Pawtucket Institution For Savings

Bank Information

Episode Type: Suspension → Closure
Bank Type: savings bank
Start Date: January 25, 1878
Location: Pawtucket, Rhode Island (41.879, -71.383)

Metadata

Model: gpt-5-mini
Short Digest: 7565327b

Response Measures

None

Description

The articles (Jan 25, 1878 reports) describe the Providence County Savings Bank of Pawtucket enforcing the 60-day rule (refusing to pay out principal) because large real-estate mortgage losses left the bank with very little cash. The pieces also mention other Pawtucket savings banks (Pawtucket Institution for Savings, Franklin Savings Bank) refusing payouts fearing a run. The articles predict the Providence County Bank will be in the hands of a receiver in 60 days; no definitive reopening or receivership assignment is reported in these excerpts. I report the bank named in the articles rather than the separate 'Pawtucket Institution For Savings' provided in the prompt. I classify the episode as suspension_closure because the reportage indicates a suspension (extension) and an expectation of impending receivership (closure); outcome is not yet finalized in these clips but closure is forecast.

Events (1)

1. January 25, 1878 Suspension

Cause: Bank Specific Adverse Info
Cause Details: Large depreciation in real-estate mortgages (over $300,000 loss) and insufficient cash led the bank to invoke the 60-day extension to avoid immediate payouts and a run.
Newspaper Excerpt: there was on last Monday, according to report, but $70,000 available cash on hand, and to save a run the bank took advantage of its charter and enforced the sixty day rule.
Source: newspapers

Newspaper Articles (2)

1. January 26, 1878 The New York Herald New York, NY

Article from The New York Herald, January 26, 1878

Click image to open full size in new tab

Article Text

A CRIPPLED BANK. BEAL ESTATE MORTGAGES PROVE UNRELIABLE INVESTMENTS FOR THE SAVINGS OF THE PEOPLE. [BY TELEGRAPH TO THE HERALD. PROVIDENCE, R. I,, Jan. 25, 1878. The affairs of the Providence County Savings Bank, of Pawtucket, do not seem to be improving, and the general opinion is that it will go to the wall. The bank was incorporated in 1853, and has been doing a large business, advertising deposits of $4,000.000. It has dealt largely in mortgages on real estate, and by so doing has brought about its own embarrassment. The first intimation the public recelved that all was not right was on Monday last, the appointed dividend day. The report of the Treasurer in November, 1876, showed mortgages held valued at $2,600,000. while that of a year later shows a depreciation in value of the same of over $300,000; the deposits in the meantime having dropped from $3,500,000 to $3,000,000. There was on last Monday, . according to report, but $70,000 available cash on hand, and to save a run the bank took advantage of Its charter and enforced the sixty day rule. From the nature of the securities held by the bank it will be hopeless to expect it to be any better on at the close of the extension. Not one piece of the mortgaged property, it put under the nammer, would bring its face value, and to attempt to raise money thereby in that time would only serve to still further jeopardize the interests of the depositors. The Pawtucket Institution for Savings, and the Franklin Savings Bank, also of Pawtucket, both declared a dividend a short time since, but Monday tollowed the course of the Providence County Bank and relused to pay out the principal to their depositors, tearing a run. State Auditor Spencer stated on Thursday that only three of Rhode Island's savings banks were in a condition to stand a run. The reason of this is that the Legislature some time ago advised the savings banks that bonds were unsafe investments, and the only safeguard was in real estate. The advice was taken, and to-day finds all of them, with the exception of one here and two in Newport, saddled with real estate mortgages that have depreclated in value until the banks are absolutely unsound. Governor Van Zandt has appointed a commission to examine the accounts and prospects ofthe Pawtucket Bank and report on the same at onee. The belief 18 that sixty Gays from now will find the Providence County Bank in the hands of a receiver, while it is an undisputable fact that other banks are sure to follow in its footsteps.

2. January 29, 1878 The Daily Gazette Wilmington, DE

Article from The Daily Gazette, January 29, 1878

Click image to open full size in new tab

Article Text

FOUR' H EDITION A Crippled Bank. REAL ESTATE MORTGAGES PROVE UNRELIABLE INVESTMENTS FOR THE SAVINGS OF THE PEOPLE. PROVIDENCE, R. 1., Jan. 25. The affairs of the Providence County Savings Bauk of Pawtucket, do not seem to be improving, and the general opinion is that it will go to the wall. The bank was incorporated in 1853, and has been doing a large business, advertising de posits of $4,000,000. It has dealt largely in mortgages on real estate, and by so doing has brought about its own embarrassment. The first intimation the public received that all was not right was Monday last, the appointed dividend day. The report of the Treasurer in November, 1876, showed mortgages held valued at $2,600,000, while that of a year later shows a depreciation in value of the same of over $300,000;the deposits in the mean time having dropped from $3,500.000 to $3,000,000. There was on last Monday according to report, $70,000 avaliable cash on hand, and tc save a run the bank took advantage of its charter and enforced the sixty day rule. From the Lature of the securities held by the bank it will be hopeless to expect it to be any better off at the close of the extension. Not one piece of the mortgaged property, if put under the hammer. would bring its face value, and to attempt to raise money thereby in that time would only serve to still further Jeopardize the interests of the depositors. The Pawtucket Institution for Savings, and the Franklin Savings Bank, also of Pawtucket, both declared a dividend a short time since, but Monday followed the course of the Providence County Bank and refused to pay out the principal to their depositors, fearing a run. State Auditor Spencer stated on Thursday that only three of Rhode Island's savings banks were in a condition to stand a run. The reason of this is that the Legislature some time ago advised the savings banks that bonds were unsafe investments, and the only safeguard was in real estate. The advice was taken and to-day finds all of them, with the exception of one here and two in Newpert, saddled with real estate mortgages that have depreciated in value until the banks are absolutely unsound. Governor Van Zandt has appointed a commission to examine the accounts and prospects of the Pawtucket Bank and report on the same at once. The belief is that sixty days from now will find the Prov dence County Bank in the hands of a receiver, while it is an undisputable fact that other banks are sure to follow in its footsteps.