The Fall of the Commercial Banking and Trust Company

In late February and early March of 1933, the country stood at the edge of a precipice of a national crisis. President Herbert Hoover was in his last weeks as President, and Franklin D. Roosevelt was poised to take the oath of office. Across the nation, confidence in the banking system was falling rapidly, and there was concern that panicked citizens would rush to the bank to withdraw all of their holdings and that banks wouldn’t be able to meet the demand for cash. In late February, the governor of Michigan declared a bank holiday in order to avoid a panic, and caught the attention of the entire nation. On March 5th, 1933, one day after taking the oath of office, President Franklin Roosevelt declared a four day national bank holiday, in order to stabilize the country’s banks. All financial transactions were halted, and businesses and individuals had to work with cash on hand in the interim.

In order to reopen after the bank holiday, every bank in the country had to prove it had sufficient funds in reserve to cover all of the funds on deposit. On March 15th, ten days after the bank holiday was declared, two Sandusky banks, Third National Exchange Bank and the Citizens Banking Company reopened their doors for business. The Commercial Banking and Trust Company waited for permission to resume business as usual.
Days passed without any word on the fate of the bank until the March 25, 1933 Star Journal announced that the Commercial Banking and Trust Company was coming back bigger and better. Plans were to reorganize the bank and open branches throughout Erie County, with capital stock of $300,000. The new bank was to be known as the United Bank of Erie County.

On May 30, 1933, the disappointing news that, after weeks of effort, it was impossible to organize the Commercial Banking and Trust due to the amount of money needed to provide working capital. Thus it became more important than ever to go ahead with the planned United Bank of Erie County. Plans to liquidate the Commercial Banking and Trust were outlined in the local newspaper. On June 15th, plans for a new bank were dashed when the Glass-Steagall bank legislation was passed. The Glass bill required newly organized banks to have more than $625,000 in capital and surplus, more than double the figure that had been planned for the Erie County bank. On Saturday, July 21, the bank was taken over by the state superintendent of banks. Depositors were requested to file proofs of claim before November 30th.

Eventually, the matter of the bank liquidation ended up in court, and dragged on for years. In March, 1941, the building was finally sold. In November, 1941, it was announced that depositors would receive a final dividend of 21.65 percent. In the intervening years, the bank paid out sixty percent of the claims of depositors, totaling $1,771,377.39. It also charged off $1,336,106.30 to loss.

Depositors of the bank faced real losses. Claims under $100 were paid a flat ten dollars, a substantial loss in 1941. The money was tied up for years as the liquidation process played out. The keys to the building were handed over by the liquidator on January 2, 1942, and the final report was filed February 26, 1942.

In the meantime the Western Securities Bank moved into the building that the Commercial Banking and Trust Company had constructed in the early 1920s. The Western Security Bank was located at the corner of Columbus and East Washington Row until it relocated in 1974.