New-York tribune., 1911-03-16
WARNING FROM CHENEY
He Believes Surplus Of Savings
Banks Too Small.
THEIR SAFETY UND0UBTED
Superintendent Says Liquidation
of Carnegie Trust Company
Is Advancing.

Albany. March Is Superintendent .. II.
Cheney OF the state Banking Department,
in his annual report 10 the Legislature to-
day OF savings banks. trust companies, safe
deposit companies and miscellaneous cor
porations. calls attention to the almost un-
broken decrease annually during the la
twenty years In the percentage Of surplus
on market value Of investment to deposits
In the savings banks OF the state. such per-
centage to-day being less than one-haf Of
what it was in 1890. and declares that the
situation deserves careful consideration
Mr.. Cheney quotes from his annual report
OF year ago on the subject, when he said :
The safety Of our savings banks is in
deed undoubtcd. and there can De no sue
cessful challenge OF the principle that every
dollar OF net earnings that can he so ap-
portoned wIth prudence should he distrib-
uted 10 depositors for whose sole benent
the savings banks have been established
But the qualifying words " with prudence,
deserve to he emphasized. Absolute SAFE
~ Of savings funds should always he the
primal COZ sideratiOn. Tine surplus OF saw
lngs bank represents It's margin OF sale'y.
Moreover. surplus adds TO the earning
power of the bank. and the statute itself
guards that surplus with jealous care by
permitting no part of 1t 10 he paid OUT III
dividendS until II reaches 10 per cent Oh
me amount due uepOSltoTs. II 'dIln'i W
over-cmpha asizcd that the management oil
every saving banks whose deposits are IN
creasng should carry proportionatc sums
10 It's surplus fund AT every dividend perloi.
Continuing. the Superintendent says:
The occurrences OF the last year and eX-
isting conditions i'm the financial and eco
nonic world have not detracted FROM out
have further emphasized. the words OF eau
tion contained In that statement. While
there may be no immediate danger. the SIT
nation is such that II deserves and IS re-
ceiving the careful consideration OF the
mos thoughtful and conservative men con,
nected with the savings bank system or
the state. Various remedies have been sus-
gested In fact. II has been proposed 10
arbitrarily limit by statute the interest or
dividends paid depositors with savings
banks to fixed rates proportionate 10 sur.
plus already accumulated. The purpose. or
course. is - build up a sufficient surplus
10 protect depositors against loss, and ms
end might possibly he served by the enact
ment ~ law requiring every savings
bank Of this state 10 set aside TO surplus
before the declaration Of dividends 10 "e-
posn,or,, certain age, OF ,mn s nfs ts
surplus based upon market values shall he
equal ~ AZ least per cent Of IFS deposits.
and less percentage until its surplus
based upon market values shall be equal
To az least 10 per cent Of its deposits.
The problem. under existing conditions
is GO complicated hv various considerations
familiar with all It's ntricscies are engaged
in its solution. that ! shall refrain AZ the
present time from making any cypress
recomm endafion. hut ] do hespeak for rms
plan, or some modification OF ", your very
serious consideration.
Superintendent cheney saws the liquida-
tion Of the Washington Savings Rank.
which the department closed because it he-
came involved in the same series Of opera
tions which led 10 tho IA lure of tho North
ern Bank Of New York. is advancing as
rapidly as may he expected and u Is hoped
substantial dividend may be paid deposi-
tors soon after the expiration of the three
months required hy Law.
The indictment of tho president NJ the
institution" continues the superintendent.
and his confession Of guilt will doubtless
result in just enforcement Of tho profi-
sions Of the penal law.
The Carnegie Trust COMPANY. which the
department took over in January. is also
being liauidated and a dividend is expected
TO he paid as soon the law will permit.
The superintendent points out that al
though the total resources of the trust
companies of the state as Of January l.
1911. exceed those of January !, 1909, nv
81, mo ON0. they are .000 less than for
tn. first day Of 1910. al which time the total
was the greatest in the history of these in
stitutions Tho report adds:
Further comparison shows 22HN,o0o less
loans than were outstanding year ago,
condition which appears TO reflect con
servative retrenchment Of commercial en-
terprse. The inactivity of the market for
securities is also evidenced by a small
shrinkage Of the surplus computed on mar.
ket value. However. the total capital or
the trust companies ~ the state was IN
creased g n00 N0 The total deposits re-
ported exceed those of two wears ago,
though per cent less than on January /
Iol0 Slight fluctuations are incidental and
are not of particular import. Ne'ertheless
The auemented surplus favoraby increases
Il az cmrrlne q dennsife