Evening star., 1933-12-31
BANKS STRONGER
AFTER HARD YEAR
Safer and More Useful Paths
Found, Head of D. c. AS
sociation Believes.
BY GEORGE O. VASS.

BY GEORGE o. VASS,
President. District of Columbia Bankers
Association.
It would be inadequate to describe
1888 as a memorable year In banking.
The bank holiday period was night
mare-tO say the least. The days Of
reconstruction that followed however,
have been hopeful and at the end of
the year banking appears to have been
guided into safer and more useful
channels.
During the last decade when bank
failures were occurring at unpre-
cedented rate in other sections of the
country, Washington had escaped such
a calamity In July, 1882, the local
banking group suffered its first cas-
ualties since the beginning of the de-
preston, when four banks closed, with
aggregate deposits of more than $780,
600. The runs which had forced these
banks to close cleared up the local
banking atmosphere and there was a
feeling of security which was not again
disturbed until the period ushered in
by the Governor of Michigan. when he
issued his portentouS proclamation on
February IA declaring banking holi-
day in his State.
The Senate's investigation of banking
practices and the publication of Recon-
struction Finance Corporation loans
also had a part in disturbing confidence
in the general banking situation. and
the stage was set for trouble when the
Governor Of Michigan struck the match.
The withdrawal of deposits began. and
as the Governor of Maryland followed
suit, the situation became more acute.
Bankers Welcomed Holiday.
On February % the first severe shock
in the local banking. group was felt.
when the Commercial National Bank,
with deposits Of more than Sll 100000,
failed to open This was the largest
Columbia. The following day two other
local banks went on a restricted basis,
and others were feeling the effect Of
slow Withdrawals. approximating in some
cases, runs of lesser magnitude. Bankers
in the Nations Capital welcomed the
respite afforded by the holiday on
March 4, but at the same time looked
forward to Mondays opening with
anxiety, realizing the banks in almost
every State were closed.
Singular as it may seem. there was
no authority for the District Commis
sioners or the controller of the currency
to declare a banking holiday in the
District, but Congress, in the closing
hours of the session. passed a joint
resolution granting the controller such
power. This precaution, however.
turned out to be unnecessary. because
the new President went into action i'm
mediately after his inauguration and
promptly issued a proclamation de-
claring a Nation wide banking holiday
which. of course, included the District
of Columbia.
This sketch does not permit OF
review of the emergency measures
applied to the banking situation by the
new administration. Without precedent
for guidance. the work of restoring
normal banking functions went on day
and night.
80 Relief Measures Issued.
Following the Presidents proclama-
ton of March the Secretary of the
Treasury issued 80 separate regulations
for the partial relief Of depositors and
to enable the banks during the holiday
to perform certain functions. Then
followed executive orders relating to
boarding licensing of banks to reopen.
gold and exchange regulations and
regulations permitting the Reconstruc-
ton Finance Corporation to assist banks
through the purchase of preferred stock
or capital notes.
A prodigious task was performed In a
comparatively short time and on the
night of March 13 those banks in the
District of Columbia which were found
to be in sound condition were licensed
to reopen the following morning
Plans were undertaken at once to
reorganize the banks placed in the
hands Of conservators. On June IS the
Riggs National Bank purchased certain
assets of the Chevy Chase Savings Bank
and established branch In the bank
ing house formerly occupied by the
Summer new bank. the Hamilton
chase assets of the Federal-American,
District National, Potomac Savings, |
Seventh Street Savings and Washington
Savings banks, and opened for business
September 25 with a main Office and
seven branches.
Year Ends With II Banks.
We started the year in the District |
with 33 banks and 26 branches, with
deposits aggregating more than $685.
600, 900, and ended with 81 banks and
81 branches, with deposits aggregat1ng |
roundly S217,000,000.
Revolutionary laws directly and in
directly affecting banking were enacted
by the first session of the present Con-
greSs. the most comprehensive being
the banking act of 1888. which, among
numerous things. provides a guaranty |
of bank deposits. In the main, these |
measures have been constructive and
have added strength to the banking
system.
Even the guaranty of deposits seems,
as matter of eXpediency, to have been
justified by the conditions which existed.
The regulatory provisions of the law
have the full approval of all who are
interested in stronger and better
banking system.
The bankers code of fair competition
which became effective october 16 and
its rules of fair practices, which be-
comes effective January l. will not only
forward the National Recovery program,
but will also build stronger banks by
eliminating unsound practices, which
were the outgrowth of the highly
competitive era.