Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1903-01-17

10 iiiStNNcfHS III SiEC, ssiiit ~ sAi'V ~
pears that the present method does not
effect the purpose intended. AS rule,
the people to whom such deposits be-
long never receive or even see copy
lof the report of the Bank Examiner.
Nor Is there any reason why the State
should bear the expense OF publishing
this list. 1t is matter relating solely
to the internal management OF the IN
ldividuGl institutions One may have a
| large number of such accounts and an
other have none. 1t seems reasonable,
therefore, that each should bear the
Expense of looking after the interests Of
its own patrons. il such lists were
published in local newspapers, instead
Iof in the annual reports as now, the
parties interested would be more likely
tor be reached either directly or through
other readers of the paper who know
them, than under the present method.
Some states having mutual savings
banks have adopted this plan and
found it much more satisfactory than
the provision now in force in this State.
The total amount of the reserve fund
at the present time is 80, III, 374.I9, being
1913 per cent. of the deposits. This is
a gain of 5000, 349.69 in that fund during
the wear. while the gain for 1901 was
| $146, 339. 40.
| Our statute has for years required
each savings bank semi-annually to
carry from its profits to this reserve
| fund. an amount equal to one-fourth Of
one per cent. of the average amount of
| it's deposits. Notwithstanding this ac-
cumulation has been thus continued
from year to year, it now appears to be
much within the limit OF the five per
cent. fixed by law. In 1892 the per cent
of this accumulation to the deposits was
4.l6. while as stated above i Is now but
3.'9. Thus it appears that the amount
required by law is none too large to
meet the purpose for which it is set
aside.
The reserve and undivided profits to-
gether amount $3.50. lie 20, being SAT
per cent of the present deposits. AS
already explained, the larger portion of
the undivided profits is but an ac-
emulation of earnings to meet the ac-
cruing charges for expenses and
dividends. Thus each bank has an ex-
listing liability, net shown in its state
ment, to which a large portion of the
accommodating profits must be applied.
This fund cannot, therefore. be con-
siderod as part of the reserve avail
able To cover future emergencies. AMI
should rot be taken into account when
determining the amount Of reserve
he'd 10y these institutions.
1t has been frequently explained that
the estimated market value of re-
1.
ing to $10,S1f, 944.T1, is not a permanent
reserve to be taken into account when
considering the future of these institu-
tians. This surplus depends upon the
existing market on securities like those
held by the banks. For example, the
above result is obtained from valua-
tons made at different times during
the year, principally upon such yalua-
tons made prior to the first of Sep
TENDER. Since that time there has
been such reduction in market values
of securities that q present valuation
would show very material decrease III
this item. 1t is possible, although not
probable, that condition of the mar
ket might come, under which this sur
plus would entirely disappear. and
even make it necessary to charge off
the present premium account, amount
ing to S4S9, 04S.2S, from the reserve fund.
These valuations are also affected by
the time of maturity of the securities.
The fact alone that the banks must
necessarily carry these securities toI
maturity, eliminates this apparent sur
plus when considering the question of
reserve.
When considering the earnings OF
savings banks it is well to keep in mind
the difference between the nature of
their business and that of commercial
banks Commercial banks always en-
joy the greatest prosperity and receive
the largest income when business is |
active and money plenty. This is rot
necessarily true with savings banks. |
Their business is limited to the receipt |
of trust funds for investment. They
have a definite amount of money toI
invest. and the income therefrom is |
limited TO the rate of interest that such
Investments pay, whatever changes
there may be in interest charges gen
orally They cannot, under the law,
transact an ordinary banking business
cannot discount business paper, cash
checks. sell drafts or do any like bank
ing business. Not only are they limit
ed in the kind OF business they may do
but their investments are prescribed
by strict regulations of statute.
When money is plenty and business
active they do not ordinarily receive
as much income from investments
made by them as they do when there is
a scarcity Of money, while at the same
time, they have fewer opportunities to
obtain safe investments. Thus, while
savings banks might make a better
showing of assets as compared with
their liabilities during such a period,
because of the higher price of securi-
ties. their earnings would be smaller.
Under such business conditions how
ever. commercial banks are enjoying
their greatest prosperity.
The average rate of dividends paid
has been 1926. while that of 190kwas $3.50.
Only two banks, having deposits
to $352,S70.6s. have MAIN
tanned their dividends at four per cent.
Eighteen with deposits amounting tol
$43, 81, 1881. have paid dividends at the
20 rs ~ +braa apd one half Dpr cent for