Article Text
FARMERS START A RUN ON A BANK Middletown, N. Y., Dec. 12.-The First National Bank of this city successfully encountered a run this morning. By noon everything was quiet, and when the hour for closing arrived the deposits exceeded the
15240. First National Bank (Middletown, NY)
Bank Information
- Episode Type
- Run Only
- Bank Type
- national
- Bank ID
- 523
- Charter Number
- 523
- Start Date
- December 12, 1890
- Location
- Middletown, New York (41.445, -74.424)
Metadata
- Model
- gpt-5-mini
- Short Digest
3954cba0
Response Measures
Accommodated withdrawals, Public signal of financial health, Books examined
Description
Multiple 1890 newspaper items report a depositor run on the First National Bank of Middletown on Dec. 12, 1890 driven by rumors and a scare over tight money. Bank remained open and confidence was restored after local leaders examined books and publicly vouched for solvency; no suspension or closure is mentioned.
Events (3)
1.
September 29, 1864
Chartered
- Source
- historical_nic
2.
December 12, 1890
Run
- Cause
- Rumor Or Misinformation
- Cause Details
- Run began amid rumors about the bank's solvency and a general scare over the tightness of money; farmers and dairymen were withdrawing deposits.
- Measures
- Officers convened local leading men to examine the bank and publicly announce solvency; a pledge by wealthy county men reassured depositors and reduced withdrawals.
- Newspaper Excerpt
- The First National Bank of this city successfully encountered a run this morning. By noon everything was quiet, and when the hour for closing arrived the deposits exceeded the
- Source
- newspapers
3.
June 4, 1931
Voluntary Liquidation
- Source
- historical_nic
Newspaper Articles (4)
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Article Text
Run on a Bank at Middietown, N. Y MIDDLETOWN, Dec. 12-There - was a run on the First National bank today on account of the scare over the present tightness of money and about $10,000 was drawn out. The bank is said to be solvent with $28,000 surplus, and confidence is believed to have been restored.
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Article Text
How to Avert a Panic. Brooklyn Eagle. When the officers of the First National bank of Middletown discovered that rumors affecting their solvency were in circulation and that the farmers and dairymen of Orange county were likely to withdraw their deposits in a hurry, they did a very sensible thing. They called together the solid men of Middletown and asked these to appoint a committee to examine the financial condition of the bank. The result was a specific announcement of the solvency of the bank and a pledge signed by the wealthiest men in the county that the depositorwould be paid in full. The announces ment did not altogether prevent a run on the bank, but it reduced it to very small proportions. If similar action was taken whenever a bank is threatened with a run the number and amount of financial disasters due to causeless panic would be largely reduced. There are hundreds of country banks, normally solvent and holding gilt-edged securities far in excess of their liabilities that could be easily. embarrassed and forced into temporary suspension by the spread of a panio among their depositors resulting in the immediate withdrawal of deposits. When such a panic is threatened the plan adopted by the First National bank of Middletown might be profitably copied. Get the local magnates whose names are synonyms for wealth and probity to guarantee the solvency of the bank, and there will seldom be any danger of a disastrous run.
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Article Text
PLAN BANK FAVORED Continued from Page One cision as to liquidation until they had considered more fully: in full elseThe report (given where) showed deficit which must restored in addition to $250.000 capital and $300,000 surplus before bank recpened sound basis in the judgment of the Mr. Wiggins. on behalf of the the statecommittee. emphasized ment that figures given were the could give withbest the committee examination of the detailed books. Such examinabank's tion would require bank examiner four assistants approximately and tweive days. he explained, and the committee had had no such accounting staff at its disposal. Such an examination has been promised. he said. by the National Bank Department prior reopening the First Merchants National Bank. the event deposwished reopen soon bank examiners are available for the task. General Reorganization Plan The general reorganization plan the committee WAS advanced afalternative of liquidation the (placing the bank in receivership and to depositors the return assets the bank at market had been fully the question submitted the that the decision was up depositors With the constantly repeated excommittee's planation figures only and that final Deures would have to come from official of the bank the plan, in brief, Surrender all common stock held and by the Orange County Associates. Use $2,500,000 the present deposits of the bank from sixtyfor five of $250,000 worth of six percent stock and the amount of common stock at of As illustration Mr. Wiggins that person $2,000 posit at the time would for deposit of $700, for withdrawal if he wished. on basis percent deposit. For the $1,300, percent. he would preferred stock of par value $130 and common stock of book value of $130. The depositor's chance realizing the evenwould depend either on increase In value the bank's nsor from pronts from the operation of the bank by depositors or Ratio of One to Ten The $130 worth of preferred stock would not assessable The $130 in common stock would be reseable but only to the par value of The necessity for Issuing the tock the ratto of each stock to $10 of deposits scale down the rieposits that the remaining percent of deposits deposits used for capital surplus would amply supby sound of total deposits In the bank of March thirtieth. Mr. Wiggins the seale-down plan because part are deposits against assets of the bank held or because they are funds estates of which bank administrator Mr Wiggins. behalf of the committee. depositors to conwhether they would require depositors with balances less than $100 of whom there 6.780 with total of $144,544) or deposHors balances between $100 $200 (of there are 980 total of $129,188 to partielpate in for other) percentage basis He suggested the necessities of such depositors are probably grenter than the immedineeds of persons with balances excess of $200 and that release of those deposits might make the small depositors the boosters the bank could have.' Valuations of Assets The Committee. Mr. Wiggins sald. used different approach either the officers the bank or the bank examining department in determining the condition of the bank. had found the deficit to be $700,000 more than was estimatby officials of the bank but $129.000 less than had been estimated bank examiners as of March by fourth, 1933. or the $129,000 greater deficit found by bank examiners, $59,000 was chargeable to "write off by examiners of fifty per cent the 1932 Class He suggested that the bonds. maining $70,000 greater deficit found by the banking examiners was due to difference In the "ppronch in estimates or was timated by the examiners. The committee had arrived Its by getting valuatic of the bonds of from the Federal Reserve Statisother fumiliar with the nancial ruting of borrowers from the bank. placed estimate all the notes classified by the bank doubtful the real estate and had appraised holdings of the bank. Morteages had taken their face value of was by offi clais of the bank in their estimate and by the bank examiner. he said. The Former Reorganization Facts previously unknown to dethe condition of the positors about banks the Merchants two old tional and the First National from which the First Merchants National were formed two vulged during the banks had faced Both of those the necessity raising new capital corsurplus closing and new poration known Orange County was formed. TwentyAssociates three individuals held ten shares shares of stock the each 230 Merchants National new First remaining 2.270 shares Bank. The the were held by County which Orange could not be Money from the of this stock provided the enpital and surfor the new bank. The needed Merchants National Bank gave to Merchants National Bank the First liquidating note $5,005,269 representing all its assets and the First National gave the new bank all of On the respective notes were imcredited the Mermediately chants National Bank cash which had hand at that on and $217,893 cash which the First National During the two years which have passed two old banks have been in the process slow liquidation and on March 851 additional credited as paid the Merchants National Bank note and $1,872,617 on the First NaLional Bank note. This left ance due on the Merchants' note of and on the First's 000, or total due the First MerBank the two old banks $3,516,000. The shrinkage In the remaining assets back those notes Mr. Wiggins explained answer to question by Harold lawyer depositor. accounted for discrepancy between $4,790,000 of forth In the December 1932 statement the bank, and the valuation of assets at "They put In the liquidating notes full value without regard to the securities the notes weren't worth it," he Arfmann Draws Applause As Instance of shrinkage In Mr. Wiggins sald that Group Two bonds which had cost the two old banks had dropped to value of $688,000 when the bank was last November. Those bonds. he said, had not been separated their value as April He said the bank examiners report November 1932. had deficit of that time. because of value of the colluteral securities back of the John Arfmann drew the greatapplause of the entire meeting when spoke ns director of the First Merchants National Bank and told the efforts of group men to save the two old banks two have always tried to live up to reputation to be fair and honest." he sald. believe some of you will leave with the feeling that bank officials have robbed you your money. This meeting should have been held years ngo. Then Mr. Murray. Mr. Morrison Mr. bank president from New put up of the amount take over the notes the "Today they say that $700,000 of those notes the bond depreciation $700,000 was carried over from the two old banks. Arfmann reminded depositors of the drop in prices virtually all bonds of the collapse of one corporation after another. any wonder banks all over the country have been closing." rectors this bank They put good money Into this bank. They don't ask any mercy. but not one of them has ever received red cent in return for his money or his work. All ask now that you treat these men as your friends and neighbors." Stock Assessment Mr. Wiggins had explained that the position which the First Merchants National Bank found was unusual in that 2.270 of the 2.500 shares of stock were held by corporation. the Orange County Associates, which has assets except the stock five closed and two open banks and the stock of the open banks pledged collateral loan from New York bank. The committee Mr. Wigthe most that could be collected by one hundred assessment on the par value the shares of First Merchants National Bank stock held by No assesment has evor been levled on the stockholders of the two banks, Mr. Wiggins in sponse to by Howard Weale. "There is no question but what those stockholders should be assessed." he remarked. He said had been estimated could had by assessment on the 000 capital of the First National from ment on the $200,000 capital of the Merchants The Orange County Associates, he said, although stock which held could not be assessed, would be required to give up all of its stock to depositors before the Comptroller of the Currency would approve reorganization plan. Three or four of the directors the group had said they were willing to give up the stock but final action awalted the decision of York lawyer who had been asked his on the legality their doing SO, he added. Situation as to Stock Individual stockholders the First Merchants National Bank also would be required to surrender their stock he indicated They had been asked by the committee to what extent they would purchase preferred stock in event of reorganization In reply the Board Directors had adopted resolution stating that because of the "liberal carried directors out of loyalty to the bank they be called upon to contribute fully to any reorganlThey also had contributed two years the noted. The Directors would be unwilling to beyond their participation as depositors, the resolution Mr. Wiggins cited rulings of the Currency on plans for the reopening of banks Spring Valley and Kingston. which the surrender of stock by the stockhold either by them for repurchase depositors required by reorganization Unless to stock the habilitation efforts depositors would give immediate book value stockholders rather than and the depositors would benefit thereby. he remarked. During the discussion someone percentage of their balances depositors would receive the bank were liquidated the don't believe anyone could answer that accurateworld the reply. you want my was only cent If thirty to per Fancher pointed out Frank the bank would that liquidation of mean the calling notes and closing mortgages. Placing properties the market these when there few buyers the time are force real estate would. he prices here down to level of fifteen to twenty years ago. Limitation on R. F. C. Aid Former Mayor Rosslyn M. Cox had two suggestions offer in connection with of the bank: That the Reconstruction Finance Corporation might participate and that the present bank might be sold to New York banking group which he said had asked him for figures on the present condition of the First Mr. Wiggins replied the R. F. C. would participate only dollar for dollar restoration capital but under no condition would lend money for up the deficit. Assets of the bank would be bound to the repayment of the loan which would to only on capital and "depositors can be paid just as quickly as the The Committee had thought of the sale of the bank to banking group. he said, but had not spent much time that line. In reference to an implication by Mr. Cox that such purchaser might make good deposits dollar for dollar, Mr. Wiggins said: depositor would were want to look over the buying grout very carefully If. in these times, paid more than the I'd wonder whether bank was competent to run the bank. days is not possible for In these conceive of any sound me to that would pay ing $5,000,000 for something roughly worth $3,000,000 and hope that succeed." Responsibility on Depositors The resolution for retention of the committee toward reorganisaintroduced early in the by Frank D. Fancher discussion but were urged by Mr. depositors Wiggins to ask more questions and consider the matter more fully before they voted. Depositors were whether they would liquidate or rehabilitate the bank was for them and them alone to make and that the Committee's plan for reorganization was only offered in the event they decided to take the latter course. Mr. Wiggins explained that neither he nor Mr. Bright of the Bar committee were depositors, stockholders. directors, counsel, or had ever held any office in the bank, and that only interest was depositor. The othmembers of the had been appointed arbitrarily from the depositors, by Robert Cunningham, president of the Chamber Commerce, who opened the meeting. The who continue to work with the bar committee toward rehabilitation are R. Wallace. B. VanSickle, Jacob Wiseman. Frank A. Monaghan and Austin George.