New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1883-11-20
BANK "DEPOSITS.r

The interesting body of information pre-
scented so clearly by Controller Knox in his re-
port needs, as usual, but little explanation.
But ii may be well to call attention to one fact
which members of Congress have always shown
an indispostiOn to recognize in dealing with
banking institutions. The "deposits" Of Ma
tiOnal banks, private banking houses and
savings banks mean very different things.
Always and everywhere they mean debts, OF
cOurse-debts of the bank to its customers. The
taxation of these debts was one of the absurdi-
ties of our legislation until recently. But these
debts arise in very different ways in the differ
ent institutions.
The savings banks of thirteen States, for in
stance, report deposits amounting to 81 ,O24,-
S56,7S7 and the increase since 1880 has been
over % per cent. These represent substantially
actual deposits of cash by those who put their
money into such institutions for safe-keeping
In most cases. interest is paid on the bulk of
these deposits, and the bank undertakes to in
vest them again so judiciOusly that it can pay
moderate interest to depositOrs with safety
Though these banks are used at times, and in
some localities quite largely, as q means of get
ting safe interest on sums larger than savings
properly sO-called, the deposits nevertheless
represent in the main the savings Of millions OF
frugal and industrious wOrkng-peOple. The
increase in the aggregate of such deposits Is an
evidence of thrift and economy, and in the main
of growing prosperity, and the taxation OF
them is n burden placed upon those members of
the community who are least able to bear it,
and whose exemption from such burden would
be most beneficial TO the public.
The deposits of trust companies include one
large and rapidly increasing item which is not
an evidence of public prosperity, namely, the
margins put up on contracts in grain, cotton,
provisions oil and other speculative tTansac-
tons. Deposits of this nature are also made in
banks of course, but the remarkable increase Of
deposits in trust companies and State banks
from S20S, 900 900 in 1850 to $500, 900 600 in
1888 is doubtless due in large measure to the
growth of speculative operations.
The deposits of National and State banks, on
the other hand, represent to a large extent only
current credits. The merchant obtains dlS-
counts on the paper of those to whom he has
sold goods, and the sum thus loaned Is passed to
his credit, with tho understanding that he is not
likely to draw out the whole, but will leave to
his credit sum proportioned in n measure to
the amount of business done. These current
credits, therefore, are really nothing but part
of tho resources of the bank employed in
making commercial exchanges practicable and
speedy. No part of the money i'll country Is
used more clearly for the public benefit, and the
taxation of such credits is foolish as 1t would
be to tax the sewers and the watcr-pipes which
make life in city possible. Added to deposits
of this class, in National and State banks, there
arc also brokers' accounts and large credits
arising from loans on securities or on other OBJ
jccts of speculation If such deposits could be
separately taxcd-as they cannOt-it would be
only taxing the Spectators. But third, there
are also large deposits which represent the sur
plus funds of investors, or manufacturers and
the savings of the industrious. These form the
active capital of commerce, provide means ior
the prompt payment of wages, and supply the
current necessities of production and exchange.
The taxation of a fund so employed is simply a
niece of folly.