Throwback to the Thirties–A Run on Banks

March 18th, 2013

Sometimes I wax nostalgic for the “good old days” and yearn for a replay of some old favorites from the past.

I’ll admit I’m a sucker for anything “vintage.” It may not even be the real deal. Just throw the word “vintage” on the label and I’m there.  I love watching period films and television shows with the beautiful clothes and the cool old cars. Right now, I’m torturing the family with my obsession with Downton Abbey (although I must admit I’m distressed with some recent developments on the show—if you’re a fan you’ll know exactly what I’m referring to).

This doesn’t mean, however, that everything about the past is all that wonderful.  Here are a few examples of things not worth repeating:  the Black Plague, corsets, stocks in the public square, and pretty much everything you could eat back in the day.  After spending some time in Colonial Williamsburg and trying out authentic recipes from that period, the only positive result I could see for me personally living in that era is absolute weight loss.  Sadly, this would also culminate in my death from starvation.

Include among these golden oldies not worth repeating is a run on banks.  For those who weren’t around during the thirties and haven’t seen the scene in It’s a Wonderful Life when George Bailey has to hand out all the money he’s saved for his honeymoon to save the Bailey Building and Loan after a run on it by the locals, a run on the bank is when depositors fear the safety of their money in the bank and make a mad dash to withdraw it.

Such was the scene this weekend on the tiny island of Cyprus when the EU decided to save the Cyprus banking system by infusing it with euros.  The trade-off was that the banks would levy a ten percent tax on the money each depositor had in the bank.  Before that ridiculous policy went into effect, people lined up at banks all over Cyprus to get their money out.

Photographs of the event looked very much like pictures of the United States during the Great Depression. The only difference was the shorts and flip-flops worn by current day depositors as they stood in line at the bank waiting for their cash.  Back in the Depression era, people had enough pride to at least get dressed up for the occasion.

The fear is now that if the EU persists in this idiotic policy, other countries like Spain and Italy will be the location of similar scenes.

Two questions immediately come to mind.  First, if you take your money out of the bank before the government confiscates part of it, where do you put it?  Sticking it under the mattress is another relic of the past.  Granted, I don’t think it’s the first place a thief would look because it’s so obvious.  Still, you wouldn’t sleep well knowing it was there.  You wouldn’t sleep well anyway.  Money can make your mattress pretty lumpy.

Alternatively, you could stick it in your gun vault.  The way gun laws are going, you’re likely to have plenty of room there.  Again, though, there are drawbacks.  Vaults are the first place crooks look for cash.  It’s kind of ironic when you think about it.  You purchase the vault to keep valuables safe, and then you know that when a burglar enters your house, the first place they’ll look is precisely the place where you hid all your valuables for safety.

The other important question to ask is whether or not this sort of policy could happen in the United States.  I wish I could say no, but truthfully anything is possible.

What we can do is try our best to avoid this disaster.  Hopefully, the foolishness of Europeans in this regard will be a strong anecdote for us to avoid repeating their mistakes.

I’m not terribly hopeful though.  We seem eager to follow their path in every other regard.