The Redwood gazette. [volume] (Redwood Falls, Minn.) 1873-1940, 1877-09-13

signally defeated. Though sadly crippled
since the fire, it was hoped by the manage
ment that the institution would worry
through, but the series Of sudden failures
In st. Louis brought . run upon the quiv-
ering bank, which, IN an effort to save It.
self, paid ous from @3OO, 900 to 100000 of
ito cash means without securing the object
sought-the allaying of the excitement. 1t
was finally forced to fall back upon the
sixty-day rule, though it has constantly
paid out money to needy deposit0rs. This
drain, the payment Of the half-yearly in
terest Of 3 per cent ON "a, O0O, 900 of de
posts, and the slow receipts of deposits,
conspired to still further weaken the Insti-
tuition, which, up to July 1, had paid
$500. 600 over Its receipts, and thus parted
with the bulk of itscash means.
Its assets were of an unfortunate nature.
Masses OF real estate, which could not be
turned owing to the general depression of
the market, crippled paper secured by lots
whose buildings had been destroyed by
the nre, and an enormous amount of un-
improved property, taken for debt, and
valuable only as 1t represented dead
loss in the taxes that must be paid, made
up the list. The $500, 900 capital had
been wiped away and the interest of the
stockholders extinguished by the hard
times that had eaten sadly into the
prosperity of the bank, and shrunk
It from live and healthy institution to q
pitiful monument of the banking system.
1t Is estimated that nearly e-third of its
loans were to mechanics and the salaried
class. who borrowed to build homes, and
whom the Institution endeavored by every
means to assist when the hour of payment
found them unable to respond. All this
time it preserved its high rate of interest
on deposits, Notwithstanding the fact that
much of its money was idle and its ex-
penses heavy. Perhaps this outline of its
affairs win remove any doubt that may
exist as to the propriety of the explosion.
It Is certain that Mr.. Spencer did not
fully enjoy the confidence of the financial
community. His unfortunate experience
in the Cook County National, which SUBJ
sequently landed high and dry, initiated
against him seriously, and through him
against the State Savings. But he man.
aged to stem even this tide until the
troubles in st. Louis precipitated the
disaster he had hoped to avert. But little
could be learned Of the condition of the
bank for some time before the failure,
and this fact, connected with surmises
that Mr.. Spencer had reasons for sup
pressing all information, did not tend to
the establishment of the confidence he
coveted.
When the necessity for raising money
became absolute, Mr.. Spencer went
among bankers and said he had 81, O00, 900
in paper good for its face, 81, OK, 900 in
slow paper, and 81, 000, 900 in miscellane-
Gus securities. Per contra, his obliga-
tons were 8, 600, 900, and on this show
ing he wanted $500, 600 ON such securi-
ties as he could afford to part with, claim
ing that this would enable him to raise
from $500, 900 to $500, 900 in New York,
with which he could restore credit. It
was readily seen that he would have NO
first-class securities left, and that the bank
must 60 under by the LIST of January, and
bankers concluded that there would be
less disappointment if it should. fall now
than in the winter, when less could be
realized on the securities than when the
corn was waving, the crops moving, and
business generally more brisk.
As to the dividends for depositors, Mr..
Spencer has claimed that they will reach
IS or 80 per cent, or, under firstclass
management, 30 per cent, if the paper
were sold wisely and slowly, while bad
management will reduce them to 60 or 70
per cent. How much really will be real
izec depends upon the manner in which
the vast mass of real estate can be utilized.
The question whether the affairs of the
bank have been managed dishonesty, or
merely imprudently, is asked, and an in
vestigation is awaited anxiously. Mr..
Spencer has always been secretive, and
has kept the details of his administration
to himself. In how far this has been a
wise course is left for time to determine.
The depositors feel DESTROYS of understand
ing the matter, even if they receive no
other equivalent for their money.
From these facts it is manifest that the
State Savings Institution was doomed. No
general pressure exists upon banking in
terests, and none was needed to cripple
the foundation of this one institution.
Flush times might have saved it, but flush
times were necessary, and little pinch
ing. which has not yet affected, and will
not affect, the rest, has raised the tomb
stone of the bank whose vitality has been
sadly impaired since the fire.-Chicag0
Tribune, dug. 90.