The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1878-04-19
THEIR MANAGEMENT
How the Vast Accommodations OF
Money Are Invested.
PRESENT CONDITION.
Effect OF The New Law and Views OF Pr0mi-
nent Citizens Thereon.

power
each savings bank can pay out in a given time is
matter about which there 10 likely TO be much differ
ence OF opinion. Tho measure was hurried through
under great strain Of public apprehension and the
only deliberate act connected with its passage
tho appending OF the Governors name. run had
bcen started The Five Cent Savings Bank, which
threatened DISASTROUS results The dcpostors In
other institutions, such the Provident, tho Suffolk,
&C., were also showing uneasness, ana there were
serious apprehensons that the panic would become
general The "stay law' sprung on the House,
and after sharp, but very brief discussion, II was
put through the stages OF legislative etiquette
and 10 the Senate for concurrence That grave
ana digui1od body caught up the spirit OF alarm and
Is speedily concurrcd; the Governor took several
days to make up his mind and finally sanctioned the
BILL which went into iorco Immediately on It's passage
The full text OF tho bill Published by the HERALD
the dny alter It's introduction In the Lower House.
GROWTH
Now, In order to understand precisely what causes
I'D up to the enactment Of this law, what
grounds, any existed Tor tho public anxiety
the condition OF the savings banks Il will be
sary TO go little into the history OF these instu-
tions thor present condition, their rapid, and may
say, indeed, thcir abnormal growth within the past
lew years. In 1884, which tho FIRST year tnat
Witnessed a report OF tho savings institutions by
State authority, thore in Massachusetts % saw
ings banks, with deposits amounting 10 So 49, or
about SIS 5S to each OF the por uation In 1851
there wore 03 banks. with deposits amounting to
$44 1885, 39. about $50 10 each inhabltant Ten
years later, in 1871 tho number OF banks was
increased 16o. with deposits amounting to
$l63 704 707 81 average OF 500 for each inhab
liant Al the close BUSINESS October 81, 1877,
cordng to the report OF the State Commissioners, the
number OF savings banks IN tho State was 49, with
total amount OF deposits reaching the enormous sum
of $244 500 GA 49, average to each person OF
the population Of sl44. The apparent number Of
dcpostors In these Institutions was 1885, 75S. This Is
liable TO mlslcad for the same persons Will appear In
some cases ten fifteen times on tho books Of one
bank The Law OF tho State limits the amount that
any person deposit in one bank TO s., O00
This Is practically, however, dead letter, tor every
bank In tho Commonw eath has been in the habit oil
taking any number OF deposits OF the amount or
$1,000, tho depostors appearing In all cases except
she first trustee. For instance, II is known that
sums large as $40. 900 have been lodged IN
bank by one mans he took book for tho
arst thousand his own name and the
remaining THOUSANDS no deposited for imaginary peo
ple whose money he appeared to hold In trust Tho
savings bank was good place TO deposit money; II
was taxed there II carefully invested;
usually paid good dividends, and ready be PAID
out At any time short notice. Consequently tho
whole number Of depostos tho State may be safely
set down at 000 showing that ABOUT one In every
seven recorded as in trust.
INVESTMENTS BANKS
OF the SPA GA Is which tho banks their dc.
positors $123 900, 900 estate,
about Sic, 900 900 IN mortgagcs and the balance
properly owned ny tho banks bought IN to tho
hrst mortgage and "nursca" III such times they
could realize the original investment In PUBIC
funds there invested s33, 223 SOL 70; bank stock
SIS 154 3s9 OIL: railroad bonds, little $9,oOooOo
and loans personal security. s34, ia $40 81 ms
named sum Is the amount loaned by the banks on
the notes OF m Individual or corporation, with
ndorsers and usually without any collateral security.
The loans made in this way most
ssses where manufacturing corporations arc
tho borrowers-ior example, the cotton mills
OF Lowell, Lawrence, Fall River. Manchester and
other large manufacturing centres OF the New Eng.
land states The value of this class Of security
necessarily depend largely the scvency OF the mill
corporations, the indorscrs are IN many instances
persons who really not responsible IN case tho
corporations become embarrassed. They are usually
the treasurers or other employees OF tho concern.
PROVISION FOR a RAINY
The largest well as the smallest savings banks OF
the State, without scarcely exception, N there BIO
exception, have always acted tho theory that
the dcposuors for being wero entitled semi
annually TO dividend OF substantially all tho earn
ings oil the banks, and therefore lind that those
sttutions have made provision Tor tho rainy day
which has SO suddenly como upon them. With the
enormous sum oi s244,590.6l4 Is duo their deposi-
tors, We mud accumulated, according TO tho state
mcnt OF the Commissioners, a surplus Of only
&5,1s2,570 &c. TO meet all shrinkagcs and losses
liable to occur ia these times oil depression ais
trust TINS sum includes what Is known MS tue guar.
anlee fund, winch was provided Tor REVISION Of
the Savings Bank law IN 1876 Tho revised law made
obligatory ON each savings bank to set IRON
the net profits which may accumulate every ak
months not less than onc-cighib more than
one.iourih OF one per cent OF The whole amount OF
deposits as a guarantee fund. Tho short sighted
policy, TO call t W mud a possible. OF the
banks OF the state IN dividing substantially all their
earnings among the dcposItors up to the time that
tuIs law went into effect In October, 1870, leaves
them, a. before stated, with surplus, including tho
guarantee iund called Tor by this aw, Of little over
f5.0J0000 TO pay up liabilities amounting to nearly
my times rs much. bank president to-day
surcd that he knows OF two savings banks Ia
New YORK city, carrying not much more iDan
500, 000,Ov0 OF deposits, that navc a surplus
equal 10 that accumulated by the 179 saw.
Las banks OF tho state. According 10 tho
Hst report OF tue Bank Com ssvuers, the oldest
avings oank IN the state ana the largest in point OF
volume OF deposits, holding $40 l6l is3 So hau on
hand ~ surplus Mt the close OF business OctoU.r 81
1871 lust S24 023 80 IL had been pay ing large dy.
ia.nds and Was regarded the strong est
In Boston, but surprising run was started on IL at
lby time, who're could u raise SI9,o00.0o0 OF money
v,in.ut sacrificing It's best sccnrtcs ana losing NJ
east twenty -iour per cent by tho trausactIon7
INVESTMENTS
The law OF Massachusetts prov,dos that It's savings
BANKS deposits cannvt be invested any otncr than
The following securities; First mortgages on real
estate situated IN the state and TO extent OK
reedtng seventy per cent OF tho whole amount OF
deposits; IN the public funds OF any New England
states or tho state OF New York or tho United
States; bonds or notes Of any city, county
or town in this STATE; bonus or notes OF
tho cites OF the New England states; nrst
mortgage bonds OF any railroad incorporated under
the authority or the state where tue company Is In
possession Of ana operating It's own road, and has
earned and paid regular dividends the lao years
next preceding such nvcstmont ana IN tho stock OF
any vank incorporated under tho authority VI the
limited States Inc law TURNER prVyiaes that n any
money hcid by any savings bank cannot be invested
M any OF securities before rcccd the banks may
loan not exceeding oBo.thrd part OF their deposits,
on bonds or other personal securities, with al least
Two suretics VINO are ctzcns and residents OF this
state the loan not TO be made Tor longer time than
IN, year Under The latter class or heading have
been made the loans TO mil corporations en-.
,iiied .oans on personal security" amounting to
fsi I24 $40 81. IL will be perceived by reference
10 the progressive statement gwen at the
Inn whole OF