The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1896-12-08

Another cause Of unfortunate invest
ments by New Hampshire savings
banks is the fact that when they first
began to invest they received large
rates of interest AS more eastern peO-
pie went into the business of organic
ing loan companies and lending money
in the west, competition became SO
great to secure loans that rates OF IN
tereSt was reduced The New Aamp-
shire institutions had all had experience
in the early days of western investments
and refused to take Investments winch
yielded low rates of returns BY in
sisting on high rates Of interest they
got less security for their loans and
when the depression which has been
general throughout the country came
they found to their sorrow that ia their
greed for large returns in interest on
! loans and dividends on stocks they had
killed the goose that laid the golden
The savings banks of Vermont though
very near TO the defunct New Hamp-
shire institutions, but which entered
the field of western investment at Ia
ter date and were always willing to
take investments which paid less re-
turns but which were better secured
have not been ruined by the the shrinh-
age OF western securities as have the
New Hampshire banks.
Another feature Of the question is
overlooked in the Herald's article. The
officers and managers of these banks
made frequent trips to the west and
made personal Investigations as to our
condition. 1T is true they did not see
what would be the result of the invest
ments that We're being made. neither did
the residents of the west who i'm many
instances borrowed their money and
invested it and have not only lost the
borrowed money and ali their own prop
erty beside but viii be under the bur
den of deficiency judgments the rest or
their lives. If these eastern bankers
could have fOretOld the result of their
investments i'm the west they We're
criminally careless in not making bet
ter Investigations before investing the
savings of the IabOring classes which
We're intrusted to their care. If they
We're not able to fOresae the result any
bitter than the western people then they
ought to frankly admit it and say they
did the best they knew how, and not
seek to blame their failure on western
men and then call them sharpers and
sWindlers.
The bank commissioners of the state
Of New Hampshire say in their report
OF 1895 in regard to western investments
OF the savings banks. THE condition
of the west during the past two years
has been one Of defaults. depreciation
Oh NalueS, and losses As consequence
the income OF the savings banks has
been curtailed. and their guaranty fund
and surplus largely reduced. Tt is the
natural result of an unlimited field of
investment. The large interest rates
received from western investments q
few years ago and the almost phenomen-
al success that attended the early in
VeStmentS in that section prompted
nearly all the savings banks to enter
that field. and stimulated the incorpOr
public demand.
These interest rates enabled the
banks to pay larged dividends than the
banks of surrounding states. and inVi-
ted deposits here from those states. We
were realizing large amount of taxes
from these deposits at rate in excess
of that of any other New England
state, dep0sit0rs We're getting dividends
of 5 per cent or more. and the deposits
We're increasing year by year. 1t was a
prosperity that could not last, yet any
1lr
savings banks not only met with no en-
enlargement, but provoked active and
successtul opposition. Some Of the de-
faults can be attributed to crop failures
of the west but not all. The loses thus
far have come largely from classes of /
investments that would have proved
disastrous whatever might have been
the condition OF the west
1t has been customary to attribute /
the troubles which have overtaken the /
savings banks to their investments in /
western mortgage loans, because of the /
large holdings Of the savings banks in [
this class of securities; but the princi- /
pal LOSSES that have come to the banks I
are not from western mortgage loans [
They are from the stock of western /
mortgage loans. They are from the /
stock of western investment companies !
state and national banks, western cor
pOlatiOn bonds and a miscellaneous |
class OF investments that ought never /
to have been purchased with trust |
funds"
Here the bank commissioners of the /
state of New Hampshire tell what the I
real trouble with the savings banks of /
their state IS 1t was not the mortgage
loans that they got from the companies /
that wrecked them, but their invest /
ments in stock of corporations that (
they came west and organized and (
brought men from the east to manage I
in a majority of cases. These men were 1
not acquainted with the conditions OF |
the west and did not succeed and in a [
few cases the men that came from the /
east We're rascals and have swindIed I
the people Of the east that backed them (
and their schemes
p. H. Bonebrake president of the
Central National bank Of this city, I
when asked as to his opinion as to the I
cause of the failure Of the savings in /
stitutiOns of New Hampshire said.
They We're large investors in west I
ern securities from very early period [
in the business. They fell into the /
common error of the rest of the east ia /
regard to western loans. AS soon as
there was any profit in the business of /
making the loans out here there were +
a great number Of banks and individ- (
uals that came out here and organized I
companies and placed them in charge /
of eastern men who were Inexperienced +
in the conditions Of the country and as I
to the value of lands and improve /
ments.
The business of making the loans
was more profitable than the loans f
were themselves and the stockholders /
or the loan companies made more +
money than the investors fla the loans /
These banks invested largely in the I
stocks of the companies and when the +
compaies We're unable to so on and T
make money they lost on their invest /
ments."
George NJ Noble, who has had large /
experience in western Investments 4
when asked If he had read the Herald |
article, said:
yes, L have read the article in the (
Boston Herald. Doubtless it has a 4
basis Of fact. although it is Inaccurate T
in many respects. Ny acquaintance +
with many of the officers and directors T
of the savings banks Of New Hamp-
shire has led me to entertain a very /