The sun. [volume] (New York [N.Y.]) 1833-1916, 1879-06-29
THE MAssACHUsErTs STAY Law.
Some OF the Abuses Praetised Under It-Its
Failure TO Relieve the Banks.


Failure TO Relieve the Banks.
BosToN, June 27.-On March 81, 1873, IAN
act for tho better protection OF depositors In
savings banks" went into effect. the final clause
providing that II should remain in force three
years. The principal provision OF the bill was
as follows:
Whenever. In the Judgment OF the Board OF
Commissioner OF Savings Banks. the security
and welfare OF the depositors in any savings
bank in this commonwealth shall require linn
tors. said Board may 81 an order in writing
payments in time and amount as the interests
OF all the depostors may require"
At the time OF the passage OF this stay law a
feeling OF insecurity existed among depositors.
which had frequent result in runs for which
the banks were not prepared. Two reasons
one OF them. however. dependent upon the
other-conduced to this uneaslness. The
shrinkage in the value OF securities had rem
derod difficult the obtaining OF money on what
were usually known as quick assets to meet
the unusual demand from deposltors oppressed
by the hard times and the complication had
driven many banks into the hands OF receivers.
or compelled them to seek relief through an in
junction In the supreme Court Every deposition.
therefore. felt an anxiety concerning his saw
ings thus invested. The savings bank inter-
ests were ieopgrdized; The officers had no
other recourse for relief but to apply to tile
courts and once in the court the almost newt
able tendency was toward winding up In the
dspositors and discredit 10 bank oficers.
Therefore tho scheme OF the stay law was de-
xtsed. IL was holly opposed. but was carried.
IL was believed. or at least argued, that II the
amount OF Withdrawals could be restricted by
law. the banks would be able. by passing one or
two dividends. and by obtaining time 10 cash
their assets without the pressure OF heavy de-
mands for money, 10 resume their usual bust
ali Of the BANK officers. Believed thai single
year would enable them all TO 40 along In the
usual manner. and be re0dy to meet the de-
The report Of the Savings Bank Commission
ere, then before the Legislature. and made up
to oct. 81 1877, showed that the number OF de-
WAS 739 1871 and the amount OF deposits t244
o96.6l4ld The number OF banks was l79. The
previous year had shown an increase OF depos-
Its Of 81. 255. 97l.43. The Commissioners saw 1T
IN the ensuing seven months to apply tho stay
law restrictions to tweny-one banks. holding
6.2OO, 90. nearly eleven per cent OF all the
deposits reported In the previous year. Sixteen
o. these banks. holding in the aggregate tl8,-
615.o6976. were forbidden 20 pay out more than
twenty per cent. OF their deposits ten per cent
each six monthsl amounting 10 t3735 1855 IS.
Three banks. with deposits OF 1882. OO9. 90.
were allowed TO pay but III irty DER cent. amount
Ing 70 q, O65 O23. and two banks with deposits
Sen were T 5ss "a 70 to per
pears an actual prohibition was placed upon the
withdrawal by depositors OF sl9.SlO $500. or
moro than eight per cent. OF the whole amount
OF money belonging to deposltOrs. In addition
70 this eight banks were placed under perpet-
uhl injunction, ana tn6lr AFFAIRS were placed In
the hands OF receivers, while five others we're
temporarily enlOined. thus adding largely the
aggregate OF money tied up and unavailable.
Under the workings OF the stay law gross
abuse sprung up. though not practised in the
majority OF cases by the banks restricted under
its provisions. The law was SO construed as 70
allow the banks 10 decline 10 Offset loans and
Interest due by deposits belonging to the debtor ;
and the advantage was taken. though unjust
stead. raising part OF the purchase money by
a mortgage at his own bank. the bank refused
or principal due foreclosed the mortgage and
took possession OF the real estate. or sold IL
under the power Of sale. This disregard OF the
rights OF the individual was not for the advan-
tage OF the bank. for often estates have been
sold for sum insufficient TO cover the mort
gage note. The practise caused so much indig-
nation that an EFFORT WAS made 10 amend the
law, but without success, in the Legislature OF
1873. The feeling IL 50 strong. however. that
don the policy,
Another violation OF the spirit Of the law
grew out OF the usual desire on the part OF bnnk
ohcers to Keep up the amount OF deposits; This
WAS the practice Of considering that new depos-
TORS. opening accounts subsequent to the appli-
cation OF the restricted order. were not subject
20 lts provisions. The invitation for deposits
was that Withdrawals upon new books could be
made In full at any time, without regard TO the
stay law or the Official orders under r. The old
deposltOrs. who had trusted the banks for
months or years with their money. were nat
nrally indignant and the expression OF their
feelings hae resulted In new form OF restricted
order in which the CONF ssioneTs tneist upon
alike.
Relieved OF the pressure Of clamorlnR depos-
TORS by the peculiar law. the banks which have
been made subject 10 II have failed TO use the
diligence expected OF them In turning their Sc
curlties into money or quick assets. The
promise OF a year ago Is unfuflled. and OF the
twenty-one banks mentioned only two have
shown an ability to resume business in full
ono In Boston, with deposits OF So ACT .035. 20.
9l3Ol. All OF the others are still under the in
fuenco OF the law. the percentages in most
cases being 30 changed ms TO make the amount
OF aggregate Withdrawals allowed the same or
approximately the amount OF last year. This
viii necessitate a greater EFFORT ON the part OF
some OF the bank officials than last year. for
their assets have been reduced. Since the be-
ginning OF the year one other savings bank,
with deposits OF 1881 .963.70 has been restricted
from paying more than ten per cent OF It's de-
poslts every six months. Deposits fell on be-
tween the dates OF the last two reports 70 t2O9.-
66OG3ll6. a decrease OF t34. 1856 $780,
Museeps Revenge.