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MAYOR AMON DECLARES A BANK HOLIDAY First National Takes Advantage of New Law to SafeGuard Depositors - Still Open for Business Following in the wake of other banks thruout the state and nation, the First National of Kennewick this morning hung a proclamation by Mayor Amon on the front door, proclaming a week's holiday. Yesterday the same action was taken by the Yakima Valley bank at Yakima, and while the local institution is in excellent shape, fear of a run developing caused the directors to take the precautionary measures as a matter of protection to the depositors. As the news of the Yakima bank's action became known here, some of the depositors asked for their money. While not developing into what might be termed a "run" nevertheless the directors felt that such uneasiness was dangerous and determined to take advantage of the new banking law which permitted banks to protect themselves in situations of the kind. The new law provides for a moratorium of six months or less for a bank. During that time, the suspended institution will be open to receive deposits and transact business as before, except that during the period of the moratorium, no matters in connection with previous business can be concluded except under the direction of the state banking department. In other words, the concern will go into a process of liquidation or reorganization. It may receive deposits and this money will be held in trust and may be checked out as heretofore, but cannot be invested or used by the bank in any way in connection with its former business. Durig the day word was received that eight states had declared banking holidays and the Old Natwo banks there, gave orders to tional bank in Spokane. one of the its string of Eastern Washington banks to remain closed today. This order closed practically every bank in the Yakima, Spokane and Walla Walla districts. The Bank of Commerce in Pasco remained open thruout the day. The following statement was given The Courier-Reporter from the bank today: During the day preceding the time for opening on Thursday morning, the Directors were confronted with the problem of determining upon a course of action having as its object the protection of all depositors. The recent closing of one large near-by bank had caused a certain amount of uneasiness among the more nervous depositors. The fact that another bank close at hand had elected to avail itself of holiday privileges had so emphasized the situation and the action of a few depositors in withdrawing their deposits indicated so clearly that increased withdrawals might be expected that the directors felt compelled to adopt some method of conserving the assets of the bank for the benefit of all concerned. In making their decision, the directors had in mind, first the equal protection of all deposits, regardless of residence of depositor or character of deposit, and second, the proper resumption of normal operations at an early date. Three methods of procedure were open: 1. The directors might continue operations and attempt to meet all demands. If successful, the community would be greatly benefited. If unsuccessful, the attempt would result in a depletion of cash, a sacrifice of the best assest, followed by actual closing and liquidation. Such procedure would have meant the safety of those depositors who elected to withdraw their deposits and the sacrificing of the saving accounts and checking accounts not withdrawn, or 2. The directors might close and go immediately into liquidation. This would have been followed by distribution of liquid assets after a considerable period and by the conversion of other assets into cash in the usual manner and the final winding up of business with more or less loss, or 3. They might accept the benefit of National and State Stabilization laws recently passed which provide for the temporary suspension of the payment of obligations. In this manner it was possible for the directors to conserve all the assets of the bank, including the available cash, in such manner as to safeguard the interests of all depositors alike, making it impossible for a few excited depositors to withdraw their money to the detriment of others. The directors realize that by properly conserving the cash and other assets of the bank they would be greatly increasing the liklihood of normal resumption of business. Under an Act of Congress, ap(Continued on Page Eight.)
