Evening star., 1931-06-19
|CUT IN INTEREST
HELD JUSTIFIED
Philadelphia Banker UphoIds
Action in Address Before
D. C. Convention.
BY EDWARD C. STONE,
stan Correspondent OF The Star


HOT SPRINGS, Va, June 19.-Re-
cent cuts in interest rates by many
banks all over the United States were
justified by o. Howard Wolfe. cashier
of the Philadelphia National Bank, in
most comprehensive address before
the second session of the District of
Columbia Bankers Associations here to-
day. Following this address, the con-
vention was absorbed with important
reports on associated activities during
the past year, Washington Chapter,
American Institute of Banking, being
accorded special attention.
Speaking on Interest on Deposits
and Methods of Computation: the
Philadelphia banker placed banking in
an unusual light by summing up these
peculiar facts bearing on interest rates:
mo other business is compelled TO
shut up shop If it ceases to earn money.
mo other business Is so restricted
and regulated by law.
mo other business has the price of
its product fixed by law that ignores
mo other business, excepting rail-
roads, which compete with automobiles
competes with private individuals as
banks do In seeking public investments
such as bonds.
mo other business Is more highly
competitive, and finally
mo other business is so foolish as to
bid the same price for raw material
whether 1t Is able TO sell its product
or not.
Beginning to See Light.
fortunately we are beginning to see
the light" he continued. From one
end of the country to the other the past
| IL months have seen marked reductions
| in interest rates. In nearly every case
the most hopeful sign Is that these
changes have come about as the result
of rules agreed upon by clearing house
associations. That, I think, Is more
significant than the reduction itself
because it gives promise OF return to
common sense and a disposition to stay
| put. II any Of you bankers IN Wash
| ington think you have done novel OF
drastic thing in reducing rates. would
suggest you take look around the coun-
try. Your city and mine were among
the last to take action.
Let me warn you the Federal reserve
authorities at the present time are very
properly. in my judgment. considering
| a tightening up of regulations govern
| ing time deposits. I am telling no tak:
out of school when I say that too large
far too large. a proportion of time money
is plain demand deposit Let any banker
refuse to pay time or savings accounts
when asked to do so; let him insist upon
| the observance of the 90-day clause, and
he may as well close up his doors.
AT the Bank Management Conference
held in your city in February, made
the statement that the bank paying
more than 3 per csnt on savings al
! present is In one of three positions:
Either 1t is losing money, or it is paying
the interest out of the earnings on cap
ital and surplus. or else it Is badly
frozen, because none but frozen loans
are yielding per cent at the present
time. You may think 1t odd that
should say that while our mutual saw
ings banks in Philadelphia are paying
per cent with comfort and safety.
Just remember they are mutual savings
banks. The largest has been in busi-
ness since 1916. During that time it
has built up a large surplus in the
neighborhood of $50, ,00O, 900. What that
bank is really doing is paying a divi-
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