Mechanics Savings Bank

Bank Information

Episode Type: Suspension → Closure
Bank Type: savings bank
Start Date: November 1, 1893*
Location: Auburn, Maine (44.098, -70.231)

Metadata

Model: gpt-5-mini
Short Digest: 4d6cd9c8

Response Measures

None

Description

The state bank examiner's report (Mar 31, 1894) describes the adverse circumstances of Mechanics Savings Bank, attributing its failure largely to large loans to the John F. Cobb Shoe Company and noting deposits were 'scaled' (i.e., impaired). The article indicates this was a local, bank-specific failure that resulted in the bank going into trouble/closure and is described alongside other banks that went into receivership. No explicit run is described in the text provided.

Events (2)

1. November 1, 1893* Receivership

Newspaper Excerpt: Mr. Whitten gives an outline of the circumstances connected with the Mechanics' Savings Bank at Auburn. He attributes this failure largely to the failure of the John F. Cobb Shoe Company. ... Taking into account the fact that the deposits of the Mechanic's Savings Bank were scaled $109,848.41 ...
Source: newspapers

2. * Other

Newspaper Excerpt: The annual report ... says: While there have been heavy withdrawals of deposits, all demands have been promptly met on presentation or at the expiration of the legal notice, with the exceptions above mentioned.
Source: newspapers

Newspaper Articles (1)

1. March 31, 1894 Daily Kennebec Journal Augusta, ME

Article from Daily Kennebec Journal, March 31, 1894

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Article Text

MAINE BANKS. What State Examiner Whitten Says in Annual Report. One Feature of the New Savings Bank Law Wasn't Intended. The annual report of the State bank examiner, Hon. Charles R. Whitten, is ready for distribution. This is the 37th annual report of this department. In the introduction Mr. Whitten says: "The past year, especially the last six months of the year, has been's trying period for our banking institutions; but I am pleased to report that only one bank has been obliged to petition the court for relief, and but one has passed into the hands of a receiver, and neither of these conditions were brought about by the financial stringency, but were entirely due to local causes. "While there have been heavy withdrawals of deposits, all demands have been promptly met on presentation or at the expiration of the legal notice, with the exceptions above mentioned. "Taking into consideration the experience of other sections of the country, more especially in the West, the stagnation of our manufacturing industries and the great depreciation in the market value of industrial and railroad securities, we have every reason to congratulate ourselves that our banks passed the trying ordeal so successfully." Mr. Whitten gives an outline of the circumstances connected with the Mechanics' Savings Bank at Auburn. He attributes this failure largely to the failure of the John F. Cobb Shoe Company. He adds: "My predecessor tells me be repeatedly called the attention of Mr. John F. Cobb, the president of the bink, to the fact that these loans were too large, and requested him to #ee that they were reduced. "The statutes say that no such bank or institution shall hold by way of investment, or as security for loans, or both, more than one-fifth of the capital stock of any corporation. The capital stock of this corporation was $80,000, and while a direct loan to a corporation may not come within the letter of this law, I believe it should be held to include direct loans to corporations as well as on its capital stock as security." Mr. Whitten then refers to the closing of the Richmond Savings Bank. Regarding this he also says: "It is no more than just to state that at the time the loans were made the management claim they had every reason to believe them safe and for the interest of the bank to accept." "On the 25th day of November last the total deposits in our savings banks amounted to $53,261.308 92, making a loss for the year of $122,383.02 Deducting from this amount $85,482.19, being the amount of deposits in the Richmond Savings Bank at the time of going into a receiver's hands, the net loss would be only about $51,000. "Taking into account the fact that the deposits of the Mechanic's Savings Bank were scaled $109,848.41, and that from the first day of May to the second day of September there was я net loss to the bank in deposits of $1,132,793.19, this showing is very gratifying. The total number of depositors on the above date was 153,922, a decrease of 260 for the year. The total amount of dividends declared was $2,069,136.33, an average of 3 99 per cent. "The Legislature of 1893 amended the law relating to the taxation of savings banks by requiring the banks to make semiannual returns to this department, and the bank examiner to fix a market value on all securities and transmit the same to the State assessors for the assessment of the tax. "Under the new law the reserve fund and profit account are included with the deposits as a basis for taxation and a discrimination made in favor of home investments acquired subsequent to January 1st, 1893. **One of the strong arguments in favor of this law was that it would have a tendency to increase the holdings of the banks in Maine securities. It is too early, as yet, to express any opinion as to whether or not it will accomplish the desired result. There is one result, however, that I do not believe the framers of this law anticipated, and that is, the lower the market value of securities and the less they may be worth at the time of assessing the tax, the higher the tax to the bank; the higher the market value, the greater the deduction and the less the tax. This is just the reverse of what it should be." In connection with his remarks upon investments, he has this to say "The wholesale reduction or railroad earnings and the passing of some 70 railroads into the hands of receivers the past year, makes the great