The Western news. [volume] (Libby, Mont.) 1933-current, 1936-02-13
Bank Taxes
VIII Provide
Big Surprise
Sums Paid by Montana
Institutions Analysed in
Much Detail.
TOTAL OVER HALF
MILLION DOLLARS
BY the Montana Taxpayers Association.

BY the Montana Taxpayers Association.
HELENA, Feb. 1O.-(SpeciaD-That
taxes form a very substantial part of
the cost of banking that is indirectly
passed on to the public in the form of
service charges and lower interest rates,
is the conclusion made by The Montana
Taxpayers Association from a survey
recently conducted by the Montana
Bankers Association and supplemented
by information secured from the state
banking department Last year the 113
banks reporting paid $320,733 taxes, of
which S277,038 was levied on property
for schools, city, county and state
purposes. For protection of deposits
against fraud, fire, theft, and every
other possible cause for loss, the banks
are paying out approximately 100000
year. The banks paid more than $780,
coo to the state of Montana bank exam
liners for auditing the business affairs
of the banks and helping them to main
tain sound financial condition that is
hardly equalled in any other state. Fire
and theft insurance premiums
amounted to s82,84O for the 100 banks
that reported this item Although
bank failures in this state have been
few and far between in this recent
period of depression, Montana banks
will have to comply with the insurance
provisions of the National Bank Act Of
1885 as further safeguard to their de-
positors. 1t is estimated by 112 banks
this will cost approximately $76,865
Taxes Exceed Half Million.
Altogether, Montana banking institu.-
tions then must take from their profits
over half million dollars annually for
taxes and depositor protection before
paying salaries, wages, plant operation
and other costs.
On September lst, 1885, ia banks
reported about sos, 254O00 on deposit
Of this $22,846, 600 was in savings ac-
counts. This sounds like huge amount
of money, yet it was owned by nearly
10000 depositors. Even counting in
the mines, smelters, railroads, mills,
power companies and other substantial
employers of labor who are compelled
to carry large bank accounts for opera
ton, and schools, cities, counties and
other public agencies with funds in
banks, the average amount on deposit
for the 10000 figures out but $3.50 The
banks report 1888 savings accounts
amounting in all to S22, SAC, 939, or an
average savings of but $412. This means
that lot Of people all over this state
are interested in the banks. According
to the 1929 census there were $4,000
persons over 10 years old "gainfully
employed" in Montana. In 1885 it is
estimated, even with an improved con-
dition over the previous year. there
were not over 175,000 gainfully en-
ployed. This means that for every four
persons earning any money there we're
three bank accounts, one of which was
a savings account. To pay their taxes,
wages, depositor protection, plant OPP
Grafton interest on savings deposits md
other operating cost banks derive their
income from interest on stocks bonds,
warrants, loans, etc, and on so-called
service charges While they are only
required to keep an amount OF, cash
equal to 1919 of their deposits in legal
reserve, as a matter of practice banks
cannot count on more than 1870 of their
average deposits as a basis for earning.
A large amount has to be invested in
quick turning low interest bearing Sc
curities, and a considerable amount
in short time government bonds which
now return only fractional interest.
Contrary to general belief only small
amount of banks money is loaned on
short time current interest rates. It IS
estimated that taxes and depositor pro-
lection take approximately 1879 of bank
earnings and that wages account for
about 500.
Payroll and Unemployment Tax.
The ia banks regularly employed
SAB people with 1540 dependents in
1885 According to the 1890 census this
is nearly half of the entire number en-
gagged in the banking and brokerage"
business in the state with an annual
payroll of approximately $3,000.0O0. On
this payroll tax for unemployment
insurance at the rate of 1so for 1886,
2T for 1887, and 3eo for 1888 is being
levied. In addition an old age benefit
tax on payrolls will start in 1887 in all
banks employing eight or more people.
When both these taxes are in complete
operation the banking and brokerage
business will probably pay about S14O,-
600 year. Banks employing eight or
more people will have to add go of
their payroll to the cost of doing