New-York tribune., 1877-05-16
Trust FUNDS md HE iNFL4TI0N or
RE4L ESTATE

An intelligent savings bank manager OF
Massachusetts, some time ago called attention 10
the great increase in the volume of loans
made by savings banks in that State on mort
gaze security. In the ten years from 1868 10
1875 these loans rose from $I5.0O0,O00 to
Sl20 ,OOO, 900, while thc total deposits in say
Ings banks in the same period rose from $780,
OOO, 900 to S23s, ,OO0, 600 1t thus appears that
the proportion of deposits invested on mortgage
increased from Onc-quarter to Onc-half, and that
al the end Of the ten years the mortgage loans
were double the entire deposits at the begin
ming of that period. The same writer states
that whereas in 1868 the savings banks held
about 500, 100000 i'll United States bonds, in
1875 they held only $12000,OOO. IN Con-
ncctcut, We learn from Mir. KcyeS's valuable
treatise on savings banks, out of total
deposit of H7l 600, 600 on the 1st Of January,
1874, SAT, coo, 00O were loaned on bond and
mortgage IN Rhode Island, out of q deposit
of 81, 600. 0OO $4,000, GOO was invested in
The same MANNER. In these three Nrw-En-
Gland states the aggregate Of deposits in say
iugs banks III 1865 was about $50 j,O0O,0OO
in 1873 it Was $31S,000,0OO, OF which
S171, ,OG3, 900, or 81 per cent was loaned on
mortgage. The amount now exceeds $780,,
100000.
These statistics show the extreme difficulty
of finding investment for a rapidly accumu-
lating trust fund within statute limitations,
and a necessary resort to the only Investment
which is practically without limit-Damely,
loans on real estate. The conversion in Mas
sachusctts of upward of twelve millions Of
United States bonds into mortgagcs-for that
-. = INT,
fed on the plea of necessity and was doubt
less due TO a greed for dividends which, prior
to ! S73, had taken the place OF the old-iash
ioncd conservatism which used 30 characterize
the managers Of savings banks in MassdchU-
sctts. After 1860 the number OF those insti-
tutous considerably increased, and a c0mpc-
tiu0n sprauG up for deposits, which were. of
course. stimulated 10y the promise of a liberal
dividend. 70 n large extent, however the
growth Of savings bank deposits was due
TO the same unnatural influences which
swclled the apparent volume of all other
species of property. Hitherto there have
been very few failures Of savings banks in
Now England, for they are in general honestly
and ably managed and under the supervision
of capable State officers who examine their
condition periodically, not by the inspection
of sworn returns, but by personal investigation
on the spot the only mode of examination
which is worth anything. 1t viii, however be
very extraordinary if this class of property
escapes the universal shrinkage, which is
bringing the country down to normal values,
though il has not yet restored it to a sound cur
roucy. There is not mortgage debtor whose
real estate has not fIightiully shrunk and many
IA man who was believed to BIZ beyond the reach
Of catastrophe Eve years ago is now utterly
impoverished by the fading away of all the
margin above his mortgages The rise in the
valuation of real estate in cities and large
towns IN New-England between 1860 and
1873 was something marvellous, and, now that
we look bacl, upon it, in the highest degree
false aud irrational. The smaller villages