Evening star., 1903-07-27
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BANKS AND BANKERS.
Why It is That Small Accounts Are
Not Always Welcome.

From the Detroit Journal.
|. While every banker Knows that small
checking accounts are moFs bother than
they are worth, and those, below 500 or
500 a source of loss instead of profit, It
does not follow that such accounts are al
ways considered undesirable. The depos-
itor's account may be worthless. and yet
his personal influence may be helpful to the
bank. He may have important social or
business connections who will keep their
accounts where he keeps his He may be
a man about town,-with many opportunf-
ties to say a good word for the bank. or
he may be a young business man whose
future Is promising and whose account Is
expected to grow. There are many reasons
why small accounts are not always unwel-
come.
On general principles, however, such &C
counts are being weeded out all the time In
well-managed banks The depostor often
starts out well and fails to keep up the
pace. His deposit falls from a respectable
figure to a nominal sum. and then the queS-
ton is how to get rid Of him without max
ing him mortal enemy.
Some banks make a charge on business
that remains below certain minimum.
Speaking Of the matter. a banker said:
Suppose 1,400 of your accounts under
$500 aggregate s126 600, as we found in the
case of our bank. This would average $40.
OF the $126O00 represented In these depos-
its under $500 one fourth. or $32 900. must
be held in reserve, leaving $4,000 all that
you can loan out. If you can keep loaned
out all the year round about $4,000 of this
S93 900 you will be doing remarkably well.
If you get 4 per cent on this $4,000 that
means $500 gross returns from your l 400
accounts
ITO handle 400 accounts will require at
least three bOokkeepers at $1,000 year,
and three statement clerks at 5000 year.
whose aggregate salaries will be s4.SoO. I
will not figure In the time Of tellerS and
others. whose services ought to be consid-
cred, nor the cost Of checkbooks, pass
books and other stationery. The small
customer usually costs more than the big
customer. in proportion to his accounts. He
draws a lot of little checks, which are just
as much bother as big ones.
"Charging 81 month on accounts of less
than $500 educates the public to appreciate
the facilities a commercial bank gives
them. OF course, it Is argued that small
customers advertise the bank. So they do,
among small class of people like them
selves They do not get big fellows in but
little fellows, who further increase the loss.
The little follow may grow and sometimes
keep with his bank a decent-sized account,
but as rule l think the money bank
spends In accounts with the little fellows,
unless they pay 81 per month, Is poorly
invested
A certain Detroit bank received a call
from young man who wanted to open a
him to the cashier, who asked him num-
Der Of questions about his business, the
probable size Of his ACCOUNT, how often he
would make deposits, draw checks, etc, all
of which the young man seemed to con-
slider unnecessary and tIppeytinent. Finally
the cashier told him the bank could not re-
ceive his account, and tRe young man went
the directors he complained 1f the cashier 8
'impertinence." When the director spoke
to the cashier about 1t the cashier said:
That young man is only clerk in a
store on small pay. He earns, perhaps, SIS
week. If we let him open an account he
will deposit his salary eYSry week and
check 1t out every month to, pay bills. His
average account won't ,he Worth mention
ing. 1 doubt If he will ever have $50 in the
bank at any one time, and then only for a
few days. What's his fttt1a game? Why,
merely to have the pleasGIe of drawing
checks: the feeling of Importance it will
give him and the imprffsiop 1t will make
on his landlady and Xasberwoman. We
can't make cent on hla account. and the
tear of pens ink, stationery, ETC.. as we'll
as the cost Of the check book IL we let
him have one for nothing.
You can put 1t down as rule" added
the cashier, that no commercial account
Is worth taking unless it never falls below
500. We have made 800 the minimum
figure In this bank. and my personal opin-
ion Is that the figure is too low"
1t Is unquestionably true that vanity
causes most of the applications to open
small checking accounts. although in some
cases the depositor gets fictitious stand
ing which may help him In business way