Omaha daily bee., 1921-08-17
WageReduction
Not Reflected in
Bank Deposits
Increased Savings Attributed
To Sacrifice Sales of Stocks
By Retailers; Depositors
Not on Increase.
BY HOLLAND.

Andrew Mills, who is president
of one of the largest savings institu-
tions of New York City, has OBJ
served a prevailing tendency among
depostors in savings banks to in
crease their deposits. In the insti-
tuition OF which he is president the
deposits increased i'll July by ap-
proxmately 100000. So far i'll the
month of August increase and with
drawals have been substantially
equal.
The experience of the New York
City savings banks, especially since
the first of January, would, II it
were unexplained, lead to the infer.
ence that much OF the complaint OF
lack of employment as well as the
reduction in wages which has been
made within the past six months
are not reflected in deposits which
wage earners and clerks and those
who keep small stores make in the
savings banks.
Number Not Increasing.
Mr.. Mills has observed that, while the
deposits have been increasing, the mum
ber of depositors has not proportlonately
increased. Therefore 1t is reasonable 10
assume that not many new deposltors are
entered upon bank books nut that the
old depositors are increasing + de-
posits. At first thought this would indi-
cate that the savings of those who work
the wages which they receive make TINS
increase possible. But there Is another
and better explanation which is MADE
possible by Mr.. Mills explanation. TINS
Al .,atr atAG IN
business depression which has prevailed.
In the vicinity of the bank or whlcn
Mr. Mills is president are many smali
stores, little retail shops whose customers
> chiefly are wage earners a..d clerks who
live in the vicinity. These storekeepers
shared in the general feenng OF depres-
plete collapse. The spirit Of pessimism
prevailed among them and for that rea-
son they decided to part with their STOCKS
of goods for whatever price they mad eou,d
Sacrifice prices and received cash for
them. But when they had the cash IN
hand they were perplexed. Ihey dlu not
dare use the money In replenlshlng thelf
stocks because they were apprehenslve OF
a continuation OF poor business. mere.
fore they placed the money on deposls
in the savings banks In when many oi
them were already depostors.
Limit Reached.
The fact that the increase in deposits
of this bank, which has taken place every
month since January anu WhiSm
amounted to 100000 in July, seems nov
to be checked. justifies the nd anpfesh others
have reached the limit Of their capacity
greatly to Increase their deposits, :. =.
The record made by thls ns panS uh,ch
has been made by other savings panks oi
New York Although there is no authorl-
tative statement which refers TO the ex
perience of savings banks IN other pal.st
of the country, the reasons are excellent
for believing that on the whole tney WI. WI.
be able to report relatively S exper,vM, aav,nrs
similar to that of the New d,v uors a,Sinr in
ali efforts which are now under way py
which a return to industrial ana business
prosperity can be secured. =, tho
building trade and in real estate opera
tions. Yet the savings banks OF view
York are lending large amounts Oh Iiones
upon mortgage security RECEIVING PEI
cent for these loans Mr. Mills bank mas
lent 50, 1000. 900 since the firSt OF Jahuat
upon mortgage security: amere ana rs a.e and
pications for some $2ooo'ooo more ,,niad
the expert searchers are now occupieo so
in Investigations into the appilcallons So
that the bank may know "hether io""'
would be justified or not
Must Depend on Loans.
other saving institutions in New YORK
and some of the insurance companies arg
sglaking loans upon mortgage seeurisy "
sucn an extent to lead TO the pelel
that building and real estate ort GperatTns ttpms
are now reviving and may IN SNORT 'iiie
show great activity. . A..
In order to earn enough to pay tne
promised interest to deposltors anu s;rn ,n
addition to gain constantly ihcreasins
surplus, the savings banks Of New YORK
must depend chiefly upon loans with mort
gage security and upon the purchase OF
bonds Here as well as elsewhere one
of the important markets for the disposal
of high grade bonds is found in the
savings bank It entails, however. much
skill and good business Judgment IN order
to reach a decision to purchase ponos.
For instance the state of Michigan OF
fered an issue of several millions of bonds
having long time to, run and bearing
interest at the rate of 6h per cent. ms
was more attractive than the issue Of
fered by New York state because the
interest upon New York ponas Mias,gan Was noe
as large as that which the Mlchlsah
bonds carried.
Glad to Buy Bonds.
New York savings banks were glad to
purchase the Michigan bonds. They con-
tinue to be glad. These bonds are as
certain to be paid when due and the
bonds issued by the United States govern
ment One saving bank bought 100000
in Michigan bonds. Since that purchase
1t has been offered three points more
no temptation to SELL The savings banks
of New York and presumably all or
nearly all of the savings banks OF the
country have Invested millions in govern
ment bonds. These banks have been one
OF the chief markets for the disposal of
government bonds by those who have been
compelled to SELL There is perhaps no
better way of discovering what the real
by careful study Of the reports which
are made by the savings banks not only
in New York City and state but through
out the United States.