New-York tribune., 1901-02-27
TAXATION OF SAVINGS BANKS.
VIEWS OF BRADFORD RHODES. .PrTRr rsryr-R
OF THE BANKERS MAGAZINE" ON
THE PROPOSED LEGISLATION.

To the Editor OF The Tribune
Sir: In decision rendered by the New-York
Court Of Appeals October IS 1895 the nature and
ownership or the surplus Of savings banks were
thus defined:
The surplus which has accumulated is a part Of
a fund which represents the original deposits and
its creation is authorized in contemplation that II
may be needed 10 be used 10 repay the depositors
the amounts put in by them. The surplus
does not belong to the bank for It holds it for the
security of depositors 10 whom Is due contingent
~ upon tho occurrence OF circumstances requiring
its payment them"
The motive for taxing the surplus Of savings
banks seems to be found in the desire 10 mako a
reduction in the rate OF direct taxation for State
purposes. II is said that by the imposition of the
taxes proposed In the measure now before ,ba
Legislature this direct State tax will be reduced
about one-half. or something over S5OO0O00 The
saving or THIS amount would not Justify placing A
tax upon the provident poor of the State. who pIt
their hard earned savings In the savings banks
Computed the market value of securities tba
surplus OF the savings banks the State is about
Sll8,co.0H or about sIoO00O00 II estimated on the
par value
Although tho surplus Of the savings hanks is
growing II Is not increasing IN the same proportion
as deposits While the surpIus Of the hanks
has increased s2s9oo coo during the last six wears
in reality II has decreased three-ouarfsrs NJ =
per cent when compared with the increase in the
amount due dspositors. This conclusion ts based
upon the market value Of the securities baI5
Taking the par value of the securities il Is found
that the decrease has heen 4-10 per cent
Ihe surplus which all the savings banks of the
State held January ] was only about ,9ta nsr
cent Of their total deposits. and If some OF The
older banks in New-York and Brooklvp vvara ev
cuded. the surplus Of the other banks would he less
than per cent of deposits There are said 20 he
not less than twenty Institutions that have M
actual surplus If their investments are 6grrad = !.
their present ma rketabe value
DepoSltors In tonal and State hanks sra 49,
t-cted by the surplus, the capital and the ltsb+x
Of shareholders i'm additional amount equal ~ tho
par value of their shares. The savings hank de-
positor has other protection against manic -
depreciation Of tho values of securities excsnt tn
surplus fund for there is no capitaI and ,ho
trustees are not liable the shareholders in
other banks
No tax can he placed upon the surplus without
decreasing this protection or imparine the shiIi,v
OF these institutions to the low rate of in
terest now paid depositors. The tendency in recent
years yea mas been toward lower dividend rate and
me proposed TAX VIII add 10 this tendency.
A tax upon the surplus of national or State
tnose VINO own the shares, generally persons of
considerable means; but as there are no shares in
stated by the Court of Appeals. would he tax
b1,mbla et'Srupls nir, VINO are as rule. persons
Ihere are over two million depositors in the
credit in these and 4 the sa no to their
average of So os Are the holders of these small
sums-in many cases the only barrier against mis-
fortune-to be compelled to give up their hard
earned SAVINGS while the bulk of personal prop-
taxation? " N4AO''Vu 'o ESCAPE
county having such institutions (thrtv-one conn
. uss IA ths state nave savings banksl. a careful
estimate has recently been made showing that
there are ABOUT seven hundred and fifty thousa nd
voters who are depositors In the aVinss institI'
uons This is more than a majority of ali tba
voters at the last general election out of the two
million mill depostors over half are women and chill
is the class of people the great Empire state nro
poses to taxi 0N'-sN PiO-
DeductinS the women and children and aIso .h,
unnauralzed foreigners and other non voters b es
remain about seven hundred and nfty thousand
voters who are deposit9rs in the savings institu-
terests therein with jealous IT ia minus, =,
these men-most OF them heads of families i'm NJ
pose upon them this new principle of taYatiop Is
II wise either from political or economic srand
point? A'''-
The economy and wisdom displayed in the man.
agement OF the savings banks of the State and tbo
with which the legislature has fostered Them
have resulted in incalculable benefits to the wsea
earners of the State. Heretofore every law nssss5
has had for its object the building up of thesa
benefcent agencies of thrift
In theory rich and poor should be taxed alike in
proportion TO their property; but ii Is fact too
familiar TO require argument that the burden OF