Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
(?-1899)
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Editor/Trans.
First Pub. Date
1881
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New York: Maynard, Merrill, and Co.
Pub. Date
1899
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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BANKS, History and Management of Savings,

I.119.1

BANKS, History and Management of Savings, institutions established without capital by philanthropists, where the economies of the poorer classes are received and invested, so as to return a profit and be payable on demand or at short notice.

I.119.2

—They are managed by trustees without salary, who have no interest in the profits of the business, which are credited or paid to the depositors at stated intervals, and when credited, become new capital which is re-invested and earns interest the same as a fresh deposit, and this operation goes on as often as dividends are declared and are allowed to remain uncollected.

I.119.3

—Savings institutions are essentially the banks of the poor, where they can safely place their temporary surplus and feel that their deposits will be returned with whatever additions they can be made to earn consistent with that safety. The proceeds of labor converted into capital by depositors in this way, are made to produce a revenue without impairing the original sum, and go on increasing, while the owner is engaged in the production of other surplus, which he can convert into capital with similar results. Such accumulations earned by individuals tend to distribute property among the masses of the people, to the extinction of pauperism, to produce comfort and happiness, to encourage education, and to the general enlightenment of the individual and the community where they exist; besides, the cares which accompany their possession sharpen the mental faculties, and incline to enlarge the moral perception of the owner. So manifest had this become late in the last and early in the present century, that efforts were then made to encourage habits of economy and thrift among those who had never enjoyed their fruits and knew nothing of the benefits of saving for themselves.

I.119.4

—The first publication in England on the subject of savings banks is attributed to Jeremy Bentham, in whose plans for the management of paupers he included a system of "frugality banks."

I.119.5

—Among those who first interested themselves, practically, was Mrs. Priscilla Wakefield, the superintendent of a "friendly society for the benefit of women and children," which, in 1801, combined with it a bank for savings for their benefit.

I.119.6

—In 1810 the Rev. Henry Duncan established at Ruthwell, in Scotland, a "parish savings and friendly society," which more nearly resembled a modern savings bank than anything which had been previously established. It was brought to the public attention by a publication of its system, and the details were received with so much favor that in 1817, when the first act of parliament was passed which established the system under government control, 78 private societies, which received and invested the savings of the laboring poor, were in operation in England, Ireland and Wales.

I.119.7

—In 1805 savings banks were first opened in Switzerland, at Zurich.

I.119.8

—The first institution in France was opened in Paris in 1818. Since then they have extended into nearly every European state.

I.119.9

—The philanthropic spirit was displayed in the colonial history of this country, and found expression in efforts to fix by law the price of articles of necessity, and the wages of mechanics and laborers; but experience demonstrated that such regulations were detrimental to the interests of the people they designed to serve; afterward lotteries with charitable designs were legalized, and charitable societies for the protection and support of members who might be in need of assistance, by reason of sickness or accident, and for the relief of destitute widows and orphans of deceased members.

I.119.10

—In 1803 a petition was presented to the legislature of the state of New York, praying that sundry persons might be incorporated into a society, with power to build workshops and purchase materials for the employment of the poor.

I.119.11

—The present political society of Tammany or Columbian order in the city of New York, was incorporated in 1805, as a charitable institution, for the purpose of affording relief to the indigent and distressed members of the association, their widows and orphans, and others who may be found proper objects of its charity.

I.119.12

—Many benevolent and charitable societies were incorporated in the New England and middle states in the next decade, some of them fulfilled the designs of their founders to a limited extent, but all failed to accomplish anything for the permanent well being of those they intended to benefit: instead of helping the beneficiaries so that at some time in the future they would take care of themselves, they ministered to present wants only, which were ever recurring and were never fully satisfied; with every succeeding dispensation the receivers became more dependent, finally lost their own self-respect, and were really becoming paupers; the disease had been aggravated by improper remedies. Experience demonstrated that, in most cases, temporary relief resulted in entire dependence, and the number of poor instead of decreasing was stimulated to increase; it was learned, that as soon as it was known in a community that anything could be had without labor, that soup, fuel, clothing or shelter could be had without cost, that moment the moral standard of the neighborhood was lowered, and when the way of supply was made plain by individuals, societies or the state, all further efforts on the part of recipients to earn their own living were abandoned, not only for the part gratuitously offered, but all honest work was given up, and ingenious schemes were resorted to in order to obtain the greatest amount possible; time and labor were wasted, which if they had been directed by honest efforts would, in most cases, have comfortably supported the degraded persons and their families.

I.119.13

—Having learned this plain lesson taught by experience, a class of philanthropists resorted to the system to help others to provide for themselves, by teaching the poor to acquire habits of thrift in laying aside some part of their earnings in a time of prosperity, to provide for future wants in the days of adversity or old age.

I.119.14

—The ideas which inspired the founders of the first savings bank incorporated in the United States, the one at Boston, in 1816, are well expressed in their announcement of intention to apply to the legislature of Massachusetts for an act of incorporation. They say: "It is not by the alms of the wealthy that the good of the lower class can be generally promoted. By such donations encouragement is far oftener given to idleness and hypocrisy than aid to suffering worth. He is the most effective benefactor to the poor, who encourages them in habits of industry, sobriety and frugality."

I.119.15

—This, the Boston provident savings institution, was incorporated Dec. 13, 1816. thus giving to the United States the honor of first sanctioning by law these most useful institutions.

I.119.16

—The Philadelphia savings fund society had gone into voluntary operation in the same year, but was not incorporated until Feb. 25, 1819. The savings bank of Baltimore was incorporated in December, 1818; the Salem (Mass.) bank in the same year; the bank for savings in New York, March 26, 1819, and in the same year also, the society for savings, Hartford, Conn., savings bank of Newport, R. I., and Providence institution for savings, R. I.

I.119.17

—All of these institutions are still in existence, and the latest annual reports show them to be in a flourishing and prosperous condition, the results of honesty and common sense in their management which have characterized them from the beginning.

I.119.18

—The method of operating savings banks is not the same in all the states where they exist. In some they take the form of a society, with power to add to their membership, and with perpetual succession, a certain number of members are yearly chosen by ballot to act as managers, these managers elect their own officers, make rules and by laws, and alter or rescind them at pleasure.

I.119.19

—In others the corporators are a limited number, and are themselves trustees with power to fill vacancies, and are responsible for the management to state authority, to which they report at regular intervals, which reports are published. In some they do business under special charters, in others under general laws to which every institution in the state conforms; this last system is growing in favor as supervision is simplified, so that superintendents or commissioners familiar with the one law, can easily determine if investments have been made in prohibited securities or generally in too great amounts on permissible ones.

I.119.20

—The laws in the six New England states in relation to savings banks are very similar, although in some banks the managers are more conservative in their practice than in others. All invest to some extent in United States bonds, in bonds and mortgages on real estate, in national or state bank stocks, state, county, city, town or village bonds, loans on personal security, in railroad bonds, and some in railroad stocks.

I.119.21

—Most of the banks are operated under special characters, but in some of the states general laws have been enacted, to which savings banks may conform if they so elect.

I.119.22

—The general law of Massachusetts is similar in many of its wisest provisions to that of New York, but as the old chartered institutions of the former state are not required to conform to it, its full benefits are not realized. All banks pay a tax on the average amount of their deposits to the treasurer of the state in which they are located. In Massachusetts this tax is ¾ of 1 per cent. per annum, payable semi-annually.

I.119.23

—Banks in all these states loan on bond and mortgage on property located in nearly every state in the Union. They may invest in, or loan on, one-quarter of the capital stock of any one bank (state or national), provided the sum is not more than 10 per cent. of their deposits, nor more than $100,000, but they may deposit in addition on call in such bank, 20 per cent. of the amount deposited in the savings bank, so that in case of the failure of the state or national bank the savings bank would become liable as a stockholder for its debts over and above the amount of capital stock owned by it, and would be obliged also to take its chances with all other creditors in recovering the amount on deposit in the failed bank. To illustrate the effect on a savings bank of the failure of a national bank in Massachusetts, let us take a savings bank having $1,000,000 due its depositors, which has invested and deposited the sums permitted by law, viz.:

Say 10 per cent. of deposits invested in stock... $100,000
Say 11 ability equal thereof... 100,000
Say 20 per cent. of its deposits placed with the bank 200,000
Would make the amount involved... $400,000

Or 40 per cent of its assets. This seems a dangerous section in the law, and the risk is not diminished, if, as is often the fact, any number of trustees in a savings bank are at the same time directors and stockholders in the national bank.

I.119.24

—The amount of savings bank deposits are present invested in, and loaned on bank stocks, and on deposit in national and state banks, is 14 per cent. in the New England states.

I.119.25

—Town and village bonds are not usually desirable securities, for the reason that they are required under state laws to be issued in a prescribed manner, and if all the forms have not been complied with, and the burdens bear too heavily on the issuing towns or villages, the interest usually ceases, and the principal remains unpaid at maturity.

I.119.26

—In the case of a village in Maine, which issued its bonds in aid of a railroad, (the usual reason for such issues), when the burden on the taxpayers became heavy, the selectmen concluded to leave their creditors in the lurch, and arranged the property in the town so that it would be valueless for even a combination of their creditors to take it. They then repudiated the interest on their bonds, and when the holders offered to take 50 per cent. of their dues, they still declined to pay, thinking to settle for less if they kept them waiting long enough.

I.119.27

—The effect is, that nearly every city and town bond in the state sells at a reduced price, most of them below par, and savings banks are the largest sufferers by the decline.

I.119.28

—The court of appeals in the state of New York, the court of last resort there, has just decided in the case of Cagwin vs. The Town of Hancock, that the town was not liable on certain bonds and coupons, issued in aid of the New York & Oswego Midland R. R. Co., because the tax-payers of the town, representing more than half of the property, had not consented to their issue, and that they were null and void in whatever hands they might be found, although the plaintiff insisted, which was not contested, that he was a bona fide holder for value, and that the affidavit of the assessors that a majority of tax payers, representing the major part of the property, had consented, which was conclusive evidence that the requisite consent had been obtained, and that such affidavit attached to the consent was recorded in the county clerk's office, and was a decision in the nature of a judgment. The court held that the affidavit of the assessors was not conclusive evidence and might be disproved, as it was. Under this decision no savings bank can safely hold town bonds in that state, unless it attends the town meeting at the time the vote is taken, knows every voter by name and the assessed value of his property, and can produce evidence that a full majority voted in favor of bonding. Even with this knowledge, it should also know that the meeting was properly called and due notice given according to law.

I.119.29

—Loans on personal security to the extent of one-third the amount held by savings banks may be made in the New England states with two sureties, i.e., they may discount indorsed notes, not, according to the custom of banks of discount, those having two or three months to run, but they may loan on notes running one year. It is only necessary to mention this form of investment, comment is needless; the practice is unsound and should be discarded. Loans on bond and mortgage have always been thought the best kind of security for trustees and executors. We have inherited this notion from our old world ancestors, and the idea suited the fathers in this country because, in earlier times, land was the most abundant thing of value to offer for the less abundant commodity money, which was a necessity, though to a less extent. Banks were permitted to issue notes to be used as money based on mortgages on land. A land bank was organized in 1740 at Boston. Each stockholder made over to the directors an estate in land for which he received its equivalent in bank bills which passed as money, the provisions for the payment of interest and a certain part of the principal per annum were very stringent, and yet the bank came to grief, its mortgage securities being insufficient to realize enough to pay its debts. Widows and children were large sufferers, and twenty-eight years after its organizations, and many years after its failure, creditors were still clamoring for their just dues from the few remaining stock-holders who were solvent. With such examples on their historical records. New England savings banks have loaned large sums on bond and mortgage belonging to other widows and children, not only to people in their own states, but in all parts of the United States, with similar results. The truth about mortgage loans is, that the value of land in this country is as changeable as that of most other security. When it is said that land security can not run away, which is thought to be unanswerable, it is not to say overmuch, for the land may remain and still become unsalable or worthless for the purpose of realizing the loans on it years after creditors have ceased from troubling; and even when good for the loans. foreclosures may be delayed and auctioneers driven away as they have been, although the interest money was not paid for more than one term.

I.119.30

—To be good security for savings banks, mortgage loans should be taken on productive property, in the vicinity of the bank making it, at not more than 40 per cent. of its cash value, and receipted tax bills should be produced once a year, as well as certificates from proper authorities that no assessments remain unpaid. These mortgages should be made payable within one year, after which the bank should have the option of calling in the principal or any part of it. Not more than 20 per cent. of the bank's assets should be loaned in this way, and it should stipulate that both principal and interest should be paid in coin of the United States of the standard of weight and fineness fixed by law at the time the loan was contracted.

I.119.31

—Had similar conditions been made by savings banks in this country, many would have been saved from the disaster and ruin which came to them between 1876 and 1879 and which may yet come to others in the future. Railroad stocks, which by their nature never become payable and may never pay a dividend, which are liens, only after five or more mortgages, are eminently unfit for investments such as we are considering. Railroad bonds secured by a first mortgage to a small amount per mile, wholly within the state in which the bank is located, which have paid the stock of dividends for at least three successive years previous to their purchase, may be considered proper investments for savings banks; but the purchase of bonds issued by a railroad for its equipment, or to raise money to build or extend a road, because trustees know the men engaged in the enterprise and have confidence in their ability or integrity, is a mistake and should be prohibited. The prospects of the road may be first class, but, in this era of railroad building and managing, combinations and consolidations are too frequent, by which the small road with good prospects may become an insignificant feeder to a great system of roads, with a revenue insufficient to pay its fixed charges. In some instances sums large in amount are received, or allowed to accumulate on deposit. $40,000 in our bank and $34,000 in another are moneys of capitalists not of savings depositors. It should not be forgotten that these are benevolent and not charitable institutions, organized to assist those who are unable to take proper care of their own, who through poverty have no secure place, or whose savings are too small to be used singly to advantage. As a rule, owners of sums larger than $2,000 should be directed elsewhere for investment, and not put needless burdens on trustees who work without fee or reward, because it is easier to do it, than to look about for themselves when pasturage elsewhere is scanty, and government bonds pay but 3 to 3 1/3 per cent. They are the ones, who, in a time of panic, when prices are depressed and money scarce, ask eagerly for their large deposits to buy the very securities which savings banks are obliged to sell at a loss to pay their deposits with. If the receipt of deposits from a single person is limited to $150 or $200 in any six months. and no interest is paid on aggregates above $2,000, it would have the effect to keep out capitalists and reserve the banks for their proper customers.

I.119.32

—BANK BUILDINGS. Extravagant amounts spent for palatial buildings to be used simply for banking offices, or even if a part of the bank if rented, has an ill effect on its depositors and the community. It is not only unwise and unjust to expend deposits or surplus in this way, but the example taught is unqualifiedly bad. When depositors see the costly buildings, and on entering are startled at the sumptuous furnishings, on lesson of economy or thrift is taught them, even if the portrait of Franklin larger than life is posted in a conspicuous place, with the motto "Save your pennies." They learn rather that trustees who build such banking houses are not the proper custodians of their savings, and if they are wise they will go elsewhere than to a bank that has cost $600,000, or even $500,000, several of which exist in the empire state, for although they may be unable to cipher it out, they know there must be a great loss of interest, and it could with truth be told them, that 10 per cent. per annum is not too much to estimate for interest, taxes and repairs, and if the building cost $500,000, $50,000 must come off their dividends annually, and if the deposits are $10,000.000, it is equal to one-half of 1 per cent. on each depositor's credit in the bank.

I.119.33

—SALARIES. This is an item well worthy of notice. With the exception of the executive officer, who devotes the principal part of his time to the interests of the institution and has charge of the internal management, no trustee should receive a salary or fees. Neither the secretary nor treasurer, who with the president jointly, should have charge of the bank's securities, should be a trustee, the influence of one salaried man in the board is enough; when the question of compensation to under officer or clerks is under consideration, it should be settled on its merits, and not with the bias that one must always feel for another of the same guild. The qualifications of a trustees should be integrity and capacity; honesty and common sense will enable any board to discharge its duties in a way that will place it above just reproach. Trustees should be selected from a class of men who have "made their way," soberly and honestly in the face of competition; these men know the value of money and how to use it economically. Great bankers are not required. Speculators should be kept out, for it is the principal sum that must be guarded, large profits are not to be sought.

I.119.34

—Directors and stockholders in banks of discount in which any part of a savings bank's available or uninvested funds are kept, should not be trustees of the savings bank, as their interests are opposed to their trusts, and they are interested peculiarly in having the sums deposited as large, and the interest paid for their use as small as possible, and when the trustee is called upon to vote, the director's interest comes up, so that he should not be required to submit to the temptation; his eligibility for one of the offices should be abolished. Directors of a corporation have been known to vote as trustees to loan the money of their savings bank in order to buoy up their sinking concerns, which resulted in the ultimate failure of the savings bank without saving the corporation. Trustees should never forget that the funds they manage belong to others, who have put them in their charge to be invested, so that the principal sum, at least so far as human foresight can determine, will be secure: trustees have no moral right, even if they are within the law, to take risks which as business men using their own capital they could afford to do. If errors are to be committed let them be on the side of security.

I.119.35

—Investments worth more than par are very desirable on account of their salable value in case of need, but the premium paid should never be counted among the assets, but be regarded as a bonus paid for the guarantee that the bonds are good for their face at maturity, which is all that can be received, and that the interest will be regularly paid.

I.119.36

—EXPENSE OF MANAGEMENT. This should be reduced to the minimum of safety. Large salaries, expensive bank buildings, incidentals, like coal, gas, janitor's wages, expensive stationery and the extravagant use of it, swell the expense account to 1 or more per cent. in some banks outside of New England, while there, notwithstanding the payment of large taxes, the average in most cases is not much above ¼ of 1 per cent; this amount, or, in large cities 1/8 of 1 per cent., is the most that needs to be expended.

I.119.37

—The business of savings banks should be confined to legitimate functions, that is, receiving, investing, and paying again, proper deposits, under suitable regulations. Accounts of business people, small traders and others, who requires interest on monthly balances, draw checks at sight without the production of the bank book, who deposit notes and drafts for collection, should be refused; buying and selling domestic and foreign exchange should be prohibited; all belong to banks of discount which are liable to general taxation, from which savings banks, as benevolent institutions, are in great part relieved. New England savings banks are properly taxed by their states because they are permitted so wide a range of investments, and receive a higher rate of interest than in New York for example, where they are more restricted in investments and are mostly untaxed.

I.119.38

—The practice of paying a premium on deposits arises from a desire to get new customers and increase the aggregate amount. Notices are posted in many institutions, that deposits made on the 10th day of January or July will commence to draw interest from the 1st day of those months. This is unfair to those whose money is in the bank on the first day, as it must earn dividends both for them, and the sharper customer who is making 10 days' interest for himself elsewhere, but who can, by making a deposit on the last day, claim a dividend for the days already passed, and so make his capital earn two dividends, although it was employed in but one place. The custom also tends to induce slothful habits and laxity in business, as there is nothing to be gained by promptness, for the profit is the same whether one gets to the bank 10 days earlier or later. Larger aggregates of money are presented for deposit on the first 10 days of the half year to nearly all the large institutions in New York, although some of the banks refuse to credit them as deposits of the first day.

I.119.39

—SURPLUS. The question of surplus to meet loss and depreciation in values, is attracting attention in all the states, although in the banks of some of them this important provision is over-looked, in others, a very small percentage accumulated gradually is considered sufficient.

I.119.40

—In New York the general savings bank law forbids the payment of more than 5 per cent.—it may be less—interest per annum, until the surplus, estimating all securities that are worth it at par value, and those of less worth at the market value, amounts to 15 per cent. After this surplus is secured, extra dividends must be declared as often as once in 3 years out of the excess. When this time arrives, all accounts should be classified according to the length of time the money has been in the bank so that accounts only 6 months old should receive a less proportion than others, the credits of which have been one or more years in possession of the bank, as it is evident that the surplus will have been earned with undisturbed balances, and that recent accounts will have had no share in making the accumulations. If some such plan is not adopted, the best banks will be overloaded with money 3 or 6 months before extra dividends are declared, by persons determined to get a large interest for their capital, and who have not accepted the more moderation rate while the surplus was accumulating, and who, therefore, have no moral right to participate in extra profits which their capital did not earn.

I.119.41

—Some instances of savings bank failures have occurred in this country through the dishonesty of officials, and many losses have been incurred by the rascalities of clerks which they were enabled to accomplish by false entries. Nothing is more detrimental to the welfare of an institution that a slovenly or careless method of keeping accounts. Monthly examinations by trustees should be the inflexible rule, and the balance due depositors in dealers' ledgers should agree with the total deposits as shown by the general ledger, which should be confirmed at least twice a year when all accounts are listed.

I.119.42

—In the larger cities where silver is refused, and the banks receive only gold or its equivalent on deposit, those securities should be preferred as investments which by their terms are to be repaid in gold of the present standard of weight and fineness, and in drawing mortgage instruments, clauses should be inserted whereby both principal and interest should be paid in like coin. As only gold or its equivalent is received, if the time should come when depreciated silver has to be returned, depositors will have good cause to complain that their trustees did not manage wisely, and there may be a responsibility fastened on the latter which it will be difficult to get freed from.

I.119.43

—Failures among savings banks have generally occurred in the past on account of competition between them to pay large dividends; primarily this was the fault of legislatures in chartering too many institutions. In the city of New York, between the years 1867 and 1870, 20 new savings banks were chartered; 7 were located on one avenue, 5 of them failed before 1876. From 1819, when the first one was chartered by the state, to 1867, a period of 48 years, 22 new banks were established in that city, and nearly all were doing business at the last date. In the four years first named this number was nearly doubled, although it was afterward proved that the public necessities did not require them, as the entire assets of the 20 new banks in 1875 fell short of the deposits in a single bank of the better class in that city.

I.119.44

—Savings bank charters in the days of the "ring," were made a means of payment for political services, and places of trust and honor in the banks were often given as rewards of partisan merit. The desire for new banks became an epidemic, and the legislature yielded to the solicitations of interested parties, and granted special charters with little or no reference to the qualifications of the incorporators for taking care of the people's money. They soon demonstrated their incapacity by buying low-priced securities which promised large dividends on the sums invested; they fitted up expensive offices with extravagant furniture, built costly banking houses, paid round salaries, advertised largely agreeing to pay high rates of interest, which promise was kept as long as sufficient deposits could be kept available, but soon there came a chilling frost and nipped those flowers in the bud, states defaulted on their mortgages, towns repudiated and failed to pay interest on their bonds; depositors heard of these things and asked for their money, then the climax was reached and the receivers stepped in and took possession.

I.119.45

—The percentage of loss by depositors, to the total deposits, has been small, still many individual cases of hardship have occurred, but they are not likely to be repeated from the same causes.

I.119.46

—Deposits in savings banks are left there by their owners against a time of need, in many cases they remain undisturbed 10 and even 20 years to accumulate interest and increase in amount: the depositors have no voice in the management of their funds nor in the election of trustees; the state, therefore, is bound to exercise a strict supervision over the investments and practices of the latter in order to correct illegalities of every sort.

I.119.47

—Sound laws are indispensable as guides, and proper authority should be invested in superintendents and commissioners, which they should not fail to exercise in case of need: much depends on good laws, more on their administration, but most of all on trustees themselves. A careless or foolish board may wreck an institution beyond hope of redemption before the supervising authority can have knowledge of the damage.

I.119.48

—The largest and most successful banks now doing business, have been managed by prudent trustees, in a way that excites admiration and profound respect, but they have been conducted in the same way for 30 to 60 years, their present prosperity being attained by early economy and strict attention to right principles. Attempted rivals have come to grief, because they disregarded these requisites; they saw results but did not care to inquire how slowly they were obtained, they plunged into extravagances from the start, they had no idea of savings and lost all in speculating.

I.119.49

—The general savings bank law of 1875 with its amendments, in the state of New York, is undoubtedly the best in existence in this country; some modifications, which have been suggested in the course of this article, might still be made. Its best features have been adopted in other states, and it would be for the interest of all if this was general in every state. Its prominent provisions are. All savings banks must conform to the law, old charters are repealed where their provisions conflict with it; the organization of new banks is thus restricted; notice of intention must be published previous to filing the certificate, in the local papers, and all savings banks in the county must be served with a copy. The superintendent is then to ascertain whether the proposed bank is needed, whether there is a population sufficient to promise success, and whether the proposed corporations are men who can command confidence; if not satisfied that the proposed institution will be a public benefit, he is to refuse his consent.

I.119.50

—The trustees' meetings are to be held at least monthly, at which the president or one of the vice presidents must be present to from a quorum.

I.119.51

—A trustee who fails to attend six consecutive meetings of the board unless he has been previously excused, or who becomes an officer, clerk or employé in any other savings bank, or upon borrowing directly or indirectly any of the funds of the bank, or becomes a surety for any money borrowed or loan made by his bank, vacates his office. Deposits shall be repaid after demand, in such manner and times as trustees shall prescribe, of which notices shall be posted in the banking room and printed in the pass books.

I.119.52

—Trustees may limit deposits in amount, refuse to receive them, or return them after deposit, in their discretion. Deposits to the credit of any one individual or corporation shall never exceed $3,000 in the aggregate, unless made prior to the passage of the act, or in pursuance of an order of court.

I.119.53

—Deposits made by a minor or a female, are subject to their exclusive control, except creditors, and shall be paid, together with dividends thereon, to the person in whose name the deposit was made. Deposits made by one person, in trust for another, unless written notice of the existence and terms of a legal and valid trust shall have been given to the bank, may, in the event of the death of the trustee, be paid to the person for whom the deposit was made.

I.119.54

—Investments may be made only: in United States bonds; three-sixty-five District of Columbia bonds, stocks or bonds of the state of New York bearing interest, and of any state which has not for 10 years previously defaulted in the payment of principal or interests on any debt authorized by any of its legislatures. In bonds of any city, county, town or village of this state, issued under state laws, or in any interest bearing obligations of the city in which the bank is situated. In bonds and mortgages on unencumbered real estate, situated in the state, up to 50 per cent. of the value of improved, or 40 per cent. of unimproved or unproductive property; but no loan shall be made except on a report of an investigating committee, which report shall certify to the value of the premises and be filed among the records of the institution; not more than 60 per cent. of the deposits shall be invested in mortgages. In real estate necessary for the bank's business, a portion of the building not required may be rented. The total cost of the buildings, and lot must not exceed 50 per cent. of the bank's net surplus. In real estate purchased under foreclosure of mortgages, but such real estate shall be sold within 5 years, unless the time is extended by the superintendent of the bank department on application of the trustees. To meet contingencies, 10 per cent. of deposits may be kept on hand or deposited in state or national banks or trust companies, provided the sum deposited in any one does not exceed 25 per cent. of the paid up capital and surplus of such bank or trust company. In case of insolvency in depositories, savings banks are preferred creditors for the full amount of their lawful deposits in state banks, and in trust companies after a small class of accounts. They may loan on securities they are authorized to purchase, up to 90 per cent. of their market value, and not above their par. Interest is restricted to 5 per cent., until after the surplus is 15 per cent., estimating securities at par value, or, at their market value if it is below par, when, at least once in 3 years, the accumulation beyond is to be divided as an extra dividend. Trustees may classify their depositors, according to the character, amount and duration of their dealings with the bank, and regulate all dividends, so that each shall receive the same ratable proportion as all others of his class.

I.119.55

—Loans upon notes, bills of exchange, drafts or any other personal security whatever, are forbidden, as well as buying or selling exchange, gold or silver, or collecting or protesting promissory notes, or time bills of exchange, or to deal or trade in any goods, wares, merchandise or commodities whatever, except as authorized by the terms of the act, and except such personal property as may be necessary in the transaction of the bank's business.

I.119.56

—It is unlawful to allow interest on deposits for a longer time than they have been in bank, except 10 days of grace, at commencement of semi-annual interest periods, or 3 days at the beginning or end of any month may be allowed.

I.119.57

—No dividends or interest shall be declared or paid except by a vote of the board of trustees duly recorded, and trustees voting for a dividend are made personally liable for the amount voted for unless it has been earned and appears to the credit of the bank on its books of account.

I.119.58

—Trustees acting as officers, who give regular and faithful attendance at the bank, may receive such compensation as a majority of the board deem just and reasonable, but such majority shall be exclusive of the trustee to whom compensation is voted.

I.119.59

—It is unlawful to pay trustees for their attendance at board meetings.

I.119.60

—A committee of trustees must examine the books, vouchers, assets and affairs generally of the savings bank, twice each year, i.e., in January and July, and report to the bank department, on or before the first of February and August in each year, under a penalty of $100 per day, for each day's delay beyond the time; this report must give a list of bonds and mortgages, and location of the mortgaged premises, and of such as have been paid, wholly or in part, or have been foreclosed, since the previous report; the cost par value and estimated value of all stocks or bonds owned, with a detailed statements of each particular kind; the amount loaned on the pledge of securities, with full details of each kind, and the amount invested in real estate, and cost of same; the amount of cash on hand, and in banks or trust companies, with the names of depositories, and the amount in each; and any other information the superintendent may require. The report shall also state all the liabilities, the amount due depositors, any debts or claims against the corporation, which are or may be a charge upon its assets. The amount of interest or profits received must also be stated, as well as the amounts credited or paid to depositors, the number of accounts opened and closed during the half year, and the number remaining open at the end. All reports must be verified by the oath of the two principal officers of the institution, and the statement of assets shall be verified by the oath of a majority of the trustees who examined the same. Any willful false swearing regarding reports to the bank department, shall be deemed perjury, and subject to prosecution and punishment prescribed by law.

I.119.61

—The superintendent of the bank department is required to make to the legislature, on or before the first of March, in each year, a statement of the condition of each bank that has reported to him, and to compile the whole. This report is afterward printed by the legislature with every detail.

I.119.62

—The superintendent is required to visit in person, or by agents, and thoroughly examine each bank once in two years, and oftener, at discretion, and whenever he is satisfied that any one is violating law, or following unsafe practices, or whenever it appears to him to be unsafe or inexpedient for it to continue business, he shall communicate the facts to the attorney general, who shall institute proceedings, which may look to a removal of trustees, to consolidation with another bank, or to such other relief as may be required.

I.119.63

—It is unlawful for any bank, banking association or individual banker, to advertise or put forth a sign, as a savings bank, or in any way to solicit deposits as a savings bank, under a penalty of $100 for every day such offense is committed.

I.119.64

—The development of savings banks in the New England and old middle states is simply enormous; from one, with a few thousand dollars, in 1816, they have increased to 594, with $824,515,162 of deposits, belonging to 2,416,280 depositors. Institutions of the name do business in nearly all the states, but as they are organized with capital, do a general banking business, and receive the largest sums of capitalists on deposit, they are not considered in this article or as belonging to the system. From the imperfect data attainable, some states not requiring reports to be filed, and there being no uniformity among those which do require it, the table on this page is compiled.

Table.  Click to enlarge in new window.

I.119.65

—The amount invested in and loaned on United States bonds is shown to be $199,675,922, no inconsiderable part of the public debt, which is a sufficient guarantee that the public faith with its creditors will be maintained unimpaired.

I.119.66

—The largest and among the oldest banks in the country, the Bowery savings bank, in the city of New York, chartered 1834, has 89,922 depositors, and $37,435,877 deposits, and total assets of $39 217,977, showing a surplus of $1,782,100, estimating the securities at par value; estimating them at the market value it is more than four times as much. $22,671,000 of these assets are invested in United States bonds at par value.

I.119.67

—The high place that the savings banks occupy in the states named, can not be over estimated; they are important regulators of the moral health of communities, they prevent crime, discourage pauperism, and lessen the tax-burdens of the people. Wherever a well managed institution exists, the people are industrious and thrifty; every week, on the days that wages are received, the bank is thronged with depositors; but their use should be still better understood, the cumulative nature of interest needs to be explained, and impressed upon the minds of the young and the poor, for many persons go through life without knowing anything of the fact that their savings may be made to earn money as truly as their labor. There are many states where savings banks have no existence, which present wide fields for benevolent labor, and which are well worthy the attention of the enlightened and philanthropic economist and statesman.

I.119.68

—SAVINGS BANKS IN THE UNITED KINGDOM. Like similar institutions in the United States they have been subjects of special legislation, but since 1863 all are managed under an act passed by parliament in that year. Every savings bank is certified under its provisions, and no other institution can take the title of "Savings Bank certified under the act of 1863." They are managed by boards of local trustees, none of whom are allowed to be depositors. At least two persons are required to be parties to every transaction with depositors; every officer must give good security for the faithful and just execution of his duties; one or more auditors, independent of the board of trustees, must be appointed by them, who shall examine the books and report in writing to the trustees the result of such audit, not less than twice each year; also at the close of each year examine an extracted list of the depositors' balances, and certify to the assets and liabilities of the bank, such extracted list to be open to the inspection of any depositor as regards his own account.

I.119.69

—The depositor's pass book must be compared with the ledger on every transaction of repayment, and on its first production at the bank after the annual balance.

I.119.70

—The trustees are required to hold meetings at least twice a year, and keep proper minutes of the proceedings; also to make weekly returns to government of business transacted, and render annually such general statement of the funds, etc., as the commissioners for the reduction of the national debt may require. If these regulations are duly complied with, the trustees are free from personal liability.

I.119.71

—Savings banks may receive from individual depositors any sum up to £30 in any one year, or £150 in all, which, with interest credited, may run up to £200, when interest shall cease. From charitable societies or penny banks, £100 in one year and £300 in all, or without limit if the government officials give consent. From friendly societies, duly registered, deposits without limit either as to time or amount.

I.119.72

—No person is permitted to have more than one savings bank account. Every person on opening an account in a savings bank is obliged to testify in writing that he has no other account, and is not entitled to any benefit from the funds of any savings bank; any violation of this law within the United Kingdom works a forfeiture of his whole deposit or benefit, to the government.

I.119.73

—These deposits are all to be placed in the bank of England, or the bank of Ireland, to the credit of the commissioners for the reduction of the national debt, who invest them in government securities, paying the bank £3 per cent. interest on the same.

I.119.74

—The trustees of each bank allow their depositors such interest as they think proper, not exceeding £2 15s. per cent.; with the difference they must pay all expense of managing their bank.

I.119.75

—To secure depositors whose balances amount to £200 from loss of interest, trustees may invest for depositor's benefit that, and any larger sums in any manner that may be desired, with the approval of the trustees, but at the depositor's risk. By an act of parliament passed at the last session, any depositor in a savings bank, besides having under £200 there, drawing £2 15s. per cent. interest, has the additional privilege of depositing any sum from £10 to £100 in a year or £300 in all, for the purchase of government stock. The bank and the national debt commissioners will effect purchases and sales for investors at the market price of the day, charging them a small commission for each transaction, viz., 9d. for £10; 1s. 3d. for £50; 2s. 3d. for £100, investors to take the risk of fluctuations in market value.

I.119.76

—The returns for November, 1878, show that there were 458 banks with £44,255,890 deposits, due to upward of 1,500,000 depositors; the expense of managing averages about 1/8 of 1 per cent. The surplus in commissioners hands was about 7/8 of 1 per cent.

I.119.77

—The banks vary in size; nearly half the number have under 1,000 depositors, while several have over 50,000, and one, the National Security savings bank, of Glasgow, has 110,051 depositors, and £3,288,448 due them. The most successful banks are those which are open for business daily at convenient hours, where money is paid on demand without notice; which have branch offices and conduct their business with freedom from unnecessary routine. In Glasgow the bank named has a head office and four branches open daily from 10 to 3, and three evenings a week from 5 or 6 to 8 o'clock. In Manchester there is a head office and three branches; in Liverpool, a head office and two branches; in Edinburgh, a head office and two branches. All these are open during the same hours. In London there are several large banks, also at Exeter, Leeds, Sheffield, etc.

I.119.78

—PENNY BANKS are feeders to the ordinary savings banks; their work is elementary and educational. In some towns they are associated to promote harmony of action, the formation of new ones, and for general efficiency. In Glasgow there are 209 such banks with 55,744 depositors, and in Liverpool 119, with 33,674 depositors; all are conducted on the same principles. Each is an independent institution connected with some school or religious body, and under the management of a small number of trustees, who guarantee the depositors against loss and appoint the officials. They are generally open one or two hours on one evening a week and are conducted almost entirely by volunteers. Any sum from one penny upward is received, and wherever any depositor has saved a pound sterling, that sum is transferred in the depositor's own name to the savings bank. By this process the trustees diminish their responsibility, and their depositors are taught the way to the savings bank. These little banks do an incalculable amount of good in their modest way. In and around Glasgow last year £17,686 were thus transferred, and in Liverpool £5,296. Statistics show that 921 permanent savings bank depositors were trained during the year by the Liverpool penny banks.

I.119.79

—The attention of educators has been directed toward the policy of giving some instruction in the principles of thrift in the elementary schools. The results are shown in the annual reports of the Glasgow and Liverpool penny banks already cited, and it is found that, not only are children easily taught, but that parents are induced by their children also to save and open accounts in the banks.

I.119.80

—POSTOFFICE SAVINGS BANKS were established by act of parliament in 1861. On Sept. 16 of that year 301 were opened in England and Wales. They were chartered to meet the growing wants of the people for a place of security for their savings, and to give facilities to those who lived in places remote from any trustee savings bank. Losses had occurred, the result of fraud and embezzlement on the part of the officers of the last named institutions, for which trustees could not be held responsible; efforts to reform existing abuses resulted, in the year stated, in the establishment of the new system without arbitrarily interfering with the old. Certain postoffices in the United Kingdom are designated, which at present includes nearly all the money order offices, where the deposits of one shilling or its multiples are received. The law relating to the amount that may be received from one person and its accumulations, is the same as that in force with regard to other savings banks. The depositor receives a passbook in which his deposit is entered, and the postmaster general is notified by the official on the same day, and he acknowledges it to the depositor within 10 days.

I.119.81

—The money is invested by the national debt commissioners in the usual way, in government funds. Interest at the rate of £2 10s. per cent. per annum is allowed on amounts of £1 or any multiple, up to the maximum amount allowed to be deposited by one person. The government is responsible for the repayment of all moneys received at designated postoffices, so that depositors are secured against the dishonesty of officials. A depositor may apply for repayment at any postoffice savings bank in the kingdom, and may direct payment to be made to him at that, or any other postoffice bank. His order is forwarded to the postmaster general in London, and after waiting two or three days, he receives a warrant on the designated office, which he presents, together with his passbook, and receives the money.

I.119.82

—These banks seem to grow in favor year by year; they are admirably adapted for the rural districts, small towns and villages, but the formality and delay inseparable from postoffice repayments, also the postman's visit with letters, revealing a postoffice account to the household, and often to the neighborhood, make them undesirable for many of the dwellers in large towns and cities. They are preferred in localities where the old savings banks are only open a few hours a week, while the postoffice banks are open every day during business hours. They pay ¼ per cent. per annum less interest; but the security is considered better for reasons before stated.

I.119.83

—In December, 1878, the number of depositors in the United Kingdom was 1,892,756, of whom 1,773,010 were in England and Wales, 51,107 in Scotland, and 68,639 in Ireland. The balance standing to their credit was £30,411,563, the average balance to each being £16 1s. 4d., and the total amount of interest paid in the year £699,603. The number of deposits was 3,360,636, and the number of withdrawals 1,304,616.

I.119.84

—The average daily number of deposits was 10,982, but one day they numbered 24,217, the amount deposited being £80,096.

I.119.85

—The success of postoffice savings banks in the United Kingdom, and their introduction in other European countries, have attracted attention in the United States, and the late postmaster general recommended their adoption by the United States government as a means of funding the national debt. If this scheme should be resorted to, the government would be obliged to offer a fixed rate of interest. United States bonds having 25 years to run, are selling in the market at a price that pays the investor but a fraction over 3 per cent. per annum, and if a series should be issued to run an indefinite number of years at the pleasure of the buyer, as savings bank deposits do, they could be easily negotiated at par or above it, if they bore 3 per cent. per annum interest. This is the maximum rate that the government needs to pay when it wishes to borrow: now to manage a system of postoffice savings banks, would cost the department at least 1/8 of 1 per cent., which deducted from the maximum rate, would leave but 2 2/8 per cent. for depositors. As the savings banks in the United States pay about 4 per cent., the government could not hope successfully to compete with them at this reduced rate.

I.119.86

—The conditions not being the same in this and European countries, is another hindrance to the establishment of postoffice banks: there, public debts increase; here, the people pay off the debt, and if this is continued at the same rate, in the future, that has ruled in the past 15 years, the funded debt will be entirely paid off in about 25 years; therefore it is evident, that the debt, on which it is proposed to found these institutions, being temporary, the institutions themselves would be short lived.

I.119.87

—Looking at the matter from another standpoint, civil service reform would have to make further progress before it would be possible to induce the two million savings bank depositors, or two other millions, to place 824 million dollars into the hands of the postmasters of the country, and the government would require a higher standard of capacity for these officials than mere party loyalty before it could afford the risk of transit for so large a sum.

I.119.88

—MILITARY SAVINGS BANKS, and SAVINGS BANKS FOR SEAMEN, have been established in the United Kingdom for the benefit of soldiers and sailors, and as auxiliaries to the general system.

I.119.89

—The statistics are not important, and do not show anything of the thrift of these classes; those among them who desire to save usually prefer to go to the ordinary banks.

I.119.90

—SAVINGS BANKS IN FRANCE. The first institution was a joint stock society established in Paris under the name of the "Caisse d' Epargne et de Prévoyance de Paris" in May, 1818, modeled after the English savings banks. Similar banks were established at Bordeaux and Metz in 1819, at Rouen in 1820, and at Marseilles, Brest, Nantes, Troyes, etc., in 1821. The founders were the managers, and they constituted a close corporation; this method has survived in some savings banks, but it has been generally replaced by an organization in which the administrators are elected by the municipal council and of which the mayor is president.

I.119.91

—The personal liability of a joint stock association, became a source of uneasiness to the trustees who were d ing a work of pure benevolence, and the state, by law in 1829, authorized the funds to be paid into the treasury, which in 1837 was amended by ordering them into the government deposit and consignment office, a bank under direct control of parliament. On the 15th of June, 1835, the first organic law was passed in relation to savings banks. An amendment of June 22, 1845, reduced the maximum of each deposit from 3,000 francs to 1,500 francs, or 2,000 francs, including accrued interest. In 1851 a further amendment reduced the maximum to 1,000 francs. This limitation was owing to the fear of difficulty in paying cash in a time of crisis, which owing to injudicious management in 1848 (a time of revolution) has forced nearly all the banks into liquidation. In 1870 they had less trouble, which in Paris was altogether neutralized by adopting a measure which had been used with success in this country in 1857: this was to pay a percentage only of deposits on the first application, and require an interval of time for each successive payment, except in cases of extreme necessity on the part of the depositor, when the regulation was modified to the circumstances of each case. This clause de sauvegarde was embodied in the Sella law for savings banks and adopted by the Italian parliament in 1875. The trustees of savings banks in the United States are allowed by law to require 30 or 60 days' notice of intention to withdraw a deposit, which in a time of crisis they are obliged to take advantage of, and in a panic it usually stops a run on the bank if the institution is in a sound condition. At such times the great majority are influenced to ask for their deposits, only from fear that the early applicants will get all the money and leave them in the lurch. They know by experience, that if an unusual call is met at first by prompt payment in full, it is only a question of a few days when the bank will be compelled to suspend from lack of ready cash, if the demand continues. Their conclusions are right although they may not reason from the proper premises; but it is simply impossible to receive deposits and invest them and return the money on demand.

I.119.92

—By the law of April, 1881, deposits with accrued interest may amount to 2,000 francs, but when an account surpasses this sum written notice is to be sent to the depositor, and if, within three months following, the deposit is not reduced, 20 francs of it will be invested in rentes for his account without expense to him. Interest on the surplus will cease from the time written notice is sent. This law also provides that in time of extreme necessity the council of state may authorize the savings banks to make payments in installments as small as 50 francs at intervals of two weeks.

I.119.93

—All French savings banks are under state superintendence through its inspector of finance, and the government deposit and consignment office receives and manages the funds and pays 4 per cent. interest to each bank. The savings banks are, in fact, simple administrative agencies, intermediates, between the depositors and the government deposit and consignment office, where the money is received and increased by interest. Each savings bank receives 4 per cent. interest, which it pays to each depositor, less a deduction reserved for expenses, which is from 25 to 50 centimes, except in Paris where it is 75 centimes, i.e., ¼ to ½ of 1 per cent. in the provinces, and ¾ of 1 per cent. in Paris. Out of this amount, reserved for expenses, the best managed banks are enabled to create a surplus fund to meet crises and pay extraordinary expenses. Deposits of one franc and upward are received. The account of a mutual aid society may amount to 8,000 francs, or if the society is registered, the amount of the account may be equal to 1,000 francs for each member.

I.119.94

—Sailors on the maritime registry are allowed to deposit at one time the total amount of their pay on being shipped or discharged.

I.119.95

—Every depositor may have the whole, or any part of his account converted gratuitously into rentes, by his savings bank, and it may be authorized by the depositor to retain the securities and collect the interest.

I.119.96

—The funds deposited are payable on demand, certain delays of the treasury excepted.

I.119.97

—On making his first deposit each depositor receives a numbered book, in which is entered every transaction with the bank, and which is his voucher against the bank. No depositor can have more than one book, either in the same or different banks. If one violates this rule his deposits will be returned without interest, and he will be forever excluded from the savings bank.

I.119.98

—By a law of Aug. 23, 1875, the post-offices and tax offices can be employed as auxiliaries by the savings banks, and be authorized by the minister of finance jointly with the minister of agriculture and commerce, who has the savings banks in his department. A bank which obtains these aids in its district, possesses the advantages of having more agents spread over a larger territory, particularly in the country, and working every day through the postoffices, and in the smaller localities through the tax collectors, thus taking as assistants the receivers and payers of deposits, who do the greater part of the work, and are paid the moderate sum or 10 centimes for each deposit or draft, which is less than the amount reserved for the expense of each transaction by the savings bank, and it transacts its business by means of documents, and without handling coin, or incurring the risk of embezzlement, since the agencies, both postmasters and collectors, receive the deposits for the bank and pass the funds directly to the government deposit office, where the savings bank is duly credited with the proper amount. In the same manner the withdrawals are paid to the depositor, with the money furnished by the same office, and all the transactions with the savings bank are in writing.

I.119.99

—The convenience to the depositor is also augmented, and his deposits tend to increase by bringing the savings bank nearer to him. By the law of April, 1881, the postal savings banks received from the government 3¼ per cent. interest per annum, and will pay to the depositors 3 per cent. interest, beginning on the 1st and 16th of each month after the day of deposit. The majority of savings banks also have branches of their own; there were, in 1880, 521 banks and 736 branches, with about 3,838,000 depositors, and 1,281,000 of francs on deposit, equal to $256,200,000 of francs on deposit, equal to $256,200,000.

I.119.100

—SCHOOL SAVINGS BANKS. The first legacy of 10,000 francs, which by his will, Dr. Guinard, who died in 1867, directed should be given in perpetuity, every 5 years, to the one, who should have made the best treaties, or the best invention, to ameliorate the material or intellectual position of the working class in general, without distinction, was in 1872 awarded to M. F. Laurent, professor of civil law in the University of Ghent, for his treatise entitled, Conference Sur l'Eparagne. The jury of five distinguished persons, chosen by the king of Belgium, from a list of ten, proposed by the royal academy, says; "that the idea which the treatise develops is so just, so fruitful for the future, and in the places, where it has been applied, and notably in Ghent, has given results so remarkable, that it has appeared to re-unite all the conditions which the founder of the prize had in view in really ameliorating the condition of the working case, as to fully merit the suffrages of the jury."

I.119.101

—The professor had demonstrated the benefits of the theory by 6 years of work, having commenced in 1866 to apply this new branch of education, by showing the teachers in the public schools, the heads of families, and the pupils, the moral value of the idea, by means of his treatise and by personal visitation. The book was soon published in Flemish, as well as is French, by the government, and 12,000 copies were distributed. In it he shows that adults have inveterate habits of expenditure, and maintains that the best means of causing the spirit of economy to become a habit of the people, is to teach it to their children and require them to practice it; that nothing is easier than to inspire in the young a taste for saving which can be accomplished in the public schools, where the managers and teachers have constant opportunities of enforcing and illustrating the advantages of saving, and where facilities can be easily afforded for carrying out the lessons of economy, by means of penny banks, conducted in the schools. Then he arranged the operations of them, and their relations with the savings bank of the city, in a way which seemed to his the simplest, the safest, and the most educating. His labors were crowned with singular success; out of 15,392 pupils in the city of Ghent, in 1873, 13,032 were depositors in savings banks, and they had to their credit, 462,800 francs, nearly $7.20 each.

I.119.102

—The managers testify that the system has produced a marked effect for good on the social and moral life of the working class.

I.119.103

—The system extended to hundreds of other towns, and has created great interest throughout Belgium. France, great Britain, Austria, Hungary. Italy and other countries.

I.119.104

—In France these school banks had been introduced, up to 1879, into 83 departments out of 86 in the republic. Returns, duly certified, to January, 1878, show that there were in 60 departments, 8,033 school banks with 177,040 depositing pupils, 143,272 of whom had books in the large savings banks. The total deposit of these pupils was 2,964,352 francs.

I.119.105

—The plan of operating these school banks is so simple and inexpensive, that they may be introduced into any school with little trouble. A blank book is provided for the school, ruled with 12 vertical columns for months, which are subdivided into 4 or 5 for weeks, with inter-columns for dollars and cents. At the left hand the pupil's name is written. On two or more large pages the accounts of a good sized school can be kept. Cards to be folded once, to keep the writing clean, are ruled like the register and provided for each depositing scholar, on which his name is written. An appointed hour one day in the week is set apart for instruction and practice in the lesson of thrift. As each scholar's name is called, he comes forward with his deposit of a penny or more, which is received by the attending teacher, the amount entered in the register, then in the scholar's card book, which is returned to him as his voucher. The total amount received each day is footed in the register and deposited in gross in some savings bank, in the name of the school. When any scholar's total deposit amounts to a certain sum, (in France and Belgium it is one franc, in Great Britain a pound sterling,) it is transferred to his credit in the savings bank and charged to the school account by authority of the teacher, the school register and scholar's card book, each having conforming entries made in them. The card book is retained to enter pennies in and the account runs on as at first.

I.119.106

—The scholar receives no interest until he opens his account in the large bank. but the school receives interest on the gross balance to its credit, which pays for stationery, and if anything remains over, it is distributed in rewards, to the most worthy or the most regular depositor among the scholars.

I.119.107

—Parents become interested, and not only add extra pennies to their children's deposits, but are induced to try the experiment for themselves, by opening deposits in the savings bank on their own account. Once the habit is begun, it tends to increase as time goes on; and as they note the semi-annual additions of interest credited, which their savings have earned, but which they do not always quite understand, it acts as an additional stimulus, and induces further economies which in the beginning they had not thought possible.

I.119.108

—No people, probably need to be taught thrift more than the poorer class in the United States. On account of the case with which money is obtained in prosperous times like the present, no nation is more extravagant and prodigal in expenditures. Too many of our wealthy people set bad examples by their luxurious habits, but there is a large class of prudent rich ones, who, though they may censure a servant for using two matches to light a candle when one is sufficient, still give $100 for a benevolent object; they agree with Franklin who said. "Whoever tells you that the condition of humanity can be ameliorated by any other means than labor and saving, is your enemy and would corrupt your judgment." Let us therefore, instead of opening soup houses in the days of adversity, establish savings banks in prosperous times, and by the systematic distribution of information in workshops and dwellings, instruct the people, and by establishing penny banks in the schools, teach the children how they may become capitalists, so that when they become men and women they will know how to help themselves and their posterity.

I.119.109

—Savings banks in other European countries have increased in number and in influence since 1875 At that date in Switzerland, the depositors were about 1 in 5 of population; in Denmark about 1 in 6; in Sweden and Norway about 1 in 8; in Prussia about 1 in 12; in Austria and Hungary about 1 in 14; and they are conducted with success in Belgium, Holland, Italy, Spain and Portugal and Russia.

I.119.110

—In the civilized part of Europe, comprising in 1879 210,000,000 of inhabitants, there were, according to A. de Malarce, 14,000,000 depositors with a sum on deposit of more than 8 milliards of francs, equal to $1,600,000,000.

I.119.111

—For fuller details the reader is referred to the following works and essays: A Practical Treatise on Savings Banks, their Past History and Present Condition, by Arthur Scratchley, M. A., London, 1860; article, Caisse D'Epargne, par Louis Leclerc and Ch. Coquelin. Dictionnaire de L'Economie Politique, Paris, 1873; Conférence sur L'Epargne par F. Laurent, Bruxelles, 1873; précédéc du rapport du Jury, qui a décerné le prix; Guinard a la Conférence sur l'Epargne; L'Ecole Primaire et la Caisses d' Epargne, par Arthur LeGrand, Maire de Milly, Paris, 1874; History of Savings Banks from their Inception in 1816 down to 1874, with discussions of their Theory, Practice, Workings, Present Condition and Prospective Development, by Emerson W. Keys, New York, 1876; The Law relating to Trustees and Postoffice Savings Banks, with notes of Decisions and Awards, by Urquhart A. Forbes, London, 1878; Trustee or Certified Savings Banks of the United Kingdom, by Thomas Banner Newton Liverpool, 1878, pamphlet, 8vo; Les Caisses d' Epargne, Scolaires en Hongrie, par Bernard François Weisz, (Traduit du Hongrois). Budapest, 1878; La Caisse d'Epargne, pour la Ville D'Amsterdam, Amsterdam, 1878, par E. J. Everwijn Lange, Secretary; Les Services D'Epargne Populaire, Caisses d'Epargne, Caisses d'Epargne Scolaires, Bureaux d'Epargne des Manufactures et Ateliers, par A. de Malarce, Paris, 1879, Br. in 8; Lette, Sparkassenwesen in Faucher's Vierteljahrschrift, 1, p. 54, etc.; Mangoldi, Die aufgabe, stellung und Einrichtung der Sparkassen; Constantin Schmid, Das Sparkassenwesen in Deutschland; Spyri, Die Ersparnisskassen der Schweiz; Horn Des Caisses d'Epargne en France, in the Journal des Economistes, vol. 41. p. 70, etc.; and the official works, Rapports sur les Caisses d'Epargne; Casse di risparmio, in the Annuano Statistico Italiario, by Correnti and Maestri, p. 603, etc. (See ACCUMULATION, SAVING.)

JOHN P. TOWNSEND, New York, 1881.

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