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Frederick and Hagerstown Failures Are Traced to Central Trust. WITHDRAWALS HEAVY, SAYS COMMERCIAL HEAD Board of Directors Requests State Commissioner to Take Charge Immediately. Special Dispatch to The Star. FREDERICK, Md., September 28.Affected indirectly by the recent failure of the Central Trust Co. of Frederick and its 11 branches, two more Maryland banks and three branch institutions closed their doors today. The institutions which failed to open this morning are the Mechanics Loan and Savings Bank of Hagerstown and the Commercial Bank of Maryland, at Frederick. The latter bank has branches at Adamstown, Jefferson and Mount® Airy, which also were closed. It was understood both of the banks closed today sustained heavy withdrawals of deposits following the closing on September 3 of the Central Trust Co. and its branches, operated by Emory L. Coblentz. Casper C. Cline, president of the Commercial Bank of Maryland, issued the following statement: Board Orders Action. "Foliowing the closing of the Central Trust Co. of Maryland and 11 branches on September 3. various rumors and gossip of a damaging nature have been circulated about this institution, causing large withdrawals and the giving of notices for a very considerable amount of time-deposit money soon due for payment. It was ordered by the board of directors at a special meeting this morning that we request the bank commissioner of Maryland to take charge of the bank immediately. "This action was felt necessary to protect interests of all depositors and stockholders. Notwithstanding the present deflation and unusual depression through which we are passing, we believe the depositors should receive the amounts due them. It is most regretable, indeed, that this action has been found necessary, but every possible effort has been made to prevent it and no other prudent course remains open in fairness to depositors and stockholders. Consideration may be given to a plan of reorganization, but nothing definite can be stated at this time." Capitalized for $400,000. Mr. Cline's bank is capitalized for $400,000 and has resources of $3,200,000. This would make its deposits amount to approximately $2,080,000. A notice on the door of the Mechanics' Loan & Savings Bank stated that "This institution is in the hands of the State bank commissioner." The directors of the Mechanics' Loan & Savings Bank, at Hagerstown, issued this statement: "We announce with regret that we have felt it necessary to suspend the business of the Mechanics Loan & Savings Bank for the protection of our depositors and for the best interests of our many stockholders. During the past two years we have been suffering from the effects of the general depression existing throughout the Nation, and the unusual demands made upon this institution by its depositors have depleted its more liquid assets. "On July 1, 1930, the deposits of our bank were nearly $3,000,000, and at the close of business last Saturday we had on deposit a total of $1,970,632. We have endeavored to be conservative in the management of our institution and have tried to render at all time to this community efficient banking service. "It was impossible to liquidate our mortgages and other investments rapidly enough to meet the unusual demands made upon us, resulting from false and unfounded rumors recently circulated by irresponsible persons. Acting in the best interest of our people and the community at large. we did not feel justified in sacrificing the value of our assets, and our final action is the result of our best judgment in this regard. Although we regret the necessity of this action, we feel confident that with proper and orderly liquidation our depositors will be paid. Henry Holzapsel, president of the bank, refused to make any statement at this time, but it was learned a steady seepage of deposits since the failure of the Central Trust Co. is responsible for the bank's closing. The bank's statement of June 30, 1931, showed resources of $2,950,489 and deposits, both savings and special, of $1,756,730. George W. Page, State bank commissioner, began an examination of the books of both institutions this morning. The Central Trust Co. at the time of its failure held deposits of $14,000,000, about one-third of the total bank deposits of Frederick County. Coblentz blamed frozen assets and "miserable publicity" received by himself in connection with the Federal investigation of the F. H. Smith Co. of Washington for the bank's failure. Coblentz is under indictment in Washington on a charge of aiding in commission of perjury in connection with the operations of the Smith company.
