The Portland daily press., 1895-09-20
GOV. CLEAvE SIS LETTER.


stalment stock
GOV. cLEAvEs's LETTER.
His Comments on the Disclosures in the
Report
With the report of Mr.. Whitten Govern
or Cleaves sent the following letter to
Mr.. Timberlake:
State of Maine,
Executive Department.,
Augusta, September 10, 1896.
Hon. E. E. Timberlake, bank examiner,
Sir-I transmit herewith the report of
Charles R. Whitten, bank examiner, re-
ceived by me on September 49, 1895, also
the report made by him in 1894, relating
to the Granite State Provident Associa-
tion, foreign loan and building compa-
ny, doing business by authority. OF the
bank examiner in this state. [ also trans
NIT herewith the action Of the Executive
Council upon this subject
You will observe by the report made in
1894, D. II, that our state bank examiner
was invited by the chairman of the bank
commissioners of NewyH Hampshire to be
present at the annual examination of
the Granite State Provident Association,
that he "spent several days looking over
their accounts and methods of doing
business that he found the practices
of this company varied. IN many respects
from those of our local associations in
Maine. That cit is their practice to
charge all expense directly against the
capital dues received from their INSTALL
ment shareholders, and this item amounts
to a very large sum- He found that
ssfifty per cent of the first years pay
ments and twenty per cent thereafter
till maturity of the shareholders are
charged back for expense;" that leach
shareholder pays $12 yearly on each
share of stock owned, and $6 ts the
charge on each share the first year, and
SO on each share after the first year. ;"
He found that sat the end of the first
year the shareholder has only Sc stand
ing to his credit for every $12 he has paid
in, and $40 for every $l2 after the first
year"
The report further states that 'tby
this method their profits show to be very
large, as there are no charges against
of legal expenses" and that ''none of
these profits are credited to the shares
semi-annually or annually, as in the
practice of our local associations"
The bank examiner further states that
he understands ''that they sell full paid
stock, as it is SO called, where the pur-
chaser pays the full amount of 5000 for
each share, and this stock receives cash
dividends of from six to eight per cent
on this amount, and at the end of five
years is entitled to proportionate part
of the profits of the Association, and
that "they have upwards OF twenty
different contracts which they make
with their shareholders.
The bank examiner further states In
his report Of 1894 that he is mot in
favor Of foreign corporations coming in
here to do this class of business" and be-
Iieve "our local associations capable Of
covering the entire field. i"
The report further shows.that at that
date December, 1894, upwards of 1886, 900
had been paid by the citizens Of Maine
and received by the Granite State Provi-
dent Association during the time it had
been permitted by the bank examiner
of Maine to carry on this business in the
state. and upon which deduction had
been made Of $6 each, on 13, 651 shares
during the first year. and So per share
had been deducted from the payments
charging back, by the company, for ex-
nenses; SO that at the end of the first year
The shareholder who pays $12 per.share
for his stock only has $6 standing to his
credit: and after the first year he has
only $40 standing to his credit for every
$12 he pays in .,,
business in Maine, and if I am correctly
informed, is now with it's new business
taking from the state probably $15, 900
or more, every month.
The statute under which the Granite
State corporation was admitted to do
business in Maine, authorizes the bank
ing the business and financial condition
of any such association or corporation
dong or desiring to do such business"
TO "make examinations of such associa-
tions or corporations, at such times and
such places as said bank examiner may
desire,'' and the corporations or assooia-
tions are required by law to pay the ex-
The statute also authorizes the examiner
to REQUIRE of such association or cOrpo
ration, returns to be made in such form
and at such times asshe may select. The
salute is complete in itself in comforting
his authority and duty, and contem-
plates examinations frequently enough
by your department. to determine wheth,,
er the corporation affords security and
safety to our people who are investing
their money therein.
Though full authority for examina-
tions was conferred by this statute on the
banking department., the legislature on
the 9th of March. 1895, by joint order,
authorized and directed the bank examin-
er to make an investigation and examina-
|
citation Of Manchester, NH, and report
to the Governor and Council In pursu-
ance of this order, the state bank exami-
ner met with the representatives of the
banking departments of the states OF New
York, Connecticut, Rhode Island, Ver-
mont and New Hampshire, ut Manchester,
on the 4th day. of June.last and began
the examination of the Association as OF
the first day of June of the present year.
The report of the Maine department
was received by me, as before stated,
on the 10th day of the present month.
The examination made in June last en-
tirely corroborates the report of 1894. be,
| fore referred to, and deals more in detail
with some of the company's methods OF
DUNG business $, and its general affairs; affairs !,
only six months subsequent to the report
of 1894, the number of shares subscribed
for by Maine citizens, has increased rea
from Is sSl IN December &c 1894 to 4 1e se
| of 4, 1876 3-4 shares during six months,