Evening journal., 1889-03-07
COOPERATIVE BANKS.
what Is Said of Thorn by the Commits
sioners OF Massachusetts,.

What Is Said of Thorn by the Commits
sioners OF Massachusetts,.
The commissioners Of savings banks make
the following remarks concerning co-opera-
tive banks: i'The favor with which these in
situations 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 u, |
with assets of IS, sos, 072. 49, gain of 81 $685.
1888 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, 1877, the number
being 1888, Of which gOl had been withdrawn
or forfeited before October, 1888, leaving 81
in force at that date, Of this number 80 were
pledged as security for loans, and AZ were
free On the 80 shares, monthly payments Of
81 each had been made for 1874 months, max
ing the cost at maturity Of each share $l34;
the value Of the shares at maturity was
S200.32, showing profit on each, S66.32 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 50 increased
the amount of money for sale as to make
probable reduction in the premiums bid las
has already been the case in some instances),
which viii reduce the profits.
within the year the question has arisen
as to whether cooperative banks can loan on
real estate situated outside this common
wealth. One bank located in town bounded
by the state line has made loans in the adj
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 a limited territory, to enable the
building of homes within the immediate
vicinity, and not for the development Of en-
terprises promising large returns to the share
holders; and, in the absence Of a fixed limit,
have taken the limit named in the law re-
garding savings banks, and ruled that loans
can be made only on real estate within this
commonwealth.
"a custom exists In these banks Of allow
ing a borrower who has bid high premium
on his loan to subsequently, when the oppor-
tunity offers, bid Off the amount at lower
rate, and use the last sum to pay the sum
first bought, the effect being that he simply
has to pay lesser premium thereafter. the
security remaining the same. Different
banks treat such transaction in different
ways, some requiring new mortgage deeds
to 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, 50 that often, in en- examination Of the
securities, two notes and sets Of papers Of the
same amount are found, which, in the hands
of dishonest person, might be awaited 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
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, TO be
effective in protecting the general public,
should DO far 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
determinations are almost entirely Of cleri-
cal nature. An accountant, expert in the
forms in use by most of the banks, and COM
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.