STAY calm, don’t panic. The Northern Rock bank is not bust even though it has had to be propped up by the Bank of England -so say the government and City bigwigs, writes Richard Woods.

But as millions of people digested these messages late last week, a deadly logic took hold. If everything was fine, then what was wrong with nipping down to the nearest Northern Rock branch and removing deposits to some other, perhaps safer, bank?

Queues swiftly formed outside branches, and yesterday they were even longer than the day before. In Leeds more than 300 people queued at one branch. In Golders Green, north London, 250 people were waiting by mid-morning; when the branch closed at 2pm, scores still queuing hurled abuse at bank staff. Police had to placate the angry crowd, some of whom said they would return tomorrow morning.

In Newcastle, where Northern Rock has its headquarters, Mary Bowman, 72, had fretted all Thursday night about the security of her savings. “It’s our burial money and everything,” she said.

In Sheffield one woman, out to withdraw her savings, said: “The captain of the Titanic said there was no need to panic and look what happened there.”

Nancy McDougal was trying to withdraw money in Edinburgh. “I hadn’t intended to,” she said, “but the panic sets in . . . with all the television, the panic spreads.”

Even in the City of London confidence evaporated. Arthur and Sheila Smith arrived at the Moorgate branch to withdraw all their money. “We are elderly and this is our life savings,” said Sheila. “We can’t afford to lose it.”

Deposits up to £35,000 are protected by the government’s compensation scheme. But in Gloucestershire Christopher Howard, a former hotelier, went to a branch and demanded the £1m he had deposited. He was told he could not have it because it was in an online account, so he threatened a sit-in - and the police were called.

But not everyone was concerned, particularly the young with modest savings. Tony, a young man outside a Northern Rock branch in Kingston upon Thames, southwest London, was positively bullish. “It’s just stupid,” he said. “It’s perfectly safe. If I could get in there I would get some money out and buy some Northern Rock shares. They’ve come down from £12 to £4.”

Unfortunately, the queue was long. Depositors have already withdrawn more than £1 billion. Whether there would be any cash left by the time Tony got to the front of the queue was what was worrying most other people.

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