New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-03-10
SAVINGS BANKS VIOLATE
LAW, CHARGES VAN TUYL
Costly Buildings, Large Salaries
and Enrichment of Lawyers
ExtravaganCeS, He Says.
ALL DUE TO COMPETITION
Institutions Cater to Capitalists
and Are Made Adjuncts for
Profitable Speculation
Record for Resources.

Albany, March 9-Keen competition
among savings banks of the state has
resulted in costly buildings. large sala-
ries and the enrichment OF attorneys,
according TO Superintendent Van Tuyl
of the state Banking Department. He
points out that while these institutions
were established for benefcent purposes
they are being used as repositories by
capitalists and others to evade taxation
and for other purposes detrimental 10
such institutions.
Superintendent Van Tuyl claims the
spirit and letter Of the law are being vio-
lated by bank officials in their desire 10
show large total resources az an excuse
for the payment % large salaries and ex-
travagant expenditures. The need for
amendments to the banking law TO cor
rect existing abuses Is emphasized in
forthcoming report to the Legislature.
Competition in these institutions" says
the Superintendent OF Banks, has at
tanned such proportions that they have
almost outgrown the ideas OF their orig
majors that savings banks should be In
situations OF a philanthropc or beneiicent
character. Advertising campaigns among
institutions have created conditions which
have brought certain OF these institutions
TO a position where they have been Obliged
to pay excessive dividends or lose so
many deposits that they would be com
PEELED TO dispose OF their holdings OF long
term bonds and mortgages. Savings bank
officers sometimes forget that they are
officials of benehcent institutions and
solicit deposits and cater TO class Of ac-
counts that do not rightfully belong in
savings banks, but should go TO interest
paying institutions.
"A savings bank is not depository FOR
capitalists or for persons who are well
qualified by training and experience TO In
vest their own money, and yet on the
books OF almost every savings bank are
! found the names Of persons VINO DO not
rightfully belong I'm the class OF savings
/ bank depositors. They enter this field fof
1 the purpose o, evading taxation, or avoid
ing the risk of loss upon their invest
ments or Of temporarily availing them
| selves Of the advantages of the savings
/ banks during periods when interest rate
are low and the prices Of securities high,
/ thus throwing az additional burden upon
| institutions which at such times are al
ready oyerburdened.
AT the first signs Of trouble. when
money becomes scarce, interest rates go
Inp and the prices Of securities fall. de
positors Of this class withdraw their FUNDS
almost en- masse for the purpose OF taklnS
| advantage Of the low price of bonds ana
the still greater income that may be de
! rived from an investment I'm them. Even
! If runs are not created by such Withdraw
ais. the savings banks are deprived OF
their best opportunities for profitable in
vastment. and are made simply adjuncts
! for the profitable speculations OF indiyid-
uals. To the detriment Of those for whose
special benefit the savings banks were de-
signed.
in one savings bank under the depart
ment's supervision II was discovered thar
the institution had been knowingly ac-
cepting deposits of several times the
amount permitted by law. The bank was
dividing the deposits SO thai they APP
peared on its books in the guise Of Joint
accounts
From the semi-annuaI reports Of the
savings banks TO the superintendent OF
Banks showing their condition on January
l. 1913. It appears that the aggregate re-
sources were 1851. 1913. which Is the
highest total ever reached in the history
OF these institutions. These figures indi-
cate an increase in resources FOR the year
OF $50. 92l. 463. The total amount deposited
during the year was AS5ol5,u9 and tn
aggregate of Withdrawals was AZ5'%9'5i'
There was an increase in total deposits
for the year Of $50 331, $50 the gain in de-
posits for the last six months OF 1912 being
s2s sss.e7s. The number Of open accounts
i'm all the savings banks at the close OF
1912 was 300, go5, gain for the year OF
1870 on January !. 1913. aggregate say
! ings bank deposits were $6ss,4o5lo'.
Thirty-four banks which were paying
rer cent per annum TO their deposltors
prior TO January I, 1913, could continue 10
do SO 4 the bill recommended by Superlh-
tendent Van Tuyl TO require the creation
of reserve funds for savings banks should
become law. he says.
.'Forty-one banks paying 80 per cent
could continue az that rate Nine banks
which pay per cent 81 per cent and
ner cent. according TO the size of the ac-
count. could continue 10 do so. one oanN
which now pays per cent would not be
affected.
"ThIrtv banks which have been paylnS
4 per cent to their depostors would nave
10 lower that rate to Si2 per cent per an
mum. There are 40 savings banks IN the
state and no savings bank would be con-
pelled to reduce its dividend to depositois
below the rate of 3i2 per cent per annuni
prior 10 November l. 1916, or within hve
wears of it's organization