Evening star., 1937-02-09
RATES TO Be CUT
ON BANK SAVINGS
Reduction From 2I2 to2Per
Cent Announced by
Clearing House.
BY EDWARD C. STONE.

Interest rates on savings accounts
IN Washington banks will be cut from
21z per cent to per cent on March
1, H H. Mckee, president of the
National Capital Bank and chairman
of the Washington Clearing House
Association, announced today.
The maximum rate allowed by the
Government Is 2l2 per cent. but
bankers here cannot find sufficient
high grade investments for savings
and time deposits to permit the con-
tinuance Of the 212 per cent rate,
Chairman Mckee said, adding that
similar action has been taken in prac-
tically all the other cities in the
United States.
Washington bank officials have
given several months special study to
the situation. Savings deposits. other
wise known as thrift accounts, have
been growing steadily in the Capital
for more than year. Bankers have
hoped that earnings on the increas-
ing amount of loanable funds would
be sufficient to prevent the need OF
any reduction in rates.
Special Rule Adopted.
Chairman Mckee, in announcing
the reduction in rates, stated that the
Clearing House Association had
adopted the following rule governing
the payment of interest on time and
savings deposits:
Beginning March /, 1887, and there
after the maximum rate Of interest
that may be paid by members and
associate members on savings accounts
shall be as follows:
Two per cent per annum on ac-
counts showing a balance of $4,000 or
less
On accounts that show balance of
more than s2,5o0. 2 per cent on $500
and per cent on the remainder.
These rates shall apply to all ac-
counts in existence March l, 1887
and to all new accounts opened after
that date.
The rates that are now paid on
certificates of deposit having a def
mite maturity are left unchanged.
They are:
One-half of l per cent on certif-
Gates having maturity Of not less
than go days.
One per cent on certificates having
. maturity Of not less than four
months
tiflcates having maturity of not less
than six months.
Causes of Rate Cut.
The reduction of the maximum rate
from 212 per cent to 2 per cent has
been caused by the inability of the
banks to use safely and profitably the
large amount of savings and time de-
posts held by them which are con-
stantly increasing Deposits must be
invested in sound loans and high-grade
securities of a readily marketable
character, Chairman Mckee explained.
The return on United States Gov
ernment and municipal bonds and
other eligible securities in which saw
ings deposits should be invested is
lower than ever before in our his
tory, it being impossible to safely
AlsCSG Savings OePOSlJo dI IdGeS NII4C4I
will permit the continuation of the
maximum of 2l2 per cent allowed by
Government regulations and, at the
same time, meet the overhead ex-
penses incident to operating savings
departments.
This is not a local condition,
Chairman Mckee stated, as an ex-
animation of the rates paid through
out the country discloses that in only
few places is a rate higher than
per cent being paid on savings or
time deposits.
After careful study by the Clearing
House Association over a period of
several months the conclusion was
reached that the maximum rate of 2
per cent on savings accounts, other
wise known as thrift accounts, is fair
and reasonable in view of existing
conditions, the clearing house official
concluded.
Small Estates Protected.
Blaine B. Coles president of the
trust division of the American Bank
ers' Association, described the protec-
fiop of tho .GIitt1o ,,,op,c oetota,, o+ ~