uals; and a large reserve is essential for the safety of the whole body of depositors.

The maximum deposit upon which interest is allowed abroad ranges from $200 in the French to $750 in the English banks. Here it has gradually run up from $500 to $1,600; and while the latter limit seems unnecessarily large, if a low rate of annual dividends is insisted upon and fraudulent trusts prevented, the prowlers who prey upon this charity may be driven away, and this advanced limit only availed of by persons who deserve the privilege. In New York one rate of interest is allowed on all sums not exceeding $500, I per cent. less on surplus over $500 and up to $1,000, and I per cent. less on the excess over $1,000.

The defalcations in the savings banks in Great Britain from 1844 to 1857 amounted to $1,330,000, of which the depositors lost about one-half. The balance was made up by government and the trustees. But the distrust and recklessness caused by these frequent and widespread frauds were out of all proportion to the pecuniary loss.

As the most effectual safeguard against malversation, it was enacted that not less than two persons being trustees, managers, or paid officers employed for this specific purpose, shall be present on all occasions of public business, and be parties to every transaction of deposit and repayment, so as to form a double check on every cash payment; and this precaution, practised in many of our savings banks, should be enforced in all of them.

The responsibility of trustees has been the subject of much discussion and legislation in England, where their function is limited to superintendence and to the faithful transfer of the funds to and from the government commission, and not extended, as here, to their judicious investment. At one time trustees were made pecuniarily liable to a limited extent, but at present, as in 1828, they are only accountable for wilful. neglect or default.

The savings banks in Great Britain are subject to frequent unapprised audits and inspections, a process more simple and practicable there than here, because limited to the accounts.

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and cash, the funds being, as I have stated, in the custody of a government commission; but all the more important here as including the value of investments, and perhaps practicable if a board of at least three upright and competent commissioners are selected and adequately compensated for the service.

An inspection and comparison of the books of depositors with the bank ledgers has been urged as the only thorough mode of testing the accuracy and verity of the entries, but, although most desirable, it was found to be impracticable, except in very small banks. A uniform system of book-keeping is insisted upon in England, and should be prescribed here, in the interest of the banks, the inspectors, and depositors.

HENRY LEE.

May 8, 1893.

APPENDIX.

The history of the Massachusetts savings banks can be read to a considerable extent from the following tables of statistics, showing their steady rise both absolutely and in proportion to the population of the State.

The only considerable interruptions to their steady prosperity have been the great financial crises of 1837, 1857, and 1873.

In 1837 their losses have been estimated at from $250,000 to $300,ooo, owing to their large investment in the stock of State banks. In 1834, out of a total deposit of $3,407,773, their investments in bank stocks, loans secured by bank stocks, and deposits in banks amounted to $2,270,696, or nearly 70 per cent. of the deposits.

The crisis of 1857 was less severely felt, both because the State banks were stronger and because the savings banks had relatively less invested in them ($8,521,472 out of a total deposit of $33,914,971, or about 25 per cent.).

The panic of 1873 brought heavy loss to the savings banks. The withdrawal of deposits incidental to hard times was greatly aggravated by the withdrawal of large deposits by financiers who were improperly using the banks for the investment of considerable sums in trust for imaginary beneficiaries.

The banks had largely invested in real-estate mortgages, and, when they were obliged to sell or foreclose a large amount of them at once in a time of financial depression, they were unable to do so without a loss. The stay-law of 1878 gave the bank commissioners power to limit the time and amount of the payments to depositors whenever, in their judgment, the welfare of the depositors so demanded. Depositors could appeal to the courts if dissatisfied. Twenty-four banks availed themselves of the law, and all but one of them ultimately resumed.

Of 180 savings banks in operation in October, 1875, 46 either suspended payments or took advantage of the stay-law. Twelve of these

ultimately closed, two paying in full. The crisis was aggravated by the starting of a number of banks that never should have existed. There were 179 banks in 1874, a number that was not again reached till 1890.

LEGISLATION.

There was no savings-bank law, except the charters of the several banks, until 1834. The law of that year has remained the foundation of the Massachusetts savings-bank law ever since. The most important modifications have been provisions for more rigid State supervision, and the extension of the permitted field of investment so as to include certain first-class railroad, State, county, and municipal bonds and notes.

For details concerning Massachusetts savings banks see the reports of the commissioners of savings-banks: a "History of the Massachusetts Savings Banks," by William Woodward, reprinted from the Banker's Magazine of New York by Homans Publishing Company, New York, 1889, from which the above sketch is chiefly taken; "History and Operations of Savings Banks," Banker's Magazine, New York, May, 1888, and "The Massachusetts Savings Banks," same, April, 1891, both by Mr. E. A. Stone, of the Franklin Savings Bank, Boston.