Sharon's Yesterdays & Tomorrow

An Outline of the Growth of Sharon and its Industries....

and a History of the McDowell National Bank, June 1935

History of the McDowell National Bank 

The scope of the bank’s influence extends throughout Mercer County, Pennsylvania, and into parts of Trumbull and Mahoning Counties in Eastern Ohio.  

In no period of financial stress has the McDowell National Bank failed to meet every demand made upon it. This bank’s business has continued without interruption, except for the “Bank Holiday” declared by President Franklin D. Roosevelt, when he entered office on March 4, 1933. Along with all other banks in the United States, the McDowell National Bank was closed. On March 15, 1933, a license was issued to the McDowell National Bank to resume business on an unrestricted basis.  

The present depression had its inception in the stock market panic of 1929. It was due, at least in part to reckless finance and unwise investment on the part of city bankers. The usual aftermath of war also contributed to the depression which has followed quite closely the characteristics of the panic that began in 1873.  

Until August 1, 1931, there had been nothing unusual about banking conditions in the Sharon District except as reflected from widespread bank failures in various other parts of the country.

The failures were caused primarily by the fact that too many banks had been chartered. There were in 1920, 30,000 banks which, with branches, made a bank for every 2800 people in the United States, or one for every 600 families. One Western State had a bank for every 780 people in the State. It was not surprising that many banks failed. In Cleveland and Detroit widespread establishment of branch banks brought failures.  

The great wave of speculation, which culminated in 1929, and the aftermath, had brought about a failure of values which led to the great wave of bank failures during 1931, 1932 and 1933.  

In August, 1931, these failures stuck near home when a bank in Warren, O., failed, followed by failures in Orangeville, Toledo. Alliance and Canton, all in Ohio. And, on October 15, 1931, three banks in Youngstown, O., did not open. There were many failures in the Pittsburgh District, including the large Bank of Pittsburgh. N A.  

A great deal of Sharon money had been attracted to Youngstown by excessively high rates of interest paid for deposits. Some banks in Youngstown offered 5 per cent, and building and loan companies paid 5 1/2 per cent.  

When people in the Sharon District found that they would not get their money in Youngstown, or in some other nearby cities and towns, it  natural that they should make careful inquiry at home. They found the McDowell National Bank ready to pay, and between August, 1931, and March, 1933, this bank paid out more than $1,300,000.00. The McDowell National Bank met all demands until noon on March 4, 1933, although the “Bank Holiday” had begun at 10 A.M. of that day by a proclamation of the Governor of Pennsylvania.  

On Sunday night, March 5, 1933, at 10 o’clock, President Franklin D. Roosevelt made his famous radio announcement to the country, in which he pointed out the financial difficulties of the moment and declared a national moratorium, closing all banks of the United States.  

It was not pointed out then, and no one has laid much stress upon the fact since, that the Federal Reserve Banks were primarily responsible for the closing of banks on March 5, 1933. A “gold rush” had started and the Federal Reserve Banks had been stripped of the supply of gold required to support the circulating notes outstanding at the time.  

Under the then existing law, and under circumstances surrounding the gold supply, no bank in the United States was able to get its reserves from the Federal Reserve Banks. It was, therefore, absolutely necessary that all banks be closed whether or not they were solvent.  

It seems necessary to point to this fact, because, due to a lack of proper information, the banks of the United States have come in for a great deal of adverse criticism. Some of this criticism they, no doubt, deserve, but not to the extent and in the general terms used.  

The McDowell National Bank would have had plenty of money with which to meet the demands then present, and in immediate prospect, had the bank been able to get its reserves from the Federal Reserve Bank.  

Having met the acid test of 1933 and having reopened at the end of the “Bank Holiday”. without restrictions of any kind, it was natural that old and many new depositors should turn to the McDowell National Bank. From March 4. 1933, to March 4, 1935, deposits have increased more than $702,000.00.  

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