The evening times. [volume] (Grand Forks, N.D.) 1906-1914, 1907-03-06
THE ADVANTAGES OF A SURPLUS.

-ADTdudIu lluCOlH.
THE ADVANTAGES OF 4 SURPLUS.
Somebody asked very interesting
question the other day relative to the
recent defalcation in New Britain,
Conn. it was how something like
100000 could be taken out of the
bank and the public still be informed
that mo deposition would lose any
thing" The statement is in one sense
correct in spite of its evident error.
1t is true that bank book for $1,000
on the Savings Bank of New Britain
is good for $1,000 and accrued interest
today and that is all that it was sup
posed to be good for before the de-
falcation-all, indeed. that it would
have brought if offered for sale. And
it is sadly true, too, that about $780,
900 has gone out Of the resources of
the institution.
The intervening factor is the sur
plus. If the bank had had no sur
plus, it's doors would have closed at
once and it's depositors would have
suffered tremendous loss. AS it is,
they will all get their money back
dollar for dollar. The cynic may say
that, therefore, SURPRISES are desira-
BILE to enable defaulters to have some
thing to run away with. But the
point fairly put is that SURPRISES are
desirable to meet losses of any sort,
emergency funds Strengthening insti-
tutions every day, contributing by
their earning power to the welfare
and prosperity of the common fund,
and ready in this volume for use
against a day of trouble.
It is argued sometimes that the
surplus is contributed by Smith and
Jones during successive years and
they get none of it, while later other
depositors come along and by drop
ping their money into the bank get
an equal title to it. In a sense this
is true. In another sense it is only
accidentally correct. Smiths deposit
may be put into loan that proves
unfortunate and be partly lost, while
the money of the depositor who comes
along ten years later may be put into
bonds at par, which in a year rises
ten points. Which of those two de-
positors is entitled to the surplus?
Any talk which advocates compulsory
distribution of a surplus until it has
acquired a large Size and then only
for the excess over all possible de-
maris for safety lis altogether mis-
taken. There is law now which re-
quires savings banks to distribute
their surplus above a certain percent
age and at times such distribution has
been made. It happened while ago
in this city, if We are not mistaken.
But even such a distribution is open
to criticism, for confessedly it is pay
Ing to one set of depositors money
earned in part at least with the mon
ey of other depositors, who have
since withdrawn their money and so
get no share Of it. That cannot be
helped.
The central fact is that a surplus
Is about the f1andiest article finan-
cial institution can have about it. It
assures the permanence and prosper
ity of the concern. 1t can be added
to in prosperous years and it can be
drawn upon in years of adversely,
which are just as certain to come
as the other kind. Even in the matter
OF robbery it must be more agreeable
to be robbed of ones surplus than of
his principal. The bank that has the
surplus will have public confidence
and surplus that is concealed in an
differentiation of assets is not really
hid Nobody keeps his money out of
a bank because it happens to have
large surplus.