The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1874-01-31

bonds is legal one, whether the modes and
forms prescribed by law have been fulfilled,
and whether the financial status of the mu-
nicipality is still good. If issued by railroads
he learns without difficulty what given road
opens up, what are lis chances for business
both local and through, what are its connec-
lions by sea and land. what competition is to
be encountered, what population, wealth,
and freight movement there are now, what
chances for growth offer, what minerals, lum-
Der, water-power, and surplus agricultural
products are on the line, what are the terms
in mortgage of which the bonds are pledge,
whether the laws of the State and the decs-
ions of the courts protect the bondholder full
ly, who the men are that have the enterprise
in hand, whether they have any business
record and character, whether they are at
hand or are far away in distant States and
communities. The books of the road are
open. The buyer of the bond can without
serious labor or loss of time inspect both these
and the road itself.
Under these circumstances that reckless
ness that has marked the issue of so many
Western railroad bonds has been an impossi-
bity in New England. 1t is a legitimate re-
suit of the facts in the case, that of the
bonds which have played so important part
ia raising the $500, 900, 900, more or less, ex-
pended on the railways of this section, next
to none have proved bad. Only two railroads
now stand in default upon the current finan-
cial record, and in both these cases trouble
has cone from unskillful management or I'M
fortunate litigation and not from intirmity in
herent in the enterprises themselves. :
1t is to be especially insisted upon that New
England bonds, as already observed, do not
pay high rates of interest This is at once
cause, an incident and consequent Of their
safety. If there is any law that has become
firmly established by financial experience, or
rather that is grounded in the nature Of
things, it is that high rates of interest and
unquestionable security do not 60 hand in
hand. Such rates in fact are not payment
for the use of capital; they are Insurance
against risk. At the same that they offset
the risk they increase it. The Western bond
that offers ten per cent, will, OF course, rep
resent it as simply louder call for means.
The judicious investor will not forget that such
call is one that vitiates and imperils the Sc
curity. He may not condemn the bond, but
he will at least demand extra proof of its
soundness. In short New England bonds are
safe---as whole pre- eminently safe, in COM
parison with those of any other section of the
country.
What we have to say in practical applica-
ton of this discussion is this, that the invest
ment of the funds of the savings banks of
Maine in distant and hazardous securities
should be prohibited. There is no need of
such investment. They can find use undoubt-
eddy safe and literally remunerative nearer
home. The line must be drawn somewhere.
It would be safe rule that such funds shall
not be placed outside of New England. These
funds should be located where they will be
beyond question secure; where at least the
nearest approach to absolute safety can be
made. individuals may take such risks as
they please. The managers of savings insti-
buttons have no right to take risks.
Further than this, it is hardly less strenu-
OuoiJ w NC insiSeCu uPoAi ohoe SAVINGS Oc%un
moneys shall be as largely as possible planted
where they will make employment for the IA
Dor that produces them-at home Individu-
ais may invest their money where they choose,
irrespective of public considerations Savings
banks that are established for the benefit of
the community, that gather their resources
from the workers of the community, cannot,
ia locating their funds, ignore the claims of
the community as interviewer with and in
volved in those Of the individual depOsitor.
This is the true policy tor both the banks and
the depositors in period of years.
Approaching fully the desirableness of the
smallest possible legislative interference with
those departments or creations of the State
which make SO close approaches to being prac-
tically pure business institutions, we are yet
prepared to say that, in our own judgment,
the savings banks of Maine should no longer
be permitted to invest outside of tho New
England states. In this rule there will be
safety. There will be in practice no hardship;
and there will be great, positive and substan-
tal advantages for our home communities, in
industrial and social respects.