Business & Finance: Open & Shut

“The bank is closed! The bank is closed!” screamed an excited woman in Brooklyn last week. She was correct. East New York Savings Bank had shut that Saturday at noon instead of late afternoon as before. Unfortunately the woman did not read the formal posted notices. She kept on screaming. Extra tellers, $8,000,000 in cash, and support of other banks enabled East New York Savings to meet the resultant run easily. Withdrawals came to about $3,500,000 against deposits of $67,416,000. Not so happy has been the winter’s tale of banking in other sections of the U. S. The storm which lashed the banking structure of New England blew itself out in Hartford fortnight ago when three institutions suspended, including the $20,000,000, 80-year-old City Bank & Trust Co. Other failures of the fortnight included Bank of Westerville, Ohio (with Anti-Saloon League funds); First National Bank of Gary, Ind. (leaving but one bank there, secure with U. S. Steel Corp. backing). In South Carolina there was a wave of failures following the crash of Peoples State Bank with $24,443,000 in deposits, 43 branches. Banks in such communities as Bishopville, Travelers Rest, Florence, failed to open. Puzzling to many a citizen was why the stream of banking failures continued in spite of National Credit Corp., the much-publicized, half-billion-dollar financed lifeline thrown out in the autumn. Bankers, however, recognized that National Credit Corp. has maintained its policy of lending only on sound collateral.* Last week National Credit, previously operating with funds borrowed from highly liquid Manhattan banks, made its first call for payment on subscriptions, raised $50,000,000 by asking for a 10% payment, presumably to pay its creditors, proceed with further loans.

* Bankers in Des Moines last week denied that National Credit Corp. had aided Iowa-Des Moines National Bank & Trust Co. as stated in TIME, Dec. 28. The statement was published by the American Banker and attributed to W. H. Brenton, president of the bank. Last week’s denial was the first made.