Selma, Ala., is truly a place of living history. But this town also tells a contemporary story -- about the risks to bankers and a community's own health when political controversy spills over.

Signs everywhere tell about the Battle of Selma in 1865. Until that Civil War fight, Selma was the second-largest industrial center for war material in the South.

Far more current are references to the famous civil rights march of 1965, the confrontation at Pettus Bridge between marchers and Gov. Wallace's state troopers, and the successful conclusion at the state capital. The march led to passage of the federal Voting Rights Act of 1965.

Delayed Effect

But the raw wounds of history heal slowly.

Rex J. Morthland was president of Peoples Bank and Trust Co. of Selma at the time of the march.

He told me on a recent visit that when he wanted to run for president of the American Bankers Association in the early 1970s, he was advised by some banking leaders not to.

Why not? Because he was from Selma, and that would hurt his candidacy. (Mr. Morthland ran anyway, won, and served with distinction in 1973 and 1974.)

But racial confrontation is not just a history-book issue in Selma today.

The city had a highly publicized conflict just two years ago, when its school board declined to renew the contract of a black school superintendent.

The board hired a replacement, who was also black.

Though the school board itself was half black and half white -- as is Selma's population today -- a group of black people fought nonrenewal of the first official's contract.

These wounds are still open in the community.

Before the controversy, the high school was 35% white and 65% black.

Today the student body is about 85% black. Most whites have moved their children to private academies or other school districts.

These parents acknowledge that those other schools lack the resources to provide the quality of education the Selma public schools used to offer. (The community's public schools have produced two Rhodes scholars.)

The losers, then, have been children of both races, as well as Selma's image.

Caught in the Middle

What has this to do with banking? Plenty.

Peoples Bank has been a family-run institution since 1934.

Henry Plant Sr. became president in that year. Rex Morthland, with a PhD from the University of Chicago, gave up an opportunity to teach and came into the bank after marrying Mr. Plant's daughter. Richard P. Morthland, the current president and chief executive, is their son. And a fourth generation will join the bank this summer when Richard's 22-year-old nephew comes aboard.

It is a true family and community bank. The largest single block of stock is owned by the family; the bank has 40% of the deposits in town and has a preponderance of the business of the black community.

Peoples emphasizes its Community Reinvestment Act obligations. Rex Morthland, now chairman emeritus, has been asked to serve on the Alabama advisory committee of the U.S. Commission on Civil Rights. Those involved in the bank have had a tradition of community service.

And when the recent confrontation broke out, Richard Morthland's sister, Edie Morthland Jones, was chairwoman of the school board's personnel committee.

Boycott of Peoples

Mrs. Jones had no connection to the bank apart from her family relationship and some stock ownership. But those protesting nonrenewal of the first superintendent's contract nevertheless led a black boycott of Peoples Bank, because of Mrs. Jones' family ties.

To a bank that had truly tried to serve the entire community and whose leaders had been deeply involved in the fight for racial integration in Selma, this was unjust.

As matters worked out, the bank stood tall.

I was told when I visited Selma last month that during the boycott's first day, the bank had a net inflow of deposits from black customers.

Rex Morthland told of one black man making a deposit who was reproached by a boycott leader as he came into the bank.

The customer responded, according to Mr. Morthland: "These are my friends. They lend me money. If I leave the bank, will you lend me money when I need it?"

Impoverishing a Town

The tragedy is that if a bank must bear the brunt of every confrontation just because it is there, or because community leaders have a bank connection, bankers will be discouraged from helping their towns.

They may fall back to considering only narrow bank issues, issues that are not politically controversial.

The community would be the loser.

What makes this worse is that towns like Selma need all the help they can get.

Downtown Selma has many empty stores -- the result of closing of the local air base, loss of jobs when local companies were bought by outsiders who moved headquarters away, and the building of three malls on the edge of town and the growth of discount stores.

Those chain retailers draw business from local stores and, as far as banks are concerned, hold cash receipts locally only as long as it takes to wire the money out of town through the automated clearing house.

I took part in a radio talk show as part of my visit, and most questions from callers were about how to create jobs in town.

My answer was that, first, a town must have good schools and a healthy environment.

The Morthlands promise to remain active in their community, despite the boycott.

But one may hope that Selma's leaders, of both races, will learn that the future is endangered when people are chased from community service by threats to businesses.

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