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Taylor Bank History - The Great Depression

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The teller's counters at Taylor Bank's main office in Berlin, Maryland, were installed in 1949.
A Stronger Bank

In 1932, the Exchange and Savings Bank in Berlin closed but was reopened when many Taylor Bank directors bought stock in the bank.

The move strengthened Taylor's position in the community as several prominent families moved their business accounts from Exchange and Savings to Taylor.

Banking Holidays

On Feb. 24, 1933, the governor of Maryland declared a three-day banking holiday and by March 1, several states and thousands of banks across the nation, including Taylor Bank, had announced banking holidays.

Then on March 5, 1933, President Franklin Delanor Roosevelt declared a nation-wide banking holiday. Calvin B. Taylor Bank reopened within a few days on a basis of 2% deposit, meaning depositors would be limited to a 2% withdrawal of the account balance.

Recapitalization

After enactment of the Banking Act of 1933, which created the Federal Deposit Insurance Corporation to give confidence in banks to the general public, Calvin B. Taylor Banking Company recapitalized with 5,000 shares of stock with a $10 par value. That created a capital of $50,000 and a $12,500 surplus.

The new issue stock sold for $15 per share to local people. Former stockholders received one share of new stock for a share of their old stock.

During this time, in one of his famous fireside chats, President Roosevelt told the nation, "I can assure you that it is safer to keep your money in a reopened bank than under the mattress." Depositors believed him and when Taylor Bank reopened, deposits began coming in.

Shortly after the banking holiday, Calvin B. Taylor Bank opened an account with Equitable Trust Bank for check clearing. Taylor Bank was one of the first banks to form this relationship with Equitable Trust.

Due Bills

Cash still wasn't readily available or plentiful and many area residents recalled the phenomenon of "Due Bills." During the height of the Depression, with cash so hard to come by for the average family, merchants also felt the pinch.

To address their cash shortages, merchants often gave change for a purchase in the form of "Due Bills." The privately minted coins, with the names of the business on them, allowed, for instance, for farmers to accept payment for butter in the form of due bills, which they would later use as cash to purchase needed store supplies.

The Depression was an unfortunate time for many farmers. In Berlin, a man's farm went up for sale at an auction on Main Street. W.J. McCabe later told his son Irving that a prominent farmer, Clyde Bassett, placed the high bid. As he did so, Mr. Bassett reached into his truck for a slat and wrote his check upon it, indicating the unsophisticated attitudes of the times.

The Recovery Begins

Calvin B. Taylor Bank, on June 1, 1933, made 75 percent of deposits available to its customers. With the remaining 25 percent classified as deferred deposits, Certificates of Indebtedness were issued to cover the same.

Those certificates were paid off in seven years (12.5% for each of 6 years and 25% on the final year in 1940). The earnings were good, but a good deal of the funds were made through the efforts of President Ernest E. Burbage Sr. and John W. Humphreys, a director.

Both men studied the recovering bond market and invested wisely. Mr. Humphreys is widely credited for working many hours on the bond market to allow Taylor Bank to recover its investments. Several of Mr. Humphreys' worksheets have been preserved by the bank in its Berlin executive offices.

Taylor Bank also, during this time, loaned a neighboring bank, The Bank of Bishopville, funds to help it out of the early Depression years. After the Bank of Bishopville reorganized, it gave stock to Taylor Bank in return for the money advanced.

Federal Reserve System

After the banking holiday, Taylor Bank officials felt they should join the Federal Reserve System. Reese Cropper Sr., Ernest Burbage Sr., and J.R. Phillips drove to Washington, D.C., to apply for membership and made Taylor Bank the first bank to apply for membership after the banking holiday.

That made Taylor Bank a test case for the nation, but the Federal Reserve Board of Governors ruled that no bank with outstanding Certificates of Indebtedness would be allowed to join. The rule was later rescinded and Taylor Bank was asked to join, but declined.

A Full Recovery

As business increased and the need for more employees was evident, the bank hired C. Vincent Holland as bookkeeper and teller in 1934 at $850 per year. He was the fourth employee for the company at that time. By 1936, a fifth employee, Hilda Jackson was hired as a bookkeeper and teller.

In May 1937, at a Masonic meeting in Cambridge, Md., assistant cashier John E. Smith died suddenly of a heart attack after serving the bank for 30 years. He was replaced by C. Vincent Holland.

That year, the bank's assets had reached $1 million. By December 1940, all of the Certificates of Indebtedness had been paid off.

In a letter to the bank's customers, Reese F. Cropper Sr., then the bank's cashier, wrote, "It is with some pride that we have been able to retire and pay in full every dollar that our depositors assigned in 1933, and for which we issued to them these certificates. In order that you may know what we have done, we wish to say the original amount of these Certificates in 1933, was $152,361.23 ... We again wish to assure each and every depositor of our appreciation of the cooperation and support you have given us and trust we may have your continued good will and assistance."

The landmark occasion was celebrated with a dinner party for the directors and officers at the home of William Thomas, one of the original founding directors.

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