Rock Island daily Argus. (Rock Island, Ill.) 1886-1893, 1889-03-01
COOPERATIVE BANKS.
What Is Said of Them by the Commits
sioners of Massachusetts.

What Is Said of Them by the Commits
sioners of Massachusetts.
The commissioners of savings banks make
the following remarks concerning co-opera-
tive banks: THE favor with which these in
stitutions are received by the people of this
commonwealth, and the growing confidence
in them, are evidenced by the fact that dur
ing the past year Is new banks have gone
into operation, being the largest number es-
tablished in any one year since the law regu-
lating such banks was adopted in 1871 The
number in operation on Oct. 81 last was &c,
with assets of S., 5O5, or 10, gain of 81 ,29S,
l23.S3 during the year ending that date.
During the year some of the oldest banks
have had the first issue of shares mature and,
as illustrative of the actual working of the
system, the following statement by one of the
banks is interesting: The bank made its first
issue of shares in September, 1871 the number
being SS3, of which 30l had been withdrawn
or forfeited before October, 1855, leaving So
in force at that date; of this number'8 IS were
pledged as security for loans, and ~ were
free. On the 81 shares, monthly payments of
81 each had been made for l3I months, max
ing the cost at maturity of each share S134;
the value Of the shares at maturity was
S3, showing profit on each, S66 80 for a
period of II years and 2 months The in
crease in the number of banks, and the con-
snued issue of shares by all have so increased
The amount of money for sale as to make
probable q reduction in the premiums bid las
aas already been tho case in some instances,
which will reduce the profits.
Within the year the question has arisen
Is TO whether cooperative banks can loan on
zeal estate situated outside this common
wealth. One bank located in town bounded
by tho state line has made loans in the i'd
joining town, situated within the state of
New Hampshire. This board has taken the
ground that the law was intended to permit
cooperation between lenders and borrowers
within limited territory, to enable the
building of homes within the immediate
vicinity and not for the development of ell
terprises promising large returns to the share
holders; and, in the absence of n fixed limit,
have taken the limit named in thelaw re-
garding savings banks, and ruled that loans
can be made only on real estate within this
commonwealth.
ing borrower who has bid high premium
on his loan TO subsequently,, when the oppor
tunity offers, bid Off the amount at a lower
rate, and use the last sum to pay the sum
first bought, the effect being that he simply
has TO pay lessor premium thereafter the
security remaining the same Different
banks treat such a transaction in different
ways, some requiring now mortgage deeds
10 be drawn and new notes given, and fire.
quently the borrowers are careless about the
matter, and the note first given is left in the
bank, so that often, in IN examination of the
securities, two notes and sets of papers of the
same amount ore found, which, in the hands
Of dishonest person, might be availed of to
cover any deficit in his assets
In view OF the methods of doing business
peculiar to themselves, and the somewhat
complicated form of book keeping in general
use in these banks, frequent and thorough
auditing of the accounts should be made by
4 committee Of the shareholders. Few of the
banks, however, number among their mem
bers men who have both the time and ability
TO do such work, and state supervision, 10 be
effective in protecting the general public.
should be for more thorough than this board,
with its present force and extended duties,
can possibly make it. The range Of invest
ments by these institutions is SO limited that
the same exercise Of Judgment regarding
loans, market value Of securities, etc, is not
required as in the case of savings banks, and
the examinations are almost entirely of cleri-
cal nature An accountant, expert in the
forms in use by most Of the banks, and con.
petent to introduce new forms when required,
should make examinations of these banks,
auditing all the transactions Such a course,
If adopted, would give the board more time
for other and more important duties, while
possibly some of the expense could be assessed
upon the banks Boston Herald