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manner. If in any State the State banks are permitted to have branches, the national banks will in that State also be permitted to maintain branches. If in any State there has been created a great system of mutual savings banks, in that State the national banks, although not mutual but operated for the profit of shareholders, will be authorized to call their interest departments savings departments, and so appropriate the word which has for a generation or more been synonymous in this State with mutual institutions created under State laws. These deposits, moreover, will not be segregated, nor will the entire net income from investments be distributed among the depositors.

It does not seem to me that the national banking system needs so much paternalism and avowed protection. In fact, it may be questioned if the national banks do not really suffer from so many alleged and widely advertised attempts to promote their interests. In this Commonwealth, at least, the national banks are able to protect themselves and are worthy of the utmost confidence and respect. National and State institutions have constantly and consistently co-operated to promote the general welfare, and during the war have united in giving patriotic support to the national government by financing the various Liberty Loans. They have, whenever necessary, taken concerted action for the purpose of promoting and sustaining the business and commerce of the State and of the entire country. When left to themselves there is no quarrel between them.

The national banking act, was designed to give to the United States a uniform system of commercial banks adapted to the needs of every part of the country. In order to distinguish them from State institutions and give them the advantage of such reputation as they might earn, they were given the exclusive right to the use of the word "national." They were also given the power to issue currency secured by bonds of the national government upon profitable terms, and the State banks, by prohibitive taxation, were compelled to forego the privilege of issuing currency. So well have the national banks fulfilled the purposes for which they were designed that the name national bank is in itself an advertisement. It has become a title of honor, descriptive throughout the United States of uniform and well-defined banking institutions, and the national banks might to-day well resent the theory that they need such

In the meantime, however, in various sections of the country State institutions have been developed to meet the special business and commercial needs of different localities. Their special powers, however, are attended by special risks, and safeguards against such risks have, as the result of experience, been embodied in the State laws which cannot be readily inserted in Federal acts applicable to the entire country. As the national banks were intended to be strictly commercial banks, they were prohibited from making longterm loans upon real estate security, and they did not solicit the small deposits of industrious laborers and wage-earners of other classes or pay interest thereon. As a consequence, mutual savings banks have been developed in the northeastern and middle States to encourage thrift by investing the small savings of the people for them and returning to them the profits derived from such investments after deducting expenses and so much of the earnings as is deemed necessary to guarantee the safety of deposits during periods of depression. In order that their deposits might be safely used for the development of the communities in which the funds were accumulated, the trustees of these mutual institutions were originally authorized to invest in high-grade mortgages; they were also authorized to invest in bonds of the United States, of the wealthiest and most populous States and in very high-grade municipal securities. The system was developed to such an extent that further investments became necessary, and the savings banks were authorized to assist in the development of the entire country by investing a portion of their deposits in the high-grade railroad bonds. The laws under which these mutual savings banks have operated are so restrictive and the system of supervision evolved has been so efficient that, although the mutual savings banks of Massachusetts alone now have total resources of $1,132,563,108, in a period of nearly thirty years, only seven savings banks have been closed by the bank commissioners with any loss to depositors, and the losses, when compared with the vast amount of deposits received and returned during that period, are of course almost infinitesimal.

It would be impossible to estimate their importance in developing the real estate resources of the Commonwealth. Their present outstanding mortgages aggregate $529,887,256.

Savings banks,

Trust companies,

LIBERTY LOAN BONDS.

The patriotism of all the institutions under the supervision of this department is indicated by their subscriptions to the Liberty Loans, which they are either holding as investments or for selling on the partial payment plan to their patrons.

The aggregate subscriptions for the First, Second, Third and Fourth Liberty Loans were approximately as follows:

Co-operative banks and savings and loan associations,
Massachusetts Hospital Life Insurance Company,
Credit unions,
Foreign bankers,

In addition to the above, $54,371,050 United States Certificates of Indebtedness were held by all the institutions on October 31, 1918.

Brockton Trust Company.
Winthrop Trust Company.

$53,999,522 00 26,478,067 19

2,653,232 93

1,087,409 19

WALES SAVINGS BANK.

The final liquidation of the affairs of this bank awaits the disposition of one estate upon which the bank holds a mortgage. The original borrower being deceased, the process of settling this estate is in progress.

This bank has already paid its depositors in full.

41,150 00 294,600 00

$83,466,572 12

BOARD OF BANK INCORPORATION.

Trust Companies.

The following trust companies have commenced business during 1918:year

the

Everett Trust Company.
Hanover Trust Company.

Permission has been granted by the Board of Bank Incorporation to the following trust companies to establish a branch office:

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Certificates were issued by the same Board to the following trust companies that public convenience and advantage would be promoted by the establishment of said trust companies, but said companies have not commenced business: —

Fall River Trust Company.
Roxbury Trust Company.
Textile Trust Company.

This department, in connection with and in addition to the usual examination of trust companies, has audited the books and accounts of 61 trust companies, which by their stockholders' examining committees availed themselves of the provisions of chapter 409 of the Acts of 1913.

At the end of the last fiscal year 7 trust companies had become members of the Federal Reserve system. As a result of appeals to the trust companies on the ground of patriotism, and their belief that the Federal Reserve Bank of Boston should be strengthened in order to meet all emergencies resulting from the war, 13 more trust companies have become members of that institution, making a total of 20 trust companies that are now members of the Federal Reserve Bank.

MATURED SHARES IN CO-OPERATIVE BANKS. By an act of Legislature passed in 1915 co-operative banks were permitted to allow members whose shares have reached the matured value of $200 each the option of leaving some of these shares as an investment in the bank.

Shareholders in 77 co-operative banks have availed themselves of this privilege, and these shareholders own 30,120 shares, valued at $6,024,000. These matured shares, upon which no periodical payment of dues is required, are represented by matured share certificates, and the return to the shareholders owning them is about one-half per cent. less than the regular dividend credited to those shareholders who pay monthly dues on unmatured shares.

EXAMINATION OF THE AFFAIRS OF THE TREASURER AND RECEIVER

GENERAL OF THE COMMONWEALTH. The examinations made by this department during the year were as follows:

The first examination was made as of the close of business January 21, 1918, in behalf of the joint committee on ways and means as

required by chapter 414 of the Acts of 1908, and the second was made as of the close of business October 10, 1918, in accordance with the provisions of section 68 of chapter 6 of the Revised Laws, at the request of the Governor and Council.

SAVINGS BANK LIFE INSURANCE.

The tenth full financial year of Savings Bank Life Insurance ended October 31, 1918. This report includes the annual statement for the year of the four banks which have undertaken the business of life insurance under chapter 561 of the Acts of 1907.

The four banks are the Whitman Savings Bank of Whitman, the People's Savings Bank of Brockton, the Berkshire County Savings Bank of Pittsfield and the City Savings Bank of Pittsfield.

These banks issued and revived during the year ending October 31, 1918, 9,122 policies, representing $3,610,795 of insurance. The net gain is 3,027 policies for $1,643,970 of insurance. There were in force in all four banks on October 31, 1918, 20,707 policies for $9,783,239 insurance, with 104 annuities representing annual payments of $30,268.

These banks are prohibited from employing solicitors or house-tohouse collectors of premiums. The largest single portion of the expense to the policy holder is thus removed. The savings bank life insurance plan appeals to the people on the basis of thrift, and especially to the savings bank depositors. It is recognized that some inexpensive substitute must be provided for the soliciting agent, consequently the banks are permitted to establish agencies throughout the State in mills, shops and factories, and public places, including other savings banks and trust companies. The mechanism whereby these agencies serve as feeders to the insurance banks is simple: an employer becomes an agency for the insurance banks by signing agency agreements in which he agrees to collect the premiums from his employees on their policies and remit them to the banks once a month. The employer appoints an agency secretary, usually the paymaster, and the agency is entitled to 2 per cent. of the collections so made. Most of the employers waive this collection fee in order that they may say to their employees that the service is rendered absolutely without compensation to the employer, while other employers take the collection fee and give it as additional

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