The Salt Lake herald. [volume] (Salt Lake City [Utah]) 1870-1909, 1901-02-07
THE SALT LAKE HERALD: THURSDAY. FEBRUARY = 1901
MILLIONS ON DEPOSIT
Banks Burdened With
Too Much Cash.
PAY 100000 INTEREST
DISCUSSING PROPOSITION TO
REDUCE THE RATE.

The question OF lowering the inter
est rate is one that the local bankers
have been discussing for months past.
The savings banks have for some years
been allowing per cent interest on de-
posits, The commercial banks allow
no interest to the average depositor,
but some of them issue interest bear
ing certificates. The general feeling
among the bankers of the city, especi-
ally those conducting savings banks,
IS that the rate OF interest on deposits
should be lower, but as deposits Of this
kind upon which interest is paid con-
stitute so small a part Of the business
of the commercial banks that they are
not worrying over the matter, and
whatever IS done in this direction must
be done BY the savings banks.
The situation is this: The lions
savings bank now has deposits to the
amount of 81, 200 600; the Deseret Saw
lnSs bank, Sl,500 000, and the other
three banks that have savings depart
mentS-the Utah Commercial & Saw
ings, the Utah Loan & Trust company
and the Bank of Commerce-have al
most enough to raise the total to
S5,O0O,O00. Much Of this vast sum is
now lying idle in the banks because it
cannot be loaned out at per cent or
more, and the banks hold that they
cannot pay 4 per cent on the deposits
and then loan the money out at a less
rate than per cent and make it pay.
The reason they cannot do this is be
cause they are compelled by law to,
keep good portion of their deposits
as a reserve, and this brings no in
come, they have the expense of run
ming their banks, and even with the
very best of management they lose an
occasional loan
Pay 100000 Yearly.
The interest paid to the depositor is
a standing expense to these savings
banks and cuts very deeply into their
profits. On the $4,000, 600 now on deposit
in the banks of this class in the city
the interest paid TO the depositors is
100000; and if even half of the de-
pOsits are lying idle in the banks it
represents a dead loss to the banks of
$4,000 a year.
The main idea underlying this move
ment for lower interest rate on bank
deposits is to force some of this money
now lying idle into the channels of
trade. It is held that the business of
the community would thus be stimu-
lated which would be a benefit, and at
the same time the banks would be re
lieved of this heavy surplus upon
which they are now paying interest
while II Is idle in their vaults.
None of the savings banks has yet
taken any action, as they are waiting
for some one to make the move
It is held that if one makes the cut
at this time, the other banks viii be
forced to follow suit, because if they
refused they would be swamped com
pletely with deposits, as people would
naturally take their money where they
could get the most for il.
Good Investments Lacking.
Old bankers of long experience say
that the trouble is not so much in the
heavy deposits as it is in the lack of
good opportunities for investment
The eastern loan companies are now
putting money into Utah and the sur
rounding states at per cent; many
good loans have been made as low as
per cent, and in one case a big loan
was made for AZ per cent This was
Of course a long time loan on gilt edged
city property But this is the cOndi-
ton that the local banks have to face
If they expect to get big interest they
must take risky. security; if they look
for good security they find many COM
petitOrs in the field, and have very
great difficulty in placing good loans
at per cent. One banker thought the
Organiza ton of a local loan company
to compete with the eastern companies
and to utilize the home capital that is
now idle would be one good solution Of
the problem.
There was a meeting Of the board
of directors of the lions Saving bank
Yesterday TO consider the matter of re-
ducing the rate Of interest on deposits
to per cent, but no definite action was
taken. although the proposition seemed
to meet with favor. It is thought that
at the next meeting Of its board Of
directors it win decided to make the
reduction