There is one other thing I would like to mention about bank runs, and it provides a peculiar connection to the Federal Reserve. In the early 20th-century, there was a banker in Utah named Marriner Eccles. He was the son of a polygamist lumber magnate named David Eccles, who made his fortune illegally cutting timber on huge swaths of western Federal lands, then bribing local officials to produce the proper signatures and paperwork when questions arose. When this failed, he bribed Federal Judges to throw trials. Anyway, son Marriner used his inherited wealth to purchase numerous banks in Colorado and Utah, and in the aftermath of the great stock market crash of 1929, he built his reputation based on his methods of dealing with bank runs. When Marriner sniffed a bank run coming, he would arrange for large bundles of cash (in small denominations, so there were many bundles) to be delivered and he would deliberately truck this cash straight through the waiting crowd in the lobby just prior to the bank opening. Marriner would then stand in the lobby making a great show, grandly announcing that the bank had plentiful reserves of cash, and that anyone who wanted their money would get their money even if he had to keep the bank open late into the night. On the second day, he would do the same thing but would instruct his tellers to count out each customer’s cash as slowly as possible, dragging out each transaction and minimizing the number of customers who could withdraw their money. On the third day, he would arrange for “plants” to stand in the Deposit line, so that when customers entered the bank they would see people cued-up to deposit, not withdraw, cash. Please note that each and every one of these techniques was a deliberate deception- a psychological ploy to fool people into thinking that the bank really did have all their money, which of course it did not. These tricks were nothing more than a ploy to hide the dismaying truth that the bank had lent out their money long ago, but the grand show would fool people into thinking that the carefully saved value of a lifetime of hard work was far less at-risk than it actually was. Marriner Eccles gained a national reputation during this time, and in a few years would be named Chairman of the Federal Reserve. Today, the people who go to work at the Federal Reserve Headquarters in Washington D.C walk through the doors of the Marriner Eccles building, a grand structure named for a man whose reputation was built on tricking and deceiving people about the genuine risk of losing their hard-earned life savings... and the greater the risk, the more elaborate was his deception to hide it. Somehow fitting, don’t you think? ~ author, Pining4 courtesy Robert Busser
Posted on: Tue, 22 Oct 2013 03:30:10 +0000
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