New-York tribune., 1911-11-29
TO FIX INTEREST RATE
Savings Banks Feel "Three and
a Half Per Cent in Air."
SEVERAL PLAN REDUCTION
Brooklyn Institutions Will Main
tain Old Rate of Four
Per Cent.

Within the next two weeks the trustees
Of most OF the savings banks Of this city
will have held their semi-annual meetings
for fixing the rate Of interest TO be credited
upon deposits on January /, and the prob
ability appears to be that several Of the
dozen which have hitherto adhered to the
per cent annual rate will decide TO lower
the figure TO 1-2 per cent. among them the
big Seamens Bank for Savings and the
West side Savings Bank. although the
Emgrant Industrial Savings Bank, one OF
the largest In the city. an the German Sav-
ings Bank are expected TO stand by the
higher rate. AS the head Of one institution
which Will probably lower its rate next
month expressed it yesterday: Three and
a half per cent is in the air
On July ]. 19Os. all OF the savings banks
in the Borough Of Manhattan paid interest
at the annual rate Of 4 per cent Six
months later the Bowery Savings Bank
took the lead in reducing the rate 20 IL
per cent. being Joined in that policy BY the
Dry Dock Savings Institution. the Union
Square Savings Bank and the North River
savings Bank.
In July. 1910. the Union Dime Savings
Bank. the Bank for Savings, the Citizens
Savings Bank and the Franklin Savings
Bank lowered their rates from 4 to l. per
cent. while the Greenwich Savings Bank
and the Manhattan Savings Institution de-
cided to pay interest at the per cent rate
on all deposits up TO $1,000 and 1-2 per
cent on deposits in excess Of that sum.
At the next interest period no changes
were made by any Of the banks. but in July
- IL.
Harlem Savings Bark and the Empire City
Savings Bank adopted the 3 1-2 per cent
rate, while the Manhattan Savings Insti-
tuition. which at the two preceding interest
periods had paid the double rate. per cent
on sums up to $1,000 and s - per cent on
amounts above $1,000, announced that ii
would in future pay II per cent on de-
posits Of all amounts.
Among the banks which have held TO the
per cent rate are tho Emigrant Industrial,
Seamen's New York. German, West Side.
Excelsior Metropolitan and Maiden Lane
savings banks and the Broadway and East
River Savings Institutions. and. as already
noted, some Of these will probably at TINS
time decide 10 adopt the policy Of lowering
their rates.
The savings banks Of Brooklyn have
solidly maintained the per cent ate and
il is commonly expected that they will con-
tinue to pay interest at that figure.
The desirability Of reducing the interest
rate from to 3i4 per cent has been urged
by successive superintendents Of banks and
by other speakers at recent annual meet
ings Of the State Savings Bank Associa-
ti0n a measure Of conservatism. and
indeed Of safety, and concerted action in
lowering the rate has been strongly sug-
gested.
Some OF the small banks, it has been
said continue TO pay per cent because Of
their fear of losing deposltors although
the additional y per cent ought TO be ap-
Piled to building up their surplus fund: and
the large institutions also, the advocates
~ the Si2 per cent rate say should bear In
mind that in paying 4 per cent interest
they are turning income into deposits
which are liabilities. more rapidly than
present conditions require. and are not
adding to their surplus sufficiently TO Offset
not only this automatic increase IN de
posits. but also possible shrinkage in the
market value Of their assets
The position taken by the savings banks
which have not lowered their rates has
been that their first duty f. to their own
depositors. who are entitled 10 the larger
return. II earned, with reasonable mar
Sin Of surplus. by reason Of advantageous
investments held by the institutions: but
since some Of the strongest and largest of
the savings banks OF the city have within
the last two years abandoned that position
IL is believed by men prominent i'm the
savings bank field that in time all of the
banks will pay 80 per cent year.
That is not 10 say that they Will never
again pay I per cent. for the history of
the local savings banks is one Of nuctua-
uons In interest rates. and with a general
and material advance in the value Of their
investments a return 10 per cent might
commend itself 10 the several boards OF
trustees. In 1900 II was predicted by lead
ing bankers that within five years most OF
the savings banks would be paving only
per cent. but that rate has not been seen
and after 1909 almost all OF the institutions
paid 4 per cent until the movement for re-
duction 10 the 3ia per cent rate. sun re-
earded as q low one, began to gather way
two years aEO.