Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1909-01-25

A'is'I tIlc otdlc ldX exceeds One-naIt OF
one per cent. that four per cent NUM-
cipal bonds command a premium and
that first class railroad and industrial
bonds usually cannot be had at a fig
ure that will net above that rate, no
extended argument is required to dem
onstrate that the savings banks can
not be expected to maintain an aver
age dividend rate of 1892 per cent with
out going outside CT the class of in
vestments in which trust funds should
be placed. An adherence to a rate
consistent with these facts should
and l believe will, when understood,
commend itself to the thinking public
Every mutual savings institution
should pay its depoSitors, for the time
being, what it earns after carrying a
proper amount to its reserve. But
none would undertake to increase these
earnings at the expense of absolute
s2fety. Periods of financial depression
have come and will come again. They
will invariably leave their wrecks in
the business world. All persons and
all institutions doing an extended bust
ness must expect to find some of this
Wreckage on their hands. 1t would re-
quire more than human wisdom to
avoid it altogether. There are, per-
haps, no infallible signs which will in
dicata the weaker among the higher
| classes of investments. But it should
not be forgotten that usually the high
| err rate of interest offered the greater
| the risk, and banking institutions
| should be very careful in assuming
| risks. None Of them are so large or
SO strong that they may not be affected
| thereby, and the larger institutions
with their larger individual invest
ment,; are in no less danger of serious
losses if care and caution are not exer-
| cised.
With other classes of banks actively
| competing for savings deposits, the
| temptation for savings banks to Under
| take to meet the competition is great.
| But it should not be forgotten that
| their function differs widely from that
| OF commercial banks. They are in
| tended to constitute system for the
| safe investment of the deposits of
| those who are not SO situated as to in
vest their own funds They are the
property solely of their depositors. 1t
matters not whether they are large or
small. each has its special field to
| serve. If each serves that field with
care and fidelity to the trust imposed
| in it's officers it does it's full duty. 1t
! is chartered because there appears to
| be a demand for it in its own COM
| munity. 1t is not responsible for the
welfare of any other community. 1t
| has no business actively to invade any
| other community if already convent
| emily served. And this is true of other
| banks as well. The ultimate welfare
of the entire savings bank system de-
ponds upon the welfare of the indivi-
dual banks constituting the system.
| They can continue successful as
whole only so long as all OF the in
dividuals continue successful Disaster
visited upon the few will bring want
of confidence, and consequent disaster
to the many 1t can be avoided only as
there continues to exist an unseihSh
regard in each for the welfare OF all,
There is no call for competition among
them. There is no place for it, IL
should not be tolerated.
| am strongly of the opinion that
savings banks should not seek deposits
by individual advertising. The Saw
ings Bank Association of the State
might properly maintain system Oh
educational advertising that would be
beneficial to the public by keeping be-
fore it the advantages offered by the
system and the blessing of habits OF
thrift and saving. Individual banks
may properly do this as long as they
do not try to build themselves up by
creating belief that others are
weaker or otherwise less worthy OF
patronage But when one institution
undertakes to exploit its claims over
that of others it necessarily engenders
a spirit Of competition that is too IKE
Nv to lead to undesirable investments
for the sake of greater dividends Inc
same class of investments in one pahk
will give substantially the same re-
turns as in another. 1t is, generally
speaking. only as one bank taxes
greater risks that it is able to pay
materially greater dividends.
Much credit is due those instltu-
lions which insist on absolute care IN
placing their investments, even at the
expense of failure to increase their de-
posits. 1t is much better that any
bank should see it's funds gradually
withdrawn dollar by dollar, than thal
it should ultimately find itself IN
position where it cannot meet Its
legitimate demands. On the other
hand much injury will be done the
public. if by persistent invasion OF
fields they We're not intended to seek
some of the larger banks so deplete tht
deposits of the smaller that the latter
are driven out of existence. Because
the minute the smaller deposltor is de-
priyed of a conveniently accesslpie
place of deposit he ceases to be de-
positor. The person who deposits MS
small savings at frequent Intervals
and for whom the system is primarily
intended will not send them abroia
unless he does so through a pos'al
savings system. The elimination OF
the smaller banks by this system Oh
connection. if it comes. ana that Is
its only logical result if persisted ln'
means finally a few large banks Tor
large depositors. and no further excuse
for n low rate OF taxation.
The result is so apparent that us
mere mention ought to lead TO CO.
operation rather than competition. IL
commercial banks are bound to com
nate LET them do 50. There are many