The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1893-01-31

1Ileln. luey are dangerous il'oio w o"A
savings banks, and any legislation which
tends to encourage them is against sound
pu lie policy. In Massachusetts the
danger from these savings bank depart
ments of national banks has become SO
serious and threatening that the savings
banks commissioners have dwelt upon
it at length. In heir report for 1891 the
commissioners say:
The system [of State savings banks
so thoroughly established, which has
proved not only of great financial aid in
its accumulations, but very beneficial as
aa educator, and system as near safe as
can be established, seems now, by a
movement recently made, to be seri-
ously endangered from two directions:
First, by National banks opening a saw
ings department; second, by some OF the
trust companies, incorporated by our
own legislature, entering upon asimilar
business. The attempt on the part of
any national bank in this commonwealth
| to establish as part of its business a
saving bank department must be looked
upon as usurping a right and privilege
belonging to the commonwealth, right
strengthened by moral obligation and
|
sayings banks should not be reck-
lessly interfered with nor interrupted
| by a system which though good
in itself as a commercial and
banking system, is not adapted to a
savings bank system and has none of the
safeguards that are thrown around our
savings banks in regard to it's invest
ments. A system founded and estab-
lished by our commonwealth, or by any
state government, ought not to be lightly
treated by the the powers and privileges
granted by federal charter.
The establishment of savings bank de-
partments by national banks is fraught
with danger, and it is directly in opposi-
ton to the principles of savings banks.
A savings bank of our commonwealth is
limited in investments in kind, in amount
proportion and character, and very prop
erly SO; a savings bank carried on by a
national bank working under federal
charter is virtually unlimited.
This year the commissioners reiterate
their views even more strongly.
Now the tendency of the bill pending
before the legislature is toinvite the dam
ger which has become SO serious in the
neighboring state of Massachusetts,. Ma
tional banks with savings departments
already exist in this state. Pass this bill
and in all probability the savings depart
4 ment will be added to great many more
of them. We are not disposed to ascribe
to the originators of this bill any pur-
poses except what they avow, namely,
the booming of the state and the
strengthening of the banks, investments,
but we are constrained to say that they
have Observation-Disclosures scheme
which will lie ten times as eficacious
to build up rivals to our savings institu-
tions as to accomplish either of
the purposes which they confess.
1t needs no argument to show that a
bank whose field of investment is un-
limited can pay bigger dividends than
one that is under restrictions. The
latter is compelled to consider safety
first and as paramount to every other con-
sideration, in the investment of its
/ money. The former may pay more at
tention to profit. Without mourning any
greater risks than private persons fire.
quently take in the investment of their
own property the savings banks could
pay a higher rate of interest. The
law will not permit them to take those
risks. But the savings bank de-
partments of National banks are under
no restraint of law, and therefore
they will frequently be able by assuming
greater risks and yet coming short of
imperilling the funds of the depositors-
get greater interest. Under the existing
law the savings banks are at consider
able disadvantage as compared with the
national banks, but under the proposed
law they will be at still greater disad-
vantage. The national banks also have a
certainly the State cannot tax the franchise
of a national bank under which the
savings bank department of the national
banks will operate. 1t would seem to be
obvious that with all these advantages the
national banks will be able to offer the
depositors in their savings bank depart
ments higher rate of interest than the
the State savings banks can. Now ev-
erybody knows that high or high er
rate of interest is powerful inducement
especially to people Of small accumula-
tons. Panicky as small depositors are
when anything happens to a bank in
which their funds are placed, they
are always the first people to be attracted
4 by the promise of high interest. This
attraction, if the pending bill becomes a
law, any national bank which sees fit to
establish a savings department will be
able to offer, and if the same danger
which is now threatening the savings in
situations of Massachusetts does not
soon make itself manifest, then human
nature is very different in Maine from
human nature in the Bay State.