The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1896-08-07
PAYING SAVINGS DEPoslTORs IN
COLI,

To the Editor of The Herald
In this mornings issue YOU mention
that San Francisco savings bank
agrees to pay its depositors in gold in
any event, and ask why other SAVINGS
banks cannot do the same On the
coast 1T is an almost universal custom
to take notes payable in gold coin.
Probably it would be safe to assume
that the savings bank in question has
taken its notes in this way, and that
for S1,00O,000 of deposits it has at least
$1,0O0,0O0 in god notes. Why should it
not pay its deposltors in gold, even if
gold should go to premium of 60, 70 or
100 per cent?
The eastern savings banks, as a rule
have taken their notes payable in dol
lars. Az least the writer has seen
about a million and a half dollars CT
them and never saw a gold note made
to a savings bank Quite a proportion
of the eastern savings banks have no
capital stock; the assets belong solely
to the deposltors; they share the profies
and bear the losses pro rata Of what
use for such banks to promise
to pay in gold? If, as the silver
men think 1t will. silver keeps
at a par with gold, such an agree
the gold men think, gold goes from so
to 50 per cent. above silver, they would
not have the gold nor could they obtain
it or its equivalent, to keep their agree
ment if they made one. They usually
carry a small surplus of undivided
profits to pay any losses, and if a bank
has million in deposits it would
usually, if 6. purely mutual affair, have
$1,050,000 TO 100000 in notes, etc. How
could such bank get $1,200000 to pay
$1,000, 900 in gold if gold went to 12O, or
s1,500,0O0 if it went to $50, or $1,900,0 900
if it went to 1870? c..
Salt Lake City, Aug. 6.
c very readily sees how bank which
has taken gold notes can promise to
pay its depositors in gold. In the lat
ter part of his letter he wants to know
how a savings bank could get gold to
pay depositors if gold went to 100. Why
would lit be amy more difficult for saw
ings banks to get gold when at that
premium than for the makers of the
gold notes?
The mutual assurance companies re
ferred to by C we do not consider saw
ings banks. The depositors in them are
really stockholders, sharing the profits
and bearing the losses pro rata, as c
says.
AS we said yesterday morning, if the
San Francisco Savings union can make
the announcement that it will pay its
dapositors in gold, why cannot other
savings institutions do the same? 1t
shows that that institution has faith in
its ability to pay in gold, which faith is
founded upon its belief that no such
conditions as C sets forth would arise
as the result of free coinage of silver.
C must know that in banking as we'll
as in business thar confidence is of
equal Importance with capital. Such
declaration as this by the San Fran
cisco Savings union gives this conf
dence that is SO essential. His assump-
ton that gold would go TO 100 can
neither be proven nor disproven. Some
think that in the event of the free coin
age of silver gold would go to such a
premium; others think thar instead of
gold going to a premium silver would
go to par with gold. The event alone
can decide which is right. c supposes
a panicky condition of things, and
bases his arguments and questions
upon it. The defect in it all is that
he fails, in fact he does not attempt,
to prove that the panicky condition
would ensue