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Closing Of Many Palmetto Banks Laid To 'Psychology'
Doors Shut on Solvent Institutions to Protect Depositors, Says Examiner—Eleven Closed Since October 17.
COLUMBIA, S. C., Nov. 16.—There have been an unusual number of banks in South Carolina to close their doors within the past month, but not all of these closings by any means are due to bad business conditions, according to State Bank Examiner Albert S. Fant of Columbia, who today made a statement to this correspondent.
The psychology of the situation is largely to blame, Mr. Fant said. In many of the cases the banks were not insolvent, but were put into the hands of the bank examiner to protect depositors, guaranteeing like treatment to all. If a run on a bank starts, Mr. Fant explained and the bank stays open and continues to pay depositors as long as the cash in hand lasts, those depositors first on the scene, regardless of the interests of the depositors as a whole or the interests of the community, will get their money while others will not get anything.
NO PREFERENCE.
This means that preference is shown to some depositors. The only way to guarantee equal treatment to all depositors in such a case as required by law is for the bank to shut its doors. This explains why a good many of the banks that have closed in the state lately have been put into the hands of the bank examiner. Not all of them by any means are failures.
There have been fifteen state banks to close in South Carolina this year. Eleven of these have closed since October 17, a month ago. Two closed this week. One of the banks, the Bank of Cheraw and Chesterfield County, located at Cheraw, which closed on November 9, had five branches, at McBee, Mount Croghan, Pageland, Ruby and Chesterfield, and all of these closed with the parent bank.
A national bank at Cheraw, the First National, also closed when a run on it was prompted by the closing of the Bank of Cheraw and Chesterfield county.
It is this bank of which S. G. Godfrey, arrested today on a charge of embezzlement in connection with a $55,000 shortage, was cashier.
State Bank Examiner Fant stated today that all of the banks that have closed recently have been in the eastern part of the state, where both cotton and tobacco crops this year are poorer than they were last year, bringing out a feeling of depression. The banks suffered, he said, even though all of them were not insolvent. It is the psychology of the thing, Mr. Fant said. The people became frightened and called for their money. The situation is unfortunate especially when its extreme trend is so unnecessary.
The banks closed this week are the Peoples bank at Scranton, S. C., and the Farmers and Merchants of Coward, S. C.
During the week of November 5-10 the Bank of Dillon, at Dillon; the Bank of Timmonsville, at Timmonsville; the Merchants and Planters bank at Hartsville; Merchants and Planters Bank at Lamar, and the Bank of Cheraw and Chesterfield County and its five branches closed their doors.
OTHERS CLOSED.
Other banks to close within the past month were the State Loan and Savings bank at Bamberg, the Bank of Florence at Florence, the Palmetto Bank and Trust Co., of Florence, and the Peoples Bank of Darlington.
