The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-01-26
THE SHAKY SAVINGS BANKS.
Cid and New Charters and Their
Respective Results.
Meetings Of the Depositors Of the Market Savings
Bank-Committse Appointed to Investi-
gate the Affairs Of the Institution.
THE RUN ON THE THIRD AVENUE BANK
Paying the Ocean Bank Depositors Their
First Dividends.

Paying the Ocean Bank Depositors Their
First Dividends.
The question as to the condition and general man.
agement OF savings banks has, owing to unfortunate
circumstances become very prominent, and there
seems TO prevail earnest desire the part OF the
public to thoroughly comprehend the situation as It
stands. That feeling OF insecurity has OF late pre-.
vailed among tho poorer classes or depositOrs has
had ample demonstration. Whether the system OF
doing business is well understood there appears TO
be considerable doubt The fact is that great deal
OF ignorance prevails as to the mode Of operation;
and since few institutions have thrown up the
SPONGE so to speak, confused ideas naturally take
possession OF those whose sudden reverses have
naturally induced feelings OF excitement. But in
order to know the OF affairs 1t Is necessary
TO CONSIDER the laws which govern the institutions
In question. representative OF the HERALD
visited yesterday many Of what are termed the old
savings banks whose charters were passed, in some
instances over twenty years ago. From converse
lions with several OF the officers It would appear
that the
STRINGENT LAWS ORIGINALLY ENACTED
for their guidance are strictly adhered to- and
hence their security and comparative prosperity.
The case Of COnklin, of the Market Savings BanK
furnished the text for inquiries, and in reply
to the question as to whether the Investment OF
money was placed In the hands OF an individual,
and whether by any dexterlty he could mlsead the
trustees it was stated generally tnat no money
could be invested except by the affirmative
vote OF at least OF the trustees out OF quorum
OF ten, while some OF the banks have rules that no
money can be invested where securities are below
par without tw0-third vote. The old banks were
restricted from doing discount business, which
for W
banks; but recent Legislatures have been much
more liberal in granting charters to the new nsti-
tun0ns. Discountlng, however, seems to be outside
their province, not little risk was involved by
that method Of procedure. Although many OF the
new savings banks in this city are regarded with
decided confidence 1t appears that all the instiLu-
tons which have caused so much
CONNECTION AND INDIGNATION
were doing that description Of business. The old
charters distinctly prohibited the discount trade,
but the Legislatures for the past years have not
been quite 50 stringent in their requirements. In
his annual report on savings banks FOR last year
the superintendent, among other things, sets forth
that, as 1t Is tmpractlcable to apply to savings
banks the requirements as to security Of Invested
capital and stock deposits In the Bank Department
which are applied to banks OF discount and circula-
ton, and in q degree to other financial institutions
the duty OF the State becomes the more imperative
to provide with jealous such safeguards for the
protection OF depOsltors are practicable. Again
the ndlscriminate multiplying Of certain class OF
savings banks such as characterized the legislation
Of the last lew years, Is considered most
IMPOLITIC AND HAZARDOUS.
The superintendent went on to show that the
competition for business to which that policy Inevi-
taby tends results In diminished security to deposit
TORS growing out OF the greater risks incurred in
doubtful investments in order to meet the higher
rates Of interest promised them. The old charters
limit the investments or the savings banks to which
they were granted, and distinctly define the charac-
Of the bonds in y(ucn these banks are to invest
They restricted from investing at o higher figure
than ninety per cent OF the cash value OF such bonds
and providing where such bonds are depreciating
that measures be taken to secure the depositors
The bonds In which the old banks
are allowed to invest were only those
issued by the United States government State
stocks, bonds and mortgages, and county bonds
issued under the laws OF the State, and city bonds
authorized by act Of the Legislature. That many o;
the new savings banks follow that wise provision
there Is no reason to doubt but 1t is
THE DISCOUNT BUSINESS
that has generally caused unfavorable comment
1t Is thought that to insure vlgilant the BUSH
ness OF savings bank should be disconnected from
all other business. The Superntendent's report
says:--"When operated in connection with bank
or insurance company the interests Of the savings
bank are almost certain to be made subordinate,
as at times they are opposed to those
OF the institution assuming the conduct OF
Its AFFAIRS, and the laxiIy on the part
of its proper guardians engendered BY this relation
only intensldes the evil" Now, 1t appears that
Legislatures Of the past two three years have
been very liberal in their provisions, and some but
not all, Of the newer banks are allowed privileges
~itot
the recent Developments Will doubtless cause
WHOLESOME REFORM,
and 1t Is expected that the present Legislature will
be more stringent than It's immediate predecessors
The older banks generally are In favor of careful
legislation. In making inquiries yesterday IL ac-
pears that many OF the banks have become so
cautious that they nave had their mortgage pro.
perry examined by special committee, and In
cases where the property has decreased In value
loans have been called in. feeling of annoy
ance is experienced in the older Institutions
ut the recent failures, as they have tended
to create uneasiness among depositors generally,
although there Is no foundation for the slightest
apprehension so far as the savings banks whose
charters provide almost entirely against loss are
concerned. In the old banks the interest generally
averages six per cent, which allows them to &C
cumuiate surplus, which Is distributed In the
form OF an extra dividend. Some OF the institu.
tons are prohibited from receiving more than
! $1,000 as deposit from one person, but Others
have had their charters managed TO allow the re.
| ceiving OF q much larger amount. However disas.
| trOus
THE RECENT FAILURES
have been, 1t is sincerely hoped that they will prove
a warning the future. Careful and judicial legis-
ation in regard to savings banks Is demanded, ana
the law cannot be TOO stringent that Will protect
the hard earnings OF the poor Below will be found
meetings OF the depostors Of the Market Savings
Institution and details OF the run on the Third
Avenue savings Bank.