The Waterbury Democrat., 1934-04-03

are still operating. 1t Is the re-
ceiver's duty to liquidate, but to use
sound business judgment in SO do
ing. That which could be sold
has been sold, and the proceeds
paid to depositors in the form OF
dividends.
/ Three Glasses OF Assets
"There remain three classes OF
assets, % Stocks and bonds. These
are liquid, in that they can be sold
at any time. The problem pre-
scented is that of waiting until they
have reached a value which war;
rants q sale. There are enough OF
these, belonging to the savings de-
partment, to provide, at present
prices, almost enough to pay an
other ten per cent dividend. But
with business throughout the coun-
try showing decided Improvement
and with strong probability OF
an increase In value, would 1t be
| good judgment to sell at the pres
ent low prices? ca First mort
cages, amounting to a very large
sum of money. Those who owe
mortgages cannot pay. To fore
close and take the real estate
would be easy; to sell that real
estate would be impossible at pres
ent. Therefore, to turn this class
, of asset into money for dividend
purposes is at present impossible.
| CD Real estate now owned by the
savings department. To sell 1t now,
as has just been stated, Is beyond
our power.
1--WE have these assets, and they
l 4 .I,,A n
not be sold now, what can be done
with them? The answer seems to
be to either await a slow process
of liquidation--a process Whlcn
will be fastened If conditions inn
prove, and retarded IL things get
worse; or borrow money on them,
and use the money to pay a divi-
dent. The receiver, having done
everything toward liquidation that
good business sense will permit,
asks advice as to whether the
time has now come when he should
borrow on their security in order
to pay another dividend. The law
seems reasonably clear. The su-
preme court mas recently said The
power of the superior court to au-
| thorize the receiver to negotiate
a loan for the purpose of paying
an early dividend to the savings
depositors and to pledge a portion
of the segregated fund as collateral
for the loan, would seem to be
clear. Whether such action Is. I'M
der all the circumstances advis-
able as a matter of sound business
policy, and whether the terms up
on which the loan can be obtained
are so advantageous to the estate
as to justify conclusion that the
making of the loan Will be for the
best interest of the savings deposl-
tors, are serious questions for the
consid Grafton OF that court in the
exercise of it's equity powers In the
recelvership proceeding.
Question of Policy
The problem thus revolves ltsei,
into the serious question or goou
business policy under the existing
circumstances. Principal argu-
merts in favor of loan are first
the benefit to the depositors ana
to the business community accru-
ing from the putting OF about Z
third of a million of dollars into
| circulation, and second, securing
the benefit of the full money value
Of the liquid assets (the stocks)
and yet preserving them for the
receivership In the hope they VIII
appreciate in value.
These are powerful considera'
lions.
| Main Arguments
The main arguments against are
the cost, and the putting OF tins
property beyond the control OF tbs
court. The cost in interest charges
4 benefits lust stated. The serious
question is the effect OF the pledge
Of the securities. l have come tt
conclusion that this danger over
balances the advantages to "
gained. AS security for the LOAF
the receiver must pledge the bes
remaining assets OF the bank. Witt
this pledge goes an absolute powel
OF sale. So long as the court boiui
! them they are governed solely %