Providence, R.I.--I WASN'T ALIVE 57 years ago when another man with a double-breasted suit and an authoritative voice took his oath of office and then shut down the banks. The image, though, of Franklin Delano Roosevelt's decisive action has become part of the national mythology, and it was chilling to be in Rhode Island's capital to hear its new governor, Bruce Sundlun, declare a similar financial emergency.
Words and events not witnessed for generations were invoked in the first days of the new year, as a forced "holiday" temporarily shut the doors on 45 financial institutions, affecting 1 out of every 3 state residents. While 22 small banks and credit unions reopened early last week, 16 of the largest institutions, representing four-fifths of the deposits, remain closed.
The most troubled institutions, Mr. Sundlun said, may repay depositors in "scrip," referring to the IOUs strapped companies and banks issued decades ago in lieu of cash.
He called upon universities throughout New England to come to the aid of young Rhode Island residents by not denying admission to any of them because of checks drawn on shuttered financial institutions. State colleges and many local markets quickly agreed to honor such checks in an act that may have stemmed as much from charity as faith and prudence.
Local diners likewise granted credit to vocally aggrieved patrons, and even the affluent suddenly faced the daunting prospect of requiring a complimentary meal -- or more substantive assistance. Depression-era pictures of men in suits in relief offices became a real prospect.
As some institutions reopened after examinations, the governor urged calm to stem panic withdrawals by depositors. "Have another cup of coffee," Mr. Sundlun suggested. "Your money is as safe as it can be."
But how safe is that? Even healthy banks are unable to repay all depositors at once because money that comes in is lent out. Besides, "healthy" is a world infrequently connected with many banks these days.
Faith is a tenuous thing. Following the Rhode Island closings, rumors sparked a run at a nearby state-insured bank in Fall River, Mass. The promise of federal insurance didn't block the far more serious run over the next weekend at the Bank of New England that forced a dramatic government takeover that could cost taxpayers more than $2 billion.
