The New York herald., 1875-11-20
THE PEOPLES SAVINGS
Recent Legal Restrictions on Their Investment
by the Banks.
SHALL THE INTEREST BE CUT DOWEt
Movement by Brooklyn and New York
Banks in That Direction.

of Boston net and took action looking TO combinEH
movement on the part OF the institutions they repre-
sentcd reduce the rate Of interest to be paid TO
dcpositors This action met with little encouragement
in this State until few days ago when all the savings
banks OF Brooklyn with one single exception, met
and resolved reduce the OF interest to be paid
TO depostors after the 1s Of January to Ave per cent
provided the banks OF New York will join them In the
movement In support OF this rather conservative
policy the nnanccrs agree that it is the only
safe mode OF getting around perplexing difDculy-
viz, the placing OF new deposits where the banks
realize sufficient profit return the dcpostors sx
per cent They maintain that no channels of invest
mcnt are open to them whereby they earn six per
cent that they are restricted by the or last May to
investments in governments, city and county bonds
and loans real estate and that with government five
per premium OF fifteen per cent six per cent
governments selling at from 12l to 123, New York
State six per at liz TO u.s. city, county and town
six per cents at about 1o1H, and Brooklyn six per
at los Il 1905, all the Of investment at
a point that will realize six per cent per annum are
closed to them. The only resort left them s mort
cages and these securities not available. Money
is plenty in the hands Of private capitalists that ali
good mortgages are taken up offered.
THE FEELING AMONG HBw YORK BANK OFFICIALS.
With view Of ascertainns the feeling of the officers
of prominent New York savings banks az TO the pro.
posed reduction Of per cent in the of interest,"
the writer yesterday visited number Of institutions
between the Battery and Fourteenth street and in
every instance found these officials in favor the pro-
posed reduction The Secretary OF the Bond street
Savings Bank while declaring that he knew not wha.
action would be taken by the banks OF this city, dis
closed that the movement calculated protect the
interests of the dcpostors and the banks we'll The
banks find great difficulty in placing their surplus
funds where they realize six per cent except in
Of loans on bond and mortgage Upon these they
realize per cent and consequently pay de-
positors six per cent, but in the case where bank
has heavy surplus hand seeking profitable
owing tho udicious restrictions of the law its rus-
tees will experience difficulty. He in favor OF the
proposed reduction a conservative measure that
would benefit all parties directly interested.
An officer OF the Dry Dock Savings Bank declared
that the banks would be compelled to take such
action as that proposed Real estate had experienced
such a shrnkage that parties seeking money mort
gage wanted than the banks could safely advance
and consequently it was impossible in the OF new
deposits surpuses on hand to place them where the
bank could realize per cent upon its advances
The old banks which had invested in certain lines OF
securities that still bring them in per cent in his
opinion could the difficulty by regulating
their dividends but with young banks II would be diff
cult to do
banks in the Bowery expressed his approval Of the
movement "The first duty" said he, "of the trug-'
OF banks for savings is to comply with the letter
and spiYit OF the law, which is seldom wrong. The
second duty is to protect the interests OF dcpostors
they protect the interests of the banks of which they
trustees The act Of last session restricting to
certain classes of securities is good one, although
there are trustees who think thoy should have certain
latitude in the way of accepting risks. Our bank can
afford TO stand its merits aud ignore this proposed
combination in the interest Of a reduction but all
savings banks and all dcposors interests closely
identified that no wall Of partition be drawn be-
tween the trustees and the dcposors The former are
merely the guardians Of the latter the executors or
ara the guardians Of the minors named In a.
will. Their Interest cannot be separated so long as
the trust continues. II becomes question here for
consideration whether the trustees shall divorce them
selves from the depostors aud they shall act at cross
purposes. Their interests, certainly, are Identical
If ono suffers the other suffers. am IN favor Of
concerted movement on the part OF all the savings
banks TO reduce the rate OF interest 10 Ave per cent,
but speak merely an individual who has read the
papers and Il familiar with the financial problcm.V
Mr. Brown the President OF the Bowcry Savings
Bank OF the veteran institutions OF the city,
planned his views fully He discussed the financial
problem at length the relations between trustee and
depogitoT and expressed the belief that there
necessity for concerted action the part Of the banks
Of Brooklyn ard New York. their lines OF securties
own interests and those Of It's depostors by ndivduaE
action In the case OF the bank OF which he was the
head he said they had invested heavy surpluscs at
time when governments and other securities
at a low premium, and consequently they were
enabled by dividends to prontaby treat with deposit
tors Yet those young banks that had no such advan-
tages and had good run OF deposits would have diff
Guilty In placing the deposits Of their patrons where
they could realize sufficient 10 justify general interest
rate of six per cent. MT Brown stated that he was
not OF any contemplated union OF the banks OF
the city with view Of faugmenng the rate OF interest,"
and he intinated that his bank would act alone and
make the best dividends could in the interest OF it's
patrons In response TO the question whether there
was probability Of the New York savings banks en-
tering into a combination such exists between tho
insurance companies and the chartered banks, rep
resented in the Clearing House. Mr. Brown expressed
no opinion Many officials OF other savings institutions
visited and all expressed themselves IN favor OF
reduction Of the rate o. interest but declined to com
themselves the policy suggested by the Brook
lyn and Boston banks preerrng to allow the trustees
OF each institution to act upon their own judgment
GOOD SENSE
There certainly s in view Of the shrinkage of real
estate necessity for such action proposed.
Under the law Of the last session OF the Legislature
ing banks have been restricted and their powers very
materially curtailed Heretofore many have been man
aged special charters and they allowed to
pay various rates Of interest to dcpostors. One
result was that competition resulted between tho
various banks to give the best terms to depostors and
naturally some banks, anxious to overrcach rival in
suuton, assumed risks that were lraught with great
danger Luckily the act OF say last forbade all such
chances and placed all par. Section SO of that
act restricts all trustees to the payment OF not more
than SIX per cent on deposits. Section 70 Of the act
OF all chances trustees hazard the savings Of
the depostos upon the rise fall Of the market
by investments in wildcat securities and restricts the
loans to the following classes Of sccurtes-
Ftrst-Unltod states bonds.
Second-Ncw York State stocks.
Third-Stocks Of other States except those OF Sates
that have rcpudiaed defaulted Ia the payment Of
their just liabilities
Fourh-City, county, town or village bonds
Ftfh--Bonds and mortgages in this state worth
twice the amount loaned, and on unpfoductive real
estate the trustees shall not advance more than forty
per cent OF the actual value, and
yixth-A plot oil ground for the erection OF buildings
10 be used for the business Office Of the ncorporaton
and portion Of which shall be set apart for other busI
ness from which a revenue may be derived In the
latter case provides that the cost OF the said
structure shall exceed fifty per cent OF the net sur
plus OF the bank except by written permission Of the
superintendent OF the Banking Department Of the
State +.
NO cAUsE ALARM.
There IL certainly for alarm In this proposi-
ton on tho part OF the savings banks Of Kings county
II Is a movement forced upon them by the general
depression OF business and there Is reason to JUS
tty the opinion that IL opposed to the true interests
Of dcpositors Every intelligent man or woman, who
haa ,ntrontzcd these establishments will agree that