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ascertained some action will probably be taken towards securing the amount of shortage from the bond.
In the meantime the new receiver is making up his schedules and collecting together the remaining assets of the bank, and when sufficient money has been realized to warrant the payment of a dividend, the court will be asked to order the same. No time can now be set, even approximately, when this will be, but the depositors are assured that no unnecessary delay will be allowed to prevent its being paid as soon as practicable.
The strange and headstrong conduct of the late receiver in opposing the commissioners and the court in their efforts to get possession of the property of the bank discloses a wilful and deliberate contempt of the authority of public officers and a shameful lack of appreciation of the rights of the depositors of the bank.
The delay occasioned by the late receiver and his maladministration of the bank has been a source of much dissatisfaction and complaint on the part of the depositors, and the foregoing account has been made thus full in order that the public may know where the blame for the delay belongs. On account of the misappropriation of the funds of the bank and the mixed condition of its accounts the Board is unable to give the usual statement of condition in this report. Not until the expert has made a full and complete examination of the accounts and discovered the exact amount of the deficiency can an accurate statement of condition be ascertained.
During the financial stringency which prevailed during the summer but one institution in the State was obliged to suspend, and this not on account of being unable to meet all its obligations in full, but from an inability to obtain currency to meet withdrawals.
The New Bedford Safe Deposit and Trust Company closed its doors on the fifth day of August, 1893. On an examination of its condition the commissioners found it perfectly solvent and able to meet all its obligations. A temporary injunction was issued restraining it from paying out money, and allowing it to collect and realize on its assets with a view to reopening.
On the fifth day of October, after having been closed for two months, this institution reopened its doors and has been doing business ever since. Its deposits are steadily growing and it appears to have the confidence of the community.
In the opinion of the Board a great mistake is made by some of the trust companies in allowing interest on small deposits.
The commissioners have frequently called the attention of the trust companies to the fact that to allow interest on small deposits is not good business policy, and is not practised by the larger institutions. No considerable gain accrues from such a transaction. The time and clerical help required to keep these accounts far outweigh any profit which the company receives from the use of the money. It is urged by the trust companies that to allow interest on small deposits attracts the small tradespeople to open accounts who would never do so but for the promise of interest. It seems to this Board that the small tradesman could be just as easily induced to place his money on deposit, by holding out to him the security offered by a safe place in which to keep his money and the accommodation furnished him of drawing checks against his account, as by the promise of an inconsiderable sum in interest. The element of safety and business accommodation far outweighs the small amount of interest credited to the account. One of the smaller trust companies has recently limited the amount on which it will allow interest and so far as known has not lost its customers or had any complaint made of the injustice of the action. We strongly recommend, therefore, the adoption by all trust companies of a limit upon which interest is allowed. Such a course we believe would strengthen the companies, entail less labor upon them, and would not be unjust to the customer.
The law relating to trust companies, chapter 413, Acts of 1888, section 18, gives authority to these companies to hold real estate suitable for the transaction of their business to an amount not exceeding twenty-five per cent. of their capital, and in no case to exceed $250,000.
There are but three trust companies doing business under this law which hold real estate under this section, and the question has recently arisen as to what is meant by the expression to hold real estate." One company, with a capital stock of $100,000, has invested $25,000 in a building and assumed
mortgages to the amount of $40,000, which makes the value. of the real estate held by the company $65,000. In addition to these amounts, it has invested $25,000 in its safe deposit vaults and $10,750 in furniture and fixtures. Thus it will be seen that although the books show but $25,000 invested in real estate, the value of the same is much larger, while the sums invested in its safe deposit vaults and furniture make the whole amount at stake in this one piece of property more than the amount of its capital stock. The Board believes that the intention of the law was to limit the amount of value of real estate which a company should hold free from all incumbrances to twenty-five per cent. of its capital, and that it should not become liable for further amounts held on mortgage.
The question is of sufficient importance to call to the attention of the Legislature, and it is respectfully recommended that the law be so amended that no uncertainty or ambiguity shall remain.
List of Safe Deposit, Loan and Trust Companies chartered by this Commonwealth and now transacting Business, giving the Amount of Capital, Surplus, Deposits, Trust Funds, etc., Oct. 31, 1893.
Beacon Trust Company, Boston,
B. M. C. Durfee Safe Deposit and Trust Company, Fall River, .
Cambridge Safe Deposit and Trust Company, Cambridge,
Lowell Trust Company, Lowell,
Lynn Safe Deposit and Trust Company, Lynn,
Massachusetts Hospital Life Insurance Company, Boston,
Massachusetts Loan and Trust Company, Boston,.
New Bedford Safe Deposit and Trust Company, New Bedford,
New England Trust Company, Boston, .
Old Colony Trust Company, Boston,
Plymouth County Safe Deposit and Trust Company, Brockton,
Mar. 12, 1881,
May 8, 1890,
Mar. 24, 1891,
Mar. 25, 1879,
April 20, 1887,
Feb. 24, 1818,
June 3, 1870,
$2,951,742 91 $67,808,175 43 $7,533,292 66 $15,142,748 04
Suffolk Trust Company.
This company was enjoined by the Supreme Judicial Court, Sept. 3, 1891.
It must not be supposed, however, that because it has been in the hands of a receiver for over two years the liquidation of its assets has been unnecessarily delayed. The character of its paper, the difficulty of transferring its various trusts, as well as the many legal questions arising through its relation with outside affairs, have all been a source of much anxiety and trouble to the receiver. The assets have been so far collected as to warrant the declaration of a dividend of thirty per cent. which was allowed by the court Aug. 25, 1893.
The character of the assets remaining in the receiver's hands and the changes which have been made in them are exhibited in the following table :—