The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1925-07-01
BANKS DISCUSS
UNPROF|TABLE
ACCOUNTS
Service Charges Are Upheld
By Majority to Cover
Handling Cost
BY RICHARD HATTON.

Considerable favorable comment
vas heard in financial and bust.
ness circles in Washington today
upon the enlightening discussion
Of the problem of Improbable &C,
counts before the recent annual
convention Of District Of Columbia
bankers at Hot Springs.
Bankers freely admitted that
many accounts were carried by
their institutions at direct loss
customers Both bankers and bust.
nsssrnen agree that this is con.
dition which should not exist and
the general view is that il would
not exist If the bank depositor, or
customer, realized that In many
cases he was asking his bank to
carry on its business at a loss
merely for his personal con.
venience.
In line with the local discussion
Of the Improbable account ques-
ton 1t Is not hard to draw a
parallel. between the bank and the
merchant No one would expect a
merchant to carry on his shelves
any considerable quantity of dead
stock. i. e. STOCK in which his
capital swas tied up and upon which
there was an overhead charge and
for which there was no sale. 1t
would be impossible for the mer-
chant to carry on business unless
his. stock, was active and unless
be made a legitimate profit upon
his sales and service.
Profit Their Due.
Likewise, it is asserted by bust.
nessmen, the bank Is entitled to
fair profit for it's service, certainly
II cannot be expected to junction
at q loss through carrying I'M
profitable accounts. The bank. as
well as the depositor. the merchant
as well as the purchaser. Is entitled
20 benefit and profit through bust
ness relations.
The question OF the Improbable
account is one which is nation
wide in Its application and Trust
Companies" q financial magazine,
has some very interesting data
upon the subject in its june issue
which was gathered through a
QUESTIONABLE sent out on Unre-
I
Banks and Trust Companies The
article referred to was complied
by Arthur d. White, chairman Of
q special committee appointed to
investigate and report on ''unre-
munerative service ard Ia q re-
capituIation OF the data collected
and set forth he states tilat 73 per
cent of the banks 10 winch Ques-
tionnaires were sent approved Of
service charge and only per
cent did not approve Of such a
charge.
That the bank customers view
the service charge az reasonahle8
and just is clearly Indicated by
the article in question for it goes
on to say: THE same economic
rules govern the operation Of a
bank as apply 10 the manufacturer
Or merchant. lis selling price or
compensation must be based on
the cost OF furnishing its services
and facilities Ia. Its customers. The
small checking account, receiving
the same sefvige as the large ac-
count. bur vita its frequent over
drafts and the more careful watch
ing IT requires, js a highly i'm
portant part OF the overhead ex-4
penses OF any bank"
Banks Responsible.
In the opinion Of Mr.. White:
Banks are responsible for the
present condition wherein many &C.
counts are earried ct a loss, and
In this he Is in agreement with
many Washington bank officials
who believe that the public will
endDrse as reasonable and just a
bank service charge when the facts
are placed DefeTe III EN-. Nc. WhIte
says.s3s tf7Is regard: 1--WE elbow
eccourS be started with de.
posts That cannot earn the cost Of
theszpper i,gw and maintained at
balances Essat cannot possibly earn
Their keeb These accounts do not
get ssessi.ey OF themselves. ard un.