BANK SUSPENSIONS, 1921-1936 - St. Louis Fed...and 1897. During the period from 1921 through 1929 the ratios were substantially higher, and in each of the years 1930-1933 the rate was

1204 FEDERAL RESERVE BULLETIN DECEMBER 1937

BANK SUSPENSIONS, 1921-1936

In the past forty-five years there have beennearly 18,000 bank suspensions2 in theUnited States. These years may be dividedinto four periods. In the period 1892-1920,2,926 suspensions occurred, an annual aver-age of 100; in 1921-1929 there were 5,712, anannual average of 'slightly less than 650;during the four years 1930-1933 there were9,096 suspensions, of which 4,000 occurredin 1933 ;3 and in the 1934-1936 period therewere 135 suspensions, or an average of 45per year.

Table 1 shows the annual figures fromwhich these totals were computed, togetherwith the ratio of the number of suspensionsin each year to the number of active banks inthat year. It may be noted that during the29 years prior to 1921 the annual rate of sus-pensions was less than one bank per 100 inoperation in every year except 1893, 1896,and 1897. During the period from 1921through 1929 the ratios were substantiallyhigher, and in each of the years 1930-1933 therate was considerably in excess of that re-ported for any year prior to 1930. The twopeak years were 1931 and 1933, when thenumber of suspensions per 100 active bankswas 10.6 and 28.3, respectively.

The large number of bank suspensionsduring 1921-1933 was preceded by a rapidexpansion in the number and resources ofbanks during the two decades between 1900and 1920. This period was in general char-acterized by rising commodity and land

1 This analysis is based largely on detailed statistics publishedin the Bulletin for September 1937, pages 866-910.

2 Bank suspensions comprise all banks closed to the public,either temporarily or permanently, by supervisory authorities orby the banks' boards of directors on account of financial difficul-ties, whether on a so-called moratorium basis or otherwise, unlessthe closing was under a special bank holiday declared by civil au-thorities. If a bank closed under a special holiday declared bycivil authorities and remained closed only during such holiday orpart thereof, it has not been counted as a bank suspension. Bankswhich, without actually closing, obtained agreements from de-positors to waive a portion of their deposits or to defer the with-drawal of a portion of their deposits have not been classed as sus-pensions. Banks which were reopened or taken over by otherinstitutions after suspension have been included as suspensions.The figures for 1933 include all banks not granted licenses follow-ing the banking holiday in March 1933 which were subsequentlyplaced in liquidation or receivership (including unlicensed banksabsorbed or succeeded by other banks), and all other unlicensedbanks which were not granted licenses to reopen by June 30, 1933.

3 See explanatory statement relative to bank suspension sta-tistics in 1933, page 1208.

TABLE 1.—NUMBER OF BANK SUSPENSIONS AND NUM-BER OF SUSPENSIONS PER 100 ACTIVE BANKS, BYYEARS, 1892-1936x

Year

1892...1893189418951896 . . .

18971898189919001901

19021903 . _190419051906

19071908190919101911

19121913

Numberof sus-

pensions

80491

83110141

13963323565

5452

1258053

90153785885

78103

Suspen-sions per100 banksin opera-tion onJ u n e 30

each year

.74.1

.7

.91.2

1.25

. 33

.4

.3

. 3

.7

.4

. 3

.4

.63

.2

.3

.34

Year

19141915191619171918

19191920192119221923 _

19241925192619271928

19291930193119321933 2

193419351936

Numberof sus-

pensions

149152524947

62167505366646

lib618976669498

6591,3502,2931,4534,000

573444

Suspen-sions per100 banksin opera-tion onJune 30

each year

.5

.5

.2

.2

.2

.2

.61.71.22.2

2.72.23.52.51.9

2.65.7

10.67.8

28.3

.4

. 2

. 3

1 Exclusive of mutual savings banks, figures for which have beenomitted from all data presented in this analysis. For information con-cerning the twelve mutual savings banks which suspended duringthe period 1921-1936, see the September 1937 issue of the FEDERAL R E -SERVE BULLETIN, page 910.

2 See explanatory statement relative to bank suspension statistics in1933, page 1208.

prices, with a rapid acceleration during thewar years. In such a period banking lossesare easily avoided and the misjudgments ofbankers are not challenged as they are in aperiod of falling prices. The conditionswhich existed encouraged the chartering ofnew banks, often where there was no realneed for them. By the middle of 1920 thenumber of national, State, and private banksin operation was 30,235, or more than twiceas many as were in operation in 1900.

1921-1929.—The decade of the 1920's maybe regarded as a generally prosperous one.The depression which occurred at the begin-ning of the period, though severe, was ofshort duration, and from 1922 on the generaltendency of business activity was upwardwith only minor setbacks in 1924 and 1927.Despite the expanding activity in industry

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

DECEMBER 1937 FEDERAL RESERVE BULLETIN 1205

and commerce, the general level of commod-ity prices was stabilized for a number ofyears much below the peak reached in waryears.

Agriculture, in particular, was passingthrough a period of readjustment incidentalto the reduction of the prices of farm com-modities and land after the war. The balanceof payments of agricultural regions in theUnited States was unfavorable, and banksserving agricultural communities were underpressure. Suspensions among such bankswere numerous throughout the 1921-1929period. Near the end of 1923 and in 1924suspensions increased in the West North Cen-tral States, particularly in North Dakotaduring the latter part of 1923 and in SouthDakota and Iowa in 1924. The number ofsuspensions in that region declined moder-ately in the following year but increasedagain in 1926, when prices of agriculturalproducts were lower. In the South AtlanticStates there was also a marked rise in 1926in the number of suspended banks, reflectingin part the collapse of the Florida real estateboom. The number of suspensions in theUnited States decreased in 1927 and againin 1928, but in 1929 there was an increase inthe number of suspensions in nearly everysection of the country.

1930-1932.—During the depression yearsfollowing 1929 there was a rapid decline inthe income of customers of banks and in thevalues underlying the loans and investmentsof banks. The general fall in prices causedwidespread difficulties among banks servingall classes of activity—commercial, indus-trial, and agricultural. Bank suspensionsbecame widespread and many banks wereunder pressure'because of the withdrawal offunds by depositors for hoarding. As eco-nomic conditions grew steadily worse sus-pensions increased, and as suspensions in-creased depositors became alarmed and with-drew funds, causing additional suspensionsand adding to the depth of the economic de-pression.

Suspensions during 1930 involved 1,350banks, with deposits of $837,000,000, com-pared with the highest previous figure of 976banks, with deposits of $260,000,000, in 1926.From January through October, 1930, therate of suspensions reported for each monthwas not far above the monthly average forthe previous 9-year period, but there were256 suspensions in November and 352 in De-cember of that year. In these months 9 largebanks in different sections of the country sus-pended. The closing of these large banks re-sulted in the closing of many other banks,partly because of affiliate and correspondentrelationships, and partly because of thespread of fear among depositors, particularlyin territory near the location of the banks.

Following January 1931, when about 200suspensions were reported, the number de-clined to less than 100 each month until June,when 167 banks suspended. While suspen-sions during the two succeeding months wereless numerous than in June, a sharp increaseoccurred in September. During the lastfour months of 1931, 1,360 banks suspended—more than in any previous full year. Thepeak of this period was in October, after thesuspension of the gold standard in England,when 522 banks closed. By the end of theyear a total of 2,293 banks had suspended.

In 1931, as in 1930, the East North Centraland West North Central groups of States ac-counted for the largest proportion of sus-pensions—610 and 717, respectively, or morethan half of all the banks that closed duringthe year. Illinois and Iowa each reportedmore than 200 suspensions during the year.The New England States, which had pre-viously been comparatively free from suspen-sions, reported 11 suspensions in 1930 and 33in 1931, compared with a yearly average of 2for the 9-year period 1921-1929. The MiddleAtlantic States also were seriously affected in1931; 230 banks suspended in that regionduring the year, compared with 30 in 1930and a yearly average of 8 during 1921-1929.



While the number of suspensions in 1931was nearly 4 times greater than the annualaverage for the 9-year period 1921-1929, thedeposits of banks suspending during this yearwere proportionately even larger—about 9times the yearly average for the 9-year period.

The placing of restrictions on deposit with-drawals, a practice that had been used in 1931in the East North Central States, becamemore prevalent in 1932 as a measure to copewith the steady withdrawal of funds. Theserestrictions on deposit withdrawals were usu-ally imposed through "depositors' agree-ments" deferring withdrawal of varying per-centages of deposits over periods of timeranging up to five years, certain percentagesof deposits to be released at the end of thefirst year and additional percentages at theend of the succeeding years. New businesswas conducted on an unrestricted basis. Un-fortunately, comprehensive figures are notavailable to show the number of banks thatobtained deposit deferment agreements, orthe amount of deposits involved in such de-ferment agreements, but from what informa-tion is available it appears that the practicewas followed in a number of States during1931 and 1932.

Another type of bank moratoria that be-came common during this period, particularlyin the East North Central States, was the re-organization of banks through the waiver orsurrender of a portion of deposits by thedepositors. This was accomplished in somecases through outright contributions by cer-tain of the depositors, but usually there wasa segregation of assets for the benefit of waiv-ing depositors under a trust agreement, witha right in the bank to substitute assets duringa period of time running generally from twoto five years. Figures are not available atpresent to show the losses sustained by de-positors through this type of reorganizationof distressed banks.

The National Credit Corporation wasformed in October 1931 by banks at the sug-gestion of the President to relieve the situa-

tion by making loans to banks on sound butnot readily marketable assets, and the Recon-struction Finance Corporation was createdby Congress in January 1932 to make loans tobanks and other institutions. Member bankswere granted additional assistance throughthe provisions of the Glass-Steagall Actadopted in February. The Act gave the Fed-eral Reserve Board power to permit the use ofUnited States Government securities as col-lateral against Federal Reserve notes. Thismade it possible for the Federal Reservebanks to increase their purchases of UnitedStates Government securities, thereby pro-viding member banks with funds to meet ad-ditional demands for currency and gold andat the same time to reduce their indebtednessat the Reserve banks. The Glass-SteagallAct also contained provisions under whichmember banks that were without adequateamounts of eligible and acceptable assetscould under certain conditions receive assist-ance on the basis of other security satisfac-tory to the Reserve banks.

The number of suspensions had decreasedfrom 522 in October 1931 to 175 in November,increasing to 358 in December. During thespring, summer, and autumn of 1932 thenumber of bank suspensions declined to lessthan 100 per month, with the exception of themonths of June when 151 banks suspendedand July when 132 banks suspended. Nearthe end of the year suspensions again in-creased in number, mainly in the Mid-West-ern and Far Western States. A total of1,453 banks suspended in 1932, involving de-posits aggregating $706,000,000. Fewerlarge banks suspended, however, during theyear than in either 1930 or 1931. During thefirst two months of 1933, 386 banks with de-posits of nearly $195,000,000 suspended.

Many banks in a number of places hadclosed temporarily in 1932 under special"banking holidays" declared by civil authori-ties. The first of a series of State-wide bank-ing holidays was declared in Nevada at thebeginning of November, 1932. Though origi-



nally for a 12-day period, it was subsequentlyextended. Early in 1933 more local bankholidays were declared by city authorities andmany existing ones were' extended, in orderto permit banks to obtain deposit defermentor waiver agreements and to afford banks anopportunity to raise funds and make adjust-ments necessary to enable them to continue tomeet their obligations.

The banking crisis of 1933.—On February4 a one-day holiday was declared in Louisianabecause of difficulties in New Orleans. OnFebruary 14 an 8-day banking holiday wasdeclared in Michigan because of difficultiescentering in Detroit. While the Michiganholiday arrested withdrawals of depositsfrom banks in that State, outside Michiganthere was an increase in the movement offunds from weaker to stronger banks and incurrency withdrawals. Funds were with-drawn from banks in other States to send toMichigan or to meet payments that other-wise would have been met from deposits inMichigan banks. Developments of this nat-ure were partly responsible for the rapidspread of the banking holiday movementamong other States.

In a number of States new laws were passedto provide for safeguarding of bank depositsand for readjusting the liabilities of bankswithout establishing receiverships. With aview to enabling the banking situation inany particular State to be better handled asa whole, a joint resolution was adopted onFebruary 25 by the Congress of the UnitedStates authorizing the Comptroller of theCurrency to exercise with respect to nationalbanks such powers as State officials mighthave with respect to State banks.

The Governor of Maryland declared abanking holiday on February 25, chiefly onaccount of conditions in Baltimore, and atabout the same time restrictions were author-ized on withdrawals of bank deposits in In-diana, Arkansas, and Ohio. On March 1bank holidays were declared in Alabama,Kentucky, Tennessee, and Nevada, and simi-

lar action was taken in six other States onMarch 2 and in seven others on March 3.On the morning of March 4, the Governor ofthe State of New York issued a proclama-tion declaring that day, which was a Sat-urday, and the following Monday to be bankholidays. Similar action was taken in Illinois,Massachusetts, New Jersey, Pennsylvania,and elsewhere. These declarations of Stateholidays in the various States had by March 4closed or placed restrictions on practicallyall banks in the country. Federal Reservebanks also observed State holidays and closedon March 4. All leading exchanges ceasedoperations and business in general was prac-tically at a standstill.

On March 6 the President issued a proc-lamation declaring a nation-wide bank holi-day to continue through the four days endingThursday, March 9. During the holiday thebanks were not to pay out any coin, bullion,or currency or to transact any other bankingbusiness whatever, except as might be per-mitted by the Secretary of the Treasury.

On March 9 the Emergency Banking Actwas passed by Congress and signed by thePresident. On this day also the Presidentissued a proclamation extending the bankholiday indefinitely, and on March 10 byExecutive Order he conferred power on theSecretary of the Treasury to license memberbanks of the Federal Reserve System, foundto be in satisfactory condition, to conduct ausual banking business with exceptions as topaying out of gold and the furnishing of cur-rency for hoarding purposes. Similar powerswere granted authorities of the various Stateswith respect to banks not members of theFederal Reserve System. On Saturday,March 11, the Reserve banks were author-ized by the Secretary of the Treasury to re-open on the following Monday. It was an-nounced the same day that on March 13 banksin the 12 Federal Reserve bank cities wouldbe reopened; on March 14, banks in approxi-mately 250 other cities having recognized



clearing houses; and on March 15, banks inother places.

By March 15, 4,507 national banks and567 State bank members of the Federal Re-serve System, with deposits (on December31, 1932) of $16,195,000,000 and $9,358,000,-000, respectively, had been licensed to reopen;1,400 national banks and 225 State bank mem-bers, with deposits of $1,943,000,000 and$926,000,000, respectively, had not beengranted licenses to reopen. Corresponding-figures with respect to banks not membersof the Federal Reserve System were not avail-able prior to April 12, 1933 by which date7,394 nonmember banks (exclusive of mutualsavings banks) with deposits of $4,946,000,-000 had been authorized to reopen, and 2,938such banks with deposits of $1,318,000,000had not been granted authority to reopen.

On December 30, 1933, there were still 512member banks with deposits of $528,000,000,and 1,257 nonmember banks with deposits of$497,000,000, which had not been grantedlicenses to reopen and had not been placed inliquidation or receivership. By December 31,1934, however, all but 11 of the member banksand 149 of the nonmember banks not licensedfollowing the banking holiday either hadbeen granted licenses to reopen or had beenplaced in liquidation or receivership. At theend of December 1936 there remained only3 member banks and 7 nonmember bankswhich had not been granted licenses to re-open and had not been placed in liquidationor receivership.

Bank suspensions in 1933.—Because ofrestrictions imposed on deposit withdrawals,the reorganization of banks through depositwaivers during local and State bank holidays,changes in status of banks incident to thenational banking holiday, and the amount oftime required in many cases to determinewhether banks should be licensed or shouldbe placed in liquidation or receivership, statis-tics of bank suspensions for 1933 are notwholly comparable with those for previousyears. The figures used in the present analy-

sis are, however, thought to be reasonablycomparable with statistics of suspensions informer years. They comprise banks sus-pended before the banking holiday, licensedbanks suspended or placed on a restrictedbasis following the banking holiday, un-licensed banks placed in liquidation or re-

TABLE 2.—SUMMARY CLASSIFICATION OF BANKS SUS-PENDED IN 1933, BEFORE AND AFTER THE BANKINGHOLIDAY X

Banks suspended Jan. 1to Mar. 4

Banks placed in receiver-ship during the bank-ing holiday (March 6to March 15)

Licensed banks sus-pended March 16 toDecember 31

Banks not licensed fol-lowing the bankingholiday and laterplaced in liquidationor receivership (March16, 1933 to Dec. 31,1936)

Banks granted licenses(July 1,1933 to Dec. 31,1936)

Banks neither granted li-censes to reopen norplaced in liquidationor receivership by Dec.31, 1936

TotaL.

Banks suspended Jan. 1to Mar. 4

Banks placed in receiver-ship during the bankring holiday (March 6to March 15)

Licensed banks sus-pended March 16 toDecember 31

Banks not licensed fol-lowing the bankingholiday and laterplaced in liquidationor receivership (Mar.16, 1933 to Dec. 31,1936)

Banks granted licenses(Julyl, 1933 to Dec. 31,1936)

Banks neither granted li-censes to reopen norplaced in liquidationor receivership by Dec.31, 1936

Total

TotalNa-

tionalbanks

Statemem-

berbanks

Non-mem-

berStatebanks

Pri-vate

banks

Number of banks

408

39

179

2,122

1,242

4,000

64

2

9

865

161

1,101

22

1

2

74

72

3

2 174

302

34

158

1,113

1,002

7

2,616

20

2

10

70

7

109

Deposits (in thousands of dollars)

198, 417

15,080

145, 072

2, 519, 958

716, 423

1,748

3, 596, €

71, 802

1,381

17,322

1, 361, 607

158, 437

1, 610, 549

21, 633

109

1,927

672, 260

'• 783, 399

102, 115

12, 732

124,920

477, 954

470, 482

1,266

1, 189, 469

2,867

858

903

8,137

516

13, 281

1 Exclusive of mutual savings banks.2 Includes 56 banks with deposits of $118,479,000 which did not re-

ceive licenses (as member banks) following the banking holiday and laterwithdrew from the Federal Reserve System. Of these, 28 were sub-sequently granted licenses as nonmembers.



ceivership, and all other unlicensed bankswhich were not granted licenses to reopen byJune 30, 1933. Supervisory authorities hadby that date completed their examination ofall or nearly all the banks not granted licensesimmediately following the banking holidayand had authorized such of the banks to re-open as could then qualify for licenses. Thereremained, however, on June 30, 1933, 985unlicensed national banks with deposits of$1,028,347,000, 114 unlicensed State memberbanks with deposits of $239,268,000, and1,983 unlicensed nonmember banks with de-posits of $1,063,984,000, to be rehabilitatedand reopened or to be placed in liquidationor receivership. All such banks are treatedas suspensions. A summary classification ofsuspensions in 1933 is shown in table 2.

Bank suspensions in 1934-1936.—Withthe closing of the weak banks and strengthen-ing of the banking structure generally, fol-lowing the banking holiday in March 1933,and the stability brought about by depositinsurance and other Government measuresdesigned to ease the burdens of banks, sus-pensions decreased in number to 57 in 1934,34 in 1935, and 44 in 1936.

ANALYSIS OF BANK SUSPENSIONS, 1921-1936

In the following pages bank suspensionsare analyzed by years and periods, by classesand sizes of banks, by geographic areas, andby sizes of communities. The analysis re-lates to the period beginning with 1921, thatyear having been selected as a starting pointbecause sufficiently reliable data are not avail-able to permit of a detailed analysis of sus-pensions in earlier years. It was in 1921 alsothat the number and rate of suspensionsmoved noticeably upward toward the highlevels which were reached in subsequentyears, particularly 1930-1933. Detailed fig-ures on which the analysis is based, coveringthe years 1921-1936, may be found in theseries of statistical tables which appeared onpages 868-910 of the September 1937 issueof the FEDERAL RESERVE BULLETIN.

NUMBER OF BANK SUSPENSIONS

By classes of banks.—Of the 14,943 banksthat suspended in the 16-year period 1921-1936, 2,719 were national banks, 592 wereState member banks, 11,033 were nonmem-ber State banks, and 599 were private banks.The number of suspensions during this pe-riod, by years and by classes of banks, appearin table 3.

TABLE 3.—NUMBERCLASSES OF BANKS

Year

192119221923

192419251926

19271928 . . __.1929

193019311932

1933193419351936

Total.

Total

505366646

775618976

669498659

1,3502, 2931,453

4,000573444

14, 943

OF BANK SUSPENSIONS, BYAND BY YEARS, 1921-1936 *

Membe

National

524990

122118123

9157

s 64

161409276

1,101141

2,719

r banks

State

191332

382835

311617

27107

55

174

592

Nonmeml

State

390281501

578433766

514406547

1,1041,6971,085

2,616433042

11,033

ber banks

Private

442323

373952

331931

588037

10913

1

599

1 Exclusive of mutual savings banks.

In the discussions which follow, the num-ber of banks suspended during the 16-yearperiod is compared with the number in opera-tion on June 30, 1920, with certain excep-tions.1 This date was chosen as the basis ofcomparison because it marked approximatelythe beginning of the banking difficulties ex-perienced during the years 1921-1933 andalso because the number of active banks inthe United States was near its peak at thattime.

1 In order to test the reliability of using active banks as ofJune 30, 1920 as a general base for comparison with suspendedbanks, an average of the number of banks in operation, byclasses, on June 30 in each of the years 1920-1935 was com-puted, and averages of the mid-year figures for 1920, 1925,and 1930 were also obtained, by size of loans and investments,capital stock, and population of towns and cities. While thedistribution of banks using the averages thus computed differedsomewhat from the 1920 figures, the conclusions drawn fromthe use of 1920 figures as a base were for the most part sup-ported by the average figures. In only a few cases, where thenumber of banks in a given classification changed substantiallyduring the period, were any important differences in the dis-tribution shown.



As is indicated in table 4, the 2,719 nationalbanks suspended during 1921-1936 repre-sented a total of 34 suspensions for every 100national banks in operation on June 30, 1920.The 592 State member bank suspensions rep-resented a suspension rate 1 of 43 per 100State member banks active on the same date,and the corresponding rate for nonmemberState banks was 57. In relation to the aver-age number of banks in operation during theperiod (based on June 30 figures, 1920-1935)the rates of suspension per 100 active bankswere 38 for national banks, 48 for State mem-ber banks, and 72 for nonmember Statebanks.

TABLE 4.—NUMBER OF BANKS IN OPERATION, NUMBEROF BANK SUSPENSIONS, AND SUSPENSION RATE,1921-1936, BY CLASSES OF B A N K S 1

Class of bank

National banks._.State member

banksNonmember State

banks.. . _.

Total

Number of banksin operation

OnJune 30,

1920

8,024

1,374

19,487

28, 885

Averageduring1920-19352

7,232

1,247

15, 303

23, 782

Numberof banksuspen-sions,

1921-1936

2,719 •

592

11,033

14, 344

Suspension rate,1921-1936

Per 100banks in

opera-tion onJune 30,

1920

33.9

43.1

56.6

49.7

Per 100banks inoperation(average)during

1920-1935 2

37.6

47.5

72.1

60.3

1 Exclusive of mutual savings and private banks.2 Based on the number as of June 30 each year.

By geographic divisions.2—While all partsof the country suffered from the numerousbank suspensions which occurred during the16 years ended in 1936, the agricultural sec-tions were particularly affected. Of the totalof 14,344 suspensions (exclusive of mutualsavings and private banks) 5,255—or 37 per-

1 Except where otherwise stated, the term "suspension rate"as used here and in subsequent pages means the number of sus-pensions per 100 banks in operation on June 30, 1920.

2 New England: Maine, New Hampshire, Vermont, Massa-chusetts, Rhode Island, Connecticut.

Middle Atlantic: New York, New Jersey, Pennsylvania.East North Central: Ohio, Indiana, Illinois, Michigan, Wiscon-

sin.West North Central: Minnesota, Iowa, Missouri, North Dakota,

South Dakota, Nebraska, Kansas.South Atlantic: Delaware, Maryland, District of Columbia, Vir-

ginia, West Virginia, North Carolina, South Carolina, Georgia,Florida.

East South Central: Kentucky, Tennessee, Alabama, Mississippi.West South Central: Arkansas, Louisiana, Oklahoma, Texas.Mountain: Montana, Idaho, Wyoming, Colorado, New Mexico,

Arizona, Utah, Nevada.Pacific: Washington, Oregon, California.

cent—were reported in the West North Cen-tral States, comprising Minnesota, Iowa,Missouri, North Dakota, South Dakota, Ne-braska, and Kansas. For this group of Statesthe number of suspensions during the periodper 100 active banks on June 30, 1920amounted to 58, the second highest suspen-sion rate shown for any geographic division.The areas for which the first and third highestrates were recorded—the South AtlanticStates with a rate of 59 suspensions per 100active banks and the East North CentralStates with a rate of 55—together accountedfor 4,809 suspensions, or 34 percent of thetotal. Both these areas are largely agricul-tural.

The three groups of States having thelowest suspension rates were the New Eng-land, Middle Atlantic, and Pacific States. Inthese States there were 1,323 suspensions, or9 percent of the total, and the number ofbanks suspended per 100 in operation in eachgroup on June 30, 1920 was 20, 29, and 31,respectively.

In table 5 are presented both a numericaland a percentage distribution, by geographicdivisions, of the 14,344 banks (exclusive ofmutual savings and private banks) whichsuspended during the period 1921-1936, to-gether with the number of suspensions per100 banks in operation on June 30, 1920.

TABLE 5.—NUMBER AND PERCENTAGE DISTRIBUTION OFBANK SUSPENSIONS BY GEOGRAPHIC DIVISIONS,1921-1936, AND RATE OF SUSPENSION PER 100BANKS IN OPERATION ON JUNE 30« 1920 *

Geographic division

New England __.Middle Atlantic __ _ __East North Central

West North CentralSouth Atlantic . . .East South Central

West South CentralMountain . . .Pacific

Total

Number ofsuspensions,

1921-1936

142748

2,938

5,2551,871

759

1,367831433

14, 344

Percentof total

1.05.2

20.5

36.613.15.3

9.55.83.0

100.0

Suspension rate1921-1936, per 100banks in operation

on June 30, 1920

19.528.854.7

58.459.041.8

42.052.831.3

49.7

1 Exclusive of mutual savings and private banks.



Table 6 shows the geographic distribution,by areas, of banks (other than mutual sav-ings and private banks) which suspendedduring the 1921-1929 and 1930-1933 periods,respectively, and the percentage ratios ofsuspensions during each period to the num-ber of active banks at or near the beginningof the period. These figures indicate that theNew England and Middle Atlantic Stateswere comparatively free from bank suspen-sions until the depression years of 1930-1933.During the 1930-1933 period 131 suspensionsoccurred in the New England States, com-pared with but 10 in the 1921-1929 period;in the Middle Atlantic States 692 suspensionswere reported during the four depressionyears, compared with only 41 in the previous9 years. Nevertheless, even for the 4-yearperiod these two groups of States togetherwere responsible for less than 10 percent ofthe country's total.

The largest increase in the volume of sus-pensions during the later period as comparedwith the earlier one occurred in the EastNorth Central States. There were 2,533 sus-pensions in this area during the years 1930-1933, or 29 percent of the United States total,as against only 375, or 7 percent of the coun-

try's total, in the 1921-1929 period. TheWest North Central States had a larger num-ber of suspended banks in both periods thanany other group of States, but the increasein the later period was small compared withthat in some of the other geographic divi-sions. While more than 47 percent of thecountry's total suspensions during the years1921-1929 occurred in this group of States,only 30 percent of the total for the 1930-1933period was accounted for by these States.

It will also be observed from table 6 thatwhile only the South Atlantic, West NorthCentral, and Mountain States had an annualrate of suspension during the period 1921-1929 of 3 or more banks per 100 active bankson June 30, 1920, all geographic divisions hada suspension rate in the 1930-1933 period ofmore than 4 banks per annum, based on thenumber of banks in operation on January 1,1930. The highest annual rates shown inthe period 1930-1933 were in the East NorthCentral, West North Central, and SouthAtlantic States, respectively.

By States.—The number of suspensions inthe 10 States with the largest number of sus-pended banks is shown in table 7 for each ofthe periods 1921-1936, 1921-1929, and 1930-

TABLE 6.—NUMBER AND PERCENTAGE DISTRIBUTION, BY GEOGRAPHIC DIVISIONS, OF BANK SUSPENSIONSDURING THE PERIODS 1921-1929 AND 1930-1933, AND RATES OF SUSPENSION PER 100 ACTIVE BANKS ATOR NEAR THE BEGINNING OF EACH PERIOD1

Geographic divisions

New EnglandMiddle Atlantic__ .East North Central

West North Central...South AtlanticEast South Central

West South CentralMountain .Pacific

Total

1921-1929

Numberof

suspen-sions

1041

375

2,567944200

614530130

5,411

Percentof

total

.2

.86.9

47.417.43.7

11.49.82.4

100.0

Suspen-sion

rate per100 banksin opera-tion onJune 30,

1920

1.41.67.0

28.529.811.0

18.933.79.4

18.7

Annualrate ofsuspen-sion per

100 banksin opera-tion onJune 30,

1920

.2

.2

.8

3.23.31.2

2.13.71.0

2.1

1930-1933

Numberof

suspen-sions

131692

2,533

2,647917549

741300302

8,812

Percentof

total

1.57.9

28.8

30.010.46.2

8.43.43.4

100.0

Suspen-sion

rate per100 banksin opera-tion onJan. 1,

1930

19.023.348.1

42.539.832.2

29.032.230.7

37.3

Annualrate ofsuspen-sion per

100 banksin opera-tion onJan. 1,

1930

4.85.8

12.0

10.610.08.1

7.38.17.7

9.3




TABLE 7.—NUMBER OF BANK SUSPENSIONS IN THE TEN STATES W I T H THE LARGEST NUMBER OF SUSPENSIONSDURING THE PERIODS 1921-1936, 1921-1929, AND 1930-1933 X

State

IowaIllinoisMissouri

NebraskaMinnesotaNorth Dakota

WisconsinSouth DakotaIndiana

Michigan

Total 10 StatesTotal, 38 other States and Dist.

Columbia

United States, total

of

Numberof sus-

pensions1921-1936

1 238952879

779726611

593

520

486

7,356

6,988

14, 344

State

IowaNorth DakotaMinnesota

South DakotaNebraskaGeorgia

MissouriOklahomaSouth Carolina

Texas . . . . . _ _ _ _ _ _ ___ _

Total, 10 StatesTotal, 38 other States and Dist. of

Columbia _ _ __

United States, total _

Numberof sus-

pensions1921-1929

452427419

392366322

293264225

219

3,379

2,032

5,411

State

IllinoisIowaMissouri

WisconsinMichiganNebraska

IndianaPennsylvaniaOhio

Minnesota, . * _

Total, 10 StatesTotal, 38-other States and Dist.

Columbia

United States, total _

of

Numberof sus-

pensions1930-1933

817785560

505470409

407401331

306

4,994

3,818

8,812


1933. The 10 States having the largest num-ber of suspensions during 1921-1936 werelocated in the East North Central and WestNorth Central regions, and included all theStates comprising the East North Centralgroup except Ohio, and all those comprisingthe West North Central group except Kansas.A total of 7,356 banks suspended in these 10States, compared with a total of 6,988 in theother 38 States and the District of Columbia.

When the two periods 1921-1929 and 1930-1933 are compared, it appears that only 4States—Iowa, Minnesota, Missouri, and Ne-braska—were included in both periods amongthe 10 States having the largest number ofsuspensions. North Dakota, which had thesecond largest number of suspensions in the1921-1929 period, was not among the 10States in the 1930-1933 period. While Illinoishad more suspensions during the later periodthan any other State, it was not one of the10 in which the largest number of bankssuspended during the earlier period.

Table 8 shows the 21 States in which therewere more than 50 suspensions during theperiod 1921-1936 per 100 active banks onJune 30, 1920. The suspension rate washighest in Florida, South Dakota, Arkansas,Michigan, South Carolina, Iowa, Nevada,North Dakota, Nebraska, and North Carolina,

TABLE 8.—NUMBER OF BANK SUSPENSIONS, 1921-1936,AND SUSPENSIONS PER 100 BANKS IN OPERATION ONJUNE 30, 1920, IN THE 21 STATES HAVING A SUS-PENSION RATE OF MORE THAN 50x

State

FloridaSouth DakotaArkansas . .Michigan

South Carolina- _ _ _Iowa _ _ - _ , _ _NevadaNorth Dakota

Nebraska ____ , _ _ _ _ _North CarolinaM i s s i s s i p p i . _ _ _ _ _ _ _ _Wisconsin _ _

GeorgiaIndiana _ _ _ _ _ _ _MontanaNew Mexico __ _ _ _

ArizonaIdaho. _ _ _ _ _MissouriLouisianaIllinois .__ _ _ _ _ _ _ _ -

Total, 21 States . _ .Total, 27 other States and

District of Columbia .__


Numberof

suspensions,1921-1936

291572368486

3371, 238

23611

779374212593

43652025070

49122879137952

9,299

5,045

14, 344

Suspension rate,1921-1936, per 100

banks in operationon June 30, 1920

2 112.883.176.374.4

74.472.369.768.0

65.164.763.161.3

60.459.259.157.4

56.355. 053.451.350.6

64.1

35.1

49.7

1 Exclusive of mutual savings and private banks.2 In Florida, and to a lesser extent in some other States, the use of

June 1920 figures of active banks as a base for comparison of suspensionfigures gives a somewhat distorted picture because the number of banksin the State reached its peak some years later, in contrast with mostStates where the peak was reached in 1920-1921.

ranging from 113 suspensions during the 16-year period per 100 active banks in the caseof Florida to 65 in the case of Nebraska andNorth Carolina. Although the absolute num-



ber of suspensions during the period was notlarge in such States as Nevada, New Mexico,Arizona, Idaho, and Louisiana, the numberof suspensions expressed as a ratio to thenumber of banks in operation on June 30,1920 was high because of the relatively smallnumber of banks in operation in those States.

DEPOSITS OF SUSPENDED BANKS

The deposits of the 14,943 banks whichsuspended in the 16 years from 1921 through1936 aggregated over $8,500,000,000. Dur-ing the 9-year period ended with 1929 the de-posits of suspended banks averaged less than$200,000,000 per year, but in 1930 the amountof deposits involved in suspensions rose to$837,000,000, or more than 4 times the aver-age for the previous 9 years. In 1931 thetotal deposits of suspended banks amountedto $1,690,000,000, exceeding the aggregateamount involved in the period 1921-1929. Adecline was shown in 1932, when the totalamounted to $706,000,000, but in 1933 theamount of deposits involved in bank suspen-sions reached its peak, approximately $3,600,-000,000.

By classes of banks.—The deposits of sus-pended banks, by classes of banks and byyears, during the period 1921-1936 are shownin table 9. Total deposits of national bankswhich suspended during the period amountedto $2,803,500,000, and those of State memberbanks to $1,463,585,000. In both of theseclasses of banks more than half of the totalfor the entire period was accounted for bysuspensions which occurred in 1933. Non-member State banks which suspended duringthe 16-year period involved deposits aggre-gating $4,133,541,000. Complete figures forprivate banks are not available, but the de-posits of 484 of the 599 private banks whichsuspended in 1921-1936 aggregated $111,-259,000.

Table 10 shows, by classes of banks (ex-cluding mutual savings and private banks),the deposits of active banks and the depositsof banks suspended during the period 1921-

TABLE 9.—DEPOSITS OF SUSPENDED BANKS, 1921-1936,BY CLASSES OF BANKS AND BY YEARS 1

(In thousands of dollars)

Year

192119221923

192419251926 __.

192719281929

1930 . . . _19311932

1933 . .19341935

1936

Total

Total

172,18891,182

149, 601

210,151167, 555260, 378

199, 329142, 386230, 643

837, 0961, 690, 232

706,188

3, 596, 69836, 93710,015

11, 306

8, 511, 885

Member banks

National

20, 77720,19734, 244

64, 89055, 57443, 998

45, 54736, 48341, 614

170, 446439,171214,150

1, 610, 54940

5,313

507

2, 803, 500

State

17, 3637,113

12, 559

13, 6459,883

23, 466

17, 94210, 24716, 459

202, 399293, 95755,153

783, 399

1, 463, 585

Nonmember banks

State

125,15961, 964

101, 025

123, 88894, 547

183, 517

131, 50392, 710

164, 858

448, 989935, 947429,079

1,189,46935, 4564,702

10,728

4,133, 541

Private2

8,8891,9081,773

7,7287,5519,397

4,3372,9467,712

15, 26221,1577,806

13, 2811,441

71

111,259

1 Exclusive of the deposits of the 12 mutual savings banks which sus-pended during the period, aggregating $30,474,000.

2 Deposit figures for 115 of the 599 private banks which suspended dur-ing 1921-1936 are not available.

1936. It also shows the percentage ratios ofdeposits involved in suspensions to those ofactive banks, based both on deposits of banksin operation on June 30, 1920 and on averagedeposits of banks in operation during 1920-1935. It will be observed that on the basisof June 1920 figures this ratio was 23 percentand on the average basis it was 20 percent.

Total deposits of national banks whichsuspended during the 16-year period repre-sented 16 percent of the deposits of nationalbanks in operation in June 1920. The corre-sponding ratio for State member banks was18 percent and for nonmember banks 39 per-cent. The ratio of deposits of national bankswhich suspended during 1921-1936 to aver-age deposits of national banks in operationduring 1920-1935 was 14 percent, and thecorresponding ratio for State member bankswas 13 percent and for nonmember banks 41percent. A comparison of the latter percent-ages with the suspension rates presented intable 4 (which were based on the number ofbanks in operation) shows that, while na-tional banks had the lowest rate of suspen-sions per 100 active banks, State member



TABLE 10.—DEPOSITS OF ACTIVE BANKS, DEPOSITS OF BANKS SUSPENDED DURING 1921-1936, AND PERCENTAGERATIOS OF DEPOSITS OF SUSPENDED BANKS TO THOSE OF ACTIVE BANKS, BY CLASSES OF BANKS X

National banks ,State member banksNonmember State banks..

Total

Class of bank

[Amounts in thousands of dollars]

Deposits of banksin operation

OnJune 30,

1920

17,159,3718, 241, 861

10, 703, 018

36,104, 250

Averageduring

1920-19352

19, 540, 48811,666,72310, 048, 802

41,256,013

Deposits ofsuspended

banks,1921-1936

2, 803, 5001, 463, 5854, 133, 541

8, 400, 626

Percentage ratio of de-posits of suspended

banks, 1921-1936

To depositsof banks in

operation onJune 30,

1920

16.317.838.6

23.3

.

To depositsof banks in

(average)during

1920-19352

14.312.541. 1

20. 4

1 Exclusive of mutual savings and private banks.2 Based on the deposits as of June 30 each year.

banks had a slightly lower ratio of depositsinvolved in suspensions to average depositsof banks in operation. This is attributablein part to the fact that average deposits ofState member banks during 1920-1935 were42 percent above their deposits in 1920, whileaverage deposits of national banks during1920-1935 were only 14 percent above de-posits of national banks at the beginning ofthe period. The number 'of banks, on theother hand, showed about the same propor-tionate decline—9 percent in the case of Statemember banks and 10 percent in the case ofnational banks. The increase in deposits ofState member banks was partly a result ofthe fact that a number of large national bankswere converted into or absorbed by Statemember banks in the 1920's.

By geographic divisions.—The distribu-tion, by geographic divisions, of deposits in-volved in bank suspensions (other thanmutual savings and private banks) duringthe 16-year period 1921-1936 is shown intable 11. The East North Central Statesaccounted for 33 percent of the deposits ofall suspended banks, although only 21 per-cent of the number of bank suspensions oc-curred in these States. The New Englandand Middle Atlantic States combined, whileaccounting for 22 percent of the total de-posits involved in suspensions in the UnitedStates, were responsible for only 6 percent

of the total number of suspensions. This isattributable to the fact that the average sizeof banks in these regions was larger thanthat of banks in other areas. In contrast,the West North Central States, where theaverage size of banks was relatively small,accounted for only 16 percent of the totaldeposits of suspended banks, although 37 per-cent of the country's suspensions occurredin those States.

TABLE 11.—DEPOSITS OP SUSPENDED BANKS, 1921-1936, AND PERCENTAGE DISTRIBUTION OF THE DE-POSITS AND NUMBER OF SUSPENDED BANKS, BYGEOGRAPHIC DIVISIONS X

Geographic division

New England _Middle Atlantic _East North Central -

West North CentralSouth AtlanticEast South Central

West South CentralMountainPacific.._ . ._

Total

Deposits ofsuspended

banks,1921-1936

(in thousandsof dollars)

418,6461. 464, 2852, 792, 559

1, 324, 431995, 044328, 682

537, 703254, 275285,001

8, 400, 626

Percent oftotal de-posits of

suspendedbanks

5.017.433.2

15.811.93.9

6.43.03.4

100.0

Percentof total

number ofsuspensions

1.05.2

20.5

36.613.15.3

9.55.83.0

100.0


Differences in the geographic distributionof the number of bank suspensions and of theamount of deposits involved, during the pe-riods 1921-1929 and 1930-1933, respectively,are shown in table 12. In the period 1921-



1929 suspensions in the West North CentralStates accounted for 47 percent of the totalnumber and 39 percent of the total depositsof suspended banks, while the correspondingfigures for the East North Central Stateswere 7 percent as to number and 9 percent asto deposits. In the 1930-1933 period, dueto the failure of large banks in the easternsection of the country, the East North CentralStates with 29 percent of the total numberof suspensions accounted for 39 percent ofthe aggregate deposits of suspended banks,while the West North Central States with 30percent of the total number of bank suspen-sions accounted for only 10 percent of thetotal deposits involved.

TABLE 12.—PERCENTAGE DISTRIBUTION OF THE NUM-BER AND DEPOSITS OF SUSPENDED BANKS, 1921-1929 AND 1930-1933, BY GEOGRAPHIC DIVISIONS X

Geographic division

New EnglandMiddle AtlanticEast North Central

West North CentralSouth AtlanticEast South Central

West South CentralMountainPacific J

Total

1921-1929

Percentof

totalsuspen-

sions

.2

.86.9

47.417.43.7

11.49.82.4

100.0


suspendedbanks

1.44.18.7

39.219.63.3

9.99.14.7

100.0

1930

Percentof

totalsuspen-

sions

1.57.9

28.8

30.010.46.2

8.43.43.4

100.0


suspendedbanks

5.820.139.1

10.410. 14.1

5.61.73.1

i Exclusive of mutual savings and private banks.

By States.—In table 13 the 10 States withthe largest amount of deposits involved insuspensions during the period 1921-1936 arelisted, and the number and deposits of sus-pended banks for these States are shown.There appears to have been little correlationbetween the number of suspensions and theamount of deposits involved in the variousStates. Michigan, for example, which hadthe largest amount of deposits involved insuspensions, was tenth on the list of Stateshaving the largest number of suspensions(shown in table 7). Ohio and Pennsylvania,which were second and third, respectively,

among the States with the largest amount ofdeposits involved in suspended banks, werenot included among the 10 States having themost suspensions. These differences are at-tributable, of course, to the existence of sub-stantial variations from one State to anotherin the average size of suspended banks.

TABLE 13.—NUMBER AND DEPOSITS OF BANKS W H I C HSUSPENDED DURING THE PERIOD 1921-1936 IN THETEN STATES HAVING THE LARGEST AMOUNT OFDEPOSITS INVOLVED IN SUSPENSIONS X

State

MichiganOhioPennsylvania..

IllinoisNew York_Iowa

IndianaNew Jersey.Missouri

Florida.

Total, 10 StatesTotal, 38 other States and

District of Columbia


Number ofsuspensions,

1921-1936

486387434

952181

1.238

520133

879

291

5, 501

8,843

14, 344

Deposits of suspendedbanks, 1921-1936

(in thousands of dollars)

929, 245813, 562746, 531

577, 840479.157460, 525

279,534238, 597232, 056

202, 353

4, 959, 400

3, 441, 226

8, 400, 626


SIZE OF SUSPENDED BANKS, MEASURED BYLOANS AND INVESTMENTS1

Of the 14,344 banks (exclusive of mutualsavings and private banks) which suspendedduring the 16-year period 1921-1936, 5,287had loans and investments of less than$150,000 each, aggregating $451,742,000, asshown in tables 14 and 15; 2,666 had loansand investments of $150,000-$249,999, total-ing $517,159,000; and 2,966 were in the$250,000-$499,999 class, their total loans andinvestments amounting to $1,043,182,000.These three size groups comprise 10,919 sus-pended banks, each with loans and invest-ments of less than $500,000, or 76 percent ofall the national and State banks that sus-pended during the 16-year period. The ag-gregate loans and investments of these banks

1 Loans and investments, rather than deposits, were used asa measure for this purpose since there was readily available aclassification of active banks by size on June 30, 1920, on thebasis of loans and investments. A similar classification on thebasis of deposits has not been made.



amounted to $2,012,083,000, or 20 percent ofthe total loans and investments of all bankssuspended during 1921-1936.

Corresponding figures for large banks, alsoshown in tables 14 and 15, indicate that thosewith loans and investments of $10,000,000

TABLE 14.—NUMBER AND PERCENTAGE DISTRIBUTION,BY SIZE OF LOANS AND INVESTMENTS, OF BANKS INOPERATION ON JUNE 30, 1920 AND OF BANKS SUS-PENDED DURING THE PERIOD 1921-1936, TOGETHERWITH THE SUSPENSION RATE PER 100 BANKS INEACH GROUP1

Size group—loans and investments


Under 150..150-249250-499

500-9991,000-1,999.2,000-4,999 _

5,000-9,99910,000-49,999. ___50,000 and over..

Total

Banks inoperation onJune 30, 1920

Num-ber

6,5485,1146,977

4,9912,7331,573

50836972

28, 885

Per-cent oftotal

22.717.724.2

17.39.55.4

1.81.2.2

100.0

Banksuspensions,

1921-19362

Num-ber

5,2872,6662,966

1,787870505

151929

214, 344

Per-cent oftotal

36.918.620.7

12.46.13.5

1.0.6.1

100.0

Suspensionrate, 1921-

1936, per 100banks inoperationon June30, 1920

80.752.142.5

35.831.832.1

29.724.912.5

49.7

1 Exclusive of mutual savings and private banks.2 Eleven banks, the classification of which is unknown, are omittedfrom the individual group figures but included in the total.

TABLE 15.—TOTAL LOANS AND INVESTMENTS OFBANKS IN OPERATION ON J U N E 30, 1920 AND OFBANKS SUSPENDED DURING THE PERIOD 1921-1936,CLASSIFIED ACCORDING TO SIZE OF LOANS AND I N -VESTMENTS, TOGETHER WITH PERCENTAGE RATIOSOF THE LOANS AND INVESTMENTS OF SUSPENDEDBANKS TO THOSE OF ACTIVE BANKS X

Size group—loans and

investments(in thousands

Under 150150-249 . _250 499

500-9991,000-1,9992,000-4,999

5,000-9,99910,000-49,999... _50,000 and over.-

Total

Loans andments of b£

mvest-mks inoperation on

June 30, 1920

Amount(in

thousandsof dollars)

601, 5241,010,7452 493 982

3, 501, 2103, 778, 4744,771,143

3, 471, 3817, 365, 5839,155, 889

36,149,931

Per-cent

oftotal

1.72.86 9

9.610.513.2

9.620.425.3

100.0

Loans and mvest-ments of sus-pended banks,

1921-19362

Amount(in

thousandsof dollars)

451,742517,159

1,043 182

1, 245, 2121, 213, 0821, 521, 145

1,010,0721, 712, 2391, 251, 421

2 9, 965, 254

Per-cent

oftotal

4.55.2

10.4

12.512.215.3

10.117.212.6

100.0

Percentageratio, loansand invest-

ments of sus-pended banks

to those ofbanks inoperation

on June 30,1920

75.151.241.8

35.632. 131.9

29.123.213.7

27.6

1 Exclusive of mutual savings and private banks.2 Excluding the figures of eleven banks, whose loans and investmentsare unavailable.

and over numbered 101, accounting for 0.7percent of the total number of suspensions,and that their loans and investments aggre-gated $2,963,660,000, or nearly 30 percent oftotal loans and investments of all suspendedbanks. Banks reporting loans and invest-ments of $2,000,000 or more accounted foronly 5 percent of the number of suspensionsduring the period, but the ratio of their aggre-gate loans and investments to the total forsuspended banks of all sizes was 55 percent.

The rate of suspension, as measured by theratio of the number and loans and invest-ments of banks suspended in 1921-1936 tothe number and loans and investments ofbanks in operation on June 30, 1920, wasconsiderably greater for the groups of smallbanks than for the groups of large banks.Almost without exception the proportion wassmaller in each successively larger sizegroup.1 Tables 14 and 15 show that the ratioof suspensions to banks in operation on thebase date, in the case of banks with loans andinvestments of less than $150,000, was 81percent as to number and 75 percent as toloans and investments. In the case of thelargest size group, comprised of banks havingloans and investments of $50,000,000 andover, the corresponding ratios were 13 per-cent as to number and 14 percent as to loansand investments.

By periods.—In the 4-year period 1930-1933, the distribution of suspended banks bysize of loans and investments was consider-ably different from that shown for bankswhich suspended in the period 1921-1929.The suspension of a proportionately greaternumber of large and medium-sized banksduring the years 1930-1933 than during the1921-1929 period accounted for the differ-ence. Table 16 shows that the proportionof suspended banks in the size groups withloans and investments under $500,000 de-

1 This variation in the suspension rates existed to about anequal degree when average figures for active banks on June30 in the years 1920, 1925, and 1930 were used as a basis ofcomparison rather than the June 1920 figures. On this aver-age base the ratios in the last column of table 14 are 87.2,60.0, 49.8, 40.4, 32.6, 28.7, 26.5, 22.0, 10.2, and 54.4 percent,respectively.



creased from the 9-year period to the 4-yearperiod, a corresponding increase being re-flected in the case of banks in size groups of$500,000 and over. During the 1921-1929period 85 percent of the banks which sus-pended had loans and investments under

TABLE 16.—NUMBER AND PERCENTAGE DISTRIBUTION

OF BANK SUSPENSIONS, GROUPED BY SIZE OF LOANS

AND INVESTMENTS, 1921-1929 AND 1930-1933x

Size group—loans and investments


Under 160.150-249.__.250-499

500-9991,000-1,999..2,000-4,999_

5,000-9,99910,000-49,99950,000 and over .

Total

1921-1929

Numberof sus-

pensions

2,3131,1231,151

532201

74

134

5,411

Percentof

total

42.720.821.3

9.83.71.4

1930-1933

Numberof sus-

pensions2

1,5261,797

1,245665427

' 13688

9

2 8, 812

Percentof

total

33.017.320.4

14.1

1.51.0.1

100.0

1 Exclusive of mutual savings and private banks.2 Ten banks, the classification of which is unknown, are omitted from

the individual group figures but included in the total.

$500,000, while only 71 percent of those sus-pending in the 1930-1933 period were in-cluded in this class. Conversely, banks withloans and investments of $1,000,000 and overaccounted for only 5 percent of the suspen-sions in 1921-1929 and for 15 percent of thosein 1930-1933.

By classes of banks.—The analysis of sus-pensions by size and classes of banks, givenin table 17, indicates that in the case of bothnational and State banks the rate of suspen-

TABLE 17.—NUMBER OF BANK SUSPENSIONS, 1921-1936, BY CLASSES OF BANKS (NATIONAL ANDSTATE) , AND SUSPENSION RATE PER 100 BANKS INOPERATION ON JUNE 30, 1920, CLASSIFIED ACCORD-ING TO SIZE OF LOANS AND INVESTMENTS1

Size group—loansand investments

(in thousandsof dollars)

Under 150150-249250-499

500-9991,000-1,9992,000-4,999

5,000-9,99910,000-49,99950,000 and over

Number of suspensions,1921-1936

Suspension rate, 1921-1936, per 100 banks in

operation on June 30,1920

TotaP

5,2872,6662,966

1,787870505

15192

Total.. . n4,344 2,719 211,625

Na-tional

278424742

606367205

65293

State*

5,0092,2422,224

1,181503300

63

Total

80.752.142.5

35.831.832.1

29.724.912.5

Na-tional3

80.655.936.6

27.825.825.3

25.015.88.1

State3

51.544.9

42.038.439.4

34.734.117.1

1 Exclusive of mutual savings and private banks.2 Eleven banks, the classification of which is unknown, are omitted

from the individual group figures but included in the totals.3 The ratios of bank suspensions during 1921-1936 to the average of the

number of banks in operation in June 1920, 1925, and 1930, distributedaccording to the size groups shown in table 17, are as follows: nationalbanks—70.0, 53.3, 40.6, 31.2, 26.8, 22.2, 22.3,14.9, 7.9, and 35.0, respectively;State banks—88.4, 61.5, 53.9, 47.5, 38.7, 36.0, 30.8, 28.1, 12.0, and 62.5,respectively.

sion was much higher at small banks thanat large banks. The rates for national banksand for State banks did not differ materiallyin the case of banks with loans and invest-ments under $250,000. In the medium andlarger size groups, however, the number ofsuspensions during 1921-1936 per 100 banksin operation on June 30, 1920, was materiallyhigher for State banks than for nationalbanks.

By geographic divisions.—Correspondinginformation by geographic divisions shownin table 18 indicates that with the exception

TABLE 18.—NUMBER OF SUSPENSIONS, 1921-1936, PER 100 BANKS IN OPERATION ON JUNE 30, 1920, BY GEO-GRAPHIC DIVISIONS AND BY SIZE OF LOANS AND INVESTMENTS X

Size group—loans and investments(in thousands of dollars)

Under 150150-249 . .250-499

500-9991,000-1,9992,000-4,999_ . .

5,000-9,99910,000 and over

Total

Total

80 752.142.5

35.831.832.1

29.722.9

49.7

NewEngland

6.75.7

19.019.926.8

28.325.6

19.5

MiddleAtlantic

27.432.830.8

30.926.928.4

31.319.2

28.8

EastNorth

Central

88.961.148.2

46.542.048.3

39.630.0

54.7

WestNorth

Central

91.558.244.2

33.627.326.2

20.910.8

58.4

SouthAtlantic

91.056.352.5

41.943.546.0

29.336.8

59.0

EastSouth

Central

56.334.240.1

32.331.931.0

23.546.2

41.8

WestSouth

Central

64.634.130.9

28.829.723.1

25.020.8

42.0

Moun-tain

74.352.944.7

46.631.918.5

29.4

52.8

Pacific

63.442.735.4

17.918.914.4

14.313.3

31.3

'• Exclusive of mutual savings and private banks.



of the New England and Middle Atlantic re-gions the highest rate of suspension wasamong the banks with loans and investmentsunder $150,000, and that in general the ratedeclined as the size of banks increased. Inthe New England States the suspension ratewas highest among banks with loans and in-vestments of $500,000 and over; in the MiddleAtlantic States the suspension rate differedrelatively little among the size groups, rang-ing from 27 to 33 suspensions during the1921-1936 period per 100 active banks inJune 1920 in the size groups with loans andinvestments under $10,000,000.

The contrast in the rate of bank suspen-sions by size of banks, as between North-eastern States (New England and MiddleAtlantic) and the other geographic regionssuggests that the size of suspended banksdepends, in part at least, on the type of com-munity in which the bank is located and byeconomic factors within the region. In theNew England and Middle Atlantic sectionsagricultural activities differ from those inmost other sections. There is a differenttype of agriculture, with big markets nearbyfor the products, and outlying agriculturalcommunities in the East were not forced toundergo the same readjustment as agricul-ture in other sections of the country. Theresulting higher degree of stability has aidedthe small banks in outlying agricultural com-munities. On the other hand, in the largeindustrial and financial centers in the Eastwhich suffered from severe business depres-sion beginning in 1929 and 1930, the largerbanks were called upon to meet a constantand prolonged strain which proved too greatfor many of them, resulting in the later yearsin a high suspension rate among the largerbanks.

Suspension of large banks.—Of the bankswhich suspended in the period 1921-1936 the30 largest had loans and investments aggre-gating $1,912,000,000. All 30 of these bankssuspended in the years 1930-1933, and theircombined loans and investments repre-

sented 23 percent of the total loans andinvestments of all banks suspended duringthis period. The individual bank figuresranged from $22,000,000 to $380,000,000, fiveof the banks having held loans and invest-ments in excess of $100,000,000. The suspen-sion of these large banks had a direct effecton other banks whose correspondent accountswere deposited with them and a profoundpsychological effect on bank depositors gen-erally, and doubtless contributed in an im-portant degree to the closing of many banksin various parts of the country.

SIZE OF SUSPENDED BANKS, MEASURED BYCAPITAL STOCK

Capital stock is not as good a measure ofsize of banks as loans and investments, ordeposits, because it is determined in part byrequirements of law and because of the prac-tice of some banks of building up large sur-pluses rather than increasing capital stock.However, there appears to be some relationbetween the size of banks, measured in thisway, and the rate at which suspensions oc-curred. Table 19 gives a distribution of sus-pended banks (exclusive of mutual savingsand private banks) during the period 1921-1936, classified by size of capital stock, andthe suspension rate per 100 active banks inJune 1920 for banks in each size group.While there was a smaller degree of variationin the suspension rates of banks measured byamounts of capital stock than in the corre-sponding distribution by size of loans and in-vestments, the figures in table 19 support ina general way the conclusions which werereached in the analysis of suspended banksby size of loans and investments.

It will be seen that 4,341 banks, represent-ing 30 percent of the 14,344 suspensions dur-ing 1921-1936, had capital stock of less than$25,000; and that 4,755 suspended banks, or33 percent of the total, had capital stock of$25,000-$49,999. About 83 percent of thebanks which suspended during 1921-1936 hada capital of less than $100,000.



TABLE 19.—NUMBER AND PERCENTAGE DISTRIBUTIONOF BANK SUSPENSIONS, 1921-1936, AND SUSPEN-SION RATE PER 100 BANKS IN OPERATION ON JUNE30, 1920, BY SIZE OF CAPITAL STOCK X

Size group—capital stock

Under $25,000$25,000-$49,999$50,000-$99,999

$100,000-$499,Q99__._$500,000-$999,999__..$1,000,000 and over.

Total

Numberof sus-

pensions,1921-1936 2

4,3414,7552,767

2,185174120

214, 344

Percentof

total

30.333.219.3

15.21.2

100.0

Suspen-sion rate,1921-1936,per 100

banks inoperation

on June 30,1920

52.754.148.3

41.342.927.6

1 Exclusive of mutual savings and private banks.2 Two banks, the classification of which is unknown, are omitted fromthe individual group figures but included in the total.

The number of suspensions during the pe-riod for every 100 banks in operation onJune 30, 1920, was 53 in the case of bankswith capital stock of less than $25,000, and54 in the case of those with capital stock of$25,000-$49,999. For banks with a capitalstock of $100,000-$499,999 the suspensionrate per 100 active banks was 41, and in thecase of those whose capital amounted to$1,000,000 or more it was only 28, indicatingthat suspensions were less numerous amonglarge banks than among small banks.

BANK SUSPENSIONS DISTRIBUTED BY POPU-LATION OF CITIES

Of the 14,344 bank suspensions during1921-1936 (excluding mutual savings andprivate banks), 4,652 or 32 percent occurredin. towns of less than 500 population, and10,277 or 72 percent in towns of less than2,500 population. Only 710 banks, or 5 per-cent of those suspended, were located in citieswith a population of 100,000 and over.

Corresponding figures by classes of banksshow a much smaller percentage of nationalbanks than of State banks suspended in placesof small population. Only 10 percent of thenational bank suspensions were in places ofless than 500 population, compared with 38percent in the case of State banks. This dif-

ference between the percentage of nationalbank suspensions in small places and that ofState banks follows from the fact that rela-tively fewer national than State banks arelocated in small towns and villages, due tothe higher minimum capital requirements fornational banks than for State banks in manyStates.

In table 20 are shown the number of banksuspensions that occurred during 1921-1936,grouped according to class of bank and alsoaccording to the population of the town orcity in which the banks were situated. Therates of suspension per 100 banks in eachclass in operation on June 30, 1920 are alsoindicated. Although there were many morebank suspensions in small than in largeplaces, the differences in the rates of suspen-sion were not nearly so marked because sucha large number of banks (particularly Statebanks) operate in small cities, towns, andvillages.

In the case of national and State bankscombined, 56 suspensions per 100 activebanks occurred during the 16-year period incommunities of less than 500; in places witha population of 500-999 the rate was 54 per100 active banks; and in those with a popula-tion of 1,000-2,499 it was 50. An appre-

TABLE 20.—NUMBER OF BANK SUSPENSIONS, 1921-1936, AND SUSPENSION RATE PER 100 BANKS INOPERATION ON JUNE 30, 1920, GROUPED ACCORDINGTO POPULATION OF TOWNS AND CITIES, AND BYCLASSES OF B A N K S 1

Population oftown or city

Under 500500-9991,000-2,499

2,500-4,9995,000-9,99910,000-24,999

25,000-49,99950,000-99,999100,000 and over

Total

Number of suspensions,1921-1936

Total

4,6522,8012,824

1,303798709

282265710

14, 344

Na-tional

279485750

425301240

8149

109

2,719

State

4,3732,3162,074

878497469

201216601

11, 625

Suspension rate per 100banks in operation on

June 30, 1920

Total

56.354.449.7

43.039.740.9

38.241.143.4

Na-tional

41.741.735.2

31.832.529.9

26.321.324.0

33.9

State

57.658.158.4

52.045.850.4

46.652.250.8

55.7




ciably smaller ratio was shown for bankssituated in towns and cities with a populationof 2,500 and over. There was not so muchcontrast, however, between the rates of banksuspensions in small places and large places,respectively, as there was between smallbanks and large banks. This is accounted forin part by the fact that quite a number ofsmall banks located in the larger towns andcities suspended during the period.

There was a considerable difference be-tween national banks and State banks in therate of suspension according to the size ofcommunity in which the suspensions occurred.While the suspension rates were higher forState banks than for national banks in allsizes of communities, the differences wereparticularly noticeable in the larger cities,where the rate of suspension of nationalbanks per 100 active banks was much belowthe suspension rate of State banks. The rateof suspension of State banks was nearly ashigh in large cities as in small cities.

In the 1930-1933 period there was a pro-nounced spread of suspensions into the largercenters. This may be seen from table 21,which compares the number of suspensionsby size of community for the two periods1921-1929 and 1930-1933. During 1930-1933,28 percent of the suspensions occurred inplaces with a population of less than 500 and

TABLE 21.—NUMBER AND PERCENTAGE DISTRIBUTIONOF BANK SUSPENSIONS BY POPULATION OF TOWNSAND CITIES, 1921-1929 AND 1930-19331

Population oftown or city

Under 500500-999 . - . .1,000-2,499

2,500-4,9995,000-9,99910,000-24,999 .

25,000-49,99950,000-99,999100,000 and over

TotaL

1921-1929

Numberof sus-

pensions

2,1081,0891,080

437224200

5765

151

5,411

Percentof

total

39.020.120.0

8.14.13.7

1.01.22.8

100.0

1930-1933

Numberof sus-

pensions

2,4961,6901,725

858567504

225195552

8,812

Percentof

total

28.319.219.6

9.76.45.7

2.62.26. 3

100.0


67 percent in places of less than 2,500 popu-lation, compared with 39 percent and 79 per-cent, respectively, during the period 1921-1929. Cities with a population of 100,000and over, on the other hand, contributed 6percent of the total suspensions in 1930-1933,compared with only 3 percent in 1921-1929.

BANK SUSPENSIONS IN RELATION TO NUMBEROF BANKS PER CAPITA

With some exceptions, suspensions during*1921-1936 were most numerous in Stateswhere the number of banks increased rapidlyprior to 1920 and in those which had a lowpopulation per bank in 1920. In the majorityof States with a high population per bank,suspension rates were substantially below theaverage for the country as a whole. Table 22gives (1) the percentage change in the num-ber of banks from 1900 to 1920, (2) the popu-lation per bank in 1920, and (3) the suspen-sion rate, for the ten States with the highest

TABLE 22.—PERCENTAGE CHANGE IN THE NUMBER OFBANKS FROM 1900 TO 1920, POPULATION PER BANKIN 1920, AND SUSPENSION RATE 1921-1936 PER 100BANKS IN OPERATION ON JUNE 30, 1920, FOR THET E N STATES WITH THE HIGHEST AND THE TENSTATES WITH THE LOWEST SUSPENSION RATE

States

10 States with highest suspen-sion rate:

FloridaSouth DakotaArkansasSouth CarolinaMichiganIowaNevadaNorth DakotaNebraskaNorth Carolina

10 States with lowest suspen-sion rate:

PennsylvaniaTexasVermontNew YorkCaliforniaConnecticutMassachusettsDelawareRhode IslandNew Hampshire

United States, total....

Percentagechange innumber ofbanks1 be-tween 1900and 1920

+403. 8+266. 5+667. 2+477. 5+ 64.0+ 67.4+371. 4+464. 8+103. 4+404. 0

+ 59.5+332.1+ 79.6- 42.7+148. 5+ 37.0- 54.1+ 66.7- 50.7+ 21.2

+ 118.3

Popula-tion perbanki in

1920

3,725917

3,6053,7094,2361,2422,346

7201,0844,412

5,7222,7054,005

10, 7954,7608,522

14, 2155,718

18, 3155,539

3,496

Suspensionrate, 1921-

1936, per 100banks in op-

eration onJune 30, 1920?

112.883.176.374.474.472.369.768.065.164.7

30.827.922.722.219.318.717.015.412.111.3

49.7

1 Exclusive of mutual savings banks.2 Exclusive of mutual savings and private banks.



and the ten States with the lowest suspensionrate.

THE AGE OF SUSPENDED BANKS

Data regarding the charter age of banksat time of suspension are available at presentfor national banks and for State banks duringa period of 10 years only, 1921-1930. Fromtable 23 it will be seen that 25 percent of thebanks which suspended in this period wereless than 10 years old at time of closing and

TABLE 23.—DISTRIBUTION OF SUSPENSIONS ACCORD-ING TO THE CHARTER AGE OF THE BANKS, 1921-1930 x

Years in operation prior to suspension

Less than 55-9

10-14

15-1920-2425-29

30-3435-3940-44

45-4950 and over

Total

Number ofbank sus-pensions,1921-1930

735925

1,266

1,2831,213561

272180100

4340

6,618

Percentof total

11.114.019.1

19.418.38.5

4.12.71.5

.7

.6

100.0

1 Covers national and State bank suspensions only and excludes 85such banks for which data are not available.

64 percent were less than 20 years old; 36percent, on the other hand, had been in opera-tion for 20 years or more. This clearly indi-cates that, although many of the suspensionsoccurred among recently organized banks,long established institutions were by nomeans immune to the difficulties which pre-vailed. Due, however, to such factors as con-versions, mergers, absorptions, and reorgan-izations, the "charter age" of some banks isnot a good measure of their span of existence;technically, some banks that resulted frommergers or conversions have been in existenceonly a few years, while as a practical matterthey or their predecessors have been operat-ing without interruption for a long time.

Considerable variation among the varioussections of the country obtained with respectto the age of suspended banks, as indicated in

table 24. It appears, however, that there waslittle, if any, relationship between the averageage of suspended banks and the rate of sus-pensions per 100 active banks in the respec-tive geographic divisions. Banks which sus-pended in the West North Central States dur-ing the 10-year period 1921-1930 were inexistence prior to suspension for an averageperiod of 18 years and 9 months, the longestfor any region, whereas in the MountainStates the average time of existence prior tosuspension was only 11 years and 7 months,the shortest for any region. In both thesegeographic divisions the suspension rate dur-ing the period was very high.

TABLE 24.—AVERAGE CHARTER AGE OF SUSPENDEDBANKS, BY GEOGRAPHIC DIVISIONS, 1921-1930 *

Geographic division

New EnglandMiddle AtlanticEast North Central _ . . _ . .

West North Central .South AtlanticEast South Central __

West South CentralMountainPacific. _ _

Total

Number ofbank sus-pensions,1921-1930

1864

631

2,9651,165

352

811470142

6,618

Average age

Years

171716

181517

141114

16

Months

1025

945

17

11

8

i Covers national and State banks only and excludes 85 such banks inMontana for which data are not available.

A somewhat greater variation in the ageof suspended banks was shown in the case ofindividual States. As was indicated in theanalysis by geographic divisions, the sectionsof the country which had experienced thelongest period of development were in generalthose in which the average age of suspendedbanks was high, and the States most recentlysettled and developed were included amongthose with a low average age of suspendedbanks. For example, in Connecticut, Iowa,Kentucky, Michigan, Nebraska, and WestVirginia, the average age of banks whichsuspended in the period 1921-1930 was appre-ciably above the average for the United Statesas a whole, while in Arizona, California, Colo-



rado, Florida, Texas, and Wyoming, it wasmaterially below the average for the country.

AID TO BANKS FROM EXTERNAL SOURCES

Prior to 1932.—During the early 1920'smany banks facing financial difficulties wereaided through the extension of loans for agri-cultural and livestock purposes by the WarFinance Corporation. These advances weremade for the most part upon assets whichthough non-liquid were believed fundamen-tally sound. They aggregated $172,114,000,and were extended to 4,317 banks located in37 States. Of these, 674 were national banksand 3,643 were State banks. By November30, 1929, the loans made to 4,136 banks, total-ing $164,051,000, had been completely repaid,and partial repayments amounting to $6,782,-000 had been made on other advances. Only0.7 percent of the total originally advancedhad not been repaid.

In the autumn of 1931 the National CreditCorporation, a private organization, wasformed at the suggestion of the President tobolster the financial structure of the weakerbanks through the aid of the stronger institu-tions.1 This Corporation made more than1,200 loans to banks in 31 States. At thepeak reached in February 1932, these loansand commitments totaled $188,000,000. De-spite this assistance, however, an increasingnumber of banks were meeting with difficul-ties, and near the end of 1931 there was anoticeable rise in the rate of bank suspen-sions.

Loans by the Reconstruction Finance Cor-poration to open banks.—The ReconstructionFinance Corporation was organized in Jan-uary 1932 and within a short time this organ-ization began to make loans to banks. Bythe middle of 1932 loans to 3,284 open banks,aggregating $615,391,000, had been author-ized. At the end of June 1933, loans to 5,584open banks had been authorized, totaling$1,234,058,000. Table 25 shows, by quarters,

1 For statements of purpose of the Corporation and for gen-eral plan of organization and operation, see FEDERAL RESERVEBULLETIN for October 1931, pages 551-557.

cumulative figures of the amount of author-ized loans to open banks and the amount dis-bursed by the Reconstruction Finance Cor-poration, together with the amount of suchloans outstanding at the close of each quarterfrom 1932 through 1936.

TABLE 25.—LOANS BY THE RECONSTRUCTION FINANCECORPORATION TO OPEN BANKS, BY QUARTERS, IN THEYEARS 1932-1936

(Cumulative figures at end of quarter, in thousands of dollars)

Quarter

1932First quarterSecond quarter.Third quarter__.Fourth quarter.

1933First quarterSecond quarter^.Third quarter . . .Fourth quarter-

First quarterSecond quarter.Third quarter . . .Fourth quarter.

1935First quarterSecond quarter.Third quarter. _.Fourth quarter.

1936First quarterSecond quarter..Third quarter . . .Fourth quarter_

Amountauthorized

156,009615, 391809, 318893, 745

1,172,5201,234,0581,268,0231, 290, 700

1, 309, 4421, 322,0621, 326, 7331, 329, 239

1, 334, 4361,337,3101, 339, 3861, 339. 835

1,339,8111, 339, 5561, 339, 5561, 339, 628

Amountdisbursed

124,107487, 062675, 254810.110

987, 4451,038,9301, 077,0941,091,785

1, 103,0801,122,1101,130, 3771, 133,063

1,135,0831,141, 9231, 142, 2901, 142, 590

1,142,9931, 143,1671,143, 2061,143. 206

Amountoutstanding

117,886419, 965525, 537576,178

677, 611614,467532, 953462, 950

353, 066290,110259, 949229, 184

204, 785194, 741180, 611167,003

153, 984143,132132, 305121,503

Loans by the Reconstruction Finance Cor-poration to closed banks.—Partly in responseto a developing sentiment that recovery wasbeing retarded by the fact that a huge volumeof deposits, a large part of which would ulti-mately become available, remained tied up inunliquidated banks which had suspended in1931, 1932, and particularly 1933, the Recon-struction Finance Corporation established aDeposit Liquidation Division for the purposeof stimulating and encouraging the extensionof additional loans to closed banks. TheDivision was established following a state-ment issued by the President on October 15,1933. Some loans to closed banks, for thepurpose of aiding in the reorganization orliquidation of such banks, had been made bythe Reconstruction Finance Corporation from



the time it was organized, but at the begin-ning they were in limited amounts.

Banks that closed after January 1, 1933,were given first attention by the DepositLiquidation Division; loans were made laterto banks that closed prior to January 1933.By June 30, 1934, loans amounting to $802,-713,000 had been authorized to closed banks,of which amount $544,060,000 had been dis-bursed. On June 30, 1935, the amount of suchloans that had been authorized was $1,117,-928,000, of which $822,557,000 had been dis-bursed. Table 26 gives cumulative figures ofthe amount of loans to closed banks authorizedand disbursed by the Reconstruction FinanceCorporation, and the amount outstanding, byquarters, from 1932 through 1936.

TABLE 26.—LOANS BY THE RECONSTRUCTION FINANCECORPORATION TO CLOSED BANKS, BY QUARTERS, INTHE YEARS 1932-1936 1

(Cumulative figures at end of quarter, in thousands of dollars)

Quarter

1932First quarter____Second quarter__Third quarter. __Fourth quarter^.

1933First quarter.Second quarterThird quarterFourth quarter

First quarterSecond quarterThird quarterFourth quarter

First quarterSecond quarter,.Third quarter...Fourth quarter..

First quarterSecond quarter..Third quarter.. .Fourth quarter.

Amountauthorized

2,17328, 84845, 62857, 913

97, 535193,112321, 260572, 230

713,037802, 713961, 429

1, 035, 733

1,069, 9761,117,9281,140,9721.170,157

1, 206, 0271, 224, 8861, 232, 4621, 248, 077

Amountdisbursed

Amountoutstanding

1,31011.77632, 78842, 572

78, 251150,663249, 958383, 377

477, 836544, 060622,138761, 704

795, 632822, 557850, 551876, 125

890.479901,630914,331930, 223

1,28110,49919, 78820, 220

48, 29299.918181,397291.604

349, 059361.296367, 114443, 343

372,065320, 135287. 3245. 725

162,698141,631120. 721108, 574

1 Includes loans to receivers, conservators, and liquidating agents,loans through mortgage loan companies to aid closed banks, and loanson assets of closed banks under Section 5e of the Reconstruction FinanceCorporation Act.

Loans to closed banks by the Reconstruc-tion Finance Corporation provided immediatecash which, in the ordinary liquidation proc-ess, would not have been available for dis-tribution to depositors for a considerable

length of time. Loans on the assets of manyclosed banks provided the means for theprompt opening of successor banks, at whichtime a substantial part of the funds of theclosed banks became immediately available.Such loans also obviated the necessity of thedumping of large blocks of securities andmortgages by the receivers of closed bankson an abnormally low market in an effort tomake depositors' claims available.

In a few instances loans on the assets ofclosed banks have since been transferred bythe Reconstruction Finance Corporation tooperating banks, the outstanding example ofthis being the'transfer of $35,000,000 in suchmanner at Detroit in the spring of 1935. Inother cases new advances to receivers ofclosed banks, secured by the unpledged assetsof these banks, have been made directly byoperating banks.

Strengthening of the capital structure ofbanks following the banking holiday.—Manyof the banks that did not reopen immediatelyfollowing the banking holiday needed addi-tional capital. Existing stockholders andthe public in general were not in a positionto provide much of the additional capitalnecessary, and the Government, through theReconstruction Finance Corporation, madeextensive purchases of preferred stock andcapital notes and debentures of banks.Banks that had been licensed immediatelyfollowing the banking holiday without re-organization were invited to cooperate in theprogram for strengthening the capital struc-ture of banks, and as a result many of thelarger metropolitan banks also sold capitalstock to the Reconstruction Finance Corpora-tion. A large number of banks were requiredto obtain additional capital funds beforebeing admitted to membership in the FederalDeposit Insurance Corporation.

By the end of June 1934 the program ofcapital rehabilitation was well under way, theReconstruction Finance Corporation havingoutstanding on that date a total of $814,679,-000 invested in the capital stock of banks.



At the end of June 1935, which marked theapproximate peak, the Reconstruction Fi-nance Corporation's investment in preferredstock, capital notes, and debentures of 5,752banks amounted to $904,666,000. On Decem-ber 31, 1935/it amounted to $897,016,000.B

Documents

BANK SUSPENSIONS, 1921-1936 - St. Louis Fed...and 1897. During the period from 1921 through 1929 the ratios were substantially higher, and in each of the years 1930-1933 the rate was