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UTAH BANKING LAWS AFFECT ELY BANKS
NO SHADOW OF DOUBT BUT THAT ALL INSTITUTIONS ARE SOLVENT.
The Bank of Ely and the First National Bank of Ely, the two banks of the district, will not open their doors this morning.
The suspension is for an indefinite period, with both of the banks in the meantime in absolutely solvent condition.
No room whatever exists for even the shadow of a shade of a doubt in respect to their solvency and further than the inconvenience that the temporary suspension will occasion there will be absolutely no loss to any interest connected in any manner with the Ely banks.
Telegrams received yesterday from President W. W. Armstrong of the Bank of Ely under date of Salt Lake City, were identical to each the Bank of Ely and the First National. They were shown to The News last night and a copy of that to the Bank of Ely is given elsewhere in these columns of the actual facts in connection with the suspensions. These are due to the following circumstances:
A complete tie-up in all the financial centers of the country, with result that Salt Lake cannot get money from Denver because Denver cannot get money from Chicago nor Chicago from New York, and so on throughout the entire financial chain of the nation, link by link, affecting big and little everywhere.
Decision by the Salt Lake clearing house yesterday, as a result of the general tightness of money, to invoke a provision of law passed by the last Utah legislature for exercise in such emergency as the country faces at present.
This law provides that banks may decline to honor checks of depositors for sums of more than $100 at one time and that checks aggregating $200 may not be cashed within six days. The Salt Lake City clearing house, as stated above, has called this law into effect, because Salt Lake City banks cannot get money on the outside and in the event of runs might not be able to avert wrecking, though they are solvent and under normal financial conditions would be equal to meeting any emergency.
The situation as affecting Ely banks is briefly, then, this: Because of the Utah law limiting the amount of money which the banks of Salt Lake City, the correspondents and depositaries of the banks of Ely, can pay out at this time and until the Salt Lake City clearing house lifts its ruling of yesterday, the banks of Ely cannot get money which they have on deposit and due them in far more than sufficient quantities to pay all demands that might legitimately be made upon them were their doors open.
In other words, the banks of Ely, are in the same position as the individual depositors of the banks of Salt Lake City; they can draw no more on their accounts than the individual depositor, who is limited to $100, at the time and not more than $200 within six days by the Utah law for the protection of banks in times of stress and exaggerated fears on the part of the public.
The Utah law has no counterpart in the statutes of Nevada, but it is as effective in the case of the banks of Ely, because they are depositors in the banks of Salt Lake City, as if the law was a creation of Nevada instead of Utah.
It is to be added that the banks of Ely are entitled to close for the balance of this week under proclamation issued last week by Governor Sparks, providing for a ten days' holiday for all banks in the state. Ely banks did not avail themselves of the three days provided for last week nor of the two they could have utilized this week, for so long as the Utah law was not invoked on their Salt Lake correspondents they had no need to, their funds available from their depositaries being, as has been clearly put, largely in excess of any need which might arise.
The effect of the temporary closing of Ely banks upon the industrial and commercial situation in this district should not carry anything whatever of more importance than the inconvenience which will naturally be suffered. As near as can be gathered from market and press dispatches, the financial situation is clearing in the east and it may be that by the end of this week such relief will be afforded as will enable general return to normal or near normal banking conditions, which will enable resumption of business on the old basis. Above all it is to be remembered in this district that its banks are good for dollar for dollar, cent for cent, and that it is merely a matter of brief inconvenience, because of inability to get at their funds or to cash checks, that the public confronts; that and absolutely nothing more.
