New-York tribune., 1909-05-26
WON'T LOWER INTEREST
SAYINGS BANKS TO PAY
1T i PER CENT RATE.
Decide Not to FolO50 Example of
Boston Institution IN July
Disbursement

Interest at the present rate of per cent a
year will be paid on July ], when the semi an
nual disbursement Will be made, by all of the
savings banks of this city, it is said by leading
savings bank officials.
Following the last dividend payment. in Janu-
ary. there much discussion among officers
and trustees of these institutions to the ad-
visa biIity Of lowering the rate to 31% per cent
in July. That action had been taken by the
Suffolk Savings Bank, one of the largest savings
institutions in Boston. at the January interest
period, and many bankers in this city felt that
similar action here would be necessary. Some
time ago the president OF OF the most i'm
portant savings banks In New York sent letters
to all the institutions in the state asking for
opinions on the suggestion to reduce the rate
to 3I2 per cent. and a result of the answers
received by him the local banks have decided to
make no change in the semi-annuaI payment on
July l.
In reaching this decision the banks have taken
no concerted action. but have simply decided.
each for itself TO adhere to the present rate. a
policy in accordance with the consensus of opin-
fon as ascertained by the president referred to.
who sent 10 ell OF the institutions the result of
his inquiry.
There are in all about 1.I10OOO savings bank
accounts in this city, representing $500 OO0OOo
Of deposits the interest on which aggregates
about $3S OO00 900 yearly; so that the lowering
of the annual rate OF 81 per cent would mean
loss OF nearly S5O0OOO0 a year to the depos-
itors
Whether the / per cent rate can be maintained
in January and subsequently IS a question
which bank officers are not prepared 10 answer
at present. For one thing, they say. the ad-
vance in the price of bonds is making II in
creasngly difficult for the banks to earn the
full per cent, and 1t is also becoming more
and more difficult for them to obtain high in
terest bearing mortgages.
The competition for deposits among the saw
ings banks IS deprecated. and it Is urged in
some quarters that the smaller institutions. in
stead of keeping up the { per cent rate should
add TO their surplus. An objection made to the
payment Of that rate by many Of the banks is
that many persons who would use their funds
for buying bonds If ga per cent were the rul-
ing rate Of interest on savings bank deposits
are well satisfied to keep the money in the banks
at { per cent interest. but in times OF panic
would hastily withdraw IT and buy bonds and
stocks with 1t at the bargain prices The de-
mand for those deposits makes It necessary for
the savings banks except In panic of especial
severity when the "sixty-day withdrawal rule
is put into application. to sell at sacrifice
proportionatc amount of their securities. les
sening to that extent the resources behind the
deposits Of the smaller customers who at
no time in a position TO invest their savings in
securities
Some Of the bank officials are in favor Of
lowering the interest rate to figure between
( and 3I7 per cent. which they believe all Of
the institutions could afford to pay. but the OBJ
lection raised 10 this proposition is that It
would tend TO confuse the grea, body OF the de-
positors and would also involve great deal
Of additional bookkeeping.