A bank run occurred in Taipei 80 years ago.It started on April 18 and the Bank of Taiwan suspended operation on the same day.

Another bank run, the first in eight decades, started in Taipei last Friday.Depositors withdrew more than NT$13 billion or US$400 million in cash from the Chinese Bank in one day.The Financial Supervisory Commission was forced to announce the Central Deposit Insurance Corporation would take over the bank, an affiliate of the Rebar Asia Pacific group.Central Deposit Insurance would inject NT$30 billion to cope with a new run that is expected to take place this morning when the bank opens.

Friday’s bank run differed from the historic one in some ways.

The Bank of Taiwan then as now was a government bank.It issued banknotes throughout Japanese occupation of Taiwan and continued to do so until the Central Bank of China took over that operation.It lent Suzuki Shoten, a sugar-trading arm of the Suzuki zaibatsu conglomerate, more than four million yen, taking special promissory notes as collateral.The promissory notes had been issued by the Japanese government to bail out major drawers of bills who lost their bank collateral in the Great Kanto earthquake of September 1, 1923.

The Chinese Bank is a private financial institution, which went under mainly because of the failure of two subsidiaries under its parent Rebar group.The two subsidiaries, China Rebar and Chia Hsin Food and Synthetic Fiber, claimed insolvency protection one day before on Thursday.

The run on the Bank of Taiwan kicked off a financial panic seizing the whole of Japan.The bank was reopened on May 9, after the Diet had passed a special financial compensation act to bail it out.The act authorized 200 million yen in credit to the bank to tide over the crisis.

We hope the government does not have to go to the Legislative Yuan to beg for a bank bailout. It may.The Financial Supervisory Commission had taken over the troubled Enterprise Bank of Huanlien a mere six hours before the Chinese Bank takeover.Depositors in other private banks suspected to be in trouble may panic in sympathy to run on theirs.The financial panic may seize Taiwan, just as the run of the Bank of Taiwan triggered the nationwide one in Japan in 1927. Of course, we don’t wish the Japanese episode would be repeated in Taiwan, but the government must heighten its vigilance.