BOSTON BANKS

The worst of the little tempest in Boston's financial teapot is over. With the assumption by the state of the seventh bank in months to close its doors, and the announcement by three more of a moratorium delaying withdrawals of savings deposits for ninety days, the course of unthinking panic seems to have been allayed. The gradual return to sanity will now offer an opportunity for grave reflection.

The causes of the terrific upheaval in Boston banking circles are generally understood. Popular chatter has thrown responsibility for the long series of calamities upon Ponzl; carefully suggestive propaganda points the finger of incrimination at the moneyed group which controls "State Street." Both allegations are false.

One underlying reason for the existent chaos is the abortive attempt on the part of a group of politicians to combine ward politics and banking methods. The preponderance of the directorates of banks which have been shut by order of the commissioner has been composed of public office-holders and their friends, unacquainted with right banking methods and appealing to face prejudice and class distinction. A definite drive has been made against the conservative methods of substantial institutions; wild accusations have been bandied about, charging that the moderate rates paid by established savings banks betokened the robbery from the poor man of his lawful due; and one small trust company has bid against another for the privilege of paying the highest rates.

Combined with this open recklessness, the internal economics of the banks now under the ban have been no less preposterous. For the sake of paying high rates on savings, commercial loans have been sought at exhorbitant rates indicative of the utmost insecurity. There seems little doubt that practices approximating extortion have been countenanced. Mismanagement and poor judgment have led to the accumulation of resources far from liquid, slow loans, worthless paper, dubious realty holdings, and notes impossible to collect.

The panic, with its evil effects even upon healthy institutions, its detriment to local manufactures and trade, and its reflections upon the financial reputation of Massachusetts, will have been worth all the trouble, if out of it can come a realization that sound, progressive banking methods, administered by trained executives, are preferable to high returns and low security.