The Richmond Indiana palladium. [volume] (Richmond, Ind.) 1854-1855, 1855-03-02
THE RICHMOND PALLADIUM.
D. p HOLLOWAY. VI. DAVIS Ea.f,-.
Friday Morning. March 2, 1888.
Interest upon Deposits.


We find in the Cincinnati Gazette Of the 27th,
the following article in regard TO Bankers paving
interests upon depostes. |! viii apply TO this
locality as well as tina, of the Queen city, and
this community feel the effects of this plan Of
securing banking capital 70 a considerable extent:
The Ohio Life and Trust Company, OF the
oldes: and most trustworthy banking institutions
IN this city, intends. understand. to cease
paving interest upon deposits from and after the
first day OF March. We are glad that an institu
ton of 50 much character and influence this,
has resolved to adopt this course. We have ever
regarded the practice Of banks or bankers pay
ing interest upon deposits Of very question
able character. We are sure that it is opposed
10 the best interests of the mercantile and indus
trial interests of Cincinnati.
+ So long as interest is paid upon deposits the
rates OF paper discount must be propor;ona:ely
high. The system is wrong altogether, and should
be wholly abolished Banking upon deposits up
on which interest Is paid, necessarily causes Dor
rowefs to pay extravagan;ly for their aecommoda-
tons. The borrowers are business men, and
from their earnings must come the per ceutage
which is to pay the interest TO the depositors, and
the profits TO the bank.
/ 1t IS The in etfec: as the practice adopted
in Ireland in regard 70 renting lands, and which
has been SO long and SO properly deprecated In
Ireland there is class called Middlemen, who
rem. lands from the owner, and re-rent them to
the farmers; the effect Of which is, that the far
mer has TO pay, as It were, double rent--the
rent 10 the owner and the rent to the middleman.
neither of whom are producers, but live from the
hard labor of the farmers and their hands. So
in regard to banking upon deposits on which
interest is paid The borrower must pay sut
fcient interest for his accommodation to afford
the banker means 10 pay his depositors, and
make a fair profit for himself. If the banker
pays six per cent deposits, he must charge
twelve per cent at least upon all paper discounted
in order to make profit. If no interest is paid
upon deposits. then extra interest should be
demanded by the banker. and tl.as the business
men of the city would obtain accommodations
upon reasonable terms
But the question arises, why should depositors
, allow their money to remain in banks, without
ceiving interest? Had we a good banking sys-
tenn in Ohio. this question could be easily
wered The gentleman who had surplus capital
! remaining in bank, could invest it in stocks of
banks Instead of being depositor drawing
interest he would be stockholder drawing inter
est. He would have his share of the legitimate
profits of the bank. and that is all that he should
have As depositor drawing interest. he is a
, wheel within wheel redundent weight in the
financial policy, rcaping where he has not sown,
and gathering whore 10 has not trcmed. The
practice Of paying interest upon deposits has led
5 to the establishment of what are called private
banks, the history and worth of which are to be
found in the results ofth last four months in this
: city. They have led to vicious practices in
banking.
We have been told that one Of the private
bankers, the first who failed-Mancheste r-has
charged as high as one dollar day for the use
Of one hundred dollars; being three hundred and
sixty five per cent year, simple interest How
man could sleep with such nightmare upon
him we cannot imagine. Such eaorbant rates
of interest defeat the purpose of those who charge
them. The practice leads to desperate shifts
those who demand these rates get hold Of dcs-
perate paper, and loose bvit. Hence the failures
We are in hope. that other banking houses
will follow the lead Of the Ohio Life and Trust
Company, and cease paying interest upon de-
posts; the good effect OF which will be- to reduce
the rates of interest. and capitalists to in
vest their surplus means in more legitimate and
safe manner
NpvY nf( nrssr