The Portland daily press., 1896-06-06
NAMES BANKS.
A Sketch of the Financial JnSt5.
tsHtiOns Of Maine.

One of the pioneer banks in Maina IN
organize under the provisions of the
Statutes of the United States as a Nation
al bank was the First National Ranl of
Portland. and it commenced business az
q National bank in 1864.
From that time until now, under the
National bank system, the com mercial
banks of Maine have enjoyed an almost
uninterrupted period of prosperity.
Perhaps the commercial banks of no
other State have been SO slightly at.
fected by the varying phases of financial
conditions existing in the country, as the
National banks of our own State.
1t can be truthfully stated that no
failed, although there has been a single
instance where one National bank was
obllged to suspend receiving or paving
deposits, for few weeks. the tempor.
airy suspension having been caused by a
loss made from credits given to financial
institutions from remote sections of the
country.
/ While it cannot be claimed that our
commercial banks have never made
losses from loans and investments. these
cases have been exceptional and gener.
ally so small at any one time, that the
payment of regular dividends to stock
holders has not been prevented.
The banks of this State are but SLIGHTLY
affected by good times or financial pan.
les, which exert such a con trolling in.
fiuence on commercial banks 10 Gated in
large cities where stock exchanges ara
established as convenient medium for
changing values and transacting business
IN the purchase and sale of active secure
ties.
In those large money centers, managers
OF banks seldom meet their customers
Iheloans are negotiated by note brokers.
who daily present to the banks lists Of
paper, from which the banks select and
buy at higher or lower rate of discou mt
according to the prevailing market price
for the use of money and the scredit
standing" of the makers of the notes of.
tered. The rate of discount is thus
liable to change from day to day.
In this State very little paper is &C.
CURED by purchase from note brokers.
Each National bank, or commercial bank,
has its regular line of customers. who
their notes to the Executive Officer of
the institution, generally making expla.
natl on as to the purpose for which the
loan is desired.
While exceptional concessions are
sometimes made for good and sufficient
reasons, the charge for discounts is GEN
orally understood between the banks and
the customers to be per cent. regularly.
without regard to the prevailing rate
between banks in Boston and New
York.
This method of conducting negotiations
has generally proved mutually beneficial
and satis factory. Through this system
few losses have been made by the banks.
and the confidence established by per-
sonal acquaintance with the financial
affairs of the borrower gives the latter a
credit with, and claim upon the bank.
which enables legit innate commercial
enterprises to be carried through finan-
cial crisis without disaster or danger to
either party.
On the other hand, a very large por-
ton of the losses which have been made
by the National banks of Maine have re-
suited from paper acquired by purchase
from note brokers at times when the
supply of money in our banks has
been in excess of the demand for local
use.
There are in Maine at the present time
" National banks with acombined CAPT.
tai of S11, goo.
Following the close of the Civil War.
and during the years from 1866 to 1872.
many new charters were granted by the
Legislature Of Maine. and under them
were organized savings banks in differ
ent parts of the State.
At that time gold commanded high
premium, paper money was in abundant
supply, activity in general business pre-
vailed, lines of credit were given by these
new banks, managed by men who were
inexperienced in financial matters), to
customers without proper consideration,
the deposits increased rapidly, and bonds
OF all classes were taken for investment.
discrimination being generally made
only in favor of the security which prom
lsed the highest rate of interest to the
investor. The savings banks were in
warm competition with each other-not
to build up the largest surplus, but to
pay the highest dividend to the deposit
Tors.
At the close of 1875 the deposits in the
savings banks of Maine reached an ag-
gregate of thirty-two millions of dol
| lars.
In 1876 the reaction commenced. and
In preparation for resuming specie pay
ment IN 1879. the wind and water which
had inflated our currency and created
hctiuous value in property of all kinds,
yielded rapidly to pressure. One after
another of the securities held by our saw
ings institutions became in default of in
terest payments. The depositors lost
confidence in the banks, and between
1876 and 1879 sixteen of the fifty-four
savings banks of Maine became insolyent
and by legal process, the credit accounts
OF their depositors were reduced from
ten to fifty per cent. in order to place
these institutions on solvent basis.
Through this process of scaling down"
deposit accounts, and Withdrawals, the
deposits in the savings banks of Maine
decreased to an extent that in 1879 only
twenty million of the thirty-two million
dollars remained as the aggregate depos-
its of all the savings institutions in this
State.
Besides the sixteen banks which by
process of law were compelled to reduce
their deposit accounts, several others
were barely solvent, but by inaugurating
a more conservative management of their
affairs, resort to the court in such cases
was finally avoided, and the business of
these banks continued without interrup-
ton.
While, perhaps, a majority of the savings
49, 49,. II