In 1926 the Manley group of banks centering in Georgia collapsed. In one week, 90 institutions closed their doors. There have been more serious troubles in U. S. banking, far more significant troubles , but never more failures in one week in recent banking history.
Last week the Manley failures no longer constituted a record. More violent, more sensational grew the storm which began sweeping over Southern banking with the failure of Caldwell & Co., Nashville investment bankers ("We Bank on the South").
During the fortnight, 143 banks failed to open; $178,000,000 in deposits were tied up. Of these troubles, 129 could be attributed to the Caldwell failure and the fear it brewed. Of the others, two were in Iowa, two in Minnesota, one in Georgia.
No bank failure—as all know who have lived in a community where such a catastrophe has occurred—can be called harmless. Yet the South's troubles did not cause great alarm to U. S. banking at large. Rather, bankers in other States said the Southern trouble has been long in coming, is now ended.
When the first announcement of Caldwell & Co.'s troubles was made, Eugene Robert Black, Governor of the Atlanta Federal Reserve Bank (whose territory runs from Tennessee through Florida and from the Atlantic into Southern Louisiana), made an assuring statement (TIME. Oct. 27). Last week he again surveyed the Southern situation, made no grimace at the wreckage. Long associated with banking and industry in the South is Governor Black, whose reputed facial resemblance to Andy Gump of the funny papers amuses rather than bothers him. Heard with respect was his announcement last week:
"At this time, by reason of the closing of a number of Southern banks it may be well to consider our fundamental situation.
"We have just harvested our various crops. All these crops were large and yielded large cash returns. . . . The millions received from these crops are distributed in all the Southern States from Texas to Virginia.
"Our industries are on a sound basis and their products yield cash returns twice as large as our agricultural products. Our problem of unemployment is probably less acute than in any other section. . . .
"With resources of approximately $10,000,000,000 in Southern banks* there should be confidence that fundamentally our banking situation is sound, and with our agriculture, our industry, and our banking resources there should be no uneasiness as to our general situation."
Failure Figures. Survey of the actual events of the unhappy fortnight indeed indicated that the storm was more sensational than devastating. In hard-hit Arkansas, 64 banks either failed or invoked the State law allowing a five-day suspension. Deposits thus tied up were $35,804,000. But in all Arkansas, as of Dec. 31 last, there were 437 banks with deposits of over $208,500,000.
In Kentucky, where there were 579 banks with deposits of $447,900,000, only 15 banks with deposits of $59,122,000 failed.
Equally small proportions of disaster would be found in North Carolina where, supposedly because of real estate deflation, 16 banks with $26,103,000 in deposits failed and in Indiana where eight banks with $4,743,000 failed as an aftermath of the Louisville tempest.*