USA > Massachusetts > Suffolk County > Boston > Metropolitan Boston; a modern history; Volume II > Part 9
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The American Trust Comany-The American Trust Company, which has the third largest commercial department of the Boston trust com- panies, received its charter in 1881 and was opened on August 29 of that year. The bank's ancestry, however, dates back to 1825, as a result of its absorption in 1910 of the Bunker Hill National Bank, which was pur- chased from the City Trust Company when the latter institution was taken over by the Old Colony Trust Company.
Among the original directors of the American Trust Company, who were incorporators of the institution, which first had the name of the American Loan and Trust Company, were I. Tucker Burr, Asa P. French, Henry D. Hyde, A. L. Coolidge, David P. Kimball, George C. Lord, Jonas H. French, Alexander H. Rice, F. Gordon Dexter, Elisha Atkins, and Henry M. Whitney.
In 1906 the Adams Trust Company was absorbed, and in 1907 the bank shortened its name to the American Trust Company. In that same
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year, Russell G. Fessenden, the present head of the institution, became its president. In 1910 came the purchase of the Bunker Hill National Bank, which is now the Charlestown branch of the trust company.
During the past twenty years under Mr. Fessenden, the American Trust Company has had a rapid and steady growth. In 1907 the capital was $1,000,000, earned surplus $1,500,000, undivided profits, $427,000, and deposits $9,500,000. On June 30, 1926, with a capital of $1,500,000, the total assets of the commercial department amounted to $33,539,932, sur- plus and undivided earnings reached $2,792,112, and the deposits were $25,920,184. In addition it had a trust department of $2,444,391 in total assets, and a savings department of $227,242.
The bank's quarters extend from 50 State Street, back to Faneuil Hall Square and to Exchange Street. It owns the Union Safe Deposit Vaults, the oldest company of the kind in the State, which was organized by Henry Lee on January 1, 1868, and which serves several thousand clients.
The Bunker Hill Bank of Charlestown, which became a part of the American Trust Company, as already mentioned, was opened on July 30, 1825, with a capital of $150,000, in Washington Hall. Its officers were Timothy Walker, president; Henry Jaques, cashier ; and Isaac Warren, Nathan Tufts, Timothy Walker, Elias Phinney, Isaac Mead, Jotham Johnson, Thomas J. Goodwin, Seth Knowles and David Devens consti- tuting the board of directors. In this same year the fiftieth anniversary of the Battle of Bunker Hill was observed, when General Lafayette laid the corner stone of the Bunker Hill monument.
Mr. Walker served as president of the bank for ten years, and upon his resignation, was succeeded by David Devens, who died in 1855. The third president, Edward Lawrence, served for thirty years. Timothy T. Sawyer, who followed, resigned after five years. Charles R. Lawrence, son of the third president, succeeded Mr. Sawyer and remained in office for sixteen years. Fred K. Brown became president of the institution in 1906, and is now the manager of the branch of the American Trust Com- pany, which the bank became. In the meantime, during this long period of years, the bank had become a national bank, and in its later years had absorbed the Monument National Bank.
The officers of the trust company, in addition to Mr. Fessenden, are as follows: Treasurer, Waldo F. Glidden; secretary, Charles H. Bowen ; assistant treasurers, A. Bancroft, L. S. Ilsley, P. P. Mason ; directors, R. L. Agassiz, F. G. Allen, J. C. Allen, Hobart Ames, J. S. Ames, Chan- dler Bullock, G. E. Cabot, A. B. Chapin, C. E. Cotting, G. W. Cox, Gor- don Dexter, William Dexter, W. R. Driver, R. G. Fessenden, S. H. Greene, F. R. Hart, R. F. Herrick, Jr., N. W. Jordan, James Lawrence, Lester Leland, J. A. Parker, J. W. Powell, R. P. Snelling, F. W. Stearns, William Whiting.
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The United States Trust Company-Like the Boston Safe Deposit and Trust Company, the United States Trust Company had a hard time in getting started, and like the other institution, had a period of eight years elapse between the time it received its charter and the time it was opened for business. The charter was granted in 1887 and the original name of the bank was the Commonwealth Safe Deposit and Trust Com- pany. This was changed in 1888 to the United States Safe Deposit and Trust Company, which was shortened in 1895 to the present name, before opening on March 4 of that year.
On June 30, 1926, with a capital of $1,000,000, the United States Trust Company had total assets of $12,263,317 in its commercial department, ranking seventh among the trust companies of Boston. Its deposits were $9,109,182, and the surplus and undivided profits amounted to a total of $1,502,907. Its trust department of $3,330,104 was fifth in size, and its savings department of $7,062,660 ranked second, being exceeded only by the Exchange Trust Company.
Its capital was increased in 1927 to $2,000,000 by the declaration of a 100 percent stock dividend. In connection with this dividend a state- ment was issued by A. C. Ratshesky, president of the institution, which said in part :
"The directors are very much gratified that the prosperous condition of the company warrants this stock dividend and take this occasion to review the dividend history of the company since its formation, which is interesting and unique among the banks of New England. The United States Trust Company opened for business on March 4, 1895, and the first dividend was paid on January 1, 1896, at the rate of five percent a year. Dividends since that date have been as follows :
"1896, 5 percent ; 1897, 5 percent ; 1898, 5 percent ; 1899, 6 percent ; 1900, 6 percent ; 1901, 8 percent ; 1902, 9 percent ; 1903, 10 percent ; 1904, 10 percent ; 1905, 10 percent ; 1906, 12 percent ; 1907, 12 percent; 1908, 12 percent; 1909, 14 percent; 1910, 18 percent; 1911, 20 percent, 1912, 24 percent ; 1913, 25 percent ; 1914, 25 percent, 1915, 25 percent ; 1916, 25 percent ; 1917, 1181/2 percent (plus valuable rights) ; 1918, 12 percent ; 1919, 15 percent ; 1920, 16 percent ; 1921, 16 percent ; 1922, 16 percent ; 1923, 20 percent; 1924, 20 percent; 1925, 23 percent ; 1926, 25 percent ; 1927, 25 percent and 100 percent stock dividend.
"In 1917 a cash dividend of 100 percent was paid, and the stock was increased from $300,000 to $1,000,000, stockholders being given the right to subscribe for 21/3 new shares for each share then held, at a price of $100 per share.
"Prior to the increase of capital in 1917, the stock was quoted at $725 bid, and after the dividend of 100 percent was paid and the new stock of 21/3 additional shares for each share held was issued at par, it sold at
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$250 a share. The stock is now quoted at $625 bid, which shows a large increase in value, in addition to the very substantial dividends paid dur- ing the past ten years."
In addition to Mr. Ratshesky, the officers are as follows: Actuary, C. B. Mitchell; secretary, Henry P. Tilden; treasurer, I. A. Ratshesky ; directors, J. L. Bates, Nelson Curtis, J. H. Edwards, Adolph Ehrlich, P. E. Fitzpatrick, C. W. Gammons, W. F. Garcelon, F. S. High, C. A. Pastene, A. E. Pillsbury, A. C. Ratshesky, I. A. Ratshesky, G. F. Schrafft, C. H. Sherburne, C. S. Spencer, E. C. Stone, Leon Strauss, H. P. Tilden.
The New England Trust Company-The oldest Boston trust com- pany, in point of actual operations, is the New England Trust Company, which has the third largest trust department and the fourth largest com- mercial department of the Boston trust companies. It does not maintain a savings department. The institution received its charter in 1869 and was opened on February 20, 1871. It is one of the few banking institu- tions that has never figured in the consolidation movement among the national banks and trust companies of the city.
With a capital of $1,000,000, on June 30, 1926, the New England Trust Company had total assets of $29,499,973 in its commercial department, with surplus and undivided profits of $2,885,660, and deposits of $23,140,- 312. The total assets of its trust department on the same date, amounted to $103,615,861.
The officers of the trust company are as follows : President, James R. Hooper ; secretary, Leo W. Huegle; treasurer, John W. Pillsbury ; direc- tors, Arthur Adams, J. O. Beebe, J. D. C. Bradley, Morgan Butler, C. P. Curtis, G. H. Davenport, F. C. Dumaine, Jr., William Endicott, F. W. Fabyan, F. P. Fish, C. H. W. Foster, F. H. Gage, F. C. Gray, Sidney Harwood, F. W. Hobbs, J. R. Hooper, R. A. Leeson, A. P. Loring, Jr., Ernest Lovering, Roger Pierce, Walworth Pierce, C. O. Richardson, H. M. Sears, H. L. Shattuck, George Wigglesworth.
The Boston Safe Deposit and Trust Company-Although possessed of the oldest charter, the Boston Safe Deposit and Trust Company is the second oldest of Boston's trust companies in point of operations. It ob- tained a charter from the General Court in 1867, under the name of the Boston Safe Deposit Company, which was changed to the present name in 1874, but it was not until June 1, 1875, eight years after the charter had been obtained, that it was able to open its doors.
Considerable mention has already been given to this institution, which has the second largest trust department and stands sixth in its commer- cial department, among the trust companies of the city. It does not maintain a savings department. With a capital of $1,000,000, on June 30, 1926, it had total assets of $23,541,464 in its commercial department,
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A HISTORY OF BANKING IN BOSTON
deposits of $16,873,297, and surplus and undivided earnings of $3,937,888. Its trust department, on the same date, had total assets of $110,802,548.
The officers of the Boston Safe Deposit and Trust Company are as follows: President, Charles E. Rogerson ; secretary, Francis J. Burrage ; treasurer, Laurence G. Dean ; directors, N. F. Ayer, H. L. Bailey, W. C. Baylies, H. G. Brooks, W. T. Carleton, C. C. Converse, E. B. Dane, James Dean, C. F. Dowse, J. W. Farwell, Amor Hollingsworth, E. W. Hutch- ins, J. S. Lawrence, Homer Loring, Herbert Lyman, E. G. Preston, C. E. Rogerson, Leverett Saltonstall, H. S. Shaw, E. E. Silver, Nathaniel Stevens.
Boston's Savings Banks-Boston is justly proud of the history of its mutual savings banks, and, indeed, has a record with respect to these in- stitutions which no other city can boast. The first savings bank ever to be incorporated by any governmental agency in the world, was the Prov- ident Institution for Savings in the town of Boston, which received its charter from the Massachusetts Legislature in 1816. From that year to the present, a period of 110 years, the Boston savings banks have played an important part in the banking history of the city.
Although the first savings bank ever to be incorporated, the Provident Institution for Savings was the second in America. Previously, also, sav- ings institutions had been established in England and Scotland, but it was not until 1817 that the British Parliament sanctioned such banks by incorporating them. The original purpose of savings banks is clearly shown in the following petition of the founders of the Provident Institu- tion, as presented to the General Court :
"Humbly represent the subscribers, citizens of the town of Boston, that in their opinion an institution, by which all classes in the community may be encouraged to the practice of frugality, and especially industrious mechanics, either journeymen or masters, seamen, laborers, and men of small capital, widows and others, may receive from their earnings of wages or profit, regularly deposited and systematically invested in pub- lic stocks or otherwise, a profit proportional to the success of the insti- tution, and prosperity of the country, is highly desirable; that similar benevolent institutions have been immensely successful in other coun- tries, and are now contemplated in Philadelphia and New York; that they do not expect or desire any benefit or profit to themselves other than is enjoyed by every individual in the community ; for the success of such a design they are willing to devote a part of their time, without reward, to the management of such a charity, and give the profits of the estab- lishment in due proportion to the depositors; that they desire to have the authority only as above to receive deposits, in sums as small as one dollar, and to divide among the depositors the profits arising from these
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funds, invested in the most secure stocks or from loans; and to ensure more effectually these useful ends, they pray that they may be incorpor- ated into a corporation by the name of the Provident Institution for Savings in the town of Boston, and with such immunities, restrictions, rights, and privileges and duties as to your honor may seem meet, and as in duty bound will ever pray."
The petition was signed by William Phillips, John Lowell, James Savage, John Phillips, Richard Sullivan, Josiah Quincy and others. It was drawn following a meeting held for the purpose of considering the expediency of establishing such an institution, and resulted in an act of incorporation being granted on December 5, 1816. The bank opened on February 19, 1817, in Scollay Square, with Hon. William Phillips as the first president, and James Price as the first treasurer.
Almost nine years later the second savings bank in Boston-the fourth in the State-obtained its charter from the Legislature. It was the Institution for Savings in Roxbury and Vicinity, chartered on Feb- ruary 22, 1825. On February 21, 1829, the Warren Institution for Sav- ings in the town of Charlestown was incorporated. The fourth Boston savings bank was incorporated on March 7, 1833, and called the Savings Bank for Seamen in the City of Boston-afterwards changing its name to the Suffolk Savings Bank for Seamen and Others.
The Suffolk was the nineteenth Massachusetts savings bank, and the last to receive a special charter from the Legislature, as in 1834 a general law was passed, known as the first savings bank act, specifying a form of charter and providing for a uniform system in the operation of such institutions, under suitable regulation. A controversy arose over the ap- plication of this act, and the Provident Institution for Savings carried the case into the courts on the ground that subsequent legislation did not apply where a special charter had been given by the General Court. The Supreme Judicial Court, however, in a lengthy opinion, held against the bank.
In 1838 an act was passed by the Legislature creating a board of three bank commissioners, whose duty it was to visit every bank in the State at least once during the year. The commissioners were given access to the vaults, books and papers of each bank, and were authorized that whenever upon the examination of any institution a majority of the com- missioners were of the opinion that the bank was insolvent, or that its further operation would be hazardous to the public, or that it had ex- ceeded its powers or had failed to comply with the law, the commissioners were empowered to apply to the Supreme Court for an injunction restrain- ing the institution from further operations.
It was not until October 15, 1859, forty-three years after savings
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banks were first established, that it became necessary for the commis- sioners to close a Boston savings bank. On that date it was discovered that there had been a defalcation by the treasurer of the People's Five Cents Savings Bank, and that the institution as a result was insolvent. The deposits amounted to $150,000. Eighty per cent was paid in divi- dends, so that the total loss to the depositors amounted to $30,000.
Little reference was made to the failure by the commissioners, al- though in their report, after commenting on two previous failures in other parts of the State, they said :
"These institutions, more than any other which deal in money, are based on faith-on the confidence reposed by the depositors, a class greatly liable to apprehension and panic, in the disinterestedness, the in- tegrity and purity of character of the managers, in their personal devo- tion to their duty, and their inflexible adherence to the well known laws enacted by the State for their guidance. So vital is this to their exist- ence, that any marked instance of neglect, of unfaithfulness, or of dere- liction in duty, any bold or reckless policy which should tend to warp these institutions from their original design, and thus to bring in general distrust instead of confidence, could not fail to produce unhappy results. Here, if anywhere, carelessness, recklessness, or indifference deepen into crime; while premeditated crime assumes a blackness unparalleled by any other which can be committed against the rights of property.
"It is a just cause for congratulation that our savings banks have, with a single recent but sad exception, been so managed-in harmony with their true design, and in conformity with the laws, that they have de- served and enjoyed the confidence of the people, and been enabled to exert a widespread and healthful influence-inducing everywhere habits of industry, economy and thrift. Their deposits have steadily increased, until they have reached $39,424,418, an amount much larger than one-half the banking capital of the Commonwealth."
This extract from the report of the commissioners for 1859 is referred to first, by way of showing the attitude toward savings banks at that time, and also by way of introducing a few facts with reference to the manner in which the banks were conducted. With the exception of the panic years of 1877 and 1878, when the savings banks were so heavily loaded with real estate investments that many of them could meet the demands of their depositors, failures have been few and far between. Cases of outright dishonesty have been exceedingly rare, and both the city and State have been fortunate in the men who have been conducting their savings banks.
In the II0 years of history of the Massachusetts savings banks, twenty-three institutions have failed, ten of which were in the two years
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mentioned and because of excessive real estate loans on inflated values. The total deposits in these twenty-three banks amounted to $15,028,870. The average amount paid to depositors, in liquidation, was 82.23 per cent, making a total loss of $2,549,868. In considering the aggregate of the deposits over this long period, the loss would represent an infinitesimal part of a mill on a dollar.
Of the twenty-three banks which failed, seven were in Boston. Their total deposits were $8,088,998. An average of 85.70 per cent was paid to depositors, the total loss amounting to $1,005,451.
Mention has already been made of the People's Five Cents Savings Bank. The other failures will be briefly referred to. The second savings bank in Boston to be closed was the Mechanics' Savings Bank, on Janu- ary 12, 1877, of which the commissioners reported :
"This institution was incorporated March 30, 1874, and began busi- ness June 27 of the same year in School Street, in close proximity to two of the largest savings banks in the city. There seems to have been no public need of this bank. Burdened with an onerous lease, its expenses were more than seven times greater than the average of the savings banks of the State. Commencing business just after the turn in the tide of a long period of fictitious monetary prosperity, its deposits were invested mainly in public funds and bank stocks at high rates of premium, and in mortgages of real estate at the high valuations of that period ; a part of which seemed to have been for the benefit of two land companies in the vicinity of Boston, members of which were also officers of the bank."
The deposits of the Mechanics' Savings Bank amounted to $428,934. Dividends of 72.20 per cent were finally paid, the loss reaching $119,243.
The West Boston Savings Bank failed on January 9, 1878, after every effort had been made to save it. The bank had been in difficulties for a year and a half, as the result of excessive dividends as well as excessive loans. It had been temporarily enjoined from doing business during that period, and on its reopening was subjected to such heavy withdrawals that it could not meet the strain. Its deposits were $1,822,015. Divi- dends amounting to 85 per cent were paid, and the total loss was $273,302.
The largest of the Boston savings banks to fail was the Mercantile Institution for Savings, which was closed on February 20, 1878. With- drawals had been so heavy prior to the failure, that a sixty days' notice of intention to withdraw deposits had been required. The real estate loans were such that the commissioners deemed it prudent to wind up the bank's affairs. The deposits were $3,298,060, and the losses amounted to $542,530, dividends in all being 83.55 per cent.
Six days later the Dorchester Savings Bank closed its doors, for sim- ilar reasons. The bank had passed a dividend in an effort to repair its
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A HISTORY OF BANKING IN BOSTON
losses, but the withdrawals were so heavy that after one-third of the deposits had been taken out, failure was inevitable. The deposits at the time of the failure amounted to $398,161. Dividends of 92.65 per cent were paid to the depositors, so that the total loss was only $29,264.
On April 16, also of 1878, the Emigrant Savings Bank failed, its diffi- culties being similar to the others during this period. Its deposits were $1,982,604, of which 99.50 per cent was paid in dividends to depositors, the loss being only $9,913. The officers of the bank protested strongly against the action of the commissioners in closing the bank's doors.
The last savings bank to fail in Boston was on September 19, 1914, when the commissioner (the board of three having given way to a single commissioner ) closed the Lafayette Savings Bank. This institution had been doing business for less than a year, and the first examination dis- closed that its funds were being illegally invested and that misappropri- ations had been made. The deposits were only $9,224, of which 87 per cent was returned in dividends, leaving a loss of $1,199.
The Boston savings bank failures, especially those in 1877 and 1878, resulted in a tightening of the statutes and in making these institutions more cautious of their investments. Every bank in the city is in a strong position as a result of the experiences of the past. Legislation has been enacted from time to time restricting these institutions, but in the past year or two the General Court has shown a disposition to broaden the investment field-a necessity because of the vast growth of the banks.
The savings banks pay a tax of one-half of one per cent of the average deposits to the State. The imposition of this tax is interesting. It was first proposed in 1850, but the legislative committee on banks and bank- ing was opposed to it on the ground that it would "deter people from depositing in savings banks, and would weaken the stimulants and in- ducements to industry and frugality among the people of the Common- wealth, and increase the number of poor, the poor-rates and the taxes upon property already subject to taxation, thus injuring many and bene- fiting none."
As a Civil War measure, however, this tax was imposed in 1862. In 1868 it was increased to three-fourths of one per cent, but in 1876, when the savings bank laws were consolidated, the tax was reduced to one-half of one per cent, where it has since remained. Under this tax the Boston savings banks have contributed many millions of dollars into the State treasury, although the bankers have felt that it was a violation of the gen- eral spirit of the laws governing philanthropic institutions.
After 110 years there are now twenty-four savings banks in Boston with total assets of $553, 187,740, and deposits of $508,858,691, as follows:
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BOSTON SAVINGS BANKS-June 30, 1926. Bank.
Total Assets.
Deposits.
Blackstone Savings Bank
$2,521,884.08
$2,372,258.63
Boston Five Cents Savings Bank.
86,299,026.02
78,948,204.24
Boston Penny Savings Bank.
20,919,267.90
18,957,628.29
Brighton Five Cents Savings Bank.
6,435,413.85 183,953.67
173,350.12
Charlestown Five Cents Savings Bank ..
55,350,632.07
51,099,029.81 4,938,977.16
Dorchester Savings Bank
5,166,102.26
East Boston Savings Bank.
13,353,864.50
11,934,388.39
Eliot Savings Bank
13,668,762.21
12,633,930.43
Franklin Savings Bank
29,228,625.45
26,294,661.79
Grove Hall Savings Bank.
2,353,936.22
2,270,678.07
Hibernia Savings Bank
2,007,742.92 1,931,825.36
Home Savings Bank
54,481,259.98
49,464,469.37
Hyde Park Savings Bank.
4,227,160.51
3,847,959.35
Institution for Savings in Roxbury.
18,037,041.09
16,761,530.84
Lincoln Savings Bank
519,877.67
492,239.19
North End Savings Bank
8,371,953.09
7.737,647.83
Provident Institution for Savings.
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