Farmers & Merchants National Bank (Matawan, NJ)

Article Text

Run on Banks Ended Normalcy Is Restored Two Hectic Days at Red Bank and Throughout This Section of Monmouth County—Money Withdrawn From Banks Has Since Been Re-Deposited. For two days previous to Christmas—last Wednesday and Thursday—Red Bank passed through an experience the like of which has never before happened in this town and which is never liable to occur again. The Seacoast bank of Asbury Park closed on Tuesday afternoon of last week, due to its inability to meet withdrawals of deposits. This resulted in a "run on the banks" of Red Bank and other nearby communities. The bank of the Merchants Trust company of Red Bank was the first financial institution to suffer. The belief was general, that this bank was affiliated with the Asbury Park concern. The directors of the Merchants Trust company sensed the danger of a run on their bank. They held a meeting which lasted from an early hour last Tuesday evening until early in the morning. Their worst fears were confirmed when the bank opened for business in the morning. Withdrawals of deposits were steady and numerous. On the advice of the directors the bank was ordered closed about twenty minutes after it had been opened. A notice to this effect was posted on the bank door and a few minutes later another notice appeared that the bank had been taken over by the state banking department. The bank was closed as a protective measure to conserve the money of the depositors. Just what the outcome of this closing of the Merchants Trust company bank will be no one knows. The state authorities are making an examination. The directors and other officials of the bank are unanimous in stating that the bank is solvent and that the depositors will get all their money. Public belief that this is true is strengthened by the fact that the last bank statements showed assets of about $185,000 in excess of liabilities. The bank officials state that efforts are being made to reorganize and reopen the bank. Such action will not be possible until after the state banking commissioner has completed his investigation. The bank officials state that if it proves impossible to re-open the bank immediate action will be taken to pay the depositors. Just how soon the depositors will get their money is impossible to ascertain at this time. The closing of the Merchants Trust company bank, following closely upon the Seacoast bank at Asbury Park going out of business, caused a "run" on the Second National bank and Trust company and on the Broad Street National bank of Red Bank. Likewise there were runs on the banks at Long Branch, Asbury Park, Ocean Grove, Bradley Beach and Matawan. Never perhaps, not even when the Morgan explosion occurred in 1918, has Red Bank been in such a furore of excitement as it was during the two days before Christmas. The Second National bank and Trust company and the Broad Street National bank were storm centers. Withdrawals of deposits were heavy and they kept up all of last Wednesday and Thursday. Incidents of this same sort took place in other communities in this part of Monmouth county where banks are located. Altogether seven banks were obliged to close last week in this part of the county and on Monday the total was increased to eight when the Matawan National bank had to quit doing business. Nearly all, perhaps all, of these banks are solvent and will pay the depositors 100 cents on the dollar. But no bank, no matter how strong it may be, can withstand a unanimous rush of depositors for cash. The banks have money invested in various securities and it is impossible for them overnight to liquidate this into cash. The Second National bank and Trust company and the Broad Street National bank weathered the storm. Both of these banks are members of the federal reserve system and while the run was on they received several shipments of federal cash. The money came into town in armored trucks guarded by men with guns. Most of these shipments were made at night when there were but few to see, but there was one daylight delivery of cash which drew a large assemblage of curious onlookers. This spectacle of thousands of dollars being carried into the banks to meet the demands of depositors did much to allay public fears. During the two days while the frenzied "run on the banks" was in progress $502,508 was withdrawn by depositors of the Second National bank and Trust company. The largest withdrawal by any single individual was $22,000. At the Broad Street National bank the withdrawals amounted to slightly more than $210,000. But this tells only part of the story. Not everybody was panic stricken. While many folks were taking money out of the banks others were making deposits. The officials of both banks which weathered last week's financial storm state that this was particularly true of the merchants. Almost without exception they made their deposits as usual and showed a wholesome disregard of pessimistic rumors. Another noteworthy fact is that both banks received deposits from new customers when the run was at its height. Late on Thursday afternoon it was apparent that the panic had subsided. Friday, being Christmas, both banks were closed. On Saturday there was a marked change. The panicky feeling had disappeared and many folks who had taken their money out of the bank made re-deposits. On Monday, yesterday and today the banks continued to get back money which had been withdrawn. There is not the slightest