The Vermont watchman. [volume] (Montpelier, Vt.) 1883-1911, 1888-10-17

!
one who has had some experience in saw
ings bank management to say few plain
words on this subject through your col
umns?
| U) Savings banks and trust companies
should be divorced. They ought never to
have been classed together Trust compa-
MES are institutions for private gain to
their managers and stockholders while saw
ings banks proper are benevolent institu-
tons, Solely for the benefit of those supposed
to be incapable OF wisely investing and
properly caring for their own money, whose
corporators and trustees serve without COM
pensation, and none of whose officers have
any private money interest in them what
ever, except to the extent OF receiving very
moderate salaries for continuous services
performed. The trust company is run solely
| to make money for its officers and stock
holders whose pockets are directly inter-
ested in securing investments bearing high
rate of interest; while to savings bank
managers high and hazardous rates
of interest offer no personal tempta-
tons or advantages, their predominating
aim being safety first, and after that
the earning of as large dividends for their
depositors as is consistent with safety.
And, by the way, many people appear to
think that the money of the poor and help
less that has accumulated in our savings
banks ought, under the compulsion of law
in the guise of solicitous guardianship, to be
loaned out to the rich Qor the poor cannot
borrow at less than the current rate of
interest. Experienced savings bank man
ayers it is safe to assume, have no sympa-
thy with this theory.
(2) 1t is claimed that six-tenths of one
per cent is less than the average rate of
taxation in this state, and so it is on the
appraisals of sworn officers and the state
ments of sworn property-holders but if
every dollar of the taxable property was
set in the list at its full value, as are the de-
posits of savings banks, how much more
than siX-tenths of one per cent tax would
have to be levied to secure the aggregate
sum now raised? Real estate is now APP
praised, on the average, at little If any
more than seventy-tive per cent of its real
value; while no observant man believes
that anything like one-haf of the taxable
personal property is represented in the
grand list as now made up. 1t is hid away
where the keen eye of the law cannot, or
does not, find it; but every dollar OF the
money in the savings banks responds to the
tax-gatherer. There is no evasion or hiding
away here. Besides, the legislature limits
and dimuishes the earning capacity of saw
ings bank money by restrictions upon its
investments, which it cannot and does not
undertake to impose upon the money of
individual citizens, and thus furnishes
strong argument, founded in simple justice
as well as sound public policy, why money
in savings banks should be under, rather
than over, taxed in comparison with other
property.
C5) Its urged that still further restrictions
should be placed upon the investments of
savings bank deposits, especially at the
West While no intelligent savings bank
trustee objects to any legal restraints that
are needful to secure safety, he does in
sist that such restraints should be based
upon knowledge that comes of experience,
and upon principles of equity and sound
public policy, rather than upon Utopian
theories. No savings bank in this state
has yet reached the limit of investment in
western mortgages now permitted by law,
and not dollar has been lost, so far as is
known and believed, on any such mortgages
for many years. Indeed, it is notorious that
the interest and principal of such invest
ments have been paid with a very near APP
proach to absolute promptness and fidelity.
The losses of Vermont savings banks for
many years, if any, have been on home in
vestments. Indeed, all such losses of any
considerable amount, from the start, have
been on loans within 200 miles of the doors
of the banks that made them. Besides, if
further restrictions are to be imposed where
will savings banks find safe investments
for their money? Take Wndham county
for instance, with over S5000,000, or nearly
one-thrd of all the deposits in the state,
where there is no local demand with good
security for even one-ifth of this money,
and where all such local demands have al
ways been promptly met to the exclusion
of all other investments The banks there
will be driven to invest in municipal and
other bonds at low rates of interest, and no
safer than well-placed western mortgages
in Kansas and Minnesota and states this
side, and their earnings and dividends for de-
positors Will be correspondingly decreased,
the obvious result of which will be large
Withdrawals; and nineteen dollars out of
every twenty of such Withdrawals will be
sent directly west through other channels,
and not one dollar in twenty thereof will
] 4,
was precisely what happened when the
present 81 800 limit was adopted, which
caused a loss of millions of dollars to the
! savings banks, nearly all of which went
directly west and no longer pays taxes of
any sort in this state. And the adoption of
| the now proposed $500 limit, or any other
! limit less than the present one, will just as
surely send other millions in the same di-
recton and with the same loss to Vermont
| both of the money itself and the taxes upon
! it, 1t is easy, by unwise legislation, to
drive money out of the savings banks or
| discourage its deposit therein, but quite inn
possible to control it when it is out. No
one will question these statements who has
! been in a position to know the truth.
Our Lawmakers should not forget that no
amount of legislation will make rivers run
up stream; neither will statute book full
of stringent laws force the flow of money
into unnatural channels, in defiance of the
higher and irresistible laws OF trade and
business. The experience of the past ought
to teach an instructive lesson to the present
and the future. Every legislative attempt
hitherto to force money where it does not
voluntarily go has resulted in a stampede
to outside investments-a stampede which
would now be greatly encouraged and in
creased by the multitude of perambulating
solicitors for foreign investment companies
that swarm the state. Any legislation
therefore, either increasing taxation or UNI
! reasonably restricting
that shall reduce the net earning capacity OF
the banks below their present income, ena
bling them to pay average dividends Of
about four and one-half per cent, free o.
taxes,-will inevitably result in disastrous
Withdrawals that will go to swell the very
class of Western investments which the
legislators desire to curtail. 1t is better t.
go slow than to go wrong. EXPERIENCE.