The New York herald., 1877-09-03
SAVINGS BANKS.
The Government Bank Scheme
Reviewed.
SENATOR BIXBY'S OPINION.
No Provision in the Law for Furnishing
Its ViOlatOrs.
A BANK EXAMINATION FUND.
Suggestions for the Protection of
Depositors.
BANK EXAMINATION FUN
SARATOGA, Sept !, ls71

OF government savings banks tor tho protection
Of icposors has attracted great deal OF notice here,
the recent session OF the State Senate for the
trial OF the late Bank Supcrntcndent has served to d.
rect attention the abuses to which, under our pres
ent laws ard their administration, such institutions
are subjected. Meeting Senator Bxby at the Grand
Union this morning among the political visitors who
max G that hotel their daily rendezvous the HERALD
correspondent sought his opinion on the subject
"As matter of principle" said the anti-fammany
democratic Senator, II am unwilling to see any more
power placed In TIE hands OF the federal
The danger Of ccnraz tiou is one against which wo
should be evor on the alert. for its approach is in
sidous and IL steals upon us uDawares. Twenty years
apo il would have been utterly impossible for party
IN ROVER 10 have committed the monstrous fraad by
which Mr. Hayes placed in the Presidential Office,
although defeated by tho people. But tho patronage
and power OF the central government row great
as 10 tempt IL to just such usurpatons do
not think the people have sufficient conf
dence in tho civil service, notwithstanding the
present furry about mpracticabe reforms TO believe
that savings banks would be honestly managed by
government officials, especially with the robberes of
the Freed mans Bank staring them in the face. But
of course the government would be responsible to the
deposors and If the bard savings of the industrious
aborn: classes cannot he protected in any other
ner am no. sure that it would be well adopt the
HyRALp's suggestion. But fail to see why, with
honest legislation ana faithful administration OF the
laws VIC cannot have sound savings institutions IN
private hands with ample protection for depositors"
DEFICITS IN EXISTING LAWS.
,"Wheren do you regard tho present Savings Bank
laws deGcient?"
"They are so imperfect and ineffective in almost all
their pal that scarcely avoid the suspicion
that they have been framed for the purpose of enab
ling the trustees and officers OF such institutions to
gamble with the dcpositors' money for their
profit rather than with the object OF protecting the
depositors savings bank is, or ought TO be,
benevolent institution. through the agency OF which
the small deposits o. thrifty poor safely kept
and MADE realize interest which they would not do
In the hands OF their owfcrs. The investments ought
TO DO OF such a character that the whole money
due the dcpositors could be realized without loss
der ordinary circumstances and repaid at Trus-
tees aud officers have right to speculate with the
depos tors' moneys, to put single dollar into real
estate which cannot be sold of hand until the
plus accumulated enables them to do SO without risk
70 the depoetors. Now, tho law OF 1875 does pro-
vide that the investments shall only be in United
States stocks and bonds in the stocks or bonds Of this
state, its cities, counties, towns or villages Of
other States which nave not defaulted in the payment
Of principal interest for years. in bonds ana
mortgages on unincumbercd real estate in this State
worth at lcast twice nc amount loaned thereon Tho
law also provides that savings bank shall only hold
in real estate a bank building which, with the lot
which It stands, must cost nos to exceed fifty per
cent of its clear surplus and such other real
may be compelled bid in foreclosure sales and
in settlements to secure debts But mark, the law
fails to attach any pcnaty for the violation of these
provisions, and IT convenient Bank superintendent
TO overlook such violation the law be dis
regarded with impunity. Open the savings banks
ports made IN January last at almost any page
ana you will see how little tho law Is observed
Bank after bank will be found to schedule asset
n banking house ana lot worth from $4,000 TO
$500 900 when their alleged surplus Is probably less
than $4,000 Look at the coilaterais on which loans
are made and you will End railroad stock, trust
pany stock. bank stock, gas company stock Western
Uuion stock and other huctuating securities among
them, Though tho law provides that temporary loans
shall only be made such securities rs have al
OF course. these things would be impossible under
vigant and faithful superintendent But with an In
efficient, incapable or dishonest head OF the Banking
Department the people have absolutely no protection
at all As have said, the law fails to impose any
penalties on trustees or officers if they should he
iound have violated its provisions through the neg
addition to this. 1t expressly exempts savings banks
from any investigation or inquiry except through the
Bank Supern endont In section IL of the law OF 1875
you will find the following provisions e.
No savings bank shall hereafter be required maze any
% Il. Of to
of any county nor any other ocor authority what
in the charter Of such corporation th contrary noswt
standing nor shall they DC subject I the inspection or su
from any such local officer bonrd matters
81 look upon this section very suspicious one,
evident object being to make the relation between
the banks and the superintendent sort Of star cham
Der arrangement and TO close the door against any in
ves;isation OF or interference with savings bank OK
copt such as the Superintendent choose to MAKE"
THE MILK IN TIKI cocoANuT.
''How do you account for tho evident remissncss in
the examinations Was there any evidence OF COL
lusion between the banks and the superintendent ?"
'The senate did not deem IL proper or necessary TO
cnlor any such field OF investigation. ] can only
say that an item appeared on the books of bank OF
So 500 paid for onioal examination; but this was
before Ellis was superintendent. The TACT
was shown, however, that by an arrange
mcnt with the superintendent the savings
special nations THIS was sort OF compromise,
the law providing that tho expense OF every such
poraton Examiner IN such amount as the Suporntcn-
dent shall certify TO be Just and reasonable Tho 15s
savings banks which reported January l. 1876 would,
under this arrangement, have paid last year ior
aminatious $50, ,000 There three examiners, two
OF whom have been accustomed 10 make exam nations
first and to be followed by the third. The two first
each, or iour days III all on each bank. They
paid for their services $50 each per day. This would
make $50 per bank for Their labors or II they examined
them all gross sum OF $4,000 for the two In tie
year, leaving s4sO 900 for the third examiner 1t does
not Seem at all likely that this third although
close friend OF tho superintendent, would have been
allowed to retain This enormous income, a1d
" It dii not co TO him TO whom did 1t
90? The payment OF regular annual amount
by the banks Is of itself suspicious. The
official examination Of a savings bank is required by
law 10 be made only once Ia two years, but may be
made as much oitsncr as in tho Judgment OF tho Su
perintendeut Is necessary. An examination made
once IN two years could not TIC supposed cost $500
and the question arises whether tho payment OF
annual tax OF $500 not intended by tho banks to
prevent more frequent examinations rather than TO
provide tor their expense ~
HOW TO PROTECT THE PEOPLE.
What changes IN tho law would, IN your opinion,
be necessary Tor the protection OF the poor dcposors
IN savings BANKS"
First and foremost, all tho provisions made for the
protection OF dcrositors shoIld be accompanied by
POSITIVE and jchucd penalties IN Of their viola
ton, plainly expressed as 10 rcudcr their evasion
npossiUic. IL II IS forb;ddcp to make any invest
mcns or loans, except certain designated securi-
ties every bank officer and trustee who misappies
the dcpostors' money by putting them to an
Illegal use should bc held responsible ana
punished either by hnc or Imprisonment or
both. IL Is wicked act 10 take the
money OF the In trust and then TO rob hem OF IT,
every icgtlmate made OF savings bap K funds
for the advantage OF the bank ana not of tho