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ORDER PARALYZES BANKS; AWAIT WORD TO REOPEN HOLIDAY FORCED UPON THIS STATE BY ACTION OF OTHERS Speedy Action Forecast For Congress When It Convenes Thursday-Business Heads Believe Worst Over-Local Banks Secure. Caught in a jam similar to the one of 1907 when the east's troubles were forced upon a solvent, stable west, Montana banks which were ordered closed last Saturday by Governor Erickson's proclamation declaring an "indefinite holiday," await congressional action before they can re-open. Meanwhile general business is* seriously hampered in its normal flow. In its canvas of the local and state situation, the Laurel Outlook finds a well-nigh universal opinion that the worst is over, that the stricken east is in line to get its feet on the ground again, and that as soon as the lid is lifted there will be a general revival of business very similar to the return of prosperity that has been so long looked for. All attention now centers on Washington where a new administration was inducted into office Saturday and where a new congress will meet Thursday noon of this week to take immediate action on solving the banking problem of the nation. What the plan is that will be submitted to Congress by President Roosevelt, no one knows. That it will be immediate and far-reaching is a foregone conclusion. Meanwhile Montana banks and Montana people have to mark time. Starts In Detroit The whole trouble had its definite beginning, in the present phase, in Detroit. Automobile production, on which that locality very largely depends, has shrunken greatly in the past three years. It is charged that business there failed to write off its losses as have other districts. Unemployment became acute. Public treasuries became impoverished through caring for unemployed. Upshot of the situation was that several large banks became embarrassed, and as a relief measure, a banking holiday was declared. Meanwhile there had been heavy withdrawals of gold for hoarding by New York depositors, who even demanded gold for U. S. gold certificates. After the Detroit holiday was declared, the movement spread to Maryland, large centers in Ohio, Indiana, some of the southern states, California, Oregon and until approximately 30 states were involved. Montana and the interior northwest's own business was normal. Several years ago this region had taken its medicine. Left alone it would have gotten along without a tremor. Forced Upon Montana But Friday night there were hurried conferences in New York, Chicago and other large centers in the east and central states when financial and business heads saw the interlocked structure threatening many hitherto unimpaired institutions. As result, New York and Chicago "buttoned up" Saturday morning as a measure of protection. With more than 40 of the 48 states under banking holiday regulations Saturday morning, Montana's Governor Erickson, as a means of protecting this state's banks and business, officially proclaimed the holiday effective here. That same day the new president was inaugurated. Among his first acts was a decree establishing the holiday in banking as a national measure and providing penalties for violation. State Surprised Although for days past the people of Montana had read of other states' actions in establishing banking holidays, it had not been generally believed such action would become necessary here. Montana people knew their own business, though reduced in volume, was sound; that they had no troubles of their own to liquidate. All that had occurred quite some time back. It was only when too many other states became involved that the action was forced upon this state. Montana was among the last eight states to bow. Laurel had the distinction of possessing the only open bank in Yellowstone county late Saturday morning. Billings closed early Saturday and some banks did not open at all. The official notice was not received here until noon, which was the Laurel bank's regular closing time on Saturday. Supplies Change Prohibited from cashing checks or transacting normal business, the banks are permitted to change currency or coin into smaller denominations, or larger, as occasion requires. This is of considerable aid in the transaction of business. Laurel business houses in most instances accept checks from reputable people on the Yellowstone bank of this city when the checks are offered in payment of purchases. Of course the checks are not now cashable, but their acceptance reflects the general attitude that the holiday is of necessity a short one and that the whole situation will clear soon. Where checks cannot be accepted, the actual cash changes hands. Credit transactions are still in vogue, and have somewhat increased since Saturday. Await Word B. M. Harris, president of the Yellowstone bank of Laurel and the Park City State bank, said Wednesday he was unable to make a prediction as to what the decree from Washington would be, though ha was confident speedy action would be taken there when congress convenes at noon Thursday. He said it was possible that the plan, whatever it is, may be known here Thursday evening. Concerning the two local banks, he said the closing order found them with about $80,000 in cash in Laurel, Park City and the federal reserve bank, and $20,000 correspondent banks. Personally, it caugth him with $3.50 in his pocket. Wednesday, when he wanted a haircut he borrowed $1 from his son. He can't touch the money in the two banks except to make change. When he had spent his $3.50 he was out on a limb, he said. Scrip has been talked of since Saturday, but no local action has been taken. Stores and individuals are using U. S. money. Banks Sound Banks of Montana as a whole are in a very sound condition. In the Yellowstone valley they are especially well fortified. Beginning with 1919 there was for several years a process of elimination that wiped out the weak and unnecessary ones. Those remaining are monuments to the fact that they are actually needed, that they have cleaned house, and that they are efficiently managed. Discussing the condition of the Laurel and Park City banks, Harris told the Outlook Wednesday that they are in position to liquidate in a short time dollar for dollar if that were necessary. "We have made a careful check since Saturday," he said, "and find there is not a single piece of paper that would be effected by a moratorium on mortgages of real estate. The same applies to chattels. All our loans are payable from income and not from capital. In other words they will liquidate themselves. Were we to take the cash on hand and in banks (correspondent and federal reserve), our bonds at the present market price, and paper eligible for rediscount with the federal reserve bank and the Reconstruction Finance corporation, we could liquidate 100 cents on the dollar." Looking over the local and state situation, the Laurel Outlook finds (Continued on Page Eight)
