Henderson daily dispatch. (Henderson, N.C.) 1914-1995, 1939-06-14
THE LIQUIDATION OF THRIFT.

The Bank of Commerce of Newark,
New Jersey. has announced that after
July 1st it will pay no interest what
ever on any deposit. This means that
the depositor will receive no income
whatever on what he has saved. 66
per cent of this banks deposits are
in idle cash, earning rothing, and
United States Government bonds,
earning little.
1t is reported that other banks may
do likewise Ii so, it will startle mil
lions of thrifty Americans. 1t will
not be pleasant news to them to be
told that they can look forward to
no income whatever on their savings.
But what the Newark bank is doing
is only a difference in degree from
what IS being done by all institutions
in which the thrifty American has
put his savings. Year by year the
thrifty American has seen the in
terest rate on his savings deposits
drop from 4 per cent to 3, to 2, to
/ 1-2 per cent And now many banks
in the Chicago area have announced
they will pay only one per cent in
terest after July 1st
: Let us state the effect of all this
on the thrifty American by simple
illustration. Let us say that Edith
Brown, a stenographer, aged 25, has
earned, and by sacrifice has saved
$1,000. She has put this in her saw
ings bank. The bank formerly paid
her four per cent, or $40 a year in
come. Without using her principal,
she could use this $40 for a vacation,
for sickness, to tide her over a pc
riod of unemployment, or for retire
ment in old age. The $40 is a measure
Of her security against the hazards
of life. If she leaves the interest in
the bank it will compound quarterly
at four per cent. In II years the in
terest alone will amount to another
$1,000. She now has $4,000. In another
II years, when she is 60 and ready
to retire, she has $4,000. Her original
$1,000, even though she has added no
more to it, has grown to be $4,000.
Today, however, instead of four
per cent she is being paid, say, only
1-2 per cent. Instead of $40 income
she now gets only SIS. This is a loss
of income to her of 81 1-2 per cent.
This means that she must now
earn and save $2666 to have at l 1-2
per cent the same $40 income that
$1,000 formerly earned her. In other
words she must now give 2 1-2 times
as much of her life, time and strength
to provide the same security for her
old age.
If she leaves her SIS interest in
the bank to compound, it will now
take over 46 years, instead of II
years, for it to amount to another
$1,000. She will be II years old in
stead of AZ before her account totals
$1,000. In the first case, at age 60 she
has $4,000, which at four per cent
would yield her $3.50 a year. Now at
age II she has only $4,000, which at
l IL per cent will yield her onlv
$50 a year. Her savings for old age
are less than half, and the income
on her savings is only one-fifth.
Suppose she figures that she could
live in her old age on $3.50 vear
or $40 month. At four per cent.
$1,000 would earn this amount for
her without eating into her PRINCIPAL
But at only IL per cent she would
have to earn and save $4,000 in
stead OF $4,000, to have an income
OF $48O a year, or $40 a month In
other words, she would have to earn
and save $4,000 more in order to
have the same security.
This is social security in reverce
gear. This simple illustration shows
what is happening, in one form mr.
another, and in greater or less de-
gree, to tens of millions of thrifty
Americans, the backbone of orr
democratic institutions. Their future
is becoming less secure whether their
savings are in banks, building and
loan, rents, railroads, utilities. or 1ife
insurance.
Behind many of todays pressure
groups is the definite philosonhv IT
Communion, wholly hostile to free
enterprise and the private ownersh;r
OF property, that property is theft3
The Woodworking men and women
who are so contemptuously referred
to as bourgeois" are to be liouidatN
ed. The liquidation goes on under
various Humanitarian" DISCUSSES
But it is important to become aware