CRASH CLOSES BANKS; SOME WEATHER THE DEPRESSION

More than 500 banks went out of business from July 1, 1928, through June 30, 1929, in what was described as one of the greatest periods of prosperity in the 1920s.

And prosperity it was, compared to what was to come in the United States. On Oct. 24, 1929, the stock market crashed in what was to become known as Black Thursday. Thousands of people lost huge sums of money as stock values plummeted far below the prices paid for stocks.

From January 1930 to March 1933, prices of industrial stocks fell about 80 percent. Some 9,000 banks failed, wiping out savings of millions of people.

"Banks closed down overnight," said Inez Smith, a retired school teacher. Smith, of Cape Girardeau, was teaching school at Clarkton, Mo., when she learned of the closure of one of Cape Girardeau's notable banks Sturdivant Bank.

Smith's father was one of the losers when the Sturdivant Bank, which was founded in 1866 and was the first local bank in Cape Girardeau, failed to open its doors on Nov. 7, 1932.

"My father was an attorney in Cape Girardeau," said Smith, one of a family of three sisters, all of whom entered teaching. "We have good reason to remember when Sturdivant Bank closed."

Earlier in 1932, B. Hugh Smith had completed a complicated law case that netted him about $2,500, a large sum of money in the early 1930s.

"My mother, Bess Smith, urged Dad to spread the money around to two or three different banks," said Smith. "A lot of banks had closed and mother was very concerned."

But Hugh Smith had always banked with Sturdivant, and "felt safe with the Sturdivant Bank," said Inez Smith. "It wasn't long after that until the bank failed to open."

Still, Smith and some other Sturdivant depositors were more fortunate than some in the country. "Dad did get some of his money back several years later," said Smith. "I don't know how much, but it wasn't a total loss."

It wasn't until a decade later that final settlements were made to Sturdivant Bank depositors when a payment representing 5 percent was made.

On December 12, 1944, former depositors received a final 5 percent payment from the bank. Depositors overall received from 25 to 35 percent of their money back, but all settlements fell far short of customer deposits.

Inez Smith said she was fortunate to be paid cash for her Clarkton teaching job during that era. "Some nearby schools were being paid in money warrants," said Smith. "Teachers could cash them, if money was available, but only if they needed some money."

There were several banks in Cape Girardeau County by the time the Depression deepened.

Some weathered the economic breakdown. Cape County Bank (now Capital Bank), even acquired a couple of smaller operations People's Bank in 1928 and the Bank of Pocahontas in the early 1930s.

"We tried to make good loans and offer good services," said Edwin Puls, who joined Cape County Bank in the 1940s and is now its chairman emeritus.

Farmers and Merchants Bank of Cape Girardeau was founded in 1904, and made it through the Depression. Farmer's and Merchants remained on the Cape Girardeau scene until 1982, when it sold to Boatmen's Bank, headquartered in St. Louis.

First National Bank, which was chartered in 1989, and Jackson Exchange Bank, which was founded in 1894, both survived the Depression. First National sold to First Union Bank in 1973, which later was purchased by Centerre Bank, which eventually merged with Boatmen's.

Jackson Exchange continued operation until 1992, when it closed due to financial difficulties. Depositors of that bank, First Exchange, were more fortunate than depositors of the 1930s Depression era.

The Great Depression caused many changes in the U.S., including increased federal control over banks and the stock market.

The Federal Deposit Insurance Corp. was founded in 1933, and insures the deposits of about 97 percent of banks today.

"That's one of the good things that came out of the Depression closings," said Puls. "The FDIC gave bank customers protection. People have more confidence in banks now than ever before."

The FDIC insures individual depositors for up to $100,000 each.

In 1932, however, there was no government protection of accounts. Failure of the Sturdivant Bank was blamed on "frozen loans" loans that could not be collected because of depressed conditions.

The banking industry in 1992 60 years later is healthy, statistics show. The 1992 banking business netted record profits during the first three quarters of the year, and, when all the totals are in, they will almost certainly surpass the annual record of $24.9 billion set in 1988.

During the first nine months of 1992, banks earned $24.1 billion, according to the General Accounting Office.