The Washington times. [volume] (Washington [D.C.]) 1902-1939, 1926-11-18
INTEREST RATE
6TIRS BANKS
Ry RIcHARD HATTON
'IPut your savings in bank and
LET .fnern draw Interest,


',Put your savings in bank and
let them draw interest, ("
No more sound advice can b
given than the above.
Millions and millions of American
people are doing just that.
Millions and millions of dollars are
credited every year to these saw
ings accounts BY the banks where
IN the deposits are made,
How many people who receive
the benefit of this interest on de-
posifs realize what the cTediting OF
/ the amount means to the bank!
A. an instance of what interest
payments mean to. banks it il stated
from data compiled by the Federal
Reserve Board that interest paid by
member banks In 1926 amounted to
$643,l5S, 900. This il q stupendous
sum and it accrued to- depositors
through no greater effort on their
part than saving and banking a
portion of their 1ncone, II was the
amount that the hanks paid to their
depositovs for the service OF SAFE
r1Iardtag savings and for the priv
ileee of investing a portion or the
sum at a moderate interest, ana
under strict regulation. for the bene-
lit OF the bank.
THAT the question OF interests
haynienta il one to which banks
must give serious consideration,
and one which the public must not
take for granted as right whlen
comes with the service the pank
renders in handling its deposits;
can Sc no. more clearly indicated
than by setting forth the fact thai
gross income of member banks o.
the Federal reserve increased only
$Ss, $4,000 during the four-year
period from 1871 to 1925, while IN.
terest paid on deposits during tne
same period rose from 72,OVS,Vug
to Ss4s.i5ss 900. or an increase o.
900, In other WORDS. ~
S1925 about onethird OF the gfoss
income az the hanks Was PAID 20
deposttprs in interest;
Obviously, the continuing increase
IN tie amount of interest PAID by
hanks. II bank income is not pro-
nortienateIv increased, must eventu-
aI1v hiring about a change IN the
svstefa under which deposits are
credited with their interest, or some
more profitable source OF income
must Be found by the banks TOT
the funds at their disposal for IN
sestment purposes. -.
T.ha deposits is, naturally, not con
earned with the management Of tne
shanks' investing capital Pubic
nafeguaras are provided by the Gov
ernHent. and bankers conduct. theH
business under the strictest regulae
don 4 regulation which, sometimes.
seems to work = hardship on enter
prise but which, neVertneisss y
provided IN the. interest OF the oe
poslteFa. What the depositof y con
cernsd with Is the safety 81 ~
.av5,9a ana the amount OF interest,"
MI 81 81 Bank can safely pay upon
theM II is- this matter OF safety
fhaf faa deposit0n must CONSIDER
when ne inevitable question OF
Fadhctien IN interest ia presented,
Cor this il matter which It seems
from the figures presented ABOVE
must eventually protrude ltsell INTO
fhaf tionship between the deposit
aor9 and the bank -.
with this situation before II, the
BANGING. public cannot fail TO unaef
800 ehe necessity upon the part OF
ner,ae banking institutions Tor chafg-
5neza- small amount for carrying acs
counts which are below the SUM
required to meet the regulations re-
Rarhing reserves. and At the sanls
finae permitting the bank to earn
reaSona able return through the legiti
mate investment OF the small pof
tion of its deposits ayallanle Ioi
this purpose. The public VIII, aiso'
realize thai every means must DC
taken By q bank to conduct It's DUST.
mesa upon an economical oasis ana
that innumerable small checks
drawn by depnsitors are a source
81 considerable aggregate expense. :,
After all, there 70 p great mutual
Interest betWeen the bank ana the
bank deposition. 1t Is a mutual Dust
ness interest as well as one OF mutual
confidence and mutual service. the
bank pays interest to the depositof
In Grder that it, in turn, may earn
interest. IL the bank pays more 10
. its depositors than it can earn. neither
IS safe. Therefore, should the time
ever come which is predicted by some
students Of modern finance, when
the interest rates on deposit must
be decreased because Of the rising
costs of the many intricate elements
which effect the income Of the banks,
II will be well for those who profit
by the bank interest on their savings
10 understand something of the rea-
sons why a lower rate must be sub
etituted in the interest of security
for the depositor and safe business
policy for the bank.