The San Francisco call., 1895-11-04
The Meaning of an Accumulation
of Savings Bank De-
poSitS.
TRANSACTIONS OF THE WEEK.
A Cheap Money Era Predicted by
Thomas Magee's Real Estate
Circular.

q substantial basis, although there are
many chances for improvement.
Among the reviews furnished is the
seventeenth annual report of the Board of
Bank Commissioners, which is replete
with interesting information concerning
the financial institutions of the State.
Among the recommendations of the Com
missioners is one that savings banks be
prohibited from taking from any indi-
vidual deposits to exceed in the aggregate
$4,000.
If the system of accepting large deposits
were wholly abolished and deposits, as in
the Hibernia Bank, restricted to a mod
crate sum to each individual depositor,
men of means would be compelled to seek
forms of investment more likely to pro-
mote industry and trade and thus benefit
the reaI-estate market.
The report of the savings banks of this
City shows an extraordinary amount of
deposits per capita. This has been often
referred to as evidence of the almost uni
versal thrift ard economy of our people.
While this may be true to some extent, to
q greater degree it shows that many of our
wealthy men have preferred the net earn
ing OF "A per cent on savings bank de-
posts rather than to assume the risks in
cident 10 investment in enterprises which
would develop the City and State resources
and yield better returns on the capital en-
ployed.
With reference to this point the Bank
Commissioners in late report remarked:
IAN increase in the depositors naturally
indicates prosperity, increase in popula-
tion or in the producing and accumulating
power of the masses; but on the other
hand ii may be largely the result of the
want Of enterprise and miserly spirit pre-
Valling IN the community. Funds may be
paced on deposit where safety is assured
and the depOsitor relieved of all care, to
earn small returns, whereas they might,
by investments requiring foresight, public
spirit and enterprise, yield larger incomes
and develop the commonwealth, though
requiring from the owners attention, labor
and greater risk"
The report of six savings banks made to
the Bank Commissioners January l, 1894,
showed that 524 depositors had sums ex-
ceeding $5O00 S42 had between $1,000 and
$1,000 and 992 had over $1,000, while the re-
port of ten savings banks of this City jan
uary l, 1895, revealed an average deposit of
$99S a. January 1, 1894, the average of
deposits in the savings banks of Vermont
and Pennsylvania were $303 20 and $287 81
respectively. The deposits of the savings
banks the State of Pennsylvania, with
Its thousands of factories, including the
flourishing city of Philadelphia, on Janu-
ary l, 1894 were $6S, ,522, ,217 20, while the
total deposits in the savings banks of Cali
fornia at that time amounted to $124, ,1O9,-
030 08. From July l, 1894, to June II, 1895,
the net increase in the amount due deposi-
tors from savings banks in this State was
81, 409, TAI 50.
The influence of the condition of the
money market on the real estate market is
very great. A wise and beneficent
policy is the employment of money
in the channels of industry and trade
in place of boarding it up in saw
ings banks. The natural result of such
course would be the purchase and improve
ment OF real estate in good localities, with
the assurance OF most profitable invest
ment.
a practical commentator of this idea
has been the investment of several millions
of dollars in real estate by Claus Spreckels,
which has proved great stimulus to the
real estate market at time when every
one was prophesying lower prices, and the
more recent purchase of the Johnson
property on Sutter street by the Regents of
the State University at an outlay of
S3S5, 900.
In discussing the banking situation the
Real Estate Circular of Thomas Magee &
Sons for this month says:
Money at Boston. New York and Philadel-
phla IS worth = per cent per annum only on
call; 1t would not be correct 10 say that it is
worth nothing on call in London, but it is
really worth next TO nothing. 1t is said that
money is now so cheap there that "if man
has enough to buy a big brass plate, and to
send out a hundred Autographed circulars, he
will have hundred bankers at his door next
morning, numbering to get in to lend him
money" Money is indeed drug at the East
and in Europe. 1t never was so cheap before,
and yet it is everywhere likely TO be still
cheaper.
Savings banks here and everywhere are going
to pay lower dividends, and it is high time
they all did We have repeatedly said that low
as many think money now is here it is yet too
offered, it must come down TO the price at
which users will take it. In other words, like
everything else it must find its level. 1t has
not yet here come down as much as have rents
and all the commodities of life The fact is
too, that good loans here are now nearly as
scarce as hens teeth, rendering it imperative
that 10 secure the best of loans and encourage
borrowing the inducement of yet lower rates
OF interest must be held out No savings bank
viii any longer pay as high dividend rates as
those which have heretofore prevailed. The
bank that did so now would thereby invite sus-
picion that 1t was making an ilegitimate bid
tor business and offering its depoSitors larger
dividends than there is legitimately in the use
of money.
The Hibernia Bank, lending at 81 per cent,
and being robbed out OF % per cent of that
rate in taxes, has its net earnin gs reduced to
Al per cent. But that is not all: out of that
low rate ii has still to pay its expenses But
for the great diffculty-nay, the impossibility
of finding enough safe loans at old rates
that bank, after the imposition of the tax rate
named, would undoubtedly have raised its
rate OF interest to per cent. But, for the
reasons named, instead Of an advance a still
further reduction is more likely. The money
lender is generally on top everywhere. He
certainly is not now so much as he used to be-
and is not likely 10 be again for the next dec
ade, if ever. There are many signs that
money has come down permanently. England
the great world lender, has been layishing
money by the hundreds of millions in invest
ments-nay, rather in the widest of specula-
tions-in South America, Australia, New Zea-
land, Africa and other countries. 1t has lost
enormously in these ventures. But no amount
OF waste OF her capital abroad seems capable of
seriously reducing her surplus at home or of
raising interest above merely nominal rates.
The whole world, and not few favored
countries only, is now being exploited and de-
veloped as il never was before by almost un-
limited capital. Old money centers are invest
ing fearful sums in this far-off development
and losing the most of it in the process, too.
But they are doing an immense WORK for world
progress and for bettering the condition of the
human race. Cheap money here means de-
velopment OF City and State resources. The
professional money-lenders may cry out at
this, but savlngs-bank depositors-mostly men
OF small means-should not, for low dividends
mean cheap loans, and cheap money means
development and plenty of work al good wages
in both (;tV and Every dollar lost