The daily morning journal and courier., 1904-09-07
THE COUNTRY" BANKS.
Their Funds Not So Greatly Desired as
 Fnrrnerlv in New York.

Ia
 Their Funds Not So Greatly Desired as
 Formerly in New York.
 It is reported that several New York banks recently gave notice to their Chicago correspondents that on and after Aug, 15 they would pay ? per cent. on balances only up to certain sum and that interest on amounts in ex- cess oe that limit would be not more than per cent. We assume that this is a correct statement, because it seems to be based upon information obtained from the depositing bank which would most likely be the first to make public the fact, because it is probably regarded by the depository as good business pol icy for it to pay no more for the see of money than can be realized thereupon and because the action appears to be in conformity with policy which has long been pursued by some banks of this city to grade the deposits of their cor Respondents according to degrees of activity and volume, paying maximum rate upon the smallest and least active balances and the minimum rate upon the largest, which are subject to fre- Iquent checks Moreover, such a policy has been suggested at intervals for many years, or whenever during periods of congestion the undesirability of pay ing unreasonably high interest rates on county deposits has been so clearly de- monstrated as to lead to conferences among depository banks with view oi securing uniformity In such rates
 Though 1t is claimed that the policy of attracting deposits of interior banks through the offer to pay maximum rates lof interest therefor has largely con- trtbuted to periodical Arrangement of the local money market, doubtless less harm has resulted from that policy than has been caused by the payment by banks of uniform rates to trust com panies, which are more directly in com Ipetition with the local banks than are country institutions. A large propor- I ton of the 200 millions of local trust company deposits of cash is lodged in the banks of this city. Uniforms rates Iof interest are paid by the banks on these deposits, and while the market has been in state of congestion this Interest has been paid without any sug- | gestion that 1t shall be reduced because of the unprofitable character of these ldeposits. When the congested condi- tion shall be relieved and more normal lrates be restored the trust companies Twill withdraw their deposits for ,enl- lployment in competition with the banks at the higher rates, and hence there will be no opportunity for the banks to ob-
 tain such reimbursement of their losses as are procurable from country de Pcsits. Therefore it would seem to be
 better for the banks to seek to bear with the lesser evil through the main
 tenance of the existing policy as re- gards interest rates on country bank deposits making the above noted pro- vision for abstention by these depositors l from competition with the Repositories
 when monetary conditions are normal \ than to seek to change their policy in
 such a manner as would be regarded as lindefensible inasinuch as the banks dc
 not attempt to make any change ir ltheir policy of paying interest on trusts
 company deposits.-Financie