Yorkville enquirer. [volume] (Yorkville, S.C.) 1855-2006, 1909-04-30
REcE1vERsizp ABUSES
New York's Safeguard for the Peoples
Money.
Money.
ISAAC F. MARcossoM ia Saturday Eosnins Post.


studded with records Of waste, excess
and often spoliation. No phase OF !,
touches the great mass Of the people
more intimately or more disastrousl5
than that which relates to failed fl
nancial institutions. the repositories OF
the peoples money.
Bank failures, the outposts OF panic
are bad enough; but when waste, delay
and extravaganza meet in the winding
I'D of their affairs the evil Is doubly
bad. In 10 state have bank receiver
ships offered such rich pickings as In
New York. This was because its poltt-
ical spoils systems were more perfect
ly organized than elsewhere; and, Sec
ond because 1t is the country's fnan-
cial center. Subject to the jurisdiction
Of it's banking department is twenty
one per cent Of the entire banking
power Of the United States, or nearly
three and three quarters billions OF
dollars Of assets.
But just as New York afforded the
fattest fruits Of receivership, 80 also
has it administered the first real re-
buke to the old system which made
them possible. In brief, the first ami
versary Of the birth of the law which
takes receiverships Of state financial
institutions out Of the domain Of spoils
and provides for a departmental liqui-
dation similar to that Of failed nation
al banks under the direction Of the con-
troller Of the currency, finds order and
economy in the administration Of one
Of the most important Of all trusts. A
precedent has been established which
may be followed with profit by every
other state. Behind its results is les
son of real public service which has
significance for all citizens, because, In
one way or another, nearly everybody
has some connection with a bank al
some time in his life.
This law sets up another mile-post ir
the triumphant career Of Charles e
Hughes as a governor Of all the people;
for this statute in checking receiver
ship excesses Is a full brother to the
public utilities measure which put 9
curb on corporation abuses. Both are
Hughes measures.
In order to get the full meaning OF
the effect Of the new banking law lei
us go back a few years and see the
work of the system at which 1t was
aimed. In New York, as in other states
receiverships of all kinds were sort OF
coin with which political debts were
paid. There was no secrecy about this
When receiverships were announced
there was frequently no occasion fc
look for the names Of the judges who
made the appointments; you could des-
ignate the judges by the names Of the
men selected for such posts. The. state
banking laws provided that just a.
soon as the superintendent Of banks
learned that an institution was in an
unsound condition he was to close II
UP, take charge and report the matter
to the attorney general, who at once
went before supreme court judge and
asked for the appointment Of a tenn
porary receiver. From the moment the
receiver was named the hands Of the
banking department were removed.
Anybody with a strong enough polit-
ical pull could be appointed receiver
He might have been a blacksmith al
Kingston or a dentist at Buffalo. Bus
mess experience was no qualification
despite the fact that the office required
the highest kind Of business capacity
All matters were referred to counsel
who were appointed by the receiver
and counsel fees became the choicest
by-product of receiverships.
Fattening on Others Failures.
One administration was as bad a.
another Once when the Republicans
were in power they had the banking
laws amended so that the attorney gen.
eral could apply to judge anywhere
in the state for the appointment Of q
receiver. This was done to get the pa
tronage away from the Jurisdiction OF
the Tammany judges in New York
city. BY this means judge in re-
mote upstate district could name the
receivers for a bank down on the east
side of Manhattan. Politicians looked
upon receiverships as legitimate spoils
1T is more blessed to receive than to
-, HAa hn nf H.
erhood that fattened on failures.
Governors came and went, but the
receivership system went on. Now, the
real losers were the depositors who had
their money tied up in the failed banks
or in the stock building and loan asso-
Citations. Even If the banks happened
to have sufficient assets to pay out IN
the end, which rarely happened the
long professional delay Of the receivers
(haste was considered very bad form
in receiverships, for the longer they
lasted the greater were the fees) kept
the deposits inactive and out OF the
channels of trade. The depositor lost
not only the value Of this money as q
means Of obtaining credit and expand
ing his business, but also the interest
that it might have earned If 1t had
been out at work. Everybody was
trimmed alike, for the system knew nc
party or creed. There was little or nc
publicity, and this silence was golden
The receiver was entitled to from two
and a half to five per cent OF al
moneys handled, in addition to elabor-
ate expense accounts. In some cases
the expense of administering a receiv-
ership was as high as eighty or ninety
per cent of the receipts or the tota
amount Of assets.
Here is one concrete case which
shows how the system worked: the
Republic Savings and Loan association
found itself temporarily embarrassed
in June, 1900, and went into the hands
of a receiver.
Most of the stockholders Of this COM
pany were poor people who had pu,
their savings into the stock in the hope
of being able some day to buy home
1t was important that every asset
should be safe-guarded and realized