Commercial Trust Company (New Britain, CT)

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BANK ORDERED TO CLOSE,

Connecticut Suspension Ruled to Protect Depositors. Conn., The Commercial Trust Company of New Britain, capitalized at was restrained from paying out deposits this afternoon by the who said the cash position been weakby of the last and the suspension to the interests The said every effort be made reorganize the bank. has of and Of the savings are nearly and than The bank the Connecticut to be closed the bank commissioner within John president of the no loss and expressed the would reopen in about week.

3 MIDWEST BANKS CLOSE. Three more small mid West banks closed their doors In the Washta State bank with deposits of closed by its This was the enth bank failure in Iowa within In Illinois, the First National Bank failed to for business the State Bank of Elroy with deposits of $160,000. was closed by the state banking department. Two other Wisconsin banks, for reorganization, were reopened.

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BANK IS RESTRAINED FROM PAYMENTS Recent Withdrawals Necessitate Connecticut Institutions Closing for Safety. By the Associated Press. HARTFORD, Conn., December 13.The Commercial Trust Co. of New Britain, capitalized at $500,000, was restrained from paying out deposits this afternoon by the State bank commissioner. The bank had already closed for the week end when the order was posted at its banking house. The commissioner said the bank's cash position had been weakened by withdrawals of the past few weeks, and the suspension was ordered to conserve the interests of general depositors. The commissioner said every effort will be made to reorganize the bank. It has liabilities of $6,000,000 and a surplus of $125,000. Of the liabilities, savings deposits are nearly $2,000,0000 and commercial deposits are more than $2,000,000. The bank was the third in Connecticut to be closed by the bank commissioner within a fortnight.

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Identity of Person Reported to Have Spread Rumors Causing Run Said to Be KnownLoomis Repeats No One Will Lose. Six Institutions to Cash Commercial Savings Accounts Up to 50 Per Cent If Need Is Shown-Analysis of Situation Being Made by State. Suspension of business by the Commercial Trust Co. on West Main street Saturday afternoon was accepted calmly in financial circles over the week-end and there was no sign of disturbance although many merchants and others were inconvenienced by their inability to issue checks against the bank or cash them. Announcement by State Bank Commissioner Lester E. Shippee that the bank was solvent and by President John C. Loomis of the bank that no depositor would lose money, both of which statements were published in an extra edition of the Herald Saturday, had a steadying influence on the populace. Apprehension was allayed by the issuance of these statements and by the allnouncement made in the churches yesterday, at the instance of Mayor Quigley, that depositors would be paid 100 cents on the dollar. Other Banks Aid Depositors Officials of the other New Britain banks arranged over the week-end to relieve the situation to a considerable extent by loaning to Commercial Trust Co. savings depositors up to 50 per cent of their accounts, at the prevailing rate of interest, but only in such instances as were proven to constitute actual need of ready cash. I The announcement to this effect f was contained in the following state. ment: "The banks whose names appear below are working out a plan to I take care of the needs of those perI sons having deposits in the savings department of the Commercial Trust company by loans up to 50 per cent : of such deposits secured by the book t representing the same if properly authenticated New Britain National Bank, New Britain Trust company. Savings Bank of New Britain, : Burritt Mutual Savings Bank, City E National bank and People's Savings bank.' t Reorganization Under Way I That there will be a reorganiza: tion of the closed bank as soon as possible was stated today by Presi) dent Loomis. Whether it can be effected within a few weeks was not known. The bank was open today (Continued on Page Two)

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NO NEED FOR ALARM Measures taken to safeguard the depositors in the Commercial Trust Co. and the bank itself Saturday aft. ernoon naturally created intense public interest and a little excitement before the reasons for the step were thoroughly understood but now that the smoke has died down it 18 quite generally realized that the state banking commissioner stepped on at an appropriate moment for the benefit of the public. The step was logical under the circumstances and was desired by the banking of ficials in order to conserve the assets that were strained under the blows of an undue ratio of withdrawals. It 13 a problem in elementary arithmetic that no financial institution can stand 100 heavy withdrawals which drain its ready cash. No bank has all its assets in liquid form, prepared 10 hand over huge sums of money at almost an instant's notice. Banks make their profit by investing the money entrusted to them. and this money in order to earn profits must be set at work Only a small percentage of funds are kept on hand for the daily needs of business. We merely mention these elementary facts for the benefit of such readers whose minds may not be clear on the subject, even though they be a small minority. Following an episode such as we have had in the city it is essential that the elementary details of bank. ing should be understood by every. body; and the more thoroughly they are understood the less likelihood there is of foolish actions by any minority of the public. actions which might cause unnecessary inconvenience to others Suspension of a bank aiter all. is merely a suspension It is not a failure Suspensions under most circunstances are necessary as steps to prevent a part of the public from weakening a financial institution A suspension in time saves everybody's money and usually turns out as merely having been an interruption of business The papers have carried stories of bank suspensions in various parts of the country: and in most instances a week later the same papers carried stories-usually under smaller headlines-of the same banks reopening for business This usually results when officials have had an opportunity to straighten out the tangles and put everything in smooth running order once again. During the period when this IS accomplished the public has had an opportunity to size up the situation to better advantage and its good sense usually tells them that earlier fears were groundless and that the situation demands nothing so much as cooperation. It is too bad. of course. that such things happen; and no doubt there are a multitude of amateur doctors of economics who believe they know how to prevent such happenings The fact is, however, that no supermen exist in the banking business any more than they exist elsewhere. and banking remains a sensitive nerve that reacts to surrounding conditions. The public. however, is the arbiter of what happens. Runs create trouble, and it is the public. or a thoughtless part of it, which causes runs. Without these to fear banks under almost any condition would have clear sailing

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Examiners Now Going Over Records to Determine Condition of Institution Future Cannot Be Forecast Before Examination County Detective Hickey Said to Be Investigating Report Run Was Caused by Rumors - Loomis Confident of Reopening in Short Time, He Says. The future of the Commercial Trust Co., which is under suspension on orders of State Banking Commissioner Lester E. Shippee, will not be known until the latter part of the week, the commissioner said today, because it will be impossible to complete the analysis which is being made by examiners from his office, any sooner. Every detail of the bank's affairs must be gone into thoroughly in order to determine accurately the condition of the institution and whether there will be a reorganization or a complete liquidation and closing out of the business cannot be foreseen at this time, he said. Few Call on Other Banks That many depositors in the savings department of the bank are content to await developments rather than borrow up to 50 per cent of the amount of their accounts from the six other banks which announced yesterday that a plan is being worked out to this effect, was apparent today when a surprisingly small number of requests for loans was received. Up to noon, one bank in the group reported one call for a loan on the savings department and one from the holder of a commercial account As the offer applied only to those having money in the savings department, the depositor in the commercial account was not accommodated. In another bank one call was reported and arrangements were made to loan the money. Other banks in the group reported similar conditions. The banks which handle commercial accounts are receiving new accounts in large numbers. as might be expected. because business houses and individuales were obliged to change banks due to the suspension of the Commercial Trust Co. Expect to Reopen Soon President John C. Loomis said to day that there was no change in the sntuation and he was confident that bank would be able to reopen in a short time. Payments on loans are being received and the work necessitated by the state banking commissioner's analysis is keeping the entire force of the bank busy. Treasurer M. Bassford and other officials did not leave the bank until 4:30 this morning and were back at work (Continued on Page Two)

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BANK'S CONDITION IS BEING ANALYZED (Continued From First Page) again a few hours later. Whether prosecution will be brought by State's Attorney Hugh M. Alcorn as a result of the alleged spreading of derogatory information about the Commercial Trust Co. by a local man could not be learned today. President Loomis would not discuss the matter except to deny that the board of directors had met and decided 10 request a probe by the state's attorney, and at the latter's office in Hartford County Detective Edward J. Hickey would not talk about it. although it is said, he is investigating That the stories in circulation as to the cause of the run OIL the bank have reached the state's attorney is known but what the next move will be could not be foreseen today. The state's attorney refused today to confirm or deny reports that a New Britain broker, whom rumor connects with circulating stories about the bank, would be questioned.

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OFFICIALS QUIETLY REORGANIZE BANK Rumors About Taking Over Commercial Trust Co. Denied That officials of the Commercial Trust Co., closed Saturday by order of State Bank Commisisoner Lester E. Shippee following a run which depleted the cash assets of the bank, are working quietly on a plan for reorganization was intimated by Mr. Shippee today. Contrary to the general opinion, it is said state bank examiners are not going over the books of the local bank. but the officers and employes of the institution are going over accounts and straightening out all records under the supervision of Deputy Bank Commissioner Harold Splain and several assistants. Asked what would happen in case the bank failed to reorganize, Mr. Shippee said that in that case it was probable a receiver would be asked and a complete liquidation would follow. Asked today when he expected to have the bank reopen, President John C. Loomis said it was too soon to tell. Denies Prospective Transfer Rumors that the Hartford Connecticut Trust Company was getting ready to take over the local bank were denied by Mr. Loomis and by one of the directors. Harold Kenyon, treasurer of the Hartford bank, said he had nothing to say on the subject. It is believed that the rumor started from the fact that Charles W. Hawkins, newly elected vice president of the Commercial Trust Co., has been conferring with Nathan Prince, president of the Hartford institution, who, it is said. has been cooperating in an advisory capacity. Foreclosure Not Likely Another rumor that the Metropolitan Life Insurance Co. is preparing to take over the building of the local institution has been denied. The insurance company holds the mortgage on the building, but Vice President Pardon C. Rickey of the Commercial Trust Co., said today the mortgage was not delinquent and he saw no reason why such steps should be taken. Skepticism in the probability of such action was expressed by Ronald Cook. manager of the Hartford branch of the insurance company. "Our company never acts hastily on foreclosures, and since the mortgage is not delinquent I don't believe there is anything to it," he said.

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SHIPPEE AWAITING NOTICE FROM BANK Receivership Possibility Depends On Reorganization Pians The possibility that a receivership may be asked for the Commercial Trust Co., which closed its doors last Saturday, following the culmination of a run on the institution depends entirely upon the crystallization o: plans for reorganization, according 10 State Bank Commissioner Lester E Shippee today. Asked about rumors that the meeting of the directors of the bank held yesterday afternoon had developed into a decision to ask for a receivership, Mr. Shippee said he talked the situation over with the bank officials and that the plans had not yet crystallized into anything definite and that this may nos happen until tomorrow or Saturday. "It depends entirely upon my ability to satisfy myself in'every partic ular that the reorganization plan is not impossible," he said. Asked if it were true that the bank would settle with depositors on the basis of 70 or 75 cents on the dollar, the commissioner replied, "any prognostications would be foolish at this time. While the bank is perfectly solid on the face of things a forced liquidation will depend entirely on conditions." While appearing to be in a more cheerful frame of mind. President John C. Loomis was obviously showing the nervous strain under which he has been laboring. He maintained his policy of making no statements. Asked if there were any developments in the investigation to ascer tain the source of the rumors which brought on the run on the institution, Mr. Shippee said there had been some work on it, but he could not say as how far the investigation had proceeded.

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01121 e TO DISCUSS BANK May Have Announcement Tomorrow on Commercial Trust Whether efforts to effect a reorganization of the Commercial Trust Co. in time to avoid the appointment of a receiver will be successful before tomorrow was problematical this afternoon. Rumors were rife in banking circles but all of them lacked official verification and Bank Commissioner Lester F. Shippee, on whose order the bank suspended business last Saturday, said nobody was in a position to announce anything of a definite nature. "Certain plans for reorganization are under consideration but I consider it unwise to give them publicity today because the effect might be to raise false hopes," the commissioner said at his office in the state capitol at Hartford. "All plans are in abeyance for today at least, but I expect to have an announcement tomorrow forenoon." In the event that decision is made to apply to superior court for the appointment of a receiver, Commissioner Shippee said it could be done tomorrow, as it is only necessary to obtain the signature of a judge to the application. No formal hearing in open court is required at this time. Attorney John King of the attorney general's office will probably present the application for Commissioner Shippee. as he has acted in that capacity for the commissioner in other similar situations. Attorney King said. in reply to questions bearing on the situation. that action will be taken tomorrow "one way or the other." his comment being substantially the same as that of Commissioner Shippee Hickey Still investigating Several New Britain men have been interviewed during the past few days by County Detective Edward J. Hickey at his office in Hartford, as part of the investigation into the source of the "malicious and vicious" reports which President John C. Loomis blames for the run on the bank which caused the suspension of business. Among those questioned at the county building Wednesday was a New Britain broker whose name has been prominently linked with the alleged spreading of the reports about the condition of the bank. Although he would not say whether action will be taken. County Detective Hickey admitted the difficulty of carrying on a successful prosecution under the statute applying in the case. He and State's Attorney Alcorn pointed out that even if they learned definitely that I'llmors had been spread, it would be necessary, to obtain it conviction in a criminal court, to prove that the rumors were false and had been circulated with malicious intent. Detective Hickey would not say that the investigation has been dropped. "We are still plugging along at it and beyond that I cannot say anything," he observed.

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F. A. SEARLE TO BE RECEIVER AT BANK (Continued From First Page) which the trust company operates, depositors in the savings departments have a preferred position and will be paid first. Commercial accounts, including Christmas club checks, rank next, then come holders of certificates of deposit creditors and finally stockholders. Mr. King told the Herald that he hardly thought it necessary to distinguish between the different classes of depositors as, he said, he was confident that all would receive 100 cents on the dollar. The Commercial Trust Co. was closed on Saturday, December 13, after a three day run during which, it was said at the time, $500,000 had been withdrawn. Suspension was ordered by Bank Commissioner Shippee when he was notified by bank officials that cash was nearly exhausted. Since that time, the commissioner has granted several periods of grace during which the directors of the institution hoped to effect a reorganization. Searle Former Banker Mr. Searle has had banking experience. Upon graduating from high school he entered the employ of the New Britain National bank and remained there for four years. Going to the old Hartford bank he was with that institution for about five years. He then came to Landers, Frary & Clark. He is a member of the board of finance and taxation. The bank's liabilities are approximately $6,000,000, of which $2,000,000 are in savings deposits, and cap. ital and surplus of $625,000, accord. ing to the last statement. Liquid assets were SO far depleted by the run as to make it unsafe to continue, Mr. Shippee announced at the time of the suspension.

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Employees of Closed New Britain Bank Are Given Salaries

New Britain, Dec. All officers and of the Commercial Trust Company, suspended 10 days ago, were given their salaries and allowed to on Wednesday. They numbered men and women from President John Loomis down assistant clerks Their release was effected by ReceivSearle of the bank The receiver during the day said that will probably require half to completely liquidate bank's assets but soon as possible partial payments will be made savings accounts. The firm of Judge Gaffney three has been engaged represent the bank.

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SUPREME COURT DECIDES CASES Hartford, Conn., Jan. 17-(UP)No error was found by the supreme court in the Fairfield county superior court ruling in the cases of Minnie R. Hill, executrix, against Andrew R. Jones, and Frank A. Hotchkiss against Jones, it was announced today. The lower court found for Jones in the first action and for Hotchkiss in the second. Both suits involved Danbury property. Judgment of the Hartford county superior court in allowing Bernard L. Crampton, New Britain, a setoff on a certificate of deposit against a note held by the closed Commercial Trust company, New Britain, was sustained. Frederick A. Searle, receiver. had appealed the finding.

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BANK UNABLE TO FIND DEPOSITORS New Britain, Conn. May 11 (UP) - The Commercial Trust Company is finding it difficult to get rid of $106,000 available to its depositors through Receiver F. A. Searle. The bank failed several years ago and recently a 10 per cent dividend was announced. amounting to $176,000. or this amount $70. 000 has been paid out. the balance being uncalled for. There still is $15,000 on deposit awaiting claim for the past two years, Searle announced

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SUPREME COURT

IS LIBERAL ON

FORECLOSURES

Court Upheld Decisions of Lower Bench in Extension of Two Years

Hartford, Conn., July 18-(UP) -The state supreme court today put in writing its expression of liberalism toward foreclosures as announced at the beginning of the New Deal, to give distressed property owners an opportunity to work out from under their tax burdens. In two decisions, the court upheld extended redemption periods. One sustained a lower court decision by Judge P. B. O'Sullivan in the case of the Metropolitan Insurance Co., against Walter M. Bassford, receiver for the Commercial Trust Co., New Britain, involving a debt of $257,685, and the other similarly regarded a decision by Judge Frank P. McEvoy, in a $9090 action of Catherine M. Brand against Eric A. Woolson, over property located at Westport.

Ahead for Two Years In both cases the lower court had set redemption dates as far ahead as two years. In the case of the New Britain bank the court ruled that the lower court "may properly consider economic conditions which render it difficult to dispose of the property and fix a law day which will give the owner of the equity a reasonable opportunity to dispose of it without jeopardizing the right of the plaintiff to the full payment of the mortgage debt." In the second decision the court set forth that "all the facts indicate that the defendant intends in good faith to redeem, and the probability that he will be able to do so within a reasonable time limited by the court."

The court, however, warned that "great caution" should be applied in determining the time to be allowed by the courts for redemption.

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$537,852.10 Other Closed Banks Other closed banks in the state are: The American Bank and Trust, Bridgeport; Broadway Bank and Trust, Bridgeport; Broadway Bank and Trust, New Haven; Cheshire Bank and Trust; Citizens Bank and Trust, New Haven; City Bank and Trust Bridgeport: Commercial Bank nad Trust, New Britain; Hamden Bank and Trust; Mechanics Bank and Trust, New Haven; Naugatuck Bank and Trust; Unionville Bank and Trust; West Haven Bank and Trust; Windsor Locks Trust and Safe Deposit. The receiver for the Naugatuck Bank and Trust company will resign at a hearing to be held here next Wednesday morning at 11 o'clock.