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Great Depression colors seniors’ view of crisis

Marcelle Uptain grew up during the Great Depression, so her response to the recent bank turmoil, the stock market plunge and home foreclosures was simple — take her money out of the bank and hide the cash at home.
Financial Meltdown Elderly
Marcelle Uptain grew up during the Great Depression. Her son recently had to talk her out of withdrawing all her money and hiding it at home.Mari Darr-welch / AP
/ Source: The Associated Press

Marcelle Uptain grew up during the Great Depression, so her response to the recent bank turmoil, the stock market plunge and home foreclosures was simple — take her money out of the bank and hide the cash at home.

Her son had to talk her out of it.

"I have a little steel box with a key and I was thinking about taking my checking account out and putting it in there," said Uptain, 83, who grew up in Alabama and lives at a senior center here.

For Americans who lived through the Depression, the last few months have felt like deja vu. Many of them are pulling money out of the bank, shopping for discounts and warning younger relatives about darker days that may lie ahead.

George Eckhoff, 95, worries the latest crisis could be even worse than the one of his youth because of rising food prices. He gets meals from his assisted-living apartment in Seattle, but remembers the bread lines and bank lines.

"Your food and everything is so high," he said. "I don't know how people will make it this time."

While there are no hard figures available, banking officials say more seniors are asking to withdraw their savings. Sales of safes are up as much as 50 percent in the past three weeks at SentrySafe, the nation's top safe manufacturer.

At the start of the Depression, the federal government did not guarantee bank deposits, so many people in their 80s and 90s recall withdrawing money — or arriving too late and seeing their savings disappear.

That's unlikely to happen today because the federal government insures most individual bank accounts to $250,000. But for seniors like Uptain, that assurance can be a hard sell.

"If you've lived through the Great Depression, you believe it can happen again," said Robert Binstock, a Case Western Reserve University professor of aging, health and society. "This all evokes the era of bank failures in the Depression, and they think burying money in a glass jar is a safer bet."

The collapse of some banks and the forced sale of others helped set today's financial crisis in motion — although it's a far cry from the thousands of bank closures during the Depression.

During the three months that ended June 30, the latest period for which data are available, domestic bank deposits fell by nearly $40 billion, according to the Federal Reserve. They now stand at around $7 trillion.

When IndyMac Bank failed in July, hundreds of angry customers lined up for hours in Southern California to demand their money. And a rush of withdrawals from Washington Mutual Inc. last month put it in an "unsafe and unsound condition to transact business," according to federal regulators, who ultimately seized the bank and sold it to JPMorgan Chase & Co.

Banker Kathy Phillips has spent much of the last two weeks encouraging customers, especially older customers, not to withdraw large amounts of cash.

"The last thing you want people to do is walk around with $10,000 in cash in their pocket," said Phillips, a vice president at Pensacola-based Gulf Coast Community Bank. "We explain the risks of taking it out in cash, try to divert them to cashier's checks, offer to wire it someplace else."

Having lots of cash on hand also makes seniors more vulnerable to theft, and the FDIC does not insure cash that is lost, stolen or damaged in someone's home, said Michael Spivey, a professor of finance at Clemson University.

But some are so shaken by the negative economic news that nothing but cash will do. One man left Phillips' bank carrying $20,000, despite her warnings.

Because survivors of the Depression generally have been retired for years, they have greater concerns for their families than for themselves, said Peter S. Kanaris, a clinical psychologist in Smithtown, N.Y., who has a geriatric specialty.

"It's not so much that it's going to affect them, but more a general anxiety for the well-being of their children, grandchildren and great-grandchildren," he said.

Many of them have passed on cautionary tales to younger generations.

Tom Curtin, 64, a publishing and travel professional in Wilton, Conn., withdrew thousands of dollars in cash a couple of weeks ago. He said his late great uncle used to tell him stories from the Great Depression and warned him to watch out for a crash.

"I think it's a smart thing to do," he said. "I'm afraid there's going to be either a bank shutdown or a bank holiday. If it doesn't get that bad, then fine, I go put the money back in the bank. If it does, at least I'm somewhat prepared."

Others are more worried about food.

While there have been no shortages and no one anticipates rations, 86-year-old Bill Richards, of Newark, Ohio, said he can't fathom how a loaf of bread got to be $3. He and his wife watch for sales and then stock up.

Perhaps most disconcerting is the worry itself. Fran Marshall, 90, of Upper Arlington, Ohio, said her father was an attorney for two banks and fell into a mental depression when both closed during the Great Depression.

He died in a mental institution, she said.

So many seniors are taking the new crisis in stride. As Bob Chapman, 86, prepared to eat lunch at the Milton Senior Center, he said he has been careful with his money and not moved a dollar.

"Taking it out in cash is the worst thing you can do because that will make the banks fail by causing a run on the bank," he said.

Milton native Sanford Perry, 80, agreed.

"You just have to trust the system. It's not something that I lay awake at night and worry about," he said. "The thing that concerns me is that people would take their money out and cause the banks to fail by doing that."