The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1872-01-25
Or Savings nanIks, National Banks and
Insuranoe Companies.

| naturally 20 inquiries ABOUT the character,
status and operations of such establishments
generally. II the savings banks, or some Of
them, are found to be In an unsound condition
in time of peace and general prosperity, what
might be expected IL financial revulsion
should Gomez No one deposits his money in
them with an idea that he is depending upon
contingencies, but expects 1t will be safe under
all and any circumstances and 1t ought to be
So The depositor has not, however, any
control over 1t after 1t passes into bank,
and he has to rely upon the character
of the bank managers and the laws regu-
lating such institutions. These banks,
therefore, should be 80 hedged about by the
| safeguards Of law that loss to the depositors
would be impossible. The savings of the peo-
ple-of the working classes-placed in these
banks are too sacred q trust to be contingent
upon accidents, or, at least, upon the ordinary
| accidents of commercial business. We can
conceive of no greater crime, morally con-
| sidered, than that of robbing the working
classes of their hard-earned money through
Incorporating 1t or through the dishonesty
or mismanagement Of bank officers.
We would not create any unnecessary
alarm about the stability of the savings banks,
and are willing to believe the greater part of
them, in this city at least, are perfectly sound.
General alarm and run upon the banks
might be disastrous to the depositors as well
as the banks, even where there may be
ample resources to meet all demands
But the possibility of such state
Of things under excitement or financial
revulsion from any other cause, and
the facts which have lately been
brought to light with regard to the bad or
doubtful condition Of several of the banks, call
for thorough investigation of these institu-
tions. The vast number of savings banks and
the great increase of them of late might sur
prise those who do not understand the facility
with which they are established. No capital
! Is required-that Is, scarcely any more than
| an Insignificant sum to fit up Offices and to
advertise. The people supply the capital.
From the start the servant girls, mechanics,
laborers aud others Of the Industrious classes
pour in their little earnings, which soon swell
up to large amount. Generally there are
some men of capital associated with these
banks, or who lend their names as directors.
to give character to them and to inspire conf
dence; frequently, however, those who work
them up and take the management are without
means. 1t is easy enough to commence
and carry on such a business with the
money furnished by the depositors.
Too often men who stand high in
the community as capitalists lend their
banks when established, without any real or
substantial interest in them. This is wrong,
and deception practised upon confding peo-
pie. All whose names are thus put forward |
to induce people to become depositors ought to
be both men of ascertained wealth and respon-
sble to the full extent of their means for the
deposits. The nature of savings banks in
vestments should be defined by law, 80 that
they might be always safe, and a sufficient
margin allowed for accidents to prevent loss
under any circumstances, and any infringe
ment of this law should be made criminal.
A large class of insurance companies, par
ticularly the life insurance companies, are
much on the same basis and in similar con-
dition to the savings banks They, too, have
sprung up lately like mushrooms in night
They are to be seen everywhere in
the principal business part of this city.
In some parts almost every building is
occupied by insurance offices. They own
some of the most superb structures in the
city. They require no capital to start with,
except what little is needed to fit up Offices.
The insurers supply the money from the be-
ginning and all along. Yet, without capital to
begin with, and with the most costly and ex-
travagant system Of paid agencies, and most
lavish expenditure in buildings and salaries for
numerous employees, these institutions multiply
and flourish like tropical vegetation. For twenty
years or so the life insurance companies will
be receiving q continual stream of money from
insurers, and little, comparatively, will be
paid out; for the mass of those insured will
live over that period. But as somebody has
to pay for all the cost, including twenty, thirty
or more per cent to agents for drumming
up customers there can be no question as to
who supply the money. Is this a healthy
state of things2 Unless the life insurance
business be capable of expansion dd infnitum
on the enormous scale of its pr ogress within
few years there must come day when
the payments will exceed the receipts. Such
unlimited expansion seems impossible. Will
the companies have realized and husbanded
| capital enough to meet future demands? This
is the question. Then, should a great fnan-
cial crisis come, would they be in situation
to bridge over that? These are questions
which the legislative bodies of the country
ought to consider, so as TO avert evils which
are threatened by the extraordinary increase
OF companies built upon no other capital than