The Washington times., 1911-09-24
IN LOCAL FINANCIAL CIRCLES
By la. FLEMING.

. Z
| private examiner idea. hold that tfs
| expulsion from this association will b
| just as effective punitive nneasnrs a.
dismissal from the clearing house. Cer-
tainly publicity Of the unfayorabia kS,d
ocgnt 70 hurt a bank. II there is one
i bank. - No' - 10
| Let the members Of the association
adopt rule that all members shall Irse
| sociaticn" on their cards rEfationsr,
advel Using. etc, and the esfectiyeness
| OF the examinations will be enhanced,
and an expulsion dreaded. - -.
naer special examination by the
examiner OF the District Bankers Asso,
cation would make another effective
slogan, and one that would give mora
confidence to the depositors. =.
September 1 the Continental-C -Comm.r-
cial Bank OF Chicago had deposits Of
$lI6. 900 cash and due from banks y7O,-
A,N0; ContiDental-Corllne Trust
snd nd Savings, s2o,S@ 600 deposits, $500. 90
sociation, S26,Soe, 900 deposits, a,l0onv0
cash on hand. All Continentai-C CONNER
c!al institutions. "a.
Up to date the postal savings system
has accomplished just what the law
makers intended that 1t should II has
not appreciably reduced the deposits of
banks and bankers bur Il has brought
the dollars from their hiding PAGES.
from stockings, out or money belts and
other secret pockets IL the makeup Of
the average foreigner OF the first gem
Grafton who distrusts everybody, bank
and business man, but has tha faith Of
all faithful subjects in the iiielity and
honesty of the Government as the guar
dian of the funds of It's iIlzens
Bankers fought the postal savings
plans from start to fipisa. claiming inst
\ would haa ayiI ha IN
banks -..F T. -
II has. but not in the way bankers
commended 1t has sent the fraternity
into the bond market. and has .aused
II this class of securities that they
might be placed with the trustee Of the
deposits, In order that the banks might
take advantage of their ruIl share Of
They are only too glad 10 gather the
savings dollars in, even wnen paying IA
per cent interest thereon. -
National banks are not required to
savings funds. but this provision does
not exempt State banks and trust COM
panies, where a reserve Is required by
the law of the State under which such
Institution Is organized. 's-
About $500, 600 face value of bonds
of the three classes provided by law
which are acceptable 10 the trustee for
deposits Of savings funds have been ,
the country, largely through local bank
ing agents, many of which will not
receive their quota for months to come,
as the deposits have. so far grown but
81 slowly; D'dit; but they are now Increasing
There is money for the banks IN han
ding postal deposits, especially when
rates are on a and 8 per cent basis IN
the country legal rates are higher and
the value Of postal deposits Is en-
hanced. '... D..
Class covers bonds of any city,
town or district In the United States
that has been in existence for a period
of ten years and which for q like period
has not defaulted on the payment Of any
part of principal or interest Of any
funded debt authorized to be contracted
by It and whose net funded Indebtedness
does not exceed 10 per cent Of the VAL
uation of its taxable property.
n. W. Harris & Co. offer the follow
ing: '-. -..
For purposes Of illustration a deposit
of 800, 900, which II secured by bonds Of
class 8, would require a face. value Of
S33, ,333.33. Assuming that the income
basis upon such bonds Is ~ per cent
the total income upon the investment Is
s. 900. The interest charge by the Gov
ernment would be s2i50o and at the
same time the bank has invested SO. 3.SS3.-
g Of its own money II the prevailing
rate for money In that locality is per
cent, these funds of the bank are worth
to 1t s. 1885,. which leaves a net profit,
OF 1888 80 upon the transaction. This :
amount represents true net profit due
to the holding of postal savings funds
over and above the amount of profit
that could be obtained by the use Of its
own funds, S33, ,333 80. at 5 per cent. y
slight correction must be made where
premium bonds are used. in view Of the
fact that the bonds are accepted only
up TO IS per cent of their par value and
the premium represents the banks own
money invested, which would otherwise
be employed at current money rates
(avera ging, as a rule, above. the bond
yield). Upon the results given above.
there should be adjusted the difference
between the current estimated rates for
money and the. bond income yield upon
the amount of premium involved.