Oxford Democrat. [volume] (Paris, Me.) 1833-1933, 1898-10-25
SCuUH PARIS SAVINGS BANK

Hon. r. T.. Undertake. bank examin-
er, presented TO the court "Wednesday
with a clear statement OF the circum-
stances, the position Of the trustees OF
the South Paris Savings Bank for such
a scale OF It's deposits as should place
the bank on solvent and strong basis.
In decreeing the scale Judge Savage
said:
Il believe 1, Is practically impossible
in the present financial condition Of this
country, that any financial institution
could be managed 40 as 10 prevent loss,
even with very careful management. Ii
has been found by experience that losses
will occur And when such losses do oe-
cur the prime question Is so 20 control It's
affairs As TO protect those who have
money deposited, and TO secure for them
the largest returns from the assets OF the
institution. To do that the statute has
provided two methods; BY one OF
which receiver may be appointed, who
thereupon takes possession OF the assets
OF the bank aud disposes OF them as well
as he may and divides the proceeds,
whatever they may DE, among the de-
positors pro rata. That Was the only
law Of this state until about twenty years
ago. At that time the legislature passed
the act under the provisions Of which
these proceedings are now pending, by
which, under certain conditions and
under certain circumstances, the deposit
accounts of the depositors may be scaled
down whatever may be necessary, IN
order 10 reduce the liabilities OF the
bank, the liabilities upon which they may
be sued and forced 10 pay, and pro-
viding that anything further can be re-
allied from the assets, beyond the
amount of the reduction, il shall be held
and divided among the depositors; 30
that, as has been suggested by the Bank
Examiner, nothing is lost; and by re-
ducing the amount Of the liabilities suf-
ficiently, the bank NAV be again placed
upon its feet, made strong and given
credit, so as 10 continue in the operation
Of its business. When this petition MAS
presented to me appointed three gentle
men as commissioners, in whom had con-
fidence, and required them to.mske an
examination Of the sfi1irs of the bank,
and report 70 me their estimate OF the
present value OF the assets Of the bank
That report has been made. | have IL
here and il will be filed as a part OF the
records of the court In this case. In ad-
di,ion 10 that 1 have personally, to-
gether with the bank examiner and the
treasurer Of the bank, carefully gone
over the entire list OF assets Of the bank,
so far as l could do so from what knowl-
edge could obtain. Now I think that
il is for the interest OF the depositors
that the bank should not be closed and
90 into the hands of receiver. in which
case feel sure much less would be
realized for them, than il the bank could
De reasonably scaled down and per
mitted 10 go on with its business. And
for that controlling reason have decided
10 grant the prayer OF the petition; be-
ing salts fled that the bank officials have
committed no wilful violation of the law,
but that ST the most there have been
errors 10 judgment, as happens in every
business enterprise, aud particularly be-
cause il seems that the chief difficulty NJ
the present time originated many years
ago, for which none or scarcely any Of
the present officials are responsible.
Having determined that question then the
next question arises, how much: There
are several things which may be consi-
dered. IL might be possible 10 scale
down the deposits of the bank only 10
figure necessary TO Offset the existing
assets, but no bank can be strong and
entitled TO credit, no old bank at least,
whose assets and liabilities are exactly
equal; there must De something for 4
nucleus. something for reserve. The
statute requires il in the case Of banks
doing business 10 accumulate a reserve
OF a certain amount, in order 10 strength
en- their credit, and make them safe for
deposit and not hazardous 10 the public; ;
and my opinion Of the law is that in
scaling down the deposits OF bank that
factor must also be taken into account.
Now the report OF the commissioners
made 20 me shows that the entire amount
due depositors is S316,Ss4 There is
also due a state tax of $500. The state
tax will not be subject 20 scale down,
because the law provides that all taxes
mus; be paid in full. The amount Of
assets estimated by the commissioners is
$50. 1876. Leaving difference between
the assets and the liabilities OF $40, s6S |;
the assets being less by that amount. A
scale down Of fraction over three per
cent would make the two items equal,
but il would not make the bank so safe
and strong as IL ought TO be, either for
the old depositors or those who may be-
come depositors hereafter. The statute
provision is: The court shall divide the
loss pro rata among the depositors,
thereby rendering the corporation sol
vent, so that its further proceedings will
not be hazardous TO the public, or TO
those having or placing funds in its
custody" From the examination have
personally made, as well as from such
information as have gained from the
bank examiner and treasurer OF the bank
and other sources Of information, have
decided that IL Is my duty 10 make scale
down Of ten per cent. And | feel thst
that will be sufficient to render the bank
entirely solvent and safe; both for the
existing depositors and those who may
become depositors in the future. Be-
cause unless the bank Is made entirely
safe il requires no prophet TO see that the
existing depositors would be uneasy. i
merely say now that that viii be the
amount of reduction in the deposit ac-
count Of each depositor. And In making
this reduction have made IL so large in
view OF the fact thst | apprehend very
many of the depositors of the bank rely
to a greater or less extent upon the usual
semi-annual dividends. And il Is my
belief that BY the reduction which shall
order, and by applying the matter Of
uncollected interest and other matters
suggested By the bank examiner, that the
bank may at the usual time, or about
that time, pay an amount equal TO its
ordinary dividend. That dividend how
ever will have to be ordered by the court
as q part of the court proceedings. l
will not sign q decree at present, be
cause before sign decree | want a
statement OF the assets drawn mp in de-
tail. have seen list but it has not
been In shape for preservation. | want
it drawn up, carrying out the several as
sets in detail, standing upon the books,
and the present estimate Of the value.
That won't effect the amount Of the re-
ductiOn, but il will be basis upon which
special dividends may be computed here
alter, and when that 10 done will make
and sier decree 70 b entered - Of to
6av.