Bank runs were not confined to the United States during the Great Depression. In ad 33, there was a massive bank panic in the Roman Empire. It started with the loss of three spice ships in a Red Sea hurricane. The ships were owned by the firm of Seuthes and Son. The rumor spread in Rome that the firm was near bankruptcy. Another important firm, Malcus and Company of Tyre, started to go under because of a strike by its Phonecian workers and because of fraud by a trusted manager. Citizens of Rome learned meanwhile that the Roman banking firm of Quintus Maximus and Lucius Vibo had loaned significant amounts of money to both firms. Depositors started a run on this bank. This run spilled over to a larger banking firm owned by the Pettius brothers because that bank had extensive dealings with the bank of Maximus and Vibo. But the Pettius Brothers’ bank happened to be temporarily strapped for cash because it held many securities issued by Belgium, whose citizens had recently revolted.

Maximus and Vibo closed its doors; the Pettius Brothers suspended operations on the same day. To make matters worse, the Roman senate had passed a law requiring one-third of each senator’s capital to be invested in Italian land. The wealthy senators needed to reduce their deposit balances at their banks in Rome in order to buy land. Finally, word arrived from Corinth and Carthage of bank failures in their towns. A true bank panic hit the streets of Rome. Ultimately, every bank in Rome closed its doors. The panic ended when the emperor, Tiberius, ordered the distribution of a large sum of Roman currency from the imperial treasury to reliable banks, which were to lend the funds to needy debtors with no interest for three years.

Could a similar bank panic end up closing all the banks in America today? Why or why not?