Windham County reformer. (Brattleboro, Vt.) 1901-1906, 1905-03-31
THE STRAIGHT SAVINGS BANK.
Widely Different from the Savings
Department of National Bank.

lnBS banks ana are solcltinS lntefeS
deposits, 1t is important that the peo
pie should understand fully the wild,
difference between straight savings
bank and the savings department of 4,
national bank.
The taking of deposits at 3h pei
cent. and loaning the same at an av'
lerage rate of 5i2 per cent. is a very
profitable transaction for both savings
and national banks, and the ultimate
disposal of this large profit should b,
of vital interest to every wide awake
depositor. Whether this profit shall
be used In such II way as to benefit
the depostors themselves or find it,
way into the pockets of Il few national
bank stockholders Is a question which
only the depostors can decide
The actual cost of caring for de-
posits In the Vermont savings institu-
lions, including service, rent, light
heat and all other items which are
usually included In an expense ac-
count, Is about one half of one per
cent of the amount of the deposits
Now what becomes of the balance of
profit, the lie per cent? To whom
does II rightfully belong? Should II
be distributed among the people who
furnish the bulk of the deposits, or
fatten the wallets of those who handle
| the funds?
| 1t is just at this point that the state
law intervenes with very explicit di-
rections, which are as follows: An
amount equivalent to 40 of / per
cent of the deposits and surplus must
annually be paid to the state treasur-
er to be used for general state expens-
es; an amount equal to Il of per
cent. of the deposits must each year
be carried to the permanent surplus
fund for the safety of the depositors
until such fund shall amount to 10
per cent of the deposits, and the ball
ance may be carried to profit and
loss account and finally be returned
to the depositors In extra dividends.
To make the problem perfectly
clear, let us illustrate 1t by suppos-
ing that in some good Vermont town
are located two banks, one of which
is a straight savings bank, the other
a national bank with a savings de-
partment; that they are under equally
good management; that they both get
their money at S1a per cent and both
loan again at the average rate of 5ia
per cent; that the cost of caring for
the money is One-half of one per
cent, and that they each have $1,000
600 of interest bearing deposits. Such
being the conditions, each of these
banks will show in its interest de-
partment a gross profit of $4,000, or
a net profit of $4,000 each year In
the straight savings bank this $4,000
is distributed as follows: $1,000 is
paid into the state treasury to help
cover general state expenses, $500
is carried TO the permanent surplus
fund Of the bank. and the balance of
50, 500 remains the property of the
depositors and will in due season be
returned to them. By this division
every dollar of the profits is held for
the benefit of the depositors or used
to lessen the burden of state taxation
upon the community in which they
reside. But how about the twin $l5,-
600 net profit made by the savings
department of the national bank?
Would any portion of 1t find its way !
into the state treasury? Not one dol
lar. Would any portion of ii be used |
to lessen the burden of state taxa
ton? Not one cent. Would any of I
it be held for the benefit of the de- /
positors. to be finally paid to them in /
extra dividends? Not one mill. All /
If it would go to the national bank !
From another point of view, the |
moral standpoint, the contrast be-
-ween straight savings bank and
he savings department of national
1ank is even more marked. The
straight savings bank is above board
n all its transactions. 1t is open to
state inspection and pays a tax on
III its assets. Listers of any town may
officially call for, and are entitled to I
eceive a complete list of depositors
esiding in their town. No evasion of
10 10 Of cd
Each depositor may have a
eposit of $4,000, which is exempt
rom local taxation because of the
ak paid by the bank. The whole
BUSINESS bears the stamp of honesty
nd uprightness.
In contra distinction to all this, the
and success of the savings
apartment of national bank is
lrgely dependent upon the perjury
f its clients and the evasion of the
tate law regarding taxation 1t be-
ONES a city of refuge" for tax |
odgers. No state commissioner of ]
ster can scale them, and this accords t
with the designs of the 5
chemers who shape the policy of the 8
lstitution. They do not say to the d
itiZens of the town where the taxes !
re ~ per cent, Lend us your mon I
Y at ~, comply with the law, pay '
our legal tax and be satisfied with
lie net income of 2 per cent which
his method will leave you" because
ley know full well that no man
ould listen to such a proposition. !,
hey say in effect. however, and per-
APPS in words, Lend us your money !,
~ per cent, make what Statement =
Oh please on April /. and we will =
,e to it that you don't get caught"
this an honest proposition or not? 9
Y this method a national bank with :
100000 in its savings department y
diverts each year from !,
lie state treasury, where it rightfully e
elongs, into the pockets of it's stock !,
)lders, large sum of money, prob ~
ply not less than $4,000, and l have
} reason to believe that 81 in $25 of
is amount would appear in the local
st Is this an honest transaction?
The Vermont savings institutions S
e in a prosperous condition. Be- ST
des contributing to the state ex- is
,nses during the last fiscal year the c,
rye sum of $312,503.S2. they added d.
their surplus funds $237,37322, and re-
lder the law governing the payment hi
dividends, IA of them paid per ii
mt, "a of them paid 3la per cent, one W
id 80 per cent and one, which had B
larger surplus than pl
e law required, divided a portion pl
this surplus and paid its depositors sc
per cent for the year. If properly 81
pported, a large percentage of our
ate banks will in the next five years
able to declare extra dividends.
A straight savings bank is a mutual
ganization, its assets are wholly
e property of the depositors, and W
e people where it is located should SO
We the same feeling of proprietor CO
ip and friendly interest for the
nix that they have for their schools,
cir libraries and other public insti-
p. McClary, in The