Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1876-02-16

Remarks of Mr.. Pike Of Calais. .

Mr. PIKE said -
| MIR. SPEAKER II am in no way responsible for
| the statements made in the newspapers in re-
| gard to the bill before the House. l have been
quoted as having an intention Of making an as
| sault upon Gen. Grants administration under the
gulse of an interest bill in the Slate of Maine.
| What logical or other connection there is between
| the two have not been able TO perceive. So far
as have noticed, republicans have to pay interest
as well as democrats, and as the republicans have
been IN majority in the State, it Is fair to presume
that they are more deeply sed in it than dem
| ocrsts. shall give no partlzan turn to tine dis
cussion of matter, which has come to be of con
siderable importance to all the inhabitants of the
\ State.
The repeal of our usury law IN 1870, was done
IN the last day Of the session, and at a time wher
| the House in my judgment would not have giver
the repeating bull its sanction, if the matter hac
been called TO its attepion. A previous discussion
| indicated the temper of the House, and those who
were active in procuring the passage of the acl
knew the difficulty of proceeding openly, and SO
| took shorter cut to compass their purpose.
The laws thus surrel titiousy repealed were Of
some thirty Yeas standing. They were very
mild. They refused to as sist lender of money to
| collect more than six per cent. If he had collect
ed more than SIX per cent, the person payi 1g
could recover back the excess over six per cent.
provided he commenced an action within year Of
ter so paying There was no feiture, and the law
was simply in the nature o: protest against usury,
| As nobody suffered by such law why was it
| repealed Of course there was no general demand
| for the repeal. There were no petitions for it.
But there were few engaged in money lending, who
desired the law abrogaed because they wished the
sanction of the statute higher rates of interest
Mild as the statute was it made o difference IN
| common parance between interest and extra in
| terest. Interest was six per cent. when one re-
quired to pay more that that he paid extra icter-
est. And there were many men OF money in the
Ston rbNb bad thnvr
per cent. bad something in it of wrong. Men were
found all over the State who went to their graves
boastDg that whatever others may have done, they
never took over six per cent.
1t may have been that the scriptural denuncia-
ton against usury which they had read in the ir
youth clung to them in after life. In these days
OF progress wholesome prejudice against usury
is deemed a superstition. Whatever it may have
been termed the feeling existed before the present
statute was enacted, and it aided in keeping down
the rates of interest.
When the discussion took place in the House in
1870 it denied that the effect of the repeal
would be to raise the rate of interest in the State
The old ideas of the fathers were scoffed at The
State. il was said, needed immediate development.
1t was discovered that we had an immense water
power: The legislature had published a book
about the Water Power of Maine The right
road to wealth was to Introduce money from
abroad. In order to get money into the State,
they said, let US pay for it. The usury laws are
Tue prosperity ol tut Sldte DS
its citizens from borrowing at high rates. Pay day
for our people had not then come They were still
borrowing, and it was to aid them in their endeay
ors to run in debt, that they wanted the laws re-
pealed. raised warning voice at the time
against the fal!acy. thought l. saw then what ef-
feet the change Of law would have. | said then,
as | say now, that Maine has no considerable bus
mess that will afford the payment Of over six per
cent interest and that its financial history would
show that money let at that rate had almost nvar-
,oI,i tba batfn ot hpS
invested.
The new law has now been in force six years.
and what has been the effects Can anybody
name a single one of the thousand water powers
in the State that has been set TO turning machin-
cry in consequence of it Does anybody know Of
any money brought into the State, and invested
here in consequence of it
On the other hand call your attention to the
movement Of money in the Savings Banks direct
" in consequence of this new law At the time of
its passage we had in the Savings Banks of the
State about ten millions of dollars. give the fig
ures in round numbers. There were but few banks
and they were conducted as such banks should al
ways be, with view TO safety rather than profit.
They contained the savings of about forty thou
sand depositors, chiefly people of limited means,
who had aptitude or facility for making invest
ments themselves. and who wanted to put some
thing aside for rainy day. The banks paid /,
l-2 and ger cent dividends and the depOsitors
were contented. The bank inv estments aside from
ty bonds, were chiefly loaned out on note and mort
gage.
The two fundamental ideas of savings bank
are safety and prompt payment, and they are en-
,irely inconsistent with high dividends. Deposi-
tors in savings banks may as well know first as
last that they cannot have high dividends. The
very conditions Of the being of these institutions
forbid money making. If our National hanks held
themselves bound at all to pay to their stockhold-
ers the money invested, they would be in precisely
| tho condition Of SAVINGS banka II ia hepauSa "a
| managers Of this new crop of savings banks ig-
nored these familiar principles that their banks are
now in difficulty. give the statement of money
in these banks for several years, promising that the
| statements made for the end of each year
named in 1860 the amount was ST Acc, ,451; ; 1869
$40 ,S39 955. After the law-lS,0, the amount was
SIG 597 SSS 1875, S32 0S3. 3l4, Ii will be that
for nine years previous to the law the average in
crease was about million of dollars annually.
| But the next year after the repeal of the usuly
laws the deposits increased to over sixteen millions
ofdollars, and the average dividend was seven per
| cent. Ii had taken thirty or forty years to
reach ten millions, and after the passage of the law
| in single year the deposits went to sixteen mil
lions. And then a race began in the State for new
banks and high dividends. And in six years the
amount has increased to thirty-two millions And
these years have been, on the whole years of bus
mess depression. 1t is burlesque TO say that these
twenty-five millions have been added from the
savings of labor. The bank commissioner reports
that single depostors have five. ten fifteen and in
some instances as high as twenty five thousand
dollars each. Thrifty laborers those.
OF these thirty two millions-an enormous sum
for this State--between nine and ten millions have
been sent out Of the State to invest in Arkansas
! Bonds and Telms and Gulf of Mexico Bonds and
Northern Pacific Bonds and thousands of other
bonds that have been abundantly advertised in the
| newspapers, and tempted cupdty by offers of high
rates OF interest So that instead of bringing mon
into the State, the law has had the fleet through
| the savings banks to send an amount out of the
state nearly equal to the whole smout in the saw
| ipgs banks of the State at the time the law was
passed.
| And the managers of the banks have had the
| usual luck of those who make haste to be rich
| They have cut loose from the true savings bank
| idea of safety and bought speculative paper and
| got bit The last report gives twelve hundred
| thousand dollars in the banks of defauted paper
! How many bad mortgages are held we are not in
| formed, but the same disposition that leads to
| bringing wild cat bonds would rot hesitate in
taking other paper provided the rates of interest
| were high enough.
| And in this respect the banks seem to have
| availed themselves of the new law to the full ex-
| tent. No money is let anywhere less than sever,
and from that the rate runs to ten and twelve. So
the effect of the new law upon Savings Banks has
| been: l, to accumulate An enormous sum OF
money; 2, TO send nearly ope-third of it out of the
| State. q 10 impoyetish the banks with bad