The Providence news. (Providence [R.I.]) 1891-1906, 1896-03-13
TH|RDEDIT|0N
Bis O'CLOCK.
THEIR REPORT.
Granite State PrOvident
Association Officers.
Result of State Bank COmmiS-
SiOner'S Investigation.
A Deficit Which is a Sufficient
Cause for Alarm.
A Deficit Which Is a Sufficient
Cause for Alarm.


OF the State Bank Commissioners who
have been investigating the affairs of the
Granite State Providence Association in
support of a petition presented by the
commissioners to have the New Hamp-
shire charter OF the company revoked,
has been presented TO the Governor. IL Is
an exhaustive dissertat ion OF the methods
OF the eassociation, containing about thirty
thousand words.
1t shows that by calculation based upon
a statement OF the assets and liabilities
OF the association as shown by the books,
January z, 1895, there Is dencit OF S26l,-
5lS.21, which, the commissioners assert,
Is su fiicient cause for grave sslarm as to
the ability Of the association TO mature
Its shares within any reasona bic term OF
years. Moreover, says the report, the fig
ures do not clearly indicate its actual
condition owing to the practice (possi-
bly, warranted by the contracts with
members) OF deducting expenses from
capital dues, thus making its liabilities
TO members less than the sum paid in by
them. IL to the deficit is added the sum
of S548, ,672 72, the amount of dues taken
for expenses and fines, $50, 500. SO is found,
as the amount the association must earn
in oroer to pay back to members what
they have paid in and the question when
the shares can be matured. in accordance
with the associations published plan, is
not worth dwelling upon, as 1t is perfect
ly apparent that the earning power of
the association can never accomp ish II,
and shares can only be matured by re-
celpts from new membirs.
The provisions of the charter granted
In 1851, and renewed in 1887, recognizing
II as an insurance corporation, its subse-
quent business methods as building and
loan association begun in 1855, its adop-
f,f NV. ftfft. htatt
charter in New York State as the Ameri-
can Allotment Association, and the diverse
and confusing nature of contracts sued,
are all discussed at length, and the fol-
lowing deductions are set forth by the
commissioners:
lin the judgment of the commission
ers, business having so many and di-
verse plans is Liable to misuse; 1t :ts not
susceptible of intelligent supervision by
examiners, and must inevitably lead TO
MISUNDERSTANDING end disappointment
on the part OF those who join in it, of
which many instances lave already come
to the knowledge of the commissioners.
Certain losses to stockholders have oc-
CURED from the withdrawal OF larger
sums than the members proportionately
share by reason OF unwise or invalid con-
tracts made by the management, by re-
batting gross premiums, and by the ma
turing of shares by an unequal division
of the profits.
"The practice of the association TO
issue psid-up stock which shares in the
profits of the association and at the same
time receives high rates OF interest on
the money invested, is a burden on the
instalment shareholder and borrower
which, in the judgment of the commits
sioners, should not be permitted.
1.-The proportion of shares borrowed
upon Is so small, In comparison with the
total number, that 1t shows the princi-
Piles of which building and loan associa-
tions are founded to have been disregard
ed by this association in its business.
throwing so large burden on the bor-
rowers that in the judgment I the com
missioners the shares cannot be matured
within reasonable time.
"The great extent of territory over
which investments are made and the i'm
possibility of proper inspection OF the
property, render the mortgages of the as
sociation OF uncertain value.
"The sale TO third parties of first
mortgage on property in which the great
or part OF the money of the association Is
invested and without fund which can
be ussd to redeem the dominant encum-
brance, as has been done, destroys the
value OF the investments as an asset
whenever disturbance occurs or a d is
trust Is created, and is likely
to result in very serious shrinkage to
"1he right claimed by the association
to carry surplus, without deducting
losses as they occur, and TO apportion it
as profit among its members as the man.
ayers may from time to time determi ae,
whether II exists by virtue of agreements
with its members or by statute, is so con-
trary to equity and sound business prin-
ciples that il should not be permitted to
be exercised.
"ln the judgment OF the comm ission-
ers the expenses OF the association have
been larger than the business warranted,
SO large that suspicion of want of good
faith on the part OF those authorizing the
expense is created.
"The payment OF items OF expense in
Cured In the solicitation of business,
taxes by banking departments, trfiing ex-
penses, influence, losses by agents, and
legal expenses, which were charged TO the
association, are properly chargable against
the Guaranty Agency Company, IL its
contract with the association is valid,
aud should he recovered by legal process
from its stockholders
"It Is evident that the great efforts have
been made by the managers TO secure
lerge numbtr OF new mem oers, whose
money seems TO have been needed by the
association i'm order TO fulHl the promise
held out TO the public. The commission
ers hold that any business depending
upon the eompany's rela ion TO new
members is against the public policy and
New Hampshire.
"Tne diversion OF any surplus OF the
amount ct aside for expenses from the
members dues, over the actual cost OF
carrying on the business OF the associa-
tion is not justifiable under the plan
adopted by the directors creating what
they called permanent shareholders.
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