Direct Action

Unable to find enough sound private borrowers, unable to get more than a tiny return on Government securities, U. S. banks have in the last decade faced dwindling incomes. Service charges have been inaugurated or increased, bank interest rates have been cut or abolished. Few weeks ago New Jersey's banking department ordered banks to cut interest to a maximum of 1% on savings and time deposits, and local bankers were somewhat apprehensive of mass withdrawals. Quite different was the situation in Booneville, Iowa (pop. 142).

Month ago the Booneville Savings Bank solved its low income problem by announcing that it would go out of business. Its 300 corn-belt customers were invited to come and get their $267,000 on deposit. To its depositors, the bank promised full payment, to its stockholders, the $10,000 capital they put up 33 years ago to found the bank, plus $21,000 surplus and undivided profits, $11,000 in real estate. Yawning, the local farmers let their money be, figuring that they would take their 2 1/2% interest as long as possible.

Last week grey-haired C. C. Cook, first and only cashier of the Booneville bank, got sore. He announced that the bank would pay no interest after June 30. If they still refused to come for their money, he threatened to mail it to them by check.

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