New-York tribune., 1910-12-10
CUTTING SAVINGS INTEREST.

To the Editor Of The Tribune
Sir: In an editorial in The Tribune OF
December ! under the heading Savings
Pank Interest You lend your Endorsement
to conclusions based upon facts only partly
stated. and therefore unsound and mislead-
ing
II is stated O. that "on January / 1850
the average ratio Of surplus 20 deposits in
all the savings banks Of New York State
was more than 17Ia per cent and that "oa
July I. 1910. this ratio was a little more
than 6 per cent" and (2) that no chain IS
stronger than its weakest link there
arc 142 savings banks in this state: that is
142 links in the chain.
Jpon these two bald. unqualified state
noents. inseniously correlated. the reader is
expected TO assume that all our savings
banks are weak and getting weaker. only
some are more so. The inference is that
for the last twenty years the managers Of
these institutions have fallen short OF the
wisdom of their predecessors in not 50
handling their depositors' money as to
maintain at all times a surplus Of 1Tig per
cent
Now the fact is that the surplus Of fTic
per cent shown in that year was abror-
maIIy nigh and unSound inasTuCh as only
small fraction of it represented The &C
clImuIatiou of excess earnings over total
outgo. In other words. it was not a true
surplus at all in proper meaning of the
term This fact was observed at that
time, and was noted by the Superintendent
of Banks in his report page 30 when he.
favoring proposed legislation for the en-
largement of the scope of investment
eligible 10 savings banks. says: at is
claimed that officers OF savings institutions
are now greatly embarrassed TO find proper
investments for the money held by them,
that pretty much of the whole surplus
possessed by the large banks is made UP Of
premiums upon their high priced invest
ments and that when the same become
due (and are redeemed at par this surplus
viii very materially decrease
The truth OF an axiom is not always evi-
dence of the truth Of it's application. and
the comparison of the savings bank sys-
tenn of New York State TO a chain with
reference to the strength of "'the weakest
link" is untrue and unsound
In New York County there are thirty
two savings banks. approximately one and
q half million depositors and about 81 fo00
eOo 900 on deposit. In the last fifteen years
all but two of the savings banks authorized
politan district The result is that TOO
many banks occupy this field. and il is
these newer and smaller banks to whose
percentage Of surplus YOU should specifcal-
ly- refer as dangerously Low Of the thirty
two savings hanks in New York County
twenty-five have a surplus of less than :
per cent of their deposits. thirteen have
less than per cent and eight less than .
va y-eee ar,I-S
psy per cent to their depostors If they
are to make any addition TO surplus. But
the larger banks. whose depositors com
prise a vast majority of the total number
of depositors in the county. can. many of
them. pay per cent after meeting ex-
penses and making a proper credit 10 sur
plus account Tet il is the trustees of
these stronger banks who are urged by YOU
to come down in their interest rate so that
the smaller and weaker banks may also
come down without loss of deposits on ac-
count of Withdrawal
Such remedy has been tried within the
last year. with the result that while some
of the large banks have made a reduction
Of rate most of the small banks have in
the eeGerness of their managers TO build
up in size adhered to the old 4 per cent
rate. The depositing public. without dis
elimination. has withdrawn large sums
from the larger and stronger banks and
put them into the smaller and weaker ones,
and the last condition of those banks is
worse than the first. inasmuch as they
have an abnormal increase in deposit liza
bility without any corresponding increase
In surplus.
II is for the Banking Department. which
authorized these banks TO open, to pre-
scribe ways and means for the rehabilita-
tion of whatever surplus they may ever
have had and not for the trustees of larger
and stronger banks TO rob their depostors
in & vain endeavor 10 help them.
DEPoSITOR-
New York. Dec. .. 1910.