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The Commonwealth of Massachusetts.

OFFICE OF THE BANK COMMISSIONER,

STATE HOUSE, January 15, 1919. To the General Court of Massachusetts.

The annual report of this department is herewith submitted under the requirements of section 15, chapter 590, Acts of 1908, and exhibits the condition of savings banks, co-operative banks, credit unions and savings and loan associations as disclosed by their annual returns of October 31, 1918, and also of trust companies at the date of each of the five calls during the past year.

The complete report will, as heretofore, consist of two parts: Part 1. relating to savings banks and trust companies, and Part II. relating to co-operative banks, credit unions, and savings and loan associations

. The customary consolidated statements covering transactions of savings banks and trust companies appear in this report.

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GENERAL STATEMENT. The aggregate assets of the various companies or individuals under the supervision of the department, compiled from their last reports, are as follows:

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* Increase for the combined departments.

2 Decrease.

The year that has just elapsed has been one of the most trying and eventful years in the history of modern banking. During that period the bankers of this Commonwealth have not only been compelled to solve their own problems, but, with their working forces depleted by the draft, they have been called upon to conduct the sale of Liberty Bonds and other government securities on behalf of the national government.

At the beginning of the year there were many who were filled with dark forebodings, believing that the difficulties to be encountered were almost insuperable; but the obstacles that loomed so large have been overcome, the problems which seemed so intricate have been solved, and the fact that this country has emerged from a successful war without the slightest apparent financial stress or strain is due in a large measure to the courage, co-operation and resourceful intelligence, without class distinction, of the bankers of this Commonwealth, and they are to be congratulated upon having maintained the high record of the past.

According to statistics prepared by the Comptroller of the Currency as of June 30, 1918, the total resources of the national banks of the United States amounted to $17,839,000,000, and the aggregate resources of the national and State banks, savings banks, private bankers and trust companies amounted to $40,210,000,000. From these statements it would appear that the resources of the institutions under the supervision of the Bank Commissioner of this Commonwealth were equal to approximately 12 per cent. of the resources of all the national banks in the country, and to more than 5 per cent. of the total banking resources of the United States.

These figures demonstrate the extent to which the banking system of this Commonwealth has been adapted to the needs of its people, its business and commerce, and the confidence that it has inspired. They are all the more noteworthy when we consider the various measures passed, recently pending or proposed at Washington for the avowed purpose of enabling national banks to compete with State banking institutions.

The strength of the banking system in this Commonwealth has been due to its adaptation to local needs and changing conditions, and to the fact that it has sought to promote intelligently the business and commerce of the Commonwealth and to aid the nation in

The 196 savings banks doing business report assets amounting to over $1,132,560,000 and deposits amounting to over $1,033,892,000, represented by 2,486,834 accounts, an average of about $415.75 to each account.

During the year there has been placed to the credit of depositors more than $42,150,000 in dividends. The guaranty fund, amounting to $50,426,647, is 4.88 per cent. of the amount of deposits. The increase in the deposits has been over $11,550,000.

There are 102 trust companies with combined assets of $899,721,003.94, of which $673,064,247.51 are the assets of their commercial banking departments, $77,975,995.72 the assets of their savings departments and $148,680,760.71 the assets of their trust departments.

There are now 186 co-operative banks doing business in this Commonwealth with total assets of about $140,201,000, belonging to about 249.000 shareholders.

There are 59 credit unions doing business, with aggregate assets of $1,977,778.94, showing an increase during the past year of $730,193.47 in assets and of 3 in number.

The combined assets of the savings banks, the trust companies and the co-operative banks, together with the Massachusetts Hospital Life Insurance Company and the branch of the Bank of Nova Scotia, all of which are under the supervision of this department, amount to $2,204,996,077.32. This is an increase of more than $155,951,530.65 since a year ago. The number of depositors and shareholders who have availed themselves of these banking facilities is about 68,500 greater than a year ago.

In addition to these 486 institutions which do a banking business as ordinarily understood, there are 1 State bank, 3 savings and loan associations, 73 steamship agents who receive deposits of money for safekeeping or transmission abroad, and 59 credit unions whose affairs are supervised and whose books and accounts are examined, making a total of 622 institutions and agents under the supervision of this department. There has been paid over to the Treasurer and Receiver-General during the year about $40,000, which was received by this department as fees for audits, license fees from steamship agents and fees for registration of public accountants.

During the period covered by this report the Department has been asked at various times to co-operate both with the Comptroller of the Currency and with the officers of the Federal Reserve Bank of

Boston in obtaining information deemed necessary for the national welfare, to the end that the banking resources of the country might be placed at the disposal of the national government to the fullest extent during the period of the war and that measures necessary to strengthen and maintain the financial structure be taken advisedly. The co-operation requested has been freely given and the interchange of views resulting therefrom has been mutually helpful.

The Department was represented by the Commissioner, Deputy Commissioner and chiefs of the Savings Bank Division and the Co-operative Bank Division at the convention of the National Association of Supervisors of State Banks, which was held at Hot Springs, Ark., on the twenty-third, twenty-fourth and twenty-fifth days of May, 1918. This association has wielded a constantly increasing influence in the banking affairs of the nation, and the enactment of wise banking laws and the adoption of various measures for the protection of depositors have been promoted by it. The Commissioner was appointed upon a special committee named to co-operate with the State banking institutions of the various States in the establishment of a nation-wide association of State institutions in order to promote sound banking legislation, both State and national. The work of this committee resulted in the organization, at a meeting attended by bankers from over thirty States and held in St. Louis, Mo., on July 15, 1918, of the United States Council of State Banking Associations. The wide scope of this organization as conceived by its originators is indicated by the fact that the first president elected was a prominent banker of Los Angeles, Cal., while the secretary of the association is connected with one of the large trust companies of New York city. The first members of the Council were chosen by Federal Reserve districts.

I ought, perhaps, to mention at this time that, as a natural outgrowth of the acquaintances formed at the conventions of the National Association of Supervisors of State Banks and the interchange of opinions at these conventions, there have been throughout the period of the war numerous conferences between the supervising officers of the New England and Middle Atlantic States which have been, in my judgment, of great benefit to the supervising officers, to the institutions under their supervision and to the general public, and have also had considerable influence upon measures

At the time the first Liberty Loan was issued there was grave apprehension of its effect upon savings deposits. The superintendent of banks of New York called a conference of the bank commissioners of New England and the Middle Atlantic States to consider what action, if any, could be taken to protect savings bank interests. At this conference the commissioners memorialized the Secretary of the Treasury, setting forth the investments of savings banks in real estate mortgages and the hardship which would result if payment was demanded, and suggesting that relief might be afforded by the government in case the savings banks had to borrow money to meet withdrawals. The Secretary of the Treasury was responsive to this appeal, and considered it in framing the war finance corporation bill. When that measure was before the finance committee of the United States Senate, Senator Gallinger secured a hearing for representatives of the bank commissioners of these several States. Mr. Thorndike of Massachusetts and Mr. Lyford of New Hampshire appeared before this committee in behalf of their associate bank commissioners, outlining the situation of the savings banks and suggesting amendments to the war finance corporation bill, and the bill was so amended that savings banks can borrow through this corporation for a length of time and at a rate of interest that is satisfactory to them. Fortunately no occasion has arisen requiring the savings banks to borrow money aside from temporary accommodations obtained from their regular correspondents or depositories. Very few banks have had to ask for accommodation, the calls of their depositors being readily met from their ordinary receipts.

National legislation has been proposed under which national banks may enter into fields which have heretofore been left entirely to State banking institutions. According to some recent recommendations emanating from Washington, while the plan for uniform nation-wide department banks has been temporarily abandoned, State institutions are not to be left to exercise their special powers without competition. Encroachments upon their special powers are to be authorized and legalized, even if it is necessary to destroy the uniformity now existing in the national banking system.

If these later theories be enacted into law, whenever a State has conferred upon any of its financial institutions the power to act in a fiduciary capacity, the national banks of that State will also have these powers, even if their exercise is not safeguarded in like

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