Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1895-02-13

in regard to Investments and it seems to
me the time has come for change in our
investment law. Two years ago there
was an amendment passed which was I'M
derstood to lcgalizc certain bonds as an
investment for our savings banks bnt i,
find wide difference of opinion as to its
Interpretation.
"Thc claim is made by certain parties
that under its provisions, street improve
ment bonds, school district bonds and
some others, are legalized, while others
say the amendment simply provides the
method of arriving at the net indebted
ness of the municipality. am sorry TO
say that few purchases of street inn
provement or special assessment bond.
have been made under this law, as take
the ground that these bonds are not n
legal investment. They are u secondary
lien. as | understand, on the property
AUDITING and benefited, and in some
states notably Indiana, the supreme
court has decided that they are in no
sense AN obligation of the city. In other
states, am told there has never been any
decision defining the exact status OF this
class of bonds. The Investment in
municipal and county bonds has. as u
rule, been very satisfactory, and believe
our present law might be amended to in
clude certain cities, which ssnould be
enumerated, where the indcbtedncss now
exceeds 5 per cent.
| have always been of the opinion that
the law governing investment in railroad
bonds did not include bonds OF electric
railroads, but there are so many OF them
now held that it may be useless TO discuss
the question If they are to be considered
a desirable investment l believe there
should be some restrictions imposed. One
great difference between eEctric ana
steam railroad bonds is that the capital
stock of an electric railroad, generally,
does not represent actual cash paid III,
while that of most steam railroads does.
In the event of trouble, the stockholders
have not the incentive to come forward
and reorganize the road, rs would be the
case if the stock represented aaaal cash
investment. but the bondholdcs are OBJ
liged to furnish the means for reorganiza-
ton.
Investments in national bank stock, es-
peciaily in the West and SOUTH, have
proved undesirable and l suggest that
hereafter no investment be .petN fted in
this stock outside of the .NeF england
and Middle states. do Rts intend to
treat this subject of investments exhaust
lively, as the banking committee of the
Legislature will undoubtedly take up the
matter, but simply to call attention to a
few of the subjects which behave should
receive consideration. The hw should
be made so plain that there should BE- no
misunderstanding as to its meaning, and
our banks should be required p conform
strictly to its provisions.
Dividends.
The total dividend declared the past
year amounts to sa,021, 475 II being an
average rate of 1856.
1t is not wise for bank ta{ pay divi-
tlends when it has not earned them, and
my belief is that bank should
invest in the bae4 and safest
securities, and after changing of
all expense pay such interestss has been
actually earned and collected The fear
that it will lose deposits il the rate is
reduced below per cent y not well
grounded, for no bank now paying per
cent desites new deposits; the more new
deposits received, the less the probability
that il can continue to declare per cent