Evening star., 1933-03-02
BANKING HOLIDAYS
TIE UP HUGE SUMS
Largest Totals Involved in
Maryland, Michigan, Ohio
and Indiana.
Special Dispatch to The Star


NEW YORK, March 2.-The amount
OF bank deposits subject to withdrawal
restrictions during various State and
local holidays" declared in February
approximate the net amount of deposits
affected by bank suspensions in the
past three years.
The largest totals in the first CLASH
f1cation are of bank deposits in Michi-
gan and Maryland. where Statewide
restrictions are imposed, and those in
Ohio and Indiana. They amount in
I'll to about s3,000,000 ,000 N the
years 1890, 1881 and 1882 the deposits
Of suspended banks aggregated So
500, 100000. In the same period banks
with total deposits of approximately
$500 100000 reopened.
DepoSitorS in banks that are still in
receivers hands have been paid out in
varying amounts. The average per-
centage of all is not high and would
be considerably balanced by the fall
ures and the locking up of deposits
that have occurred in the first two
months of 1888
Bank Failures Reduced.
The falling off of bank failures this
year has been in sharp contrast with
the mortality record of the three years
previous, owing to restrictions on with
drawals put into effect by emergency
laws enacted in Michigan, Maryland
Delaware. New Jersey, New York, Ne
braska, Wisconsin, Pennsylvania, Ohio,
Iowa, Florida, Arkansas and Oklahoma.
The change is one from a condition
where the depositor faces an indefinite
period of loss of the use of his money
and the probability of an eventual
heavy shrinkage in his deposit to one
of temporary inconvenience through
inability to withdraw more than per
cent of his deposit and the prospect of
having 25 per cent or more of it tied
up for considerable period under the
proposed segregation of frozen" assets
and quick assets. This means an eX-
tended interval of slow liquidation of
the liabilities of his bank under an i'm
provement in the market conditions for
real estate or securities not now saleable.
Obviously, the increasing restrictions
on Withdrawals are leading to great
amount of boarding of money through
out the country. 1t Is the opinion OF
bankers that the sum of this consider
ably exceeds that sequestered in all
sorts of places year ago. Probably
the most serious effect of this condition
is on the business life of those commu-
mites whose banks have invoked the
limited withdrawal provisions embodied
in the new State laws. 1t has been
extremely difficult for instance, for
corporations to obtain sufficient cur
rency to make up their pay rolls. One
of the first reactions of the Maryland
holiday was the urgent demand on
New York and Philadelphia banks by
firms in Baltimore to assist them in OBJ
tanning sufficient currency to pay off
their employees Retail trade has been
greatly reduced in all of the commu-
mites where the limitation of deposit
Withdrawals has been put into effect
One phase of the situation is the
heavy loss in deposits of New York
banks that have been compelled to go to
the assistance of their interior CORE
spondents. Since the middle of jan
uary the shrinkage of the New York
Clearing House institutions has amount
ed to about s55O,OoO, 900, or nearly 6
per cent, and has reduced by half the
total gain in deposits which these banks
had enjoyed from the low point to
which they dropped last Spring. The
two largest New York institutions have
in the past six weeks each lost approx
mately S100,000,000 in deposits.
Movement Spread Rapidly.
The swiftness of the movement in
the East toward deposit withdrawal
restrictions is Illustrated in the case
of large communities in the Middle
West that few days ago were positive
they could carry on as before, but
which, within "a hours of the an
nouncement of limitation Of with
drawals in other sections of their
State, have been compelled to adopt
similar restrictions.
With this condition spreading so rapid
ly, it is felt that the final solution
must be some sort of Government
guarantee or insurance of bank de-
posits, although the idea is not popu-
lar with many bankers. Objections to
it have been raised by the conservative
elements in Congress. It Is at the
moment not in favor with the finan-
cial representatives OF the Govern
ment, because of the possible effect
that it might have on Government
credit.
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