The Providence news. (Providence [R.I.]) 1891-1906, 1895-03-27
SAVINGS BANKS INVESTMENTS.

$3.50. s44.s7 of defunct Providence saw
ings bank, we note that $l1S, % are
Western and Southern loans, divided
among ten states.
Should we know the precise facts Of
these individual loans we, would un
doubtedy find excessive interest in
every case, and, as is often in such
cases, the payment Of interest but the
loss of the principal. The comment on
these loans is. that some of them have
already shrunken over 20 per cent.
The suggestions are that in order to
protect future investments this State
should have an official examiner. We
tail to see how that would be a perfect
cure, as the loans are made by the direc-
tors, and an examiner might not know
anything about them until months after
the money was gone. la view OF the
recent financial troubles, and the po-
sition officially taken in one of these
states where the investments referred to
are made, and also recognizing the
growth OF populistic sentiment, such
loans cannot we'll be regarded as con-
servatiye.
There is, however, one way, we think.
to protect the depositors, and al
though they would not nominally re-
ceive the extra rates, yet bo.h interest
and principal would be absolutely safe
We think we can safely assert that the
bulk of losses to banking institutions for
several years has been directly attribu-
table TO just such Western aud Southern
loans. Many of our states already have
law prohibiting loans from savings banks
being made outside their respective
states, and many of our life insurance
companies who have very large amounts
of money to invest, have similar restric-
tions.
While the framing OF law to control
the investments of our savings banks
would be most delicate matter to ap-
proach. and while we are not prepared
to assert that such investments should
be restricted absolutely TO the immedi-
ate territory of the bank and the com
munity in which the greater part OF the
depositors live and labor, yet laws
practically like this are in SEEM
ingly successful operation, and where
there are no such laws the experience of
banking men has led them to soconfine
their investments. The advantages
of home investment are obvious both to
the individual capitalist and TO the banks
New England has put over eighteen mil
lion dollars into the West and South
in recent years and has got but
100000 of it back again, a
feature of the disastrous transactions
being that losses have been frequently
not so much due to the fact that the
investments have been intrinsically poor
but that to rascality is attributable their
failure, this rascality being possible
because of the distance that separates
the investor and his investment and the
consequent impracticability of wafchin g
the investment.
There are doubtless qualifications to
any argument for such restriction as we
have suggested, but the advantages,
subject to such qualification, are:
First--The loans will be on property,
where the directors can examine often,
and fully know all the changes.
Second-It will develop our own re-
sources, and advance the growth and
prosperity of our State.
Third-Many a small loan can be
made on undoubtedly reliable security,
that is now denied in order that larger
amounts can be loaned West and
South.
Fourth-Many steady, deserving
mechanic will be enabled to own his
own home, giving to him more stability,
and making him one among US.
Fifth-Many of the savings banks in
the country will promptly create popu-
lous communities in their midst, and
the suburbs of our cities will soon
blossom like the rose.
This matter, it seems to us, is we'll
worth a careful consideration at the
hands of the General Assembly.