THE SAVINGS BANK CENTENNIAL The One Hundredth Birthday of Two New Hampshire Banks BY JAMES O. LYFORD TH HIS year is the Centennial of New Hampshire Savings Banks. The legislature of 1823 granted two savings bank charters, one for the Portsmouth Savings Bank, at Portsmouth, and the other for the Strafford Savings Bank, at Dover. This was seven years after the first savings bank was chartered in this country. Four years earlier, in 1819, an attempt was made by the citizens of Portsmouth to obtain a charter. A bill was introduced in the house and passed that body, but it was defeated in the senate. There is nothing in the records of the legislature or in the newspapers of that year that shows why the bill failed to receive the approval of the senate; but in 1823, when the charter for the Portsmouth Savings Bank was passing through its various stages in the house, a leading member remarked that as the principles of the bill were new and required some consideration he would move that it be referred to the judiciary committee. That committee prompt ly made a favorable report. It was probably conservatism in dealing with a novel proposition that postponed for four years the starting of savings banks in New Hampshire. The charter for the Portsmouth Savings Bank was signed by the governor June 26, 1823, and that for the Strafford Savings Bank, July 1, 1823. The Portsmouth Savings Bank received its first deposit August 20, 1823, and the Strafford Savings Bank, February 28, 1824. These savings banks have had an uninterrupted existence ever since they opened their doors. From 1823 to 1838 six additional savings banks were chartered, only two of which are now in operation,the New Hampshire Savings Bank at Concord, which opened in 1830, and the Laconia Savings Bank at Laconia, which began business in 1831. The third savings bank chartered failed in 1841, and for a few years the legislature refused to grant applications for charters. It was not until 1846 that the Manchester Sav- the Philanthropic motives. were basis of the inception of savings banks in this state. In the first quarter of the nineteenth century manufacturing establishments were multiplying. of human judgment, and this judgment varied with individuals. Many things were done and other things were left undone which in the early years continually impaired the confidence of the public. If there were space in this article, an interesting story might be written of the trials and vicissitudes of savings banks through a long period of their history. It required many object lessons to teach savings bank officers and trustees, and even the public, the plain, homely truths regarding the care of trust funds. In the first hundred years of their existence the losses through the dishonesty of savings bank employes were paratively small, and the instances. infrequent; but mistakes were made which were incident to experimenting in an untried field. Yet the fact that the first two savings banks have stood the test for a century, that two others are approaching one hundred years. of uninterrupted existence, and that over half of the whole number have an age exceeding fifty years, speaks well for the integrity and business sagacity of a large majority of savings bank officials. com The employes were drawn from the rural communities of the state because of larger wages than could be obtained on the farms, and because wages were paid in cash by the mills, whereas employment in the rural communities was largely a matter of barter, or payment in the products of the farm. There were periods of adversity in manufacturing which threw the mill operatives out of employment. Improvidence in spending during the prosperity of the mills brought as a sequel suffering to the operatives in times of industrial depression. This is set forth in the petition for the charter of the Strafford Savings Bank, in which it was alleged that nearly one-fifth of the population of Dover and the surrounding manufacturing towns. likely to become public charges. The establishment of savings banks was the means used to teach the people habits of thrift and to make them independent when adversity came. Well have they served the purpose of they allowed him. The treasurer their creation. The savings bank was an institution of slow growth for many years. It had to win the confidence of the people. There was no no experience elsewhere for its officers to draw upon. The fundamental principle of the savings bank was that it should be a safe depository for the savings of the wage earner, and that the savings should be so invested that there would be no loss of deposits and a reasonable interest gain. What are safe investments is always a question For the first half century of their existence the management of savings banks was almost wholly philanthropic. The treasurer was the only paid official; and the trustees, who served without pay, were generally parsimonious in the compensation was not only responsible for the funds of the institution, but in numerous cases in the early years he supplied the bank with quarters at his home or place of business. As late as my first service as bank commissioner, beginning in 1887, there were several savings banks that were adjuncts to country stores, and in two cases were located in the houses in which the treasurers resided. The store safe, possibly fire proof but not burglar proof, was the only security vault for the books and assets of the bank. Such bank treasurers received for their services and responsibility and the quarters they furnished a munificent stipend running from one hundred to three hundred dollars a year. The trustees were usually successful business men whose names gave the bank credit in the community. Very few of them gave much attention to the affairs of the bank they were chosen to supervise. If the treasurer were an enterprising man, he very soon dictated the policy of the bank. The responsibility that goes with an election as trustee or director of a bank was not brought home to these officials until near the close of the nineteenth century. It was comparatively late in their history before the legislature awoke to the importance of savings banks and the marvelous growth of their deposits. It required the panic of 1893, with its numerous closing of savings banks to arouse the law makers to the necessity for legislation regulating their management and prescribing their investments. Prior to that time, little savings bank legislation was enacted except to provide severe penalties for acts of dishonesty by bank officials. There were commercial banks, or banks of discount, in this state long before savings banks were started. As early as 1814 these banks were required to make returns of their condition to the Governor and Council, who submitted these reports to the legislature. A few years later a committee of the legislature was required to visit the banks and examine them. In 1837 the first act creating the office of bank commissioner was passed and approved by Governor Isaac Isaac Hill. The bank commissioners were not required to examine savings banks until 1841. This was the year when the first savings bank failed. There were then eight savings banks in the state, but their aggregate deposits were than one million dollars. Yet a million dollars in the early forties less was a very large sum of money. Three bank commissioners were provided for by the act of 1837, with terms of one year. This abbreviated term of service continued until 1881, when the number of commissioners was reduced to two and their appointments were made for two years. Until 1881 the commissioners were paid for their examinations by the banks, at the rate at first of two dollars per day and ten cents a mile for travel. Subsequently the per diem was increased to three dollars. and in 1885 to five dollars. Salaries were first established in 1889. There was little continuity of service of the bank commissioners until after 1889. Several served but one year, a number had but two years' service or the one re-appointment that came from the governor who originally selected them, a limited few three years, and only one reached five years of service during the first fifty years of the existence of the bank commission. Some resigned after a year or two of service, and three men declined the appointment. The subsequent career of some of the bank commissioners is evidence, however, that the governor and council endeavored to select men of ability. Jonathan Harvey, of Sutton, one of the first appointees to this position, was afterwards a congressman from New Hampshire for three terms. Amos Tuck of Exeter, one of the pioneers in the promotion of the Free Soil and the Republican parties, was in congress from 1847 to 1853, and afterwards Naval Officer of Customs at Boston. Titus Brown of Francestown, represented the state in Congress two terms. John S. Wells, John G. Sinclair, and Henry O. Kent, were candidates of the Democratic party for governor in later years; and a number of others were subsequently active and prominent in state affairs. That these commissioners for the first half century of the bank com mission did not accomplish more was my At the time of my first appointment in 1887, officers of savings banks looked upon the bank commissioners as a necessary evil to be patiently endured during the time that they were making examinations. Nor is this strange when it is considered that the commissioners were practically without authority, except to close a bank that could not meet its obligations. Having little continuity of service, they could establish no policy in their examinations. Investments were practically unrestricted. There was law to regulate the management of savings banks. Bank officials looked askance at the suggestions of the commissioners, and their recommendations to the legislature were unheeded. In 1889 a bank commission of three members, appointed so that the term of only one member expired during a given state administration, was created. From this time dates the effective work of this commission. The legislature began to give heed to their recommendations. Bank officials saw the value of their co-operation and soon welcomed their examinations. The public realized that the savings institutions of the state are New Hampshire's greatest asset, and that their supervision exceeded in importance that of any other state activity. Since 1915, the savings institutions of the state have had an association, meeting semi-annually for the consideration and discussion of subjects pertaining to the management and investments of these institutions. It is an open forum to which the bank commissioners and experts from other states are invited. Trustees and directors of the savings institutions now comprehend the responsibility resting upon them, and in the main have personal knowledge of the work of the treasurer and his subordinates. All this change in the relations of the commissioners with bank officials and with the legislature is not solely the work of the commission. It has been promoted by the progressive bankers of the state, who came to realize that any weakness of one savings bank was a peril to others; and that in so large an industry there must be legislation and supervision to regulate the management and the investments of these institutions. To the close of the Civil War, the savings deposits were not a large factor in the interests of the state. In 1865, there were 29 savings banks, with 42,572 depositors out of a state population of 326,000 and not quite $8,000,000 deposits. This represented 42 years of growth. At the end of the next decade there were 68 savings banks, 96,938 depositors, and $30,000,000 deposits. Adding another ten years and we find the same number of banks, with 121,216 depositors, and $43,000,000 deposits. The next eight years were years of continued growth, the number of savings institutions having increased to 83, the number of depositors to to 184,210, and the volume of deposits to nearly $78,000,CCO. Then occurred the panic of 1893. It was especially disastrous to New Hampshire savings banks, due to the fact that the banks were without restrictions as to their investments and management until years later. The next six years were years of recovery, and the deposits dropped to less than $62,000,000, and this amount included the deposits of several banks in liquidation. two Then the tide turned as confidence was restored; and with the exception of one year during the world war, every year has shown an increase of deposits. From 1900 to the present year the deposits have grown from $62,000,000 to $162,000,000. This in a period of 23 years, which is in the recollection of the greater part of the people now living, is phenomenal. The depositors in our savings institutions include more than half the population of the state. If the total deposits were divided among the inhabitants of the state, each man, woman and child would receive $350. A few comparisons will emphasize this growth. This volume of deposits is more than three times the taxable value of the railroads of the state, more than twice the value of all its manufacturing plants, half the value of all the lands and buildings of the state, and one-forth of the value of all the property of New Hampshire as assessed for taxation. These deposits are for the most part the accumulations. of wage earners, clerks, farmers and people of small income, the average deposit being about $500. Such, in brief, is the story of the savings institutions of New Hampshire and their growth in one hundred years. For the last twenty years no savings bank of the state has failed. In fact, only one savings institution. has suspended payments for thirty years that was not primarily involved in the panic of 1893; and this institution in liquidation paid its depositors one hundred cents on the dollar. No other state has so clean a record. Perhaps nothing has contributed so much to this situation as the cooperation of bank officials with the bank commissioners, a co-operation that has been constantly growing more sympathetic and cordial for thirty years. Another factor which has been contributory to the success of all has been the absence for the most part of unfriendly rivalry of savings banks covering the same field of depositors. With very few exceptions the savings banks of the state have united for two years in joint advertising of the benefits derived from their use by the people. In the two instances that have occurred in the last two decades of unfounded alarm of savings bank depositors of any one institution, neighboring banks have come promptly to the rescue by taking over securities of the imperilled bank and furnishing it with cash. With such a spirit prevailing among the officers of the savings institutions, and between them and the officials who are supervising them, there is much to be expected of their future usefulness to their depositors and to the business welfare of the state. |