Article Text
AVERAGE DEPOSIT IN CLOSED BANKS FOUND TO BE $118
Average Loss Expected to Run Under $40.
An analysis of deposit liabilities in 64 state banks closed in Cook county during the last three years shows that the average account in each of these banks on closing day was only $118.22. The analysis was prepared by State Auditor Oscar Nelson.
On the generally accepted estimate that the closed banks will pay approximately 66 per cent of their deposit obligations, the average account stands to lose less than $40 if the loss amounts to that much. The $40 estimate is made without consideration of the stockholders' liability law, which compels present and former owners of bank stock to pay up any deficit remaining after other assets have been realized upon.
87% of Accounts Under $100.
"In view of the lamentation in certain quarters over the plight of closed bank depositors, it may be enlightening to the general public to learn that approximately 87 per cent of all depositors had less than $100 in the banks when they closed," Mr. Nelson said.
Tables prepared by accountants of the auditor's staff, showing total deposits tied up in the 64 banks and grading these deposits in brackets from $1 to $10,000, present a picture which, in the auditor's opinion, confutes those prophets of despair who profess to see calamity in the numerous bank closings.
In drawing up the tables the accountants analyzed the records of the three Cook county banks closed in 1929, eleven closed in 1930 and fifty closed in 1931. The total of commercial savings and club savings accounts carried in all 64 banks was 750,225, and total deposits were $88,695,118.
Summary of the Accounts.
A table summing up account conditions in the 64 banks follows:
$1 to $100 accounts.................. 613,551
$100 to $1,000 accounts................ 121,235
$1,000 to $5,000 accounts.............. 14,205
$5,000 to $10,000 accounts............. 904
Accounts over $10,000.................. 330
Total accounts....................... 750,225
Total deposits....................... $88,695,118
Average deposit...................... $118.22
The $118.22 estimate was reached by dividing the total deposits by the number of accounts. In this connection the auditor pointed out that the divisor in the calculation was increased by thousands of $1 accounts, these being mere tokens of soliciting campaigns undertaken by the banks in the past to encourage thrift.
"I have no disposition to minimize the plight of the small depositor," the auditor said. "I have no doubt that in many instances $40 means more to a jobless breadwinner than $1,000 means to a business man. But it seems to me that in few instances does the tying up of $118.22 represent the difference between distress and affluence."
"Offsets" for Larger Accounts.
Subjecting the higher brackets of the table to analysis, Mr. Nelson pointed out that in a majority of accounts above $500 the depositor was the beneficiary of an "offset," this being an arrangement whereby a customer's debt to the bank is deducted from his claim and canceled. Many of the accounts in the $500 to $1,000 bracket and practically all in the $1,000 to $10,000 brackets had the benefit of "offsets," the auditor said.
As for the 330 accounts above $10,000, the auditor said a substantial percentage of these represented public funds left on deposit by taxing bodies.
"It has been my experience in this situation that those who have the least at stake complain the loudest," the auditor said. "I have in mind a man who has been extremely active in stirring up depositors of a closed bank on the northwest side. Believing from the violence of his utterances that he must have a huge sum tied up, we examined his account. His claim, allowing for an offset, was $1.40.
Hits Hoarding Tendency.
"I would not dispute this man's right to shout for his $1.40, except for the evil he may work upon others. Far from accomplishing any constructive purpose, his activity starts distrust of other banks that are sound and incites depositors of these banks to withdraw their money for hoarding.
"Whereas the decline of the real estate was formerly the outstanding problem of the banks, the depletion of cash resources through heavy withdrawals for hoarding has now become the principal peril. I venture that if all cash now being hoarded in American cities were turned back into the banks tomorrow, failures would definitely cease."
Study of the individual bank tables disclosed a marked variation in the ratio of large and small accounts. A north shore suburban bank, for example, had practically twice the percentage of large depositors as a bank in the south side colored district. Tables of a few banks typifying conditions as a whole are presented herewith.
The City State bank of Chicago, situated in the loop at Randolph and Wells streets, closed on Nov. 2, 1929, with account conditions as follows:
$1 to $100 accounts.................. 18,562
$100 to $1,000 accounts................ 3,135
$1,000 to $5,000 accounts.............. 357
$5,000 to $10,000 accounts............. 17
Accounts over $10,000.................. 26
Total accounts....................... 22,097
Commercial deposits.................. $2,430,763
Savings deposits..................... 1,143,869
Savings clubs........................ 102,686
Total................................ $3,677,319
Average deposit...................... $166.41
The Lake View State bank, serving a well developed residential and commercial district at 3179 North Clark street, closed on Sept. 22, 1930:
$1 to $100 accounts.................. 24,032
$100 to $1,000 accounts................ 7,664
$1,000 to $5,000 accounts.............. 1,089
$5,000 to $10,000 accounts............. 58
Accounts over $10,000.................. 27
Total accounts....................... 32,870
Commercial deposits.................. $1,641,206
Savings deposits..................... 4,257,114
Savings clubs........................ 131,913
Total deposits....................... $6,030,234
Average deposit...................... $183.45
The Binga State bank, a Negro owned institution in the colored district at 3452 South State street, closed on July 31, 1930.
$1 to $100 accounts.................. 16,274
$100 to $1,000 accounts................ 2,048
$1,000 to $5,000 accounts.............. 157
$5,000 to $10,000 accounts............. 11
Accounts over $10,000.................. 2
Total accounts....................... 18,492
Commercial deposits.................. $288,271
Savings deposits..................... 896,770
Savings clubs........................ 37,883
Total deposits....................... $1,222,926
Average deposit...................... $66.12
The Glencoe State bank in the north shore suburb closed on June 23, 1931:
$1 to $100 accounts.................. 2,864
$100 to $1,000 accounts................ 1,077
$1,000 to $5,000 accounts.............. 93
$5,000 to $10,000 accounts............. 1
Accounts over $10,000.................. 2
Total accounts....................... 4,037
Commercial deposits.................. $257,916
Savings deposits..................... 351,705
Savings clubs........................ 10,773
Total deposits....................... $620,396
Average deposit...................... $153.67
Depositors of the Lake View State bank tomorrow will receive a $737,533 dividend, representing 10 per cent of total deposits, as the result of an order entered yesterday by Circuit Judge Joseph Burke. The bank receiver, William Beckman, has previously paid a 20 per cent dividend.
