The Indianapolis journal. [volume] (Indianapolis [Ind.]) 1867-1904, 1883-08-17
INTEREST ON DEPOSITS.

inconvenience to the business interests of
this community. Yet, with all this, they
may not be without some compromising ben
eft, if the causes that led to them and the les
sons taught by them be carefully considered.
The existing banks of indianapolis are
sound, with ample capital, managed by gen.
tlemen OF sterling integrity and long expert
ence, and are entitled to the confidence and
patronage of the community, and of all with
whom they may have business connections
and correspondence throughout the country.
Certain evils have grown up with the de-
velopment OF the country, which are by no
means local to this vicinity, but maintain to
a greater or less degree throughout the
country, probably, however to greater de-
gree in the West than in the older and richer
parts of the United States The one to which
we will now refer is the payment of interest
on call deposits.
Banks are a necessity in all commercial
| communities and are of mutual benefit to
the banker and depositor.
All prudent men place their money in
banks for safe keeping until such time as
their business or inclination may require
for other investment, subject usually to their
sight draft for all or part as they may de-
termine, and it is the duty and business OF
the banker TO so conduct his affairs that he
may be able to respond to all calls that his
customers may make
Banks of discount and deposit, and those
| that add to this the issue of circulating
notes, are for the mutual benefit of their
stockholders and the commercial and pusi-
ness communities in which they are located,
and should not be guarantors of profit to
depositors except in so far as they should
pay all just claims on demand and facilitate
by clearances and exchange the business and
commerce of the country. In other words,
they should be loaners of money and not
borrowers only. Whenever an individual or
| corporation has money to loan, that should
be matter of specific contract in which each
party should wisely consider the question of
profit and security.
No bank or banker in city like Indian
apolis and other cities of Indiana should pay
interest on call deposits. II is neither wise
nor safe to customer or banker, and the
sooner the men on each side of the counter
come to this conclusion the better it will be
for both.
The prime object in making deposit with
bank is that the depostor shall be able to
get his money on the instant that his inter-
est or his fear prompts him to draw for it.
He cannot reasonably expect to get
interest on-his money while it lies sleeping
in a bank vault. The banker must use it to
be enabled to pay the interest; the more in
terest he pays the more money he must loan,
and the higher interest he must charge.
When money is easy, if he pays interest
on deposits, his vaults are full, and
the banker will lose money unless he lets it
out to some one who will pay him greater
interest than he pays. The more his deposits
the greater his loss. The temptation 10
loan is great and it is at such
times that bad debts are made
When the strngency comes, and come. it
surely will, the deposition wants his money;
the banker has loaned it to Smith, and Smith
cannot pay. Now if Jones were to deposit
as much as he had loaned Smith he could
pay A, but Robinson has borrowed Jones's
money and he doesn't deposit in the bank, but
draws instead SO Jones, Robinson and Brown
all want their money. They are to pay, and
so is the devil. Now, if the banker paid no
interest his vaults would be full and he
could pay them all, and everything would
run smooth as Corliss engine.
The individual depositor should look to
the solvency of the banker his capital, his
experience and his prudence. Smith has no
right to creek on the deposit of Jones' nor
has he any right to look to the deposit of
Jones as his security, and the banker is crimi-
nal ii he relies upon such deposit for means
TO pay it with.
The payment of interest on deposits has
caused customers to usurp the place of the
stockholders-the profits made by the bank
that should have gone into dividends and
surplus have gone into the monthly inter-
est payment account" and by that token
has weakened instead of strengthened the
bank
If A. has a surplus of money he can UNI
doubtedly find borrower in the manu-
facturer merchant, grain dealer, or pork
packer, or some neghbor who wants to buy
house or farm, or has some other legiti-
mate use for more capital than he has, and
he can loan it to him at per cent. or some
fair rate of interest. This would be
mutual benefit, and, to the extent