21994. Farmers & Mechanics Savings Institution & Trust Company (Burlington, VT)

Article Text

CURRENT AFFAIRS. Our Savings Banks and Trust Companies. The annual report of Carroll S. Page, State Inspector of Finances, on the condition of our Vermont trust companies and savings banks, states that two institutions-a savings bank and trust company at Barre, and a savings bank at Lyndonville have organized and begun business during the past biennial term. The St. Albans trust company is still in the hands of the receiver. The West Fairlee savings bank has been practically wound up, and the Farmers' and Mechanics' savings bank and trust company of Burlington and the State trust company of Rutland are proceeding with a view to winding up their business. The whole number of depositors In the State June 30th last was 49,453, an increase in the two years of 3,616. The total amount of deposits was $14,253,963.47, an increase of $529,671.94 in two years; $11,899,956.69 belonged to depositors living in the state, an increase of $599,594.16 in the past year, and of $572,855,91 as compared with 1884 $2,354,006.78 belonged to non-resident depositors, a decrease of $44,862.32 in the past year, and of $40,211.97 as compared with 1884. The average amount to the credit of each depositor was $288.23, a decrease of $4.63 as compared with 1885, and of $11.12 as compared with 1884. Three savings banks have paid 5 per cent dividends, one 4% eight 41, and five 4 per cent. The total amount of the guaranty or surplus fund has been increased by a little more than $89,000 during the two years, and amounted on June 30 to $300,332 11. The Inspector believes that many of the banks are paying too large dividends and would have dividends limited by law to 4 per cent per annum until a net reserve of at least six per cent. has been accumulated. Safety, he very properly says, must always be the "first and strongest consideration" in savings bank management. "The chief reason urged by trustees who advocate high dividends is that they believe it to be their duty to divide to depositors the actual earnings of each semi-annual period, but in my judgment they are quite as liable to wrong future depositors, who may have to suffer the losses sustained when these loans mature, they are to wrong present depositors by providing now for losses growing out of loans which are at present abnormally profitable, and of which pres. ent depositors are reaping all the benefits without incurring any of the risks which experience teaches are the almost universal accompaniment of excessive rates of interest." Mr. Page deprecates the extent to which the banks are tending to invest their deposits in western farm mortgages. From less than four millions in amount in 1883 these invest ments have now grown to almost five and one-half millions. "Under the present law 58 1-3 per cent. of all the assets of our savings banks may be invested in these western mortgages. I am fully convinced that the limit should be reduced to 40 per cent., believing that such a limit is only in accordance with the dictates of safety and conservatism. That they have proved desirable investment in the past is not questioned, but that there are indications that the business is being overdone in this line of securities and that the results may be disastrous, very few cautious financiers profess to doubt." It is well for the Inspector to caution the bank managers against rash investments in this or any other direction, but it is always to be remembered that a good western farm loan is better than a poor loan at home or elsewhere, and that the security and desirability of the western farm mortgages depends very largely on the ability, character and experi. ence of the agents who place them. In the hands of good men they are undoubtedly among the best securities of the present day, and are as safe, at least, as the western county or municipal bonds of which Mr. Pagespeaks favorably. The tables which the report contains show that our Vermont savings bank of Brattle. boro still continues to lead the savings banks of the state in the amount of deposits, its to. tal deposits on June 30 being $2,051,504.34 against $1,689,285.27 for the Rutland savings bank and $1,486,053.83 for the Burlington savings bank, which come next in amount of deposits. The Brattleboro savings bank has the handsome sum of $929,539.66 in depos. its. The amounts in the other Windham county savings banks are-Jamaica, $172,171.41; Wilmington, $298,498.88; Windham County, at Newfane, $447,992.62. The two Brattleboro banks have paid 4 ≥ per cent. div. idends, the Jamaica bank 4% and the banks at Newfane and Wilmington 5 per cent. each. As only one other strictly savings institution in the state than those here named pays SO high a rate of dividend as 5 per cent., it would seem that the Inspector's remarks about daugerously bigh rates of interest are aimed especially at our Windham county banks, but we should be surprised if a thor. ough investigation did not develop the fact that the investments of our local banks have be made 80 carefully and that their western loans have been placed through such responsible agents, that their securities, whatever rate of interest they pay, are as absolutely 86cure as those of any bank in the state.