies,
manufacturers and merchants.
Men Of High Esteem
And in addition to all this there was
the position of the borrowers from all
this mass of banks. If the city bank
should fail, there must be immediate
demand for the payment Of the money
due from its borrowers. II any OF the
banks dependent upon 1t should fall
their borrowers in turn would be COM
PEELED to make immediate payment OF
money due and to realize upon tnelr
property at time when property could
not be turned into cash at anything
like its real value. In this city banK
and in the 755 banks who carried their
reserve deposits in this city bank there
were 695, 900 men and women and IN
stitutions owing money on their notes.
They were scattered throughout the
length and breadth of the land. They
were on the farms. in the cities, the
villages and hamlets. Most OF all these
groups Of people were unaware OF their
danger. They were in their homes and
in their churches, concerned with their
own affairs-but they were not being
forgotten.
The men who had conducted this
bank over great numbers OF years were
men of high esteem in the whole COM
munity To their credit be it said that
their chief concern was the preserva-
ton of these hundreds Of thousands
or millions of people from disaster.
They were not asking aid for them
selves.
The Investigations and the CONVEX
sations occupied many hours OF con-
tinuous communication from these two
cities to Washington and back again.
Remember, this was on Sunday, When
the normal processes of business were
difficult to conduct Countless diff
cultleS were encountered and solutiors
worked cut. They were working against
time
Finally, at three hours after Sunday
midnight the task was completed. The
assets had been valued by the examiners
of the Reconstruction Corporation.
The banks of the two cities Joined in
lending assistance and the Recon-
struction Corporation agreed to furnish
a sufficient sum to assure that this
bank could open without fear and meet
every demand of its depositors.
At 10 o'clock on Monday all these
banks opened for business as usual
Public announcement was made that
ample funds were on hand to pay
every depositor. As had been antici-
pated, Immediately excitement and
panic subsidized and confidence was re-
stored. The crowds melted away-de-
posts began to return. The situation
was saved, not only in this bank, but
In the other banks which had been
subject to heavy Withdrawals.
The loans offered by the cooperating
banks and the Reconstruction Corpora
ton were never fully called for and
have since been largely repaid, and
every danger in connection with that
episode is now over.
National Necessity.
The central human figure Of that
bank was a man who had served his
country for 40 years in many high
capacities, who in recent years had
been absent from the country in a
position of first importance to the
American people.
That is the story Of the Dawes Bank
In Chicago. You know the use our
political opponents have made Of this
incident. They ignore the fact that
Gen. Dawes resigned from the Recon-
struction Corporation three weeks be-
fore on his first news that attacks
were being made on the bank with
which his name had long been asso-
ciated. He resigned to try to save that
bank without call on the Retonstruc-
ton Corporation, of which he had been
a director. He knew and appreciated
the use that would be made in this
camnaipn of SIlch ca1umnv He sought