Evening star., 1936-07-05
Lively Interest in
Future of Savings
BY FREDERIC J. HASKIN.

ucSG1IllSS Oh InG american people are
showing a lively interest in the trend
of savings of wealth in the United States.
The American people have been, for the
most part, thrifty people. 1t might
be said that they had learned the habit
of saving from attention to the maxims
of Benjamin Franklin, contained in
Poor Richards Almanac" 1t is more
likely that Franklin learned his maxims
from the people themselves, that he
merely reflected national characteristics
and gave them articulation.
But fear developed in the last few
years as to now much the incentive to
thrift had been destroyed by the hard
times. A story which was widely told
during the darkest years was about two
men who encountered each other at mid
night on Brooklyn Bridge. They corr
rectly suspected each other of attempt
ing suicide, and with this bond between
them fell into conversation. The first
said that he was failure, that he had
never been able to make decent living
and that he was so weary OF the hard
ships of penury that he had concluded
to END it all by leap from the bridge.
The second said that he had been
fortunate in mundane affairs, that he
had amassed a competence, but that
through the decline in security values
and the failure of banks he had been re-
duced to destitution. So these two men,
one OF whom had never exercised thrift
and one of whom had exercised that
virtue only to see his fortune swept away,
found themselves at the same pass.
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Scores of hundreds of thousands of
Americans did indeed see their hard-won
life savings destroyed in the great de-
preston, and it was scarcely to be Won
dered at that many should lose heart
and lack the fortitude to start building
all over again. This attitude of mind
has been regarded by many observers
as perhaps the worst aspect OF the bad
years Without the will the incentive to
save and help build up the common
wealth on the part of the populace the
Nation would be in bad case.
One of the first steps taken by the
New Deal administration was for the
protection of bank deposits. The Fed
eral Deposit Insurance Corporation was
created and bank deposits insured up to
IS 600 But this by no means proved
universally convincing. The national
bank act was in itself calculated to in
sure against bank failures. Yet often
because of disregard of the letter of the
law national banks failed. If that law
did not work, perhaps the insurance sys-
TEN would not work Previous systems,
tried in the States, had failed miSerably.
There are indications now that saving
on the part of the American people is
once more going forward and that the
habit of thrift has not been eradicated.
This is regarded as one of the most
heartening signs of the times. It gives
promise that the losses of the lean years
will be repaired and that the Nation will
surge forward anew and gather augment
ed financial strength.
Savings are found in many forms. The
term does not relate alone to money on
deposit in savings banks. The largest
single repository of the peoples savings
is the vast life insurance fund Through
steady payment Of premiums individuals
build UP savings funds for themselves
which. in an emergency. can be drawn
upon during their lifetimes. and. in any
ChCI4C. 1dl4 W LllCll dI dC6IlA
Moreover. there has been a material in
crease in the popularity of endowment
or annuity insurance policies which pro-
vide system whereunder the individual
may retire in his declining years and be
assured Of an income.
One may read occasionally of how
some vastly wealthy individual has been
insured for $1,000000. Policies Of even
greater sums have been written. The
premiums. of course, are huge. But these
are not the insurance policies which
really furnish the great mass of accumu-
lated wealth in the insurance fund. The
millions of relatively small insurance
customers, not the rich men, are the real
accumulatorS of this fund. The same
is true in the matter of bank savings.
In 1888. the year counted as the low
point of the depression, the American
savings fund in insurance, banks and
other forms representing current savings
was placed at only S50,000, 100000. In
1880 it had reached peak of S56,000,-
100000 But the hard times made it
necessary for many individuals to draw
out and spend their savings, and, of
course, millions we're lost outright in
failures
Had the rate of withdrawal and dis
appearance of savings continued, the
financial backlog of the Nation soon
would have dwindled dangerously, doubt
less ultimately affecting the national
credit. But figures for the first of this
year show that the tide has turned. The
savings fund has climbed to $50 ,00O,-
O00 and unless some fresh economic cata-
clysm deScends will ere long outstrip the
previous peak.
In 1888 there were 55,0O0000 policies
held, according to statistics covering the
more important life insurance companies.
Now there are 100000. In 1888 there
were 39,262 900 accounts IN the mutual
savings banks and other banks, and now
there are 41,315,000. This indicates a
swift reversal Of the trend. In view Of
the fact that there still are some
100000 unemployed persons in the
country and that persons on relief can
scarcely be expected to save, the showing
is regarded ss remarkable. 1t reflects O
determination to build for the future.
The individual is practically certain to
think of his savings in terms of what his
pass book shows or how much insurance
he has taken out. Actually, these savings
find their way into many channels. For
example, nearly one-quarter Of all the
money held by the insurance companies
has been invested in farm and other
mortpareS huge amount has been in.