Daily Kennebec journal. [microfilm reel] (Augusta, Me.) 1870-1975, 1925-01-08
State Departments AS They Have Progressed LIZ
An Excellent Supervision Over
Financial Institutions of Maine
BY Fred F. Lawrence, Commissioner
BY Fred, F. Lawrence, Commissioner

The operation of state chartered
banking institutions in the State of
Maine antedates the admission of the
State to the Union, although no bank
now III existence was in operation at
that time. The earliest institutions
recognized by state laws were the
original banks of deposit and dis
count. the state Banks" of the early
history of the country. Prior to 1881
there was no state banking depart
ment of any character. The direc-
tors OF the several incorporated
banks were required to make semi
annual returns embodying certain
prescribed statistical data to the Sec
rotary of State The oldest abstract
OF returns on the files of the state
banking department is that of 1925,
showing sixteen banks then doing
business in Maine, having COM
bined paid in capital stock of
Sl.S0l $40 and total deposits of $631,-
Ol6.4G. The relatively small interest
OF the public in these banks as shown
by the foregoing figures, indicating
that their resources consisted mainly
of the contributions OF the stock
holders, was no doubt one reason
for the lack of insistence upon public
supervision. The returns of 1925
show only one bank whose deposits
| exceeded its paid in capital stock.
In 1881 the first step in the direc-
ton of direct state supervision was
! taken, when a statute was enacted
: requiring the appointment of two
commissioners who were to examine
the state banks once a year and as
| much oftener as the Governor and
Council deemed eXpedient. If, as Il
result of the examination, any bank
was found to be insolvent or it's con-
dition such as to render it's further
, progress hazardous to the public or
to those having funds in its custody,
or if the bank had exceeded it's pow
erS. the commissioners were author
lied to apply to a Justice of the Su-
preme Court for an injunction and
for such further proceedings in
equity by way of receivership or
otherwise as conditions might re-
quire. This power so given to the
! courts over failing institutionS has
remained practically unchanged
since that date.
| The early state Hanks also had a
| right TO issue paper currency, d
privilege which led at times to con-
| siderable confusion ard created Il
| generally unsatisfactory condition,
| until the passage of the national
bank act during the civil war afford
cd the country more uniform and
standardized circulating medium.
The varying fortunes of the old state
| institutions and the manifest prestige
| of banks organized under national
charters combined to bring about
the gradual elimination of banks of
deposit, discount. and issue organized
! under state laws and the last of
, charter in 1877.
bank had been rapidly developing as
an institution with functions distinct
end separate from that of other
banks. The first savings institution
In Maine and the third or fourth of
its kind in the country was the In
stitution for Savings for the Town
of Portland and it's Vicinity" incor-
porated in 1919, its first president
| being Hon. Prentiss Mellen, first
Chief Justice of the Supreme Court
of Maine. This institution continued
| in business until 1853, when unfor-
/ tunate investments led to it's failure.
| The next institution for savings to be
organized was the Saco &c Biddeford
! Savings Bank. later the Saco &:
J Biddeford Savings Institution. which
was incorporated in 1927 and is the
| oldest mutual savings bank now in
| existence.
In the early days of the states
! history these institutions do not ap-
pear to have been under direct state
supervision and had few legal re-
! strictions placed upon them. 1t was
not until 1857 that the bank COM
missioners We're given direct super
yisory authority. In the examiners
report for 1865 we find this COM
ment: 1.-The existence of these insti-
tutions as objects of state care is
almost entirely ignored" 1t was at
about that date that the savings
! banks experienced their most rapid
expansion. In the two years prcvi-
Gus to 1869 the deposits of mutual
! savings banks practically doubled,
! increasing $5,241,355 to total of
$40. S39,955. A summary of the re-
sources of the banks in Maine in
that year is interesting:
| State banks of deposit
and discount ......... S445,0OD
| National Banks ......... S9,OS5,O0O
| Savings Banks $40. SD 800
| The first attempt at systematic
restriction of savings bank invest
ments was the codification which
went into effect in 1877. Since that
time there have been frequent revi-
sions of the savings bank investment
law. the latest being the work of a
special committee enacted into law
in 1923.
In 1868 the system Of banking
|