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EVENTS LEADING TO TYPICAL BANK FAILURE RELATED E. R. Litsinger Addresses S. W. Trust Depositors. Depositors in the closed South West Trust and Savings bank meeting held in St. Agnes hall heard a narration of the processes by which an apparently typical bank failure comes about. E. R. Litsinger, president of the bank from its organization in 1912 until its closing on Oct. 9, 1931, met the depositors and made the speech. Granting this bank's suspension arose from causes similar to other such bank closings, the story of the leading to and the run that climaxed it might be interesting to depositors in closed institutions generally. Mr. Litsinger first related that the bank was founded to serve real need-there being no banks in Chicago south of 31st street or west of Ashland avenue at the time. Its establishment, he said, was approved by George M. Reynolds and B. A. Eckhart, and both became stockholders. Shows Steady Growth. The growth of the South West Trust and Savings in satisfactory manner until 1929, when deposits reached $5,500,000. Capital and surplus rose from the original $220,000 to $675,000. Total resources in September, 1929, were $6,200,000. Then when the stock market crash occurred in October of that year," said Mr. Litsinger, "our customers started to draw funds. In the next twenty months we paid our depositors over $3,000,000, or $150,000 month. "To meet these withdrawals we used our cash reserve, called many loans and proceeded in an orderly way to sell such bonds and investments as were necessary. Like thousands of other bankers and business men we hoped and almost prayed that condiwould take turn for the better. But June 1931, the Foreon National bank was absorbed by another institution and in a few days about fifty outlying banks closed. Depositors started runs on our bank as well as others. There were heavy every day until Oct. 9. To meet the demands we more loans, sold investments and borrowed $350,000 cash from the Continental Illinois Bank and Trust pledging $1,000,000 of security.' Co-Founder Becomes III. Mr. Litsinger then related that Thomas J. Healy, co-founder with him of the bank, became seriously ill in July last year and was unable transact any after that. Mr. Healy died on Oct. 20. called on Mr. Reynolds," Litsinger continued, at the Continental bank and on Melvin A. Traylor of the First National. They agreed to help all they could. They appointed officers of their banks to see what could be done. offered to deliver majority of the bank's capital stock, being that held by own and the Healy families, if the Central District bank would take us over and pay our deposits in full. Negotiations with the Central District bank lasted nearly three weeks. The Continental and the First Na. tional had agreed to advance $1,600, 000 if the Central District would take us over and pay deposits in full. Final ly all negotiations were broken off. had been up to that moment morally certain that deal would be made to pay every depositor in full. Ask Auditor to Take Charge. On Oct. made a detailed report of the desperate efforts to save the bank to the full board of directors and a motion was reluctantly passed to have the state auditor take charge of the bank. Before the closing the institution had paid out 75 per cent of its 1929 and was due at the closing about $1,700,000. Mr. Litsinger said that a 20 per cent dividend is ready to be paid to depositors. At present, he said, there are assets of 000 to cover this. Of the assets $368,000 is cash, and bonds, $535,000 loans and discounts and $645,000 real estate bonds and mortgages. In addition the banking house is owned outright. In making this presentation Mr. Litsinger suggested that if the depositors would persuade friends with hidden funds to purchase the mortgage paper in the hands of the receiver (which he says is good), large cash dividends could be paid. His own loss, he added, included 25 per cent of the bank stock, which in 1929 was worth about sixteen times the $55,000 he had originally invested.