The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1877-08-21
Savings Banks.

The removal OF the Superinten dent OF the
Banking Department will, no doubt, be
Immediately beneficial by compelling
greater caution on the part of savings
banks, insuring more efficient supervision
and strengthening public confidence. But
it is to be hoped that yet more substantial
benefits will result from the recent investi-
CATION. The savings bank laws require re-
modelling. There is reason to suspect that
the influence Of the late Superintendent
was used to prevent good legislation. The
Governor should now take care that the
efforts of the department arc directed to-
ward tho success of wholesome changes in
the existing laws.
Savings banks are benevolent institutions.
Their legitimate object is to receive, protect
and put to fair interest the savings of the
poor The moment such an institution is
made to pay large salaries to it's employees or
begins to be used for purposes of specula-
ton by its directors and officers it turns
aside from its legitimate purpose and be-
comes cruel and dangerous imposition.
No savings bank has right to put away a
single dollar OF it's depositors' money where
it cannot be realized and returned to its
owner when needed within a reasonable
time. 1t ought to be able to pay all its de-
positors if necessary by the sale of the
securities it holds. For that purpose it is
restricted as to the stocks and bonds in
which it may invest, so that it may promptly
realize upon it's securities without loss. It
follows that bank, to be really sound,
should never invest any large amount in
real estate until its surplus is SO large that
it does not depend on the sale of its real
estate to be able to redeem all it's obliga-
tions. We find in the list of New York and
Brooklyn banks many which have only a
narrow alleged surplus after crediting as
an asset real estate and bank buildings that
would not sell for half their assumed value.
The present law provides that the cost Of
savings bank building and lot ''shall in no
case exceed fifty per cent of the net surplus
Of such corporation except by written per-
mission Of the Superintendent Of the Bank
Department" But owing to buildings having
been erected before this provision was
enacted it is in many cases dead letter.
The Long Island Savings Bank, whose
affairs We have recently criticised,
makes n July report to the department
claiming surplus of $4,000 But to
make this appear the bank and lot are in
cluded as an asset at $4,000 illegitimately,
when they cost only S2O7,O 200, and would
not probably sell for over half that sum.
Other real estate is also claimed as an asset
at $4,000 which, probably, if sold would
not bring more than sixty per cent Of that
amount. Can such an institution be re-
garded as entirely sound? A correspond
ent calls attention to the fact that the Union
Dime Savings Bank, of this city, schedules
among its assets nearly S75O,OOO of real es-
tate, of which its bank buildings count
$650,000. This statement deserves refec-
ton. But turning to the Union Dime Saw
ings Banks report made last January we
find salaries of officers to the enormous
amount of s53, 900 a year. We certainly
need laws that will prevent reckless spec
ulation in real estate by savings banks and
the payment of extravaganza salaries to the
officers of such institutions.