The Richmond Virginian. (Richmond, Va.) 1910-1920, 1914-10-18

were made In almost every sul,seTu ,nt
year up to 1905.
To my mind, however. one Of the
/ most significant devc.,iD:r:n's n SAY
,ngs bank bond requirements is The
recognition OF publ, serve Corpora
ton bonds Telephone ana street rail-
way bonds have been legal fer some
/ time in Connecticut, Massachusetts.
/ Rhode Island and several other States.
| While these two types OF public ut''i-
| ties are undoubtedly excellent addi-
tons, there is warrant sor the asser-
| { on that they do not comprise exclr-
tsively the best in the public utility
| field Electric railway securities, for
example. are now, generally spraking.
1 less in favor with the investing public
than any other class of public utility
/ bonds. This is due both TO the pub1ic's
memory OF the overestimates OF value
INDUCED in while financing the consol-
| idations OF the traction systems in
| many OF our large cities and to the
fact that the hazards OF the street rail-
way business are greater than those of
practically any other public utility.
! We cannot go into these hazards in
detail, but the following enumeration
may suffice: the rapid depreciation
and obsoIescence of property, labor
troubles, municipal interference dam
age suits and a growing tendency to-
ward rate reduction. which does not
have the compensating advantage
found in nearly all other public utility
lines of increasing the business. The
principal other classes OF public service
corporations are gas electric light
and power companies. including the
increasing important hydro electric
developments.
1t may be gathered from certain
| things / have said that I think the
| prosperous future OF savings bank so
| far as their investments are concerned,
depends upon more closely conditioned
savings bank laws In part yes. Com
! r]etely, no / would like nothing bet
ter than to analyze for you the de-
tails of some Of these elaborate laws
ind point out to you where many
pounds Of prevention fail to effect even
an ounce of cure. But I win De arse
at this time merely to pick out at ran
dom some weak links in the guardian
| chain your laws have welded that will
suggest, IL nothing more. the funda-
mental weakness there Is in all such
chains. Gentlemen, general rules de-
pend upon generalities--and general
| ties play an uncertain role in the fin7n-
| cial world. For that world consists
Of myriad of complex, vet very con-
crete. details. upon which one must
specialize, not generalize- Those Of
sou who are familiar with the New
| York law for instance, will recall that
savings banks may invest In the first
or refunding mortgage bonds of any
railroad which. among other things.
has paid dividends Of four per cent
for the preceding five years. A SINH
lar provision occurs in botl the Con-
necticut and Massachusetts law 1T
T glo IA oF
servatisrn. Now. gentlemen. surely ex-
perience has taught you that almost
every good railroad that has gone
on the rocks" as they say, has pre-
/ {. plated Its own trouble by paying
dividends when foresight and conserva-
tism demanded that the money go
back into the property.
The shortcomings IN many of the
savings bank laws are not confined
Ia railroad bond requirements There
is distinct room for Improvement in The
municipal sphere. A conspicuous case
IL that the present law OF New York
State imposes restrictions which shut
ont from the eligibility class such
bonds as those OF Richmond and At
lcnta, cities whose physical and f!nan-
| cial position Is, and has been for a
| great many wears, above any un-
| favorable criticism. On the other
hand, cities such as Dallas San Anto-
! MO, Kansas City. Kansas, Peoria, Oak
| land, Tacoma. and many others whose
size and general importance are GER
| tainly not greater. are eligible, and
while I am not disparaging the. merits
of the obligations of these communi-
! ties, 1t does not seem 20 the best in
terest of the savings banks in New
/ York State that they should not have
an opportunity OF adding to their list
| of investments such desirable bonds
/ as those of tfis and similar cities IN
/ this portion Of the country.
To Handle Problem.
| AS constructive suggestion Il has
occurred to me that committee com
POSED of representatives of the saw
! iEgs bank department. n representa-
! tive of the attorney-general depart
ment and one or more representa-
tives of the Savings Bank association
! would form a desirable and practical
means OF handling this problem. The
duty of this committee would be to
/ consult with the authorities and &c
SIT all of the information at hand
so as to put the case up to the Of
fIcials In such shape that they coufd
intelligently and readily pass upon the
questions involved. knowing that all
CT the features bearing on the situa-
ton had been presented at one time
Srch a committee would find active
! cooperation with any reliable invest
nlent banker. and for that very rea-
/ son its work would not be as difficult
as might seem at first thought.
II has been recognized by individual
| investors, who have been most sue
cessful. that a first essential In the