The New York herald. [volume] (New York [N.Y.]) 1840-1920, 1878-04-19

than one nalf OF Inc present amount or deposits In
their keeping Was placed there and invested during
the panic In the fall OF 1874. That Was the period
which witnessed tho gigantic strides maae by building
ORGANIZATIONS, whom whole streets sprnng up where
only farms swamps existed before. Real estate
was then the best Investment Tor values went up 10
proportion to improvements ana bangs were glad 10
place their money on first mortgages
HARD TINES.
When tho panic struck, all those who we're building
on borrowed capital ran away from their unfinished
houses, and the mortgages hau either abandon the
original loan or eso finish the structure aud try
get the interest out OF u In rent. Sei IL they could
not. except NJ y terrible sacrihce. Tito number OF
banks was 50 large then and the composition so sharp
that unless dividends were declared and paid, de-
posts were Withdrawn, and SO tho ruinous practice
was kept up OF paving out everything aud accumu-
latng nothing. The tumble 10 values, winch felt
Mt once ana which kept on increasing the an xicty,
naturally made capllai conservative 10 all branches
Of business Money that before sought occupation In
various enterprises pourca into the savings banks 10.
safe keeping much as for investment, but We find
scarcely any more prudence or foresight in the
managc ment than before. Instead Of accum ula.lng
large surplus tor OF emergency tho banks paid
oat every dollar earned either in dividends or OK
penses spersoaal securities were taken largely IN
excess Of Tho spirit Of tho law, and mortgages
werc assumed. Theso two cassos oil securities sui
fered shrinkagc OF ~ least fifteen per cent, and
thcrc was at one jump loss Of over Sl2 600 000 Al
present he total amount OF Tho savings bank funds
invested IN rcal estate and personal securities Is
S57 900. 900 anu II glance Just where
the banks stand should they be forced TO wind up
their Affairs mms diately. Their condition would b.
very unfortunate, might say disastrous, If general
run were startoa, as, ike similar nstitutions every
u
OF cash ON hand, and would be compelled, IL forced
realize Tor the calls OF their depositors nur-
reay, " sell quick assets or convertible securities ut
forced SALE aud necessarily at very considerable
loss these securities are under the law not MARKET
able IN tho money centres outside OF Boston. 10
iorcc the quick assets OF the savings banks
or any OF them on tho Boston market
would necessarily be to ''bcar' them trenenaously,
a line Of action which, II pursued by the savings
banks. would call for the severost censurc from tho
people, and would justify Tho EXTREMIST measures OF
the Legislature aud The courts to prevent II.
A
IL cannot DO denied that the savings bank system OF
this State Just nov IN very perous condition and
calls for the wisest management and The prudent
legislation TO bridge over the danger. great want
vi confidence in these institutions has suddenly
sprung up here which Is attributed by many oil the
soundest thinkers 10 the discussion the
bill and It's final passage Law, well Us to
the agitation by tho Secretary OF the Treasury OF the
policy the part oil tho general government 10
the people 10 withdraw Their deposits IRON tho savings
banks ana invest thcm in popular loan or in Tho
proposed postal savings banks Many OF most
intelligent people OF this state bitterly dcn0unco such
policy ana very Apply reproach the senera government
with the consequences following Its experiment IN the
savings bank business IN tho case OF the Frecdman's
Bureau. managed ny directors appointed by the gov
crnmcnt and It's anairs, IN contemplation OF the law
assumed 10 have Decn under the immediate super
vision OF the government. The savings banks Of
Massachusetts hold about oneenth o the total ASSESS
able property OF The STATE, and the transferring oil
the bulk OF this large section OF tho money or bust
ness capital oI the State the OF the national
govern mcnt ana enterprises here would
be attended with serious consequences. In order TO
oct an expression OF tho OF tho State officials
and savings bank people on the new .Stay law" your
correspondents called on some eadlug representatives,
OF classes, and the result of his investigation IS
given below.
GOVERNOR RlcE's OPINION.
Governor Rice was found seated IN the business
Office OF the firm OF which he Is the head, Federal
street. Always cordial In his manner, he received
the HERALD cofrcs pondent with that easy dignity
hcn has distinguished MIN not ony In the chair OF
tho executive but ia tho circle Of society whero he
moves. After learning the object OF the visit he Gov
crnor wheeled h's char round ana said, en-
pnaticaliy ~ beiiove that such legislation 10 un
wise when II Is pushed through as thus bill was"
q. What VIII DC tho eject on tho savings banks OF
A. Well, nothing Is changed by this measure.
The power OF The Savings Bank Commissioners Is IN
creased, but the increase OF power Will prove bcnc-
contract made by tho banks as corporate
bodies doing business IN a business way will
be intcricIed with. People must not imagine that
this bi Is ntondcd 10 protect tho banks or encourage
them In violating Lie provisions OF any obligations
association. Every depositor Is a Btockn0dcr; the
officers are SIMPLY the men employed TO manage tho
affairs OF the Whole body oil uepOsttors Whatever
debts or obligations the officers may contracted
must first DO paid ana then tho residue must DO
equally divided among those who have puthcir mo oy
iDio The bank. Nov the law winch has gone INTO
effect, is stated In the first section is intended to
provide Tor the security and welfare oil the depositors
The Commissioners are placed between the select
ewthe oficers-ant the great mass OF creditors, 10
that Tho bank Is III danger OF being injured,
by misman or the tboughtess action Of
the OF It's capital or deposits, check Tay DO
put on the downward tendency and an equal division
oi tue assets be made.
O. OF course you found some objection to the bill.
Upon what grounds ard you base your signature
chiefly?
OF law involved, studied the authorities tho sub
| Jeci, which were supplied by the Attorney General
and lhc Bank Comm ssioncrs. The IHct That The bill
bau passed botn houses almost UNANIMOUSLY OF course
ina uucd weigh well the questions involved ana
ascertain II possible the effect might have or the
10 savings banks IN the State 100 expressed
their opinions 10 wiring IN avor OF tho bill ten OPP
posed anu The balance we're either not heard IRON
nj all or they did reply they showed their inder-
ence and expressed H. The amount oil money IN.
volvcd-nearIy $780, 0vo 000-also had lis weight and
adacd a fresh incentive Tor study. After carefully
| examining tho whole subject decided TO sigL tho
| bilL The TACT that It had been passed by both
branches of the Legislature never considered SUI
1cient ground Tor approving any measure; but thus
the almost unanimous action OF the Two houses
was backed up NY the testimony oil the banks them
selves.
O. DO you regard the measure ms Mt all tending 10
booster up weak banks wnicn may be unable TO meet
A. No cot At all The Commissioners have their
rci utaiion at stake II they allow bank to pay out
certain percentage OF ITS indcbtouness nj certain
times with the understanding that may eventually
discharge all It's obligations and In tho end would DO
compelled 10 sc INTO qu'datcn 'hs would DC rencc-
ton on their Judgment ana ON their method OF dis-
chorgng their duties to The STATE and the people Mt
large Hardly any bank can pay all rs indebtedness
Oh demand PROBABLY not ono national bank IN this
city could this clear its docket put 10 the
tesL What mercantile mouse IA Now England, " com.
peeled to convert It's quick Bsscts INTO money and
call IN all its outstanding bits aud WIND up It's affairs
without reasonable lime TO do IT IN, could pay dollar
for dollarY Tho savings banks arc suffering IRON tho
branches Of business, and II they were ordered
or compelled 10 pay out over their counters tue two
hundred liiy millions OF money that Is 10 their
keeping they could not do H. Their money rs invesu
largely mortgages real estate, and forced sale
would cause loss That they cannot we'll Afford hut
all this Il the Tact that the banks are not
tended u DO enterprises Tor speculation; they are
operative institutions IL Tour or hvc men como TO-
sether aud agree 10 put ur their money In conmon
fund ana engage certain parties To manage tnat, IN
vest and guard u, they agree 10 share equally the
pronls and expenses, aud why not tho ioss,sf Now
II IL should happen that the officers of bank took
into their heads 10 form ring or the purpose OF pay
ing acposits 10 their iriends or OF privately spec
ulatng IN the funds of the institution 10 tho detrl
mont oil the dcpositors, tho COMMISSIONER. under
THIS new law, have the power 10 Interfere anu pre-
vent IT, The sixty-dny rule under which banks
have been In the habit OF acting is us much ''say
law" the that has Just gone into effect That
still Ia ioreo Besides this there arc Two Vtnor courses
open 10 Enthusiastically, To 70 10 the supreme Court
ana get enjoined, or cali on tho Commissioners and
have an examination.
q What arc the chief objections you have heard
urs ed against tho passage oi this act
A. The chtct was that people said We wero low.
erng the standard that has been observed and fol