The herald., 1898-12-23
MORE ABOUT DECREASE IN RE-
TURNS ON DEPOSITS :.
THE FINANCIAL OUTLOOK
Activity III Municipal Bonds-Copper
Mining Statistics-Wire Nails.
The Gold Output
OFFICE OF THE HERALD,
Los Angeles CAL, Dec. %, 1893.


Since 1890 the savings bank deposits have
increased about S4l5,O00,000, or, say, "a per
cent. Meanwhile the population has in
creased about l8 per cent. In view OF this,
It is not surprising that the rate OF income
on this capital should have tended to de-
cline; and that the banks are now generally
arranging to pay a. lower rate OF interest to
their depositors. That there never was-so
much pressure to invest these immense ac-
cumulations is proven, says the American
Banker, by the fact that the securities IN
which most savings banks are allowed 10
buy were never dearer than now. Premiums
were never SO high, andv as a consequence,
the average income from first-class invest
ments never SO low. A striking instance.
among hundreds is the recent sale OF River
head. N, Y, school bonds This is small vii
lape on Long Island which offered per
cent bond, the total being T3l,O0O. The
Riyerhead Savings bank took the whole Is
sue at los. .O5, upon which basis it will not net
more than per cent per annum. Aside
from the indication which this negotiation
affords of the abundance of capital compet-
ing for investment, the sale was remarkable
in another way. Riverhead has the distinc-
ton of selling it's obligation at the highest
price, with few exceptions, at which muni-
cipal or state bonds have been sold in this
country.
But while the resources of the savings
banks have been growing at ratio much IN
excess Of the population, their funds have
had to meet competition OF late from other
sources, both private and corporate. Cap-
tai has been accumuating in the commercial
banks for several years beyond the demand
for it. For two seasons we have been able
TO sell our farm products at better prices
than have been known for years. This
money has gone west, and much OF 1t lies idly
in the banks. Farm mortgages have been
paid and renewed at lower rates, owing to
the unusual facilities which the banks are
now able to offer. Although trade is inn
proved and active, the demand for money
from this source is not by any means great
enough to prevent the banks from investing
large sums in other than purely commercial
securities. Thus the savings banks meet the
banks of discount in markets which in FORM
er years they had regarded as their own ex-
elusive field. And not only that, but mun-
cipal bond dealers, being able to borrow
money at rates less than many savings banks
pay on their deposits, offer a competition for
bonds which the savings institutions often
cannot meet.
In the real estate mortgage field the saw
ings banks are pressed by private investors,
and in some measure by building and loan
associations, the great insurance companies
and other corporations, offering means for
buying property. Real estate mortgages
which used to bring and per cent do not
yield more than 4 or 5 per cent now. There
was time when the savings banks were able
to pay 10 per cent on deposits. Then they
were compelled to reduce the rate to per
cent. The Dry Dock Savings bank OF New
York CITY kept up that rate for about three
years. The same bank then reduced the rate
to g. then and then 4 per cent; finally
reaching az per cent last July. n