The Portland daily press. [volume] (Portland, Me.) 1862-1921, 1893-01-27

oI MAINE could be called III 1fou
outside of the State tomorrow
and placed in the savings banks,
SO that every dollar of loans to sound
Maine municipalities came from our saw
ings banks no Maine enterprise would be
promoted particle and no Maine re-
source developed an iota. The authors
of the bill cannot, therefore, expect to
''boom' Maine by concentrating its
municipal securities in the savings banks.
A second class of securities which saw
ings banks seek is the bonds of trans
portation companies, especially railroai
companies. Here of course the mama
gers are to seek first safety, then CONVEX
tibility. No prudent savings bank man.
ager, except in very exceptional circum-
stances, would accept the bonds of a rail
road unless it was built and was earning
more than it's fixed charges, or the
stock of road unless it had been earning
and paying dividend for some years.
There is practically but one road in this
State that will furnish any considerable
amount of bonds and stocks answering
this description-the Maine Central road
The securities of this road are almost
the only securities that the saw
wings bank managers could look to to
increase their railroad holdings in
Maine, consistent with their obligations
to their depositors. Now supposing the
Maine savings banks could gather in
every Maine Central security would
Name be any better off than it is now
with part of those securities held out
of the state. Would the state derive any
more benefits from the road because it's
savings banks owned its securities?
Obviously not. If the Maine Central
road was weak financially, if it's securi-
ties were a drug in the market, or if it
was venture the success of which was
in doubt then it would undoubtedly help
it, and indirectly help develop the re-
sources of the state and promote it's en-
terprises, for the Maine savings bank to
loan it money. But to loan it money un-
der those circumstances would be to
take risks which trustee of other peo-
ple's funds has no right to take. Under
existing conditions Maine would not
be benefited particle by an exchange of
all the investments of its savings banks in
railroads outside the state for securities
of the Maine Central.
We might pursue the examination of
savings bank investments down through
the list, and we should find that the
same rule governed the prudent savings
bank manager in his investments in all
kinds of stocks and bonds--irst safety
then convertibility. Now when bond or
stock is safe, that is, worth its face value
and likely to continue to be, and when it
is convertible, it will seldom want for
takers. Investors everywhere are seek
ing such securities and when they are
offered they are readily bought. If there
was not savings bank in this state
securities of this description lin Maine
would not lack for market, and none Of
the corporations issuing them would be
hampered in the least for want
of money. No savings bank now buys
these securities with the idea that it is
helping the town or the railroad, or be-
Q luse it thinks the town will suffer or
the railroad lag if it does not. It buys
them simply and solely because it thinks
they will prove a safe and profitable in
vestment for the depositors' money.
On the other hand whenever a private
investor or a savings bank manager buys
a security for the purpose of helping an
enterprise he thereby confesses that the
security lacks something to make it gen
orally acceptable to investors. 1t may be
uncertainty as to its present or pros
pective value, it may be doubt as to it's
easy convertibility. But one or the other
of these elements is pretty certain to at
tach to a security which is purchased for
the purpose of helping an enterprise.
Now for the private investor to buy such
security is frequently praiseworthy
act. 1t reveals oftentimes commenda-
BILE public spirit and a willingness to
help enterprises which may be beneficial
to the community even if they do not
return profit to the investor. These
are the kind of securities the purchase
of which helps the state, because
they are almost always based on new
enterprises which will add something to
the convenience or comfort or business
facilities of the people. The man of
large means should be encouraged to in
vest in them, and any legislation tending
in that direction which does not amount
to coercion is praiseworthy. But when
the trustee of other peoples money,
whose highest obligation is to invest the
money entrusted to him safely, who is
bound by every consideration Of honor
to seek investments which have about
them the least possible element of I'M
certainty-when this trustee buys Sc
curity for the purpose of helping along
an enterprise he is false to his obliga-