Full text of "The savings bank and its practical work; a practical treatise on savings banking, covering the history, management and methods of operation of mutual savings banks, and adapted to savings departments in banks of discount and trust companies"

See other formats

THE SAVINGS BANK AND
ITS PRACTICAL WORK

MM. H. kMfFIN, Jr.

;»*tV

mmM

- 55

■■B

t" ?

— ;

* _. V

"" bt"^

:ii

2^1

R-"

5 *^'S

K.''

► " ^,

*!^

"■

'5's ^

ct T ..

^ C '-C

V- ■■ ^_^^ij^

c ? ^

X i, '^

1 !9D^^^^^^^^|

-^5-

L~V^^^^H

III

v^-m'^^^H

-'^■t

1" «1^^l

[14

^m ^^^^^^1

^ -ii ■<

''a —

5-1
■;; .a • .

. a) ?^

3-9

« 5 c

*^ u

~ -_ c

° "S

vc 1 ^

c r

art?

- . is

r. ^ .

>:; M o

THE SAYINGS BANK AND
ITS PRACTICAL WORK

A PRACTICAL TREATISE ON SAVINGS BANKING, COVERING THE

HISTORY, MANAGEMENT AND METHODS OF OPERATION OF

MUTUAL SAVINGS BANKS, AND ADAPTED TO SAVINGS

DEPARTMENTS IN BANKS OF DISCOUNT AND TRUST

COMPANIES, WITH OVER 180 ILLUSTRATIONS

TAKEN FROM ORIGINAL SOURCES

By WM. H. KNIFFIN, Jr.

Treasurer, Onondaga County Savings Bank, Syracuse, N. Y.

and formerly Secretary, Savings Bank Section,

American Bankers' Association.

NEW YORK

THE BANKERS PUBLISHING COMPANY

1912

PREFACE

Savings bank literature is not abundant. As a matter of fact^ it is
exceedingly' scarce. One has only to make inquiry at any circulating
library for books bearing on this subject, to become convinced that this
is true. The most pretentious works have been historical and theoretical
rather than practical, the latter phase of the subject having been cov-
ered only by scattered magazine articles, convention addresses and a
few chapters in works on practical banking.

There may be some merit — at least there is some boldness — in un-
dertaking to do what no one has before attempted on so large a scale,
and had it not been for the uniform courtesy of bank men in all
parts of the country, much of the matter here presented would have
been unobtainable.

Acknowledgment is, therefore, due to those who have so willingly
answered the many inquiries, and furnished the hundreds of forms from
which these selections have been made. No attempt has been made to
cover such phases of banking as personal loans, the buying of commer-
cial paper, or collateral loans, which pertain more particularly to the
work of a bank of discount, although practiced to some extent in savings
banks where the laws permit such operations. For such information the
reader is referred to works on practical banking.

The work, like Topsy, was not born, but just grew, month by
month; and while the hours spent hereon have been many, it has been in
no sense a tedious task. Much of the matter has appeared serially in
The Bankers Magazine during the years 1908-'12, and parts of the
chapters treating of the history and management of savings banks and
bond amortization in the pages of the Banking Law Journal, for
which due credit is here given.

In treating of the several departments of savings bank work, there
has necessarily been an oveijWapping and, in some instances, apparent
repetition, as the work has been viewed from different angles; but this
has been avoided as much as possible.

The book is offered in the hope that it will, first of all, be practical in
treatment, correct in statement and comprehensive; so that those who

463206

want to know will here find the information they seek, and those whose
life work it is "to inculcate habits of thrift and industry among the
masses," and are, therefore, familiar with the subject, will acquire new
and useful ideas, so that altogether it will prove a helpful work in the
interest of the savings bank and the practical work it aims to do.

W. H. K., Jr.
Syracuse, N. Y., Januart, 1913.

CONTENTS

I. — The Savings Bank Movement 1

II. — The Savings Bank Movement in the U. S k^. 14

III, — The Nature and Functions of Savings Banks *] . . . 21

IV. — The Thrift Habit 28

V. — The Savings Bank, a Public Benefactor 40

VI. — The Savings Bank as an Institution t 52

VII. — Savings Banks in the United States .^. 77

VIII. — The Organization of a Savings Bank 96

IX. — The Management of a Savings Bank 112

X. — The By-Laws of a Savings Bank 144

XI. — The First Deposit 188

XII. — The Bank and its Depositors 204

XIII. — Deposits 219

XIV. — Withdrawals 236

XV. — Miscellaneous Deposits and Withdrawals 256

XVI. — Deposits by Check 26l

XVII. — General Orders and Identification 267

XVIII. — Alteration of Pass Books and Transfer of Accounts 274

XIX. — The Teller and His Cash 288

XX. — The Passing of the Deposit Ledger 298

XXI. — Posting and Proving Methods 3l6

XXII. — Testing Time in the Savings Bank 336

XXIII. — The Dividend — Its Declaration and Computation. . 355

XXIV. — Mortgage Loans and Realty Values 385

XXV. — Bond Amortization in Theory and Practice 411

XXVI. — Savings Bank Audits 428

XXVII. — Banking Through the Mails 442

XXVIII. — Accounts of Deceased Persons 448

XXIX. — Lost Pass Books 462

XXX. — Advertising the Savings Bank 473

XXXI. — Dormant Accounts 485

XXXII. — Society Accounts 491

XXXIII. — School Savings Banks 497

XXXIV. — Insurance on Mortgaged Premises 51 6

XXXV, — Finger Print Identification 518

XXXVI.— Home Banks 523

XXXVII. — Interest on Mortgage Loans — Taxes 527

XXXVIII. — Insolvency in the Savings Bank 532

Subject Index 539

Index to Proper Names 544

Cases Mentioned in This Work 548

Index to Forms 550

CHAPTER I

THE SAVINGS BANK MOVEMENT

Following upon the French Revolution and the horrors
of that epoch-making crisis, statesmen, economists, and
philanthropists in all parts of Europe set themselves to study
what had been the prime cause of so terrible an upheaval
of the old order of things, and found that while many and
divers agencies had contributed towards the cataclysm, the
main factor at work was the abject poverty of the lower
classes and the legislative disabiHties under which they Hved,
Each of the surrounding nations took alarm and bestirred
itself, with more or less earnestness of purpose, to avert if
possible the application of similar drastic remedial measures
to its own special disorders. The ferment of reform was felt
throughout the whole of Christendom, and was only stayed
for a time by the Napoleonic wars diverting the minds of
men from the main issue. Among the many ameliorative
projects which were then advanced was the proposal to
estabhsh banks for the safe custody and increase of the small
savings of the worldng classes. The resources of these
classes, already meagre enough, had largely gone to waste
owing to the lack of facilities for husbanding them, and as
a result, on the advent of bad times masses of impoverished
people, having nothing in reserve upon which to subsist,
were a danger and menace to the State, and a cause of much
anxiety to well-disposed and peace-loving citizens. It did
not require much astuteness on the part of the level-headed
Georgian to perceive that by maldng each individual a small
capitalist the immediate source of danger would be averted.
The economist of the day argued that if the ordinary work-
ing man were offered inducements to save, and were per-
suaded to lay apart in the coffers of the State some of his
earnings, the fact of his possessing a small sum to his credit
would stimulate a desire to have more, — develop a natural
though latent acquisitiveness, — till ultimately the conclusion
would be borne in upon him that he held some stake in his
country. Being thus materially interested in its good gov-
ernment, he might safety be depended upon to uphold the

2. ., THE SAVINGS BA>sK AND ITS PRACTICAL WORK

powers of law and order as against sudden revolutionary
outbursts or anarchy. He would be found maintaining a
just attitude of respect towards property, and ranldng gen-
erally as a peaceful, contented, and happy — because pros-
perous— citizen, a unit of power and strength to the com-
monwealth. , Wages, however, at the begimiing of last
century were small, and neither the power nor the inclina-
tion on the part of wage-earners to save had been demon-
strated. The project was ridiculed, damned with faint
praise, and otherwise met ^ith considerable opposition.
Many were dubious of the success of the proposed banks,
wliile others in the financial world conceived a foolish preju-
dice against them as probable rivals. Some men saw in them
a danger to the finances of the State. But the idea was
eventually proved to be sound in principle, and banks for
savings soon sprang up all over the civilized world.*

While the sa^'ings bank movement owes its conception to
such patriotic sentiments, it M'as essentially a religious move-
ment; that is to say, it was connected with the church. The
history of the early banks in England, Ireland and Scotland
shows that almost invariably the banks were organized
and, in a large measure, conducted by the clergy. The
motives were doubtless twofold: first, to inculcate habits of
thrift and industry among the ])eople, and, second, as a result
of this thrift, to rid the church of the load .which poverty
placed upon her finances. But however this may be, the
primary motive was philanthropic.

The success of the movement, however, was due to the
desire on the part of the thrifty to lay by in store for
the rainy day. Without this desirable trait of character, the
movement Mould never have succeeded, either abroad or
here. These two elements — ])hilanthropy and thrift — are
necessary to the establishment of a mutual savings bank
anywhere. They are the bed rock upon which it is built,
and wherever such a movement is sought to be instituted
we must first find these qualities to exist; for wliile phil-
anthropy rniist establisli, tliriCt nmst sustain.

It cannot })e said — more's the pity — that every savings
bank has })een conceived in honor and conducted honorably;
for history cliroMicks a different tale. The motives which
prompted the establishment of many savings banks in New

•w. A.

IJarrl.iy. .Jr.. in Scottish Bankers Magazine.

ADDENDUM

The statement regarding losses in New York on page 3 is slightly
in error. On June 28, 1892, a defalcation of about $400,000 was dis-
covered in the National Savings Bank of Buffalo, impairing the assets
to the extent of about 22 per cent. Under order of the Court the de-
posits were scaled in the same amount and business resumed September
1, 1892. Subsequently the name was changed to the "Empire State
Savings Bank" and the bank continued in existence until 1902 when it
went into voluntary liquidation. Eighty per cent, of the amount due
depositors was paid immediately on demand and it was thought that ulti-
mately all would be paid in full. (Reports of Banking Department for
1892 and 1902.) See also page 534.

THE SAVINGS BANK MOVEMENT 3

York in the 60's and early 70's were selfish and unworthy
in the highest degree, and the management was reckless,
improvident and criminal, as the history of those stormy days
will demonstrate; but this era of bad banldng was also an
era of readjustment, and many of the banks that were never
needed and should not have been chartered under any con-
ditions, political or economic, were weeded out, leaving the
fittest only surviving. How thorough was this work of elim-
ination may be seen from the fact that in New York from
1878 to 1910, a period of thirty-two years, there have been
but two cases of loss to depositors, and only two banks have
closed, and these recently, through thefts on the part of the
officers.* y

The Birth of Savings Banks.

It has been claimed that the savings bank movement
found its first hterary advocacy in France, the first practical
test in Germany, and the first statutory regulation in Eng-
land. A French writer has asserted that the idea dates
back to Hugues Delestre, who proposed such an institution
in 1610.

The honor of establishing the first bank of this character
is in dispute, being claimed for both England and Germany.
Claims are also made that a genuine savings bank was estab-
lished in Brunswick in 1765; Hamburg (as below) in 1778;
Berne, Switzerland, in 1787; Basel in 1792; Geneva in 1794.

Indeed it is even claimed that "Robinson Crusoe's
father," Daniel Defoe, was the original savings bank man,
for he not only was the first to propose that the bankruptcy
laws be modified, but also drew up a scheme for a mutual
marine insurance society, a friendly aid society, and a savings
bank.'f

In 1689, when about twenty-eight years old, Defoe con-
ceived a scheme similar to our savings banks, except that

*One loss referred to above was in the Ulster County Savings Bank of King-
ston, N. Y., where thefts prior to 1892, on the part of its officers necessitated
scaling down 15 per cent to permit the bank to resume operations. During tdlO
and 1911 the Washington Savings Bank an^ the State Savings Bank of New
York City both closed their doors owing to embezzlements on the part of officials.
The exact amount of the depositors' loss is not yet known. (See chapter on
"Insolvency.") The Chenango Valley Savings Bank of Binghamton also scaled
its deposits fifteen per cent, in 1895. Both banks that scaled deposits are now
flourishing institutions.

t Pamphlet issued by the Williamsburgh Savings Bank of Brooklyn in com-
memoration of the Scottish Savins:? Bank Centennial, June, 1910.

4 THE SAVINGS BANK AND ITS PRACTICAL WORK

it was to be run by tbe Government. It was to be a j^uhlic
benefaction, wbile tbe mutual savings bank is a piivate pliil-
anthropif. His scheme was to have all wage earners of a
community ])ool a certain amount of their earnings and
place the pool at the disposal of the Government, the latter
paying interest, and any member of the pool, upon proper
claim, could draw out funds proportionate to his deposits
whenever he needed them to tide him over an emergency.
This scheme, wliile remote from what we understand by a
savings bank to-day, was, in its fundamentals, similar to the
conception of savings banks at the beginning of the move-
ment in tliis country. The Bank for Savings in New York,
chartered in 1810, found it impossible to obtain its charter
until it showed itself to be a movement to alleviate poverty.

The idea of an institution where the wage worker might
deposit his savings and withdraw them in whole or in part,
as necessity demanded, tdtli interest according to the time
left on deposit (the elemental principle of savings banldng),
was first utihzed in Germany in 1765 in the reorganization
of a ])hilanthropic institution (Besorgunga7istalt) by a num-
ber of benevolently-inclined citizens of Hamburg. This was
made over into a savings bank in 1778, operated especially
for the industrial classes. The movement spread rapidly
throughout Europe. The o])portuneness of such an institu-
tion seemed to appeal strongly to the philanthropic sense of
Christendom, ministers and churches being promdnent in the
work, especially in England.*

Concerning this matter, Mr. Lewins, in his "History of
Banks for Savings in Great Britain and Ireland," remarks,
that from the best investigations he has been able to make,
the institutions in question were something very different
from the savings banks as the English people understand
them, dealing, as they did, in business more like the sale of
deferred annuities. The institution at Hamburgf simply
took the spare cash of domestics and hand-craftsmen and
granted annuities on the members arriving at a certain age.
No xvithdrazcal of money was allowed.^

"Hamilton, "Savings and Savings Institutions," p. 15G.

INapok'on swept this l)ank clean of its cash and pave it a death blow —
Lewins, p. IH

JKeyes Histon,- of Savings Banks, ji. 16.

THE SAVINGS BANK MOVEMENT 5

The Movement in England.

When a gi-eat want is felt in the world, men begin to try-
to satisfy that want. Tliis question of dealing with simple
men and women; of taking care of the humble who had no
estates; of helping the poor who come to want by im-
providence or by misfortune, appears to have received the
studious notice of the economist and philanthropist at the
same time. Wliile Jeremy Bentham and Malthus enforced
the benefits of providence and saving in the interests of the
great body of the people as well as of those who saved,
about the opening of the nineteenth century an English
clergyman and a Scotch minister, each in his own parish, set
in operation a j)lan for liis parishioners to save money, which
embodies in substance the fundamental principles of the
savings bank.*

The English have long maintained that their system of
savings banks dates from the schemes of Rev. Joseph Smith
and jMrs. Priscilla Wakefield.

It must not be forgotten that all the early banks were
essentially charities. Thus the "Wendover Bank" (1798)
was conducted by the Rev. Joseph Smith and two rich
parisliioners, who agreed to receive sums of not less than two-
pence, keep strict account of every deposit and repay the
same at Christmas, or during the winter, with one-third the
amount added, as interest. Deposits could, however, be
drawn before that time on demand. A Christmas dinner at
the expense of the directors was added; but whether for
advertising purposes or as an additional bounty upon thrift
is not known. Deposits were received only on Sunday even-
ings; and it became, therefore, really a part of the church
work. This work was carried on for several years, with
about sixty subscribers, who deposited from five to ten
pounds each year. The bank was duty organized in 1804 and
trustees appointed. It was called the "Charitable Bank."

Priscilla Wakefield's scheme (1799) was a sick and aid
society rather than a bank. The members paid a certain
sum per month according to their age and received a pension
after sixty years of age. In sickness four sliillings a week
was granted. On extraordinary misfortune a certain amount
could be drawn, and at death a sum for the funeral.

'Bolles' Practical Banking, p. 266.

6 THE SAVINGS BANK AND ITS PRACTICAL WORK

Honorary members paid subscriptions M^hich went to
meet deficiencies and current expenses. In 1801 a fund was
added from wbicb loans* ^^'ere made to members, and also a
savings bank. Tlie interest in tbe bank was the same as that
charged for loans — five i)er cent. The expenses of manage-
ment must, therefore, have been borne by the promoters,
since no profit accrued on the deposits. Children could also
deposit a penny a month. The management of tliis bank
rested between the "honorary" and the "benefited" members.

The "Sunday Bank" (1808), at Hereford also savored
of charity. This bank was "open" on Sunday mornings
only, and received from sixpence to two shillings. About
three Iiundred pounds per year was invested from 1808 to
1816. The money was re])aid at New Years, with ten per
cent, additional, through the help of charitable friends.

Jeremy Bentham, mentioned above, in 1797 established
a "Frugality Bank," and is also a candidate for the honor
of being the pioneer savings bank man.

Whicli of these "schemes" is entitled to the distinction of
being the forerunner of the savings bank, as we know it to-
day, is a matter of opinion. The granting of annuities and
sick and dcatli benefits has never been a part of savings bank
work in this country until the JNIassachusetts banks were
authorized in 1908 to conduct a life insurance department.
The ^Massachusetts plan does not contem])late sick benefits,
and confines itself to insurance and annuities. The bounty
of the Rev. Smith, while partaldng of the nature of interest,
lacked one of the principal elements of interest calculations,
!. e', time.

The first "woman's bank" was opened in 1808 at Bath,
designed to receive the deposits of female servants, and was
managed by four men and four women. No servant could
deposit over £.50, and no single deposit could ever exceed
£2.000. Interest was paid at the rate of four per cent.

The First Modern Savings Bank.

The first modern savings bank dates from INIay 10, 1810,
the centciinial nf wliicli m as so admirably celebrated in June,

•'Ihcsc loans were dircctt-d particularly to cnabiiiig them to purchase noces-
Sitii-s at wholrsalc prices or to supply thcrnselves with articles for sale, materials
for work, a pif), or any other thin;; likely to produce a profit. These loans
were repaid in small monthly payments. Scratchley, p. 6. (A plan very much
like the Uaiffeiscn banks [village banks] of Germany and other countries.)

THE SAVINGS BANK MOVEMENT 7

1910, under the auspices of the Edinburgh Savings Bank,
which dates from 1814.

To the Reverend* Henry Duncan, of Dumfrieshire,
Scotland, belongs the honor of conceiving the first practical
scheme for a savings bank, the plan of which is given below,
but which was greatly improved and simplified by the Edin-
burgh Savings Bank.

Dr. Duncan was a scholar, a friend of Thomas Carlyle
and the celebrated Dr. Chalmers. The Dumfries commun-
ity of lowland Scotch people was a good field (good because
of the Scotch thrift), but hard, in which to test his plan;
for to the poverty of the people was added the lack of
wealth}^ men able and willing to help him in a financial way.

He found the condition of his parishioners in many cases
very distressing. A series of bad harvests had raised the
price of food. Labor was scarce ; provisions were scarcer,
and wages were low. He left no plan untried to ameliorate
those conditions. His active and philanthropic mind soon
came to the rescue. He employed many of them in ditching
and draining, for he well knew that idleness soon engendered
a distaste for work. He bought flax to be spun by the
women, and imported Indian corn from Liverpool and sold
it to the people in quantities, graduated according to the size
of the family, so that better conditions were soon the result.

While studying the question of poor laws, he came across
a paper called Tranquillity, which contained among much
that was impracticable and visionary, the germ of an idea for
enabhng the prudent poor to provide for themselves, thus
effecting an abolition of the poor rates. He set to work at
once to develop the idea. His efforts met at first with little
response, and had it not been that he had a passionate belief
in the system itself, and the pertinacity to continue in spite
of all opposition, it would have been difficult to carry the
matter through; but to his lasting honor, he achieved his
object single-handed. t

Henry Duncan^s Bank.

The Rev. Henry Duncan's Bank, at Ruthwell (1810),
Scotland, was the first real savings bank of which we have

*Note the activity of the clergy in the savings bank movement.

t Sketch of Rev. Henry Duncan in the Savings Bank Centenary Memorial.

8 THE SAVINGS BANK AND ITS PRACTICAL WORK

record. Dr. Duncan seems to have grasped the fact that
the sa\ings hank should first be thoroughly organized, and
that while philanthropic in its management, is far from being
a charity in its bcnejits. He was a scholar — a thinker — and
one whose acquaintance was sought by the notable men of
his day. He reasoned that "the only way by which the
higher ranks can give aid to the lower in their temf)oral con-
cerns, without aiding them to their ruin, is by affording
every possible encouragement to industry and virtue, and by
judiciously rewarding extraordinary efforts of economy."

He concluded that even in the poorest family there are
odds and ends of income which are hkely to get frittered
away in thoughtless extravagance. He planned, therefore,
to induce the people to comprehend the value of saving;
to retvard them from the interest from investments and not
from charitable contributions ; to run a bank upon the earn-
ing potcer of money at ^^'ork rather than the generosity
of friends. He probably did more than any other agency
to establish the savings bank idea on a logical and business-
like basis. Having nothing but the usual Scotch community,
sparsely settled and poor, as his field, the wonder is that he
succeeded at all. "Few parishes," we are told, "presented so
many and such unusual obstacles to the progress of a scheme
of this kind. Almost every adult member of the parish be-
longed to some Friendly Society, and many of these found it
difficult to fulfill their agreements."* It was his "hobby,"
and he rode it to success, traveling, writing, and speaking
extensively in the interests of his pet scheme.

Duncan's Bank (banks everywhere are called after the
name of the man. most prominent in the management, and
we here follow the common practice) was over organized
and had more elaborate "machinery" than any hundred-
million-dollar-bank of to-day. It had three classes of mem-
bers: (a) Ordinary — the poor w^ho deposited ; (b) Extraor-
dinary— who paid into an auxiliary fund a certain amount;
(This has its counterpart in the New Hampshire "guarantee
savings bank") ; (c) Honorary — who paid a larger sum into
the auxiliary fund. The bank was managed by a "Court of
Directors," consisting of the Governor, five directors, the
Treasurer, and one or more trustees, chosen from the hon-
orary and extraordinary members. This court acted under

•Lewin's History of Savings Banks in England and Ireland, p. 33.

"^ ^ h

rt^ *^ '^

H H &

S „ «

~ Q H

V-. S

<, a -/^

H -< S O

§i

< ^

> tn X

THE SAVINGS BANK MOVEMENT 9

the supervision of a Standing Committee of fifteen men
chosen from the members. The last named bodies were sub-
ordinate to the "General Meeting," composed of all mem-
bers of the last two classes, and all ordinary members of six
months' standing.

In some resj)ects Duncan's scheme still obtains in Maine
and Vermont at this time. In the former State the corjjora-
tion consists of thirty members, from whom are elected five
trustees; in the latter, fifty members constitute the corpora-
tion, from whom are elected seven trustees.

Objections to Duncan's Plan.

The part of Duncan's plan most open to objection was
the penahzing of those who failed to deposit a small sum
during the year — a feature that is foreign to the savings
bank idea and is not in vogue to-day any^vhere unless it be
in Germany, where, in a municipal bank, depositors obligate
themselves to deposit weekly, and if they fail to do so, the
bank reserves the right to close out the account. The second
objectionable feature was the fact that every depositor's
record was investigated before he was permitted to deposit.
His age, family affairs, moral conduct, etc., were looked into
and if the report was favorable he was allowed to "join the
bank," and the rate of interest to he allowed Mm was decided
upon!

The only modern instance of this idea is found in
the Raiffeisen banks of Germany, wherein character forms
the basis of membership; but this test is largely due to the
fact that members are j^ermitted to borrow, and character
there, as everj^where, forms the groundwork of credit.

Depositors of three years' standing, having £5 to their
credit were paid five per cent., provided they wanted to get
married, while the others received but four per cent., wliich
certainly put a premium upon marriage. After a depositor
became incapacitated for labor, a weekly allowance was
made out of his own samngs at the optiofi of the court of
directors!

The auxiliary fund contributed by the honorary and ex-
traordinary members was used to provide premiums for those
being the most regular in their deposits, especially for those
"who should have exhibited proofs of superior industry or
virtue."

10 THE SAVINGS BANK AND ITS PRACTICAL WORK

The idea of making the savings bank a self sustaining
institution, as embodied in the Kuthwell bank, was widely
adoj)ted, and such banks sprang up in various parts of Eng-
land, Ireland and Scotland; it being estimated that there
were over two hundred such banks when the movement
spread to this country in 1816.

Savings bank historians are agreed that Dr. Duncan did
more than any one man to reduce the plan of a savings bank
to a practical working basis. It is true he did not conceive
the idea, but he worked it out, made it practical, and
adapted it to the existing conditions. He is, therefore, in a
sense, the founder of the present savings bank movement,
since his was the first self-sustaining bank, operated on a
plan adaptable to the whole country. In honor of Dr.
Duncan, who died in 184C, a "savings bank house" was
erected to liis memory at Dumfries. If, as Emerson says,
"Every great institution is the lengthened shadow of a man,"
the savings bank must therefore be the lengthened shadow
of Henry Duncan.

Improving the Plan.

The rules of Dr. Duncan's bank were brought to the
attention of the "Edinburgh Society for the Suppression of
Mendacity," which resulted in the formation of the Edin-
burgh Savings Bank in 1814. The Edinburgh bank was
modeled somewhat after the Ruthwell bank. In fact it
improved u])on Duncan's plan and operated with less "red
taj)e." It also was open but one hour a week, but required
no investigation prior to opening an account, and deposits
and drafts could be made at will, but not less than one
shilling could be deposited. All depositors were paid the
same rate of interest. It is in this bank that we find the
first of the savings bank methods to be universally adopted
and steadily adhered to until this day — i. e., the pass book.
It was at first a du])licate page of the deposit record, but
later took the form of a pass book. The expense of con-
ducting these banks was kept at a minimum, and in many
cases there was no rent, salaries, or other expenses save that
of stationery. This Mas true also, in a measure, of many of
our well-known savings banks of to-day. The trustees, at the
beginniiiLT, .'ictcd as executive officers for an hour or two each
week until the business warranted the employment of a

THE SAVINGS BANK MOVEMENT 11

salaried man, and even then the compensation was extremely-
modest. In fact, the expenses of the savings banks to-day
are kept at a reasonable figure, it being not uncommon to
find a three-million-dollar bank conducted for less than
$10,000 a year. Economy has ever been the watchword,
there being, of course, exceptions to this as to all rules.

The Provident Institution for Savings of Bath (1815)
invested its deposits in pubhc funds — another of the perma-
nent features, but varied its interest according to the price
of the funds on the day when the investment was made for
the depositor.

The Provident Institution of Southampton (1815) re-
quired notice of withdrawal — one of the safeguards now
quite universally provided for by law. The originator of this
bank was also a clergyman, and agents (usually clergymen)
in neighboring parishes were authorized to receive money
on account of the bank, but the institution assumed no re-
sponsibility until the funds were received by it, which seem-
ingly did not tend to attract deposits; but whether on ac-
count of suspicion that they would never get as far as South-
hampton or some other reason, Iiistory does not record. The
Exeter Savings Bank (1816) had sixty branches, of which
the only example to-day in this country is the Massachu-
setts law which permits essentially the same thing. A most
pecuHar feature, and one which many people still seem to
think is operative to-day, is found in a Httle bank in Ireland,
called the "Parochial Bank," at Stillorgan (1815). This
bank was founded by the parish priest, who kept each de-
positor's money by itself, showing the same upon request,
and permitting the depositor to count it over and add to
or subtract from it at will. Where the profits came from is
not known. The preacher evidently followed the parable
in the Good Book and, instead of adding to his ten talents,
"wrapped them in a napkin and buried them."

Early Problems.

Two other features remain to be mentioned in this con-
nection, namely, first, the safety of principal. In the debates
which followed the introduction of the first savings bank biU
in Parliament in 1817 and various times thereafter, the para-
mount question was, how to invest the deposits of these
banks so that absolute security would be afforded as to the

12 THE SAVINGS BANK AND ITS PRACTICAL WORK

principal. jMortgage loans were discarded as risky, and
Government securities, only, were allowed. Safety has been
the imderlying principle of savings banks ever since, and
the\- have only departed therefrom at their peril. The recent
discussion in New York regarding the interest rate and the
siupliis has had to do solely with this question — the safety
of ihc principal.

The second problem came as a result of the success of the
savings bank mo\'emeiit. Abroad, as in this country, the
wealthy classes soon "discovered" these banks. One man
known to be worth £40,000 was charged with having large
deposits in savings banks in the names of liis cliildren. The
sa^ ings bank rate being better than current rates obtainable
in other lines, the banks were deluged with deposits from the
well-to-do, resulting in a measure restricting the amount that
could be deposited in any one year. Some banks voluntarily
limited their facilities to all but mechanics, servants and
others of small means,* while many were open to all. Even
this regulation proved ineffective, for the j^eople soon dis-
covered the trick of opening fictitious trust accounts, one
man having seventeen books in this mamier. The law of
1844 provided that the relationship between the parties be
stated, and that no funds should he /;a?VZ unless the receipt
was signed by all the parties to the account. This was to be
made retroactive, and caused great consternation; but was
j&nally made to apply to future accounts only. The experi-
ences of the banks in this country have been along similar
lines, and when the savings bank rate proves more attractive
than the income in other lines the wealthier classes are to be
found using the banks in preference to making private in-
vestments. For instance, along about 1895 — 1900, when
four per cent, could be obtained in some banks, while the rate
on high-grade bonds was in the neighborhood of three and
one-half per cent., the large depositor was quick to avail
himself of the "limit account." So noticeable has this be-
come that many banks now do as the early English banks
were forced to do — limit the amount that may be deposited
M'ithin a certain period; as, for example, one large bank in
New York restricts the amount to $500 in any period of six

•'ITie Bowery Savings Bank at one time in its early history was so troubled
witii undesirable deposits that they passed a resolution not to take any money
except frnni "widows, orphans, single women and minors" — a rule they could
not lonpr enforce

THE SAVINGS BANK MOVEMENT 13

months, upon the theory that any sum beyond a hundred
dollars a month cannot he ''savings/' and therefore does not
properly belong in the savings bank. In a large measure
they are right. The Englishman found the speculative ac-
counts undesirable; the American has come to the same con-
clusion. A perusal of the savings bank cases in the New
York courts will demonstrate that we, too, have had the trust
account problem ^vith us; and it is not solved yet. The Eng-
lishman's problems have been handed down to us.*

*Much of the historical matter in this chapter appeared in the Banking

Law Journal, January-March, 1911, under the title "Savinars Bank Systems of
the M^orld."

CHAPTER II

THE SAVINGS BANK MOVEMENT IN THE
UNITED STATES

The savings bank movement in England was a success.
The fact that gross and inexcusable frauds* crept in and
cast discredit upon the system and entailed severe losses upon
depositors did not prove that the idea was wrong — it proved
rather that there were weaknesses in the methods by wliich
the idea was carried out. The banks met a popular need,
and served their purposes admirably, and in spite of criticism
(in many cases justified) and "being damned with faint
praise," the movement was bound to spread. It did spread
throughout England, Ireland and Scotland, and finally
crossed the Atlantic. This was but the logical result of the
close relationship existing between England and the United
States.

The conditions that obtained at the close of the French
Revolution in Europe were in a measure to be found in this
country at the close of the Amierican Revolution. The
country was drained of its available resources; the people
were poor, and their riches lay solely in the undeveloped re-
sources of a new country. It would not seem to be a pro-
pitious time for the establishment of a savings bank. The
development of the country readily absorbed what little cap-
ital the people had, and while rainy days were to be expected,
little or no provision could be made for them. The perplex-
ing problem of poverty was unsolved, and although the call
for some remedy was urgent the attempts to better condi-
tions were in the main futile.

Eaely Attempts to Better Conditions.

In the attempts to improve the condition of the people,
not only were "dense gropings in the dark" the order of the
day, but even natural laws were sought to be set aside by
legislative enactment. Of such nature was an act "to regu-

•See Chapter on Frauds in Lewins History.

THE SAVINGS BANK MOVEMENT IN THE U. S. 15

late the wages of mechanics" in New York in 1778, which
fell down of its own weight. An act in 1779 to afford "gen-
eral rehef" to the poor, and another in 1780 to hmit prices
serves to indicate the lengths to which well-minded people
went in order to solve the economic problems of the time.

Sick and aid societies were organized, educational insti-
tutions promoted, and even lotteries were legalized as a
means of improving the condition of the poor. Tammany
Hall, now famous (?) as a poHtical organization, was first
instituted in 1805 as a society to "afford relief to the indigent
and distressed members of the association, their widows and
others'' — an object wMch they seem to have accomphshed.
We must admit, however, that in "relieving" others they
have also relieved the poor tax payer of not a little of his
money and some of his sleep and sweet temper. Keyes, the
historian, gives a list of forty institutions organized in New
York about this time, all seeldng to amehorate the prevail-
ing poverty.

The Movement Spreads to the United States.

Just how and when, and in what boat the savings bank
idea, c^-me across the Atlantic is uncertain. It is conceded
thauPatrick Colquhoun, a local magistrate of London, wrote
ThomSs Eddy of New York, in April, 1816, sending under
separate cover, the plan of a savings bank then being formed
in London. Mr. Colquhoun is also mentioned for honors in
introducing the first comprehensive scheme for a national
savings bank in Parliament in 1806. A similar pamphlet
also fell into the hands of Hon. James Savage of Boston in
1816, and the first public announcement of a savings bank
in this country appeared in the Christian Disciple, a small
religious paper, in December, 1816. Tliis article states that
a meeting has been called to consider plans and to make
appKcation to the Legislature, then in session, for a savings
bank; that similar institutions exist in EiUgland and Scot-
land, and one such is jjroposed for Philadelphia. The plans
of the Boston bank must have been well matured at this time,
for the "Provident Institution for Savings in the Town of
Boston" was chartered on December 13, 1816. "This," says
Keyes, "was the first public act of legislation in the world
which recognized the beneficent character of savings banks

16 THE SAVINGS BANK AND ITS PRACTICAL WORK

and invested them with the sanction and protection of the
law." The population of Boston at this time was about
35,000, and in five years the deposits of the bank were
$600,000, the surplus $6,200 and the interest one per cent,
quarterly. ^

New York.

Xew York did not have such an easy time as Boston.
The Evening Post of December 2, 1816, gives an account of
a meeting held on November 29, 1816, at the City Hotel, to
organize a savings bank, in which Mr. Eddy prominently
figures, and wliich, no doubt, was inspired by the aforesaid
pami3hlet. DeWitt Clinton was one of the directors,
and Thomas Eddy, Jr., was appointed cashier. No other
notice of a meeting appears until April 5, 1819. By this
time the Boston bank had become of considerable size. In a
letter to Mr. Colquhoun, as of April 9, 1817, Mr. Eddy
states that he has proposed such a scheme to several of his
friends, and the matter is before the Legislature. The Leg-
islative committee was not convinced that a savings bank in
this country would do all the good claimed for it ; hedged on
the question of expense, and suggested that a savings depart-
ment (to use a modern term) be opened in the then-existing
banks, and a clerk paid a little extra to run it. The bill did
not get through, largely on account of the fact that it was a
bank that wanted a charter, and banks were not particularly
in favor with the makers of laws at that time. Had it been
a "society" or an "institution" (tliis accounts for the use of
this term in many bank titles to-day) or a "company" it
might have had a chance; but a "bank bill" meant a fight.

At a meeting of pliilanthropically inclined peoj)le in New
York, held December 16, 1817, to discuss measures to allevi-
ate the prevailing poverty, it was proposed, as a remedy, to
establish a savings bank, "such associations being already in
operation in Europe, Boston, Philadelphia and Baltimore."
Soon after this report was printed, at a meeting held at a
private house in William Street, a motion was made by Mr.
John Griscom (who made a like motion November 29, 1816)
that a savings bank be organized, which was soon afterwards
done at a meeting held in Chambers Street, and the Bank for
Savings was formed, but not chartered. Thomas Eddy was
present at the meeting in William Street, and probably also

THE FIRST SAIE LSEU BY THE SAV1>;G BANK OF BALTIMORK
1818. THIS SAFE IS STILL IX POSSESSIOX OF THE BAKK,
AND IS SHOWN WITH JIUCH PRIDE IN CON-
TRAST WITH THEIR MASSIVE, MODERN VAULT

■IlIE FIRST SAFE OWNED BY THE BOWERY SAVINGS BANK IN

WHICH SECURITIES AND VALUABLE PAPERS WERE KEPT

WHEN THE BANK FIRST C03IMj:NCED BUSINESS.

THIS TRUNK IS STILL IN EXISTENCE AND

IS CAREFULLY GUARDED

See p. 96

THE SAVINGS BANK MOVEMENT IN THE U. S. 17

at the one in Chambers Street. DeWitt Chnton, who was
elected governor in 1817 and who was present at the first
meeting, in his first message considered savings banks among
the institutions "liighly deserving the pubHc patronage."

On Friday, March 26, 1819, after many vicissitudes, and
having been able to convince the hostile legislators that such
a bank could do no harm and might do some good, the bill
was passed and the Bank for Savings became a corporation,
as Governor Clinton put it in his next message, "to cherish
meritorious industry, to encourage frugality and retrench-
ment, and to promote the welfare of families, the cause of
morality, and the good order of society."

The Albany Savings Bank soon followed the Bank for
Savings, in 1820.

Philadelphia.

It is remarkable that while savings banks in the United
States had their first practical test in Pennsylvania, in the
form of voluntary associations, they have never had the
growth either in numbers or resources that has attended the
introduction of savings banks in other Eastern States. The
need for such a depository, or, rather, thrift agency in the
Keystone State, is met by over 1,400 building and loan asso-
ciations. Pennsylvania may in fact be said to be the home
of these institutions wliich have been exceedingly po]>ular.
In 1910 there were but eleven savings banks in the State,
with deposits of $176,194,529.61.

On or about the 20th of November, 1816, Mr. Condy
Raguet, having noticed in the recently received English
journals an account of the establishment of savings banks in
that countrj^ and meeting on the same day, when on his way
to his ofiice, Mr. Richard Peters, Jr., at the southeast
corner of Fourth and Chestnut Streets, introduced to him
the subject of the expediency of establishing a similar insti-
tution in Philadelphia. They subsequently, on the same day,
met Mr. Clement C. Biddle and Mr. Thomas Hale, and these
gentlemen, at the office of INIr. Biddle, discussed and agreed
upon the propriety of establishing a savings bank in this
city. It was decided to call a meeting of a few prominent
citizens on the following Monday to consider and at once to
act upon the suggestion of Mr. Raguet.

Accordingly, on Monday, November 25, five of the

18 THE SAVINGS BANK AND ITS PRACTICAL WORK

twelve gentlemen who had now agreed to unite for the pur-
pose of estabiisliing a society after the plan of the savings
banks of Great Britain — namely,' Condy Raguet, Thomas
Hale, John Strawbridge, John C. Stocker, and John
MeCrea — met at the office of the Pennsylvania Life Insur-
ance Company in South Second Street, of which company
Mr. Kaguet was the president, when it was determined by
these gentlemen to establish a society under the direction of
twelve managers, afterwards increased to twenty-five, * for
the purpose of receiving and investing small deposits. At
tliis meeting Mr. Raguet submitted the i)lan of such an asso-
ciation, with some English and American publications ex-
planatory of the objects and principles of savings banks.
This plan, after some discussion, was amended, and at an
adjourned meeting adopted and constituted the "Articles of
Association" under which "The Pliiladelphia Saving Fund
Society" was organized. Andrew Bayard, Esq., at the same
meeting was unanimously elected the president of the society.

The plan of the association having been acted upon, the
necessary officers elected, committees a])pointed to con-
duct the business of the association, by-laws adopted,
and the contingent expenses provided for by the voluntary
contributions of the managers, the business of the association
was commenced and continued up to the 31st of JNIarch,
1819.

On the 25th of February, 1819, an act of the Legislature
incorporating "The Philadelphia Saving Fund Society" was
approved by the Governor of this Commonwealth, and ac-
cordingly the trustees under the articles of the association —
namely, William Jones, the president, and Jonathan Smith,
the cashier of the United States Bank — transferred all the
assets to the incorporated society.

On Monday, December 2, 1816, the office of the society
was first opened for the transaction of business on the west
side of Sixth Street, nearly opposite Minor Street, next door
to Rubicam's well-kno^Mi tavern.*

At this time savings banks were also voluntary associa-
tions in England, none having been incorporated in either
country, and it is but natural that the first bank here should
take on the same character as the banks over there. No
restrictions were placed upon the managers, as to invest-

*Sketch of the origin of Philadelphia Saving Fund Society.

THE SAVINGS BANK MOVEMENT IN THE U. S. 19

No. 1

Curtis Roberts

Dr.

Cr.

1816

Dec. 2

By Cash

5.00

1817

April 21

" do

5.00

1818

Jany 1

Interest
" Balance

J any 1

10.40

1819

Jany 1

Interest

10.88

Mar. 31

By Interest

Apl. 1

To the Pliilada Savings

Fund Society

THE FIRST SAVINGS BANK ACCOUNT OPENED IN THE UNITED STATES— ACCOUNT NO. 1 IN

THE PHILADELPHIA SAVINGS FUND SOCIETY BY COURTESY OF THE SOCIETY.

(MR. ROBERTS LIVED AT 308 CHESTNUT STREET AND GAVE AS
''reference" MR. CONDY RAGUET.)

ments, and to this day the laws of Pennsylvania are not strict
or explicit in this regard, as strictness and explicitness is
understood in New York.

In this bank each corporator contributed ten dollars
toward a fund of $250, with which to defray expenses, a sum
hardly large enough to carry one of our newer savings banks
a month. The managers took turns here as in many other
early savings banks in performing the clerical labor, since
the fund was not large enough to employ any clerks. At a
meeting of the savings bank men of New York Chapter,
A. I. B., February 14, 1911, Mr. Andrew Mills, president
of the Dry Dock Savings Bank, told of finding an old charge
on profit and loss account of ten dollars for a brass medal
wliich one of the trustees had taken in for a ten-dollar gold
piece.

If some of these early philanthropists could come back
and see up-to-date philanthropists of the same brand, but
of later vintage, assuming an expense of $5,000 the first
year, and erecting a $100,000 building for their bank in the
second year, they would sit up and take note that we do
things differently now. Perhaps we do not so well.

20 THE SAVINGS BANK AND ITS PRACTICAL WORK

Baltimore.

Incited, no doubt, by the examples of Philadelphia, New
York and Boston, Baltimore philanthropists met on January
1, 1818, to organize the "Savings Bank of Baltimore," for
the avowed purpose of "receiving deposits of such small sums
of money as are the profits of industry and economy, and in-
vesting the same in public stocks, or such other safe securi-
ties as may from time to time be deemed expedient." The
first deposit was received JNIarch 16, 1818, and for some time
the ofiice was open but a few hours on one day in the week
(as was the case Avith many if not all the early banks), and
except the services of a secretary at a small salary, the work
of receiving and pajang money was performed by the
"monthly attending committee." Provision is still made for
this attending committee in many banks, but the duties are
now perfunctory only. The Baltimore bank was so suc-
cessful that it was chartered in December, 1818, being the
second of its kind to be chartered in America and the tJiird
to open its doors.

For chronological purposes the following from Paine's
Banking Laws, page 56, will summarize the introduction of
savings banks in this country:

(1) Philadelphia Saving Fund Society, organized in
1816 as a voluntary association. Began to receive deposits
December 2, 1816. Chartered February 25, 1819.

(2) The Provident Institution for Savings in tlie Town
of Boston, incorporated December 13, 1816.

(3) The Savings Bank of Baltimore, incorporated De-
cember, 1818. First deposit March 16, 1818.

(4) Bank for Savings, New York (first conceived in
1816), chartered March 26, 1819. First deposit July 3,
1819.

New York was, therefore, the first to institute the move-
ment; Philadelphia the first to put it into practice; Boston
the first to legalize savings banks.

CHAPTER in

THE NATURE AND FUNCTIONS OF SAVINGS

BANKS

In order to demonstrate how superficial is the knowledge
of the average man in matters which should be perfectly
famihar to him, and also to show the difficulty of framing a
good definition of some of the ordinary things of life, a
lawyer put the question. What is a bank? to a body of about
four hundred bank men. "A place to deposit money," was
the quick response. "But so is an old shoe or a tin box,"
said the speaker, "and neither of these are banks." And so,
after skirmishing for a time, a true definition of a bank of
discount was evolved.

Doubtless the same condition would be found to exist
if the test were put to a body of savings bank men ; therefore,
before proceeding to treat the savings bank in its broader
aspects, as a corporation receiving money on deposit and for
investment, keeping books, making contracts, and figuring
interest, let us look into the institution itself and get a com-
prehensive idea of xicliat it does before attempting to show
how it does it. We can have no better starting point than our
lawj^er friend's simple question, What is a savings bank?

What Is a Savings Bank?

The legal mind is generally careful about its definitions,
and it will be time well spent to inquire what the courts
have said about sa\angs banks; and most of all, how they
define them. In the case of People vs. Binghamton Trust
Company,* the court defined a savings bank as "a char-
itable institution, the sole corporate purpose of which is
to securely protect money deposited up to a certain fixed
amount by individuals, and, by investing it in such limited
and prudent ways as the legislature has prescribed, to secure
safe and moderate return by way of interest upon the moneys
held." In the case of Hun vs. Cary, a leading New York

*New York Savings Bank Cases, p. 15.

22 THE SAVINGS BANK AND ITS PRACTICAL WORK

case, the court said: "■Sa\iiigs banks are not organized as
business enterprises. They have no stockholders, and are not
to engage in speculation, or money-making in a business
sense. They are simply to take the deposits, usually small,
wliich are offered, aggregate them and keep and invest them
safely, paj-ing such interest to the depositors as is thus made,
after deducting expenses and paying the principal on de-
mand. It is not legitimate for the trustees of such a bank to
seek depositors at the expense of present depositors. It is
their business to take deposits when offered."*

The Supreme Court of the United States has said: "It
(the savings bank) is not a commercial partnership,. nor is it
an artificial being, the members of wliich have a beneficial
interest in it. Nor is it strictly eleemosynary. Its purpose
is rather to furnish a safe depository for the money of those
members ■ f the community disposed to trust their property
to its keeping. * * * Jts purpose is a public advantage,
without any interest in its nfiembers."

Is THE Savings Bank a Charity or a Philanthropy?

Continuing the same thought, Paine's Banking Laws
(N. Y.) says: "It may not be considered out of place to
state that under no proper construction of our statutes are
the savings banks of this State (New York) charitable in-
stitutions; and the frequent designation of them as such has
become odious. As constituted and regulated by law, they
are, strictly s^eaikmg,. benevolent institutions, and while the
two terms are, to a certain extent, synonymous, they have a
widely different significance when applied to our savings
banks.

"He who has more than his necessities compel him to
expend for the support of himself or family and has a
remainder to loan or save, though trifling in amount, is in no
sense an object for charity.

"A natural person who is liberal in his benefactions to
the poor, thus relieving them in distress, and an artificial
entity wliich relieves the needy by the giving of alms, are
properly termed charitable, while he who has a disposition'
to do good, who possesses a love for mankind and a desire
to promote their prosperity and happiness, and a corporation

*New York Savings Bank Cases, p. 2.

NATURE AND FUNCTIONS OF SAVINGS BANKS 23

based upon such disposition and desire, are accurately termed
benevolent.

"Wliile the motives wliich primarily brought about the
establisliment of 'banks for savings of the poor' or to receive
'surplus earnings of domestic servants,' were in the begin-
ning wholly philanthropic, yet the whole character of
the institutions which followed these so-called banks has
changed. The use of an expression which savors, however
remotely, of the giving of alms must needs be peculiarly
offensive to the thousands of our citizens whose self-denial
is represented by the deposits of over a billion (and a half)
dollars held in the savings banks of tliis State."

The courts usually look upon savings banks in the light
of investment institutions rather than banks, as we ordinarily
understand the latter term. By an investment institution is
meant "an organization which combines the savings of its
members for investment on their account."

Thus, in the case of People vs. Ulster County Savings
Institution,* the court said: .i ..

''Savings hanks are quite unlike ordinary banks. Com-;^"
monly banks are business corporations, have stock and stock-
holders and paid officers, and conduct their affairs with a
view to profit. Their relation to their depositors is in no
sense one of trust. Thej^ receive deposits to be paid upon
the check or draft of the depositors without interest or addi-
tion. Their profits, if saw, are distributed among their stock-
holders, and the losses fall upon them, and their property is
subject to sequestration at the suit of any creditor.

"A savings bank is an institution of quite a different
character. Its relation to its depositors is in a large sense
one of trust and confidence. It has no stock and stockhold-
ers. Its depositors are not entitled to draw checks against it.
It does not receive deposits to be paid upon demand simply,
but for investment in securities taken for the benefit of the
depositors. Its assets are held for distribution among de-
positors ratably^ and its losses fall in like manner upon its
depositors." \

The chief business of a savings bank is to receive de-
posits, invest them in certain classes of securities specified
in the statute, and pay to tihe depositors the amount due

•New York Savings Bank Cases, p. 9.

tFor further treatment of this subject see "Insolvency."

24 THE SAVINGS BANK AND ITS PRACTICAL WORK

them either in whole or in part, as they may from time to
time demand. It has no authority to do a general banking
business, not even to engage in the business of discounting
bank paper.* The principal features of a savings bank are
that they offer safe security with small interest with no
profit to the managers j, as contradistinguished from a larger
rate of interest and less security, f

Whether a bank is a savings bank or not depends not so
much upon its name, as upon its functions. An institution
that does a business similar to a savings bank is not by that
token a savings bank, nor does the acceptance of deposits in
the same manner as a savings bank indicate that it holds
itself out as a savings bank. To be a savings bank it must
first be regularly incorporated and thereafter do a regular
savings hank business.

In proceedings brought by the Attorney-General of
New York to recover the legal penalties for violating the
banldng laws of New York, and seeking to show that a trust
company, hy accepting savings bank deposits, thereby held
itself out as a savings bank and solicited business as such, it
was ruled that doing business similar to that of a savings
bank and in a similar manner did not of itself constitute a
violation of the statute forbidding such practices in defense
of savings banks. The facts were as follows: The Bing-
hamton Trust Company advertised for business, and evi-
dently got it. They did not pretend to be anything but a
trust company, and held out no false inducements, but rather
emphasized the fact that they were a trust company, and
thereby a better institution in which to deposit money than
a savings bank. They issued passbooks in the "interest de-
partment" very much like the regular savings bank pass
book. These books contained rules and regulations stating
the hours of business, the fact that the book must be pre-
sented at time of deposit or withdrawal, that the company
reserved the right to demand notice of payment, the rates
of interest, the right to refuse and close accounts, the rules
relating to deposits of minors and procedure in cases of lost
books, and that the acceptance of the book evidenced com-
pliance with the by-laws and rules, all of which were un-
doubtedly borrowed from the savings banks. Circulars and

*Bradee vs. Warren Five Cent Savings Bank, 127 Mass. 107.
tBarret vs. Bloomfield Sav. Inst. 64 N. J. Eq. 495.

NATURE AND FUNCTIONS OF SAVINGS BANKS 25

other advertisements were put out inviting accounts, and
laying special stress on the fact that trust companies had
capital stock, while savings banks had none ; that this was an
extra guarantee, etc.

The court, in deciding in favor of the trust company, said :
"I do not think that savings banks, however closely in the
public interest they should be guarded, should be accorded
monopoly of a set of rules. The prohibition is that an in-
stitution shall not solicit or receive deposits as a savings
bank, and not as a savings hank solicits or receives deposits."
(Italics our own.)

In keeping with the foregoing, let us evolve the following
definition of a savings bank: I" A savings bank is a mutual
institution conducted without profit to the managers, for the
purpose of receiving on deposit and for safe keeping such
sums as may be offered, limited by the law of the State, and
investing the same for account of the depositors jointly and
severally in such manner as shall be prescribed by law, and
pajdng to the depositors as interest all the earnings of the
institution except the amount paid for expenses and such
part as may be set aside and held in reserve as a guaranty
fund for the benefit and protection of all.")

Savings Banks in Name and in Fact.

All but 21 out of the 638 savings banks that conform to
the foregoing definition are located in the Eastern and New
England States. Their general character and distribution
Avill be found in the chapter on "Savings Banks in the
United States." For present purposes, we are interested
more particularly in ascertaining what is and what is not a
savings bank; for to conclude that every bank that uses the
word "savings" in its title is an investment institution,
whether stock or mutual, would be at variance with the facts.

It would not be true to say that all the savings banks of
the country are in this limited territory, for upwards of 1,200
stock savings banks may be found elsewhere, many of which
are most excellent institutions, ably managed and sound ; the
only difference being in the fact that they have capital stock
and share their earnings with the stockholders, and are sav-
ings banks both in name and fact. I am not prepared to
admit that the mutual savings bank is the best type, even
though some of our best banks are mutual institutions.

26 THE SAVINGS BANK AND ITS PRACTICAL WORK

Surely a well managed stock bank, with the capital stock as
an extra guarantee fund, is superior to a mutual bank with
little or no surplus fund, and equal, at least, to the mutual
concern with a large surplus. In other words, a good stock
bank is better than a poor mutual.

It is also true that hundreds of banks having the word
"savings" in their title may be found in other parts of the
country, wliich are commercial banks in every sense of the
word. Thus in Pennsylvania there are a large number of
such institutions; and in order that the public may not be
misled, the bank department of that State will no longer
charter such institutions. The bank that accepts checking
accounts, discounts commercial paper, and does a strictly
commercial business, even though it has a savings depart-
ment, is not a savings bank, for the savings department is but
an incidental feature.

We cannot correctly judge a bank unless we analyze its
business — its name may be a misnomer. In the Binghamton
Trust Company case, already mentioned, we have a trust
company doing, in one of its departments, a strictly savings
bank business, but the court very logically held that doing
business as a savings bank does business is somewhat differ-
ent from doing business as a savings bank. Its functions by
law and charter were those of a trust company, and receiving
money in the same manner as a savings bank would receive
money, does not by that token make it a savings bank or
guilt}^ of holding itself out as such, and thereby amenable to
the law.

We can distinguish a savings bank very clearly by this
"hall mark": — If it receives money not subject to check, but
payable on presentation of pass book and due notice, which
pass book by its terms constitutes the contract of deposit,
and invests the funds in mortgage loans and certain legalized
bonds, collateral and personal loans, it is a savings bank;
if, on the other hand, it discounts commercial paper, handles
checking accounts, loans on notes of hand — in short, does a
"commercial" business, it is not a savings bank.

The solution lies not so much in where the money comes
from, or in what amounts, but what the bank does with it
after it has gone through the receiving teller's window.

Throughout the West and South the stock savings bank
predominates ; and no doubt this form of savings bank is best
adapted to these sections, since it offers the "commercial

NATURE AND FUNCTIONS OF SAVINGS BANKS 27

motive" that prompts men to undertake such ventures and
provides savings facilities where otherwise there would be
none.

In fact, some States do not provide for mutual savings
banks at all (Kansas has no savings bank laws of any kind) ,
and in others, as Illinois, for instance, banks may do a sav-
ings, a commercial and a trust company business under one
charter, and in the multitude of activities the separate identity
of each is lost or merged in the others. This is somewhat in
keeping with the spirit of the times; for as we expect the
great stores to supply all our wants from under one roof, so,
in finance, one institution is able to do for a man anytliing
he wants done. In Iowa there are 663 "savings banks,"
banks for saving, for the most part, in name only.

In the entire South there is but a handful of strictly sav-
ings banks, either stock or mutual.

As has already been suggested, the fundamental differ-
ence between the stock and the mutual savings bank is this:
The former divides its earnings between depositors and stock-
holders ; the latter has no stockholders and holds all its prop-
erty for the benefit of the depositors. Thus in Colorado,
savings banks must have at least $25,000 in capital stock, and
when they comply with the law in all other respects, they are
entitled to receive deposits; when a deposit is made, the de-
positor does not thereby become entitled to all the accretions
in the business (here note the distinction bet\^'een the stock
and mutual type) ; the assets, the property, the gain and the
profits are not his; his deposit is made subject to the right
to receive such interest as the directors may agree to pay.
Power to determine what they will pay is left to the directors,
and the balance may be divided among the stockholders as
the resulting profit in the shape of dividends.*

•Colorado Savings Bank vs. Evans, 13 Colo. App. 334.

CHAPTER IV

THE THRIFT HABIT

The philanthropy that does not instill in the minds of its
beneficiaries a wholesome inspiration toward better tilings is
no pliilanthropy at all, but rather a charity; and charity
unguided or misguided is apt to do as much harm as good.
It is conceded that to alleviate the present necessity is a
commendable work; and for the many unfortunates upon
whom fate has laid a heavy hand, that is about all that can
be done. But to "help a man help himself" is a much bet-
ter work, and more lasting in its results.

Charity can do nothing if she merely, with skirts held
high, walk once a week through the street with note-book in
hand, and smoked glasses on her nose. Though she open
her ])urse and scatter alms from a full basket, she will learn
and teach notliing helpful unless she stop long enough to find
out what is the life of the people; what are their daily hopes
and fears, their genuine short-comings, and their real human
qualities. Charit}^ will be made to give all that she offers,
and will receive nothing in return but a "tangled web of
deceit," if she content herself with a superficial survej^ of the
street. But the fatal mistake made by the charity that
"means well" rather than "does well" is not that it learns to
distrust human nature, but by treating the poor as irre-
sponsible members of society, it teaches them to be improvi-
dent, and to look for money as a reward of their thoughtless-
ness. Such indiscriminate relief prevents the developmetit
of benefit insurance and savings agencies, and so holds the
poor man down instead of lifting him up.*

But how can the poor be thrifty? There is at any rate
one sort of thrift which is in the power of the very poorest,
and which is to refrain from waste. If I wanted to train
up a child to be thrifty, I should teach him to abhor waste.
I do not mean the waste of money. That cures itself, be-
cause very soon there is no money to waste. But I mean
waste of material, waste of something which is useful, which
may not represent any money value to the waster.

'Development of Thrift, p. 10.

THE THRIFT HABIT 29

All great empires have been thriftj^ Take the Roman
Empire, which in some respects, as a central empire, was
the greatest in history, which lay like an iron clamp on the
face of the world. That was founded upon thrift. When it
ceased to be thrifty it degenerated and came to an end. Take
the case of Prussia, which began with a little narrow spit
of sand in the north of Europe, "all sting," as someone has
said, referring to its shape and the fact that all its inhabitants
were armed men. It began Math a narrow spit of sand. It
was nurtured by the thrift of Frederick the Great's father,
who prepared a vast treasure and a vast army by economy
^^'hich we would call sordid ; but it was the weapon by wliich
the greatness of Prussia was founded, from which the pres-
ent German Empire has arisen.

Take the case of France. In my humble belief, France
is in reality the most frugal of all nations. I am not sure
that the French always put their money in the savings banks,
and they therefore do not figure so well in the proportion of
depositors as some other nations may do; but after the dis-
astrous war of 1870, when France was crushed for a time
by a foreign enemy, and by a money imjDosition which it
seemed almost impossible that any nation could pay, what
happened? The stockings of the French peasantry, in wliich
they had kept their savings of years, \^'ere emptied into the
chest of the State, and that huge indemnity and that war
expense was paid off in a time incredibly short. The other
two nations that I have spoken of were made by their thrift ;
and France w^as saved by her thrift.

I do think it is serious for those who have the governance
of our affairs to remember that great nations and great em-
pires only live so long as they are thrifty; that the moment
they begin to waste or disperse their resources the day of
their end is at hand. That is a fact abundantly proved in
history, proved up to the hilt, I think, by two of the examples
I have given you, and though I do not pretend to preach
thrift from an exalted standpoint, I beg those who are here
present and those outside these walls whom my words may
reach to remember that thrift is the surest and strongest
foundation of an empire — so sure, so strong, and so neces-
sary that no great empire can long exist that disregards it.*

*Lord Roseberj' at the annual meeting of the Edinburgh Savings Bank, De-
cember 28, 1908.

30 THE SAVINGS BANK AND ITS PRACTICAL WORK

What Is Thrift?

But before proceeding further, let us get a clear idea of
what is meant by tlirift and the thrift habit. Thrift is more
than prudence, which is merely good judgment and foresight
in the practical affairs of life. It is more than economy ^
which is a disposition to save — a wise and careful administra-
tion of the means at one's disposal; — the practical adjust-
ment, organization, or administration of resources. "Econ-
omy," says Ruskin, "no more means saving money than it
means spending money; it means adnmiistration of a house;
its stewardship ; spending or saving, whether money or time,
or anything else, to the best possible advantage."*

Thrift is more than frugality , which is prudent economy
in the care of money or goods. "Money," sa^'S Gladden, in
Apphed Christianity, "is almost always a curse to those who
have not won it by their own industry and frugality. Fru-
gality is the withholding of expenditure; or sparing of sup-
plies or provisions to a noticeable or even painful degree.
Parsimony is excessive and unreasonable saving for the sake
of saving. Miserliness denies one's self and others the com-
forts and even necessities of life for the mere sake of hoard-
ing. Prudence and providence look far ahead and sacrifice
the present for the future, saving as much as may be neces-
sary for that end. Industry earns, economy manages, pru-
dence plans, frugality saves; hut thrift earns, plans, man-
ages, and saves. It was said of Franklin that he was
industrious, thrifty, and saving; full of hard, common
sense and worldly wisdom. He suffered no chance to pass
unused and rapidly rose to the place of chief printer in
the province. The thrift habit teaches a man to earn
largely, that he may save wisely, so as to be able to spend
advantageously in the time of need or of opportunity, when
the need will be greater or the opportunity better than that
of the present.

Whatever thrift is, it is not avarice. There is a broad dis-
tinction between thrift and avarice. Avarice is not generous ;
and after all, it is the thrifty people who are generous. All
true generosity can only proceed from thrift, because it is
no generosity to give money which does not belong to you,
as is the case with the unthrifty. And I venture to say that

•A Joy Forever, lecture 1, p. 7.

THE THRIFT HABIT 31

all the great philanthropists, all the great financial benefac-
tors of their species of whom we have any record, the most
generous of all must have been thrifty men.*

Thrift a Habit.

Thrift is a habit; and like all habits, cannot be put on
and off like an old shoe, but becomes fixed. It is acquired
by training and environment, and is an essential element in
good character. When we talk of thrift producing charac-
ter, Me would probably come nearer the truth in saying
thrift is character.

In the granting of credit by banks and business houses
a man of industrious habits is considered a much better risk
than one of thriftless, shiftless disposition. The cooperative
banks of Europe, which have had such pronounced success
in the "capitalization of honesty," make thrift the basis of
their loans, and in so doing have been singularly free from
losses.

Whether or not it is true that "every man is as lazy as he
dares to be" is a matter for debate. We all know men and
women who are rarely idle and can never be charged Math
wasting time ; while others seem to regard time as an element
of no consequence in fife. It is, of course, not enough to be
doing something — that "something" must be a useful work
and M^orthy. The familiar storj^ of the hod carrier who was
half way up the ladder when the whistle blew for twelve
o'clock and carried his load dotvn instead of up, is typi-
cal of many M^orkmen, who are particular not to begin work
a moment before the alloted time, and are equally as par-
ticular not to work a moment after. Such an one could
hardly be termed a thrifty workman.

A study of men and of nations m^II demonstrate the fact
that thrift is a matter of training. The thrift of the French
people, already noted, is proverbial. Tliey are a nation of
savers. Through long years of training along these lines
they have acquired habits of thrift and industry that have
placed them in the front rank of capitalistic nations. It is
said that the M^aste from an Englishman's or an American's
kitchen would support a Frenchman. But M^hether this be
true or not, the Frenchman is a saver and an investor, and

? ■

*Lord Rcsebery on Thrift. Centenary of Savings Banivs, p. 299.

32 THE SAVINGS BANK AND ITS PRACTICAL WORK

the amount of capital available in France for outside in-
vestment is enormous. Likewise the German. He cannot
help being thrifty. His mother was thrifty before him and
her mother before her. Any savings bank man who has
come into contact with this class of depositors will have
noted the fact that no matter how small the income, there
is always a surplus for the savings bank. And those banks
which cater particularly to the German element, or which
have a large clientele of such people have always and every-
where been exceedingly well patronized. The reason is
simple: The Germans have the thrift habit.

The Spendthrift Habit.

As admirable as is the thrift habit, the spendthrift habit
is quite the opposite. And yet how prevalent, how natural is
this habit ! We see it on every hand. Children early acquire
it; the boj^ or girl just beginning to earn wages soon suc-
cumbs to it; legacies, life insurance and the "flowing bowl,"
urge it along, and "good spenders" are ever with us, like the
proverbial poor. The temptations of a large city in this
line are many and varied. The shop window, the "bargain
sale" and the theatre beset the pathway of us all, and only
he who can say "No" and stick to it can hope to escape the
snare.

We have no quarrel with the proposition that every man
has the inherent right to live comfortably; to dress decently;
to have wholesome and beneficial recreation, and to see some-
thing of the world; but when he lives too comfortably and
dresses too decently, and sees too much of the world, society,
which must sup])ort him when he can no longer support him-
self, has a right to say something to him, and say that some-
thing in no uncertain tones. When those who conserve and
create must care for those who do not create but waste, it is
time for both to get together and see where the trouble lies.

Easy Money.

Every savings bank man can tell sad tales of money sud-
denly acf|uired going as quickly as it came, leaving only the
short memory of a good time behind. The widow who "in-
vested" her two thousand of life insurance money at Sheeps-
head TJav when the races were on. onlv to come back "broke."

THE THRIFT HABIT 33

in three short weeks, as a charge upon her old father's
bounty; another who invested her portion in jewehy, only to
find a place on the cigar maker's bench; the youth who quit
work as soon as his legacy arrived and settled down to a
year of debauchery, are but types of thousands to M^hom
money has been a curse through the spendthrift habit, urged
along by the fact that it was easy money, and therefore of
httle value. Wise is the man who, in leaving a will, or buy-
ing insurance, so arranges that the beneficiary shall have the
incoine but not the principal; for to the average man or
woman a large sum of money suddenly acquired is as an
intoxicating beverage, and they drink to their sorrow and
ultimate regret.

The Rainy Day.

The book of Genesis furnishes us with a graphic account
of the world's first great rainy day. In the story of Noah
and the flood, we have an example of a thrifty man, in
obedience to Divine command, laying by him in store for the
rainy daj^ wliich left liim, his familj^ and his "menagerie"
safeh" on top of Mount Ararat, none the worse for their
long boat ride. But had he operated liis shipbuilding plant
on the theory that business was good and would continue so
indefinitely, and the talk of a "big rain" another error on
the part of the weather man, this book would probably not
have been WTitten.

The story of Joseph and the corn trust, in the same book,
is more than a bit of Hebrew history ; it is the story of a far-
sighted man looking out for the days when it wouldn't rain,
and Egypt and Palestine rose up and called him blessed for
cornering the corn crop.

Success in private life, in business life, in national life,
resolves itself into due preparation for the day of adversity.
Sickness and old age are bound to come and seriously alter
a man's ability and capacity to work. Happy and lucky is
he who has a reserve fund of some sort to fall back upon in
his emergencies. All well managed business concerns have a
surplus account — a bumper against losses and bad times.

The strength of both men and nations, as has been so
admirably said by Lord Rosebery, depends upon their stored
energy — their reserve power. The nation that raises barely
enough food to meet the present need will sooner or later face

34. THE SAVINGS BANK AND ITS PRACTICAL WORK

stai'vation. Witness India and other countries where famine
is frequent. They cannot or will not accumulate a food sup-
ply, and the world must step in when crops fail and with
charity seek to alleviate the suffering thrift would make un-
necessary. Even the dog, by animal instinct, realizes that he
will not only have his day, but that on his day it may rain,
and in preparation therefor buries the bone his present appe-
tite does not crave!

Saving by Incentive.

The lesson that each man must provide for himself is a
hard one for the pliilanthropist to teach and for the poor man
to learn. Nevertheless, even in a primitive state each man
must realize that his survival depends on his own energy and
thrift. So in a civilized society each man must learn that
he has to make liis own way, though his civilized companions
will and should be kinder to him than were the barbarous
ones to his progenitors.

The great incentive to him in his work will be a clear
knowledge of the benefits that are to come to him from his
labors, for "the sweat of industry would dry and die but for
the end it works to." So soon as a little property is ac-
quired, that in itself will act as an incentive to make further
effort seem worth wliile, and it will then constantly be found
easier to lay aside for the demands of that "unknown to-
morrow." The practicing of thrift in one direction will be
found to encourage the practicing of it in others, and saving
will he no hardship when it is learned that present denial is
going to make possible some future gratification*

Naturally the first step in the direction of capitalism is
to save; the second to save for soinething ; the third and end
of all saving is the power, privileges and opportunities wliich
attend the possession of wealth. The life stories of success-
ful men of affairs attest the fact that the foundation of great
fortunes lies in the thrift habit. One of our leading finan-
ciers states that he was early taught to pick up every pin he
saw, and even yet the habit follows him. With the accumula-
tion of a small sum of ready cash came opportunities to use
it advantageously. The judicious employment of the small
capital resulted iii a larger fund and larger opportunities;

•Pcvelopmrril of I'hrift, p. 1?.

THE THRIFT HABIT 35

and as the capital expanded, new avenues opened, borrowing
became possible and profitable, great enterprises could be
financed and large contracts undertaken, until in due time a
fortune was acquired.

A good foundation must, however, be supplemented by
a proper and an impelling motive. Many a man has found
it impossible to save until he bought a house, with a mort-
gage to liquidate, or took out a policy of life insurance re-
quiring prompt and steady payments ; and having a worthy
incentive has surprised even himself at his saving ability.
The author once knew a young man, earning $12 per week,
who, intending to get married, saved $5 a week for three
years, including Christmas week. The hard-working book-
seller, w^hose hobby is Indian relics, has the right idea. As
opportunity affords, he sets out with his dirt hook, and he
will dig for hours, in happy anticipation of turning up an
arrow head, or perchance a greater find in Mr. Shinne-
cock's thinking cap. Dig — but dig for something; save —
but save for a purpose. He who has learned to save simply
that he may have, has learned a good lesson; but when he
saves that he might in time invest wisely and worthily, then
he has learned a better one.

Saving by Education.

All education begins in the home. The child is a good
imitator. If it grows up amid waste and thriftlessness, it
naturally becomes a thriftless and wasteful man or woman.
Like father, like son. If the historj^ of the human derelicts
that drift around our cities, like the flotsam and jetsam of
the ocean, were unfolded, it would be found that their pres-
ent condition is largely due to poor training. Give a grow-
ing child everything it asks for, and you make a spendthrift ;
send a boy to college with unlimited spending money, and
you make a "sport." Make him earn his waj^ and you make
him a man!

Education of every sort comes first by compulsion. The
average child does not relish the confinement and restrictions
of the school room. But in a normal child, as the brain
begins to awaken, a thirst for knowledge comes, and he
becomes fired with an ambition to know, and you need no
longer urge him to study — you need rather to hold him in
check. The thrift habit must be learned — it does not, as a

36 THE SAVINGS BANK AND ITS PRACTICAL WORK

rule, come by inheritance. The tendency to gratify one's
self is inherent in humanity. Witness the Indian; yea,
witness the wliite man — on pay day he gets drunk! The
Indian schools recognize this tendency in the red man, and
as Captain Pratt, of the Carlisle Indian School, says: "We
require our students to earn and to save'' — thrift in its essen-
tial elements! During the summer they place large num-
bers of students at work all over the country, in hotels and
on country estates, etc. They impress upon the employer the
importance of helping them save their wages; to buy what
they need, but to buy uith wisdom. Students going out sign
a contract — and part of that contract is to save.

Herein lies the value of the school savings bank, treated
at length in a subsequent chapter. Not that it will or can
bring much money into the coffers of the bank, but for its
educational value. "Train up a child in the way he should
go and when he is old he will not depart therefrom," is as
true in finance as in morals. And has it not been Vv'ell claimed
for the savings bank that it is an educational as well as phil-
anthropic institution? And as an educator in thrift it should
cooperate with the home in teaching the value of money. The
child must learn to know relative values; that money in the
bank is just as much real wealth as money in the purse, and
of far greater value than candy in the hand. The trouble
lies in getting the child to believe in reserve energy; to be-
come persuaded that he must neither sap his strength nor
"tap his bank," nor spend liis money for "that wliich is not
meat." Can we not all remember how, as youngsters, we
"itched" to break our penny bank and spend the money in
a "riot of extravagance"- — to the extent of thirty cents? And
how we envied the boy who could walk up to the candy
counter and say, like a man, "Gimme a nickel's worth o'
chocolates!" while our penny must buy the biggest stick of
the longest-lasting-concoction the confectioner offered for
sale. Years ago a youth came East for his health. He
bought his candy by the nickel's worth and had all he
wanted. A short time ago he came again — for pleasure,
and he paid ten dollars to see a prize fight! That nickers
worth of candy and the ten dollars' worth of prize fight were
closer related than second cousins — perhaps they were twins !

A dime foolishly spent at twelve may grow into a dollar
at twenty, and ten at thirty; while a cent saved at five may

THE THRIFT HABIT 37

mean a thousand at twenty-five. It is not the amount but
the education that comes from the proper use thereof.

The best argument for teaching cliildren to save money
lies in the mere fact that the cliild learns the lesson that
"twice two is four" in money matters as well as in arithme-
tic; and that four cents will buy twice as much as two, and
sometimes more.

Saving by Sacrifice.

The thi-ifty man soon learns that he can only satisfy the
greater and nobler desires of life by denying liimself the
lesser. He who would do a good day's work to-morrow must
not spend to-night in dissipation! The boy who wants a gun,
a bicycle, or a boat, will cut down or cut out the candy habit,
knowing well that the coveted article will give him lasting
pleasure, while the other is but temporary.

As a shrewd business man, trained in the efficient school
of the Standard Oil Company, puts it: "I own an automo-
bile. I admit it is expensive, both to own and to operate.
Many men of my means could not afford such a car.

"I neither drink, gamble, nor spend money foolishly. My
tastes are modest. I ride in my car at the expense of the
cigar man, the saloon keeper, the theatre and the 'swell'
hotel." And he is right. In denying liimself passing and
perhaps harmful pleasures he makes possible the enjoyment
of lasting and helpful ones.

Saving by Compulsion.

There are not many schemes by which saving is com-
pulsory. There may be cited the insurance policy which
becomes lapsed if payments are not promptly met, — and
this has been a most excellent plan in many cases, and in the
endowment form has produced excellent results from a sav-
ing, if not from an investment, standpoint. There is also
the building and loan association, which carries a small fine
if payments are not promptly met; also "friendly aid so-
cieties," which penalize tardiness in payment. But the sav-
ings bank has no such plan to offer.

The only scheme, operated in connection with a savings
bank that has ever come to the author's notice, is a plan in
operation in Germany. A savings bank, in order to induce

46320B

38 THE SAVINGS BANK AND ITS PRACTICAL WORK

systematic saving, has a system of opening accounts with the
stipulation that an equal amount shall be deposited every
week, to be paid to collectors, who call and present coupons
for the stated amount. If not paid to the collector or to the
bank within eight days, the bank reserves the right to close
the account.

But the ordinary savings bank operates no such scheme.
It gives no chromos, no trading stamps, no inducement but
the porver of the accumulated littles and a modest interest
return. Its patronage must be voluntary, and it must work
on its merits alone.

It is questionable if a man is very much benefited by
saving because he has to. Permanent good can only come
when he acquires the saving habit, for otherwise, when the
complusion ends, the saving ends also. Until he saves from
choice and not necessity the thrift habit ^vill not have gained
a victory. A father once dropped the life insurance policies
on his children and determined to put the premiums in the
savings bank instead. He made just one deposit — the com-
pelling force of the collector was gone.

The free withdrawal feature of the savings bank no doubt
tempts men to use their money, when, if it were "tied up" in
a more inaccessible form, they would get along without it.
The withdrawal notice, in a few cases rigidly enforced, and
quite generally permissible, no doubt prevents hasty and ill-
advised withdrawals. The little home banks are popular on
this account: money once dropped in cannot be taken out
without trouble, for the bank holds the key. The Saturday
Evening Post told of a man who, on Saturday night, put his
money in a letter addressed to himself, and dropped it in the
mail box, knowing he could not keep it over Sunday, and
chose this original preventive measure in order to save.

Saving by Encouragement.

There are limits beyond which the savings bank may not
go in safety, in its endeavor to "inculcate habits of thrift and
industry among the masses." In some of the early banks a
reward was offered for the most frequent depositor ; a larger
rate of interest for the larger deposits, and even a turkey
dinner at the expense of the managers, is mentioned in
Lewin's "History of Savings Banks in England and Ire-
land." But if it could, with safety, offer ten per cent, instead

THE THRIFT HABIT 39

of four, the results in deposits would be greater than ten is to
four. Get-rich-quick-schemes bear witness to this fact. The
best it can do, however, is to make it easy and convenient to
save. Hence the acceptance of dollar (in some places and
largely in early days, of dime) deposits, the home banks,
evening opening, saving clubs, postal banks, municipal sav-
ings banks, cooperative banks, and kindred ideas, the last
three striving to bring the bank to the people, rather than
asking the people to come to the bank. The commendable
saving spirit of the German is, no doubt, largely due to liis
training; but may we not attribute it also to the fact that
when he has a bit to lay away, he finds a bank at his very
door to receive it?

The savings account is a rainy day fund; a life insurance
policy ; a sick benefit ; a funeral fund ; an old age pension. It
lacks, to be sure, the protective feature of the insurance
policy, and the compulsion of other methods ; but there is no
"forfeiture clause" in the pass book, and it is under the
owner's control at all times, even at his death. It will tide
him over sickness, pay his landlord and his grocer when times
are hard and work is slack. It will not give him a compe-
tence, unless of considerable size, but it will give liim an
inco7ne when his working days are over, and it will bury him
when he dies. But it must be of his own choosing. It is a
simple business proposition: begin early and keep it up, and
like the pillar of fire and of cloud, it will be with him as he
journeys. The savings bank will not compel him to save a
cent, but once he gets the habit, it will take his savings, large
or small, invest them safely, and pay him for the service it
renders. It will return his money on demand or due notice,
with a little for good measure (if he leaves it long enough)
— an angel could do no more.

CHAPTER V
THE SAVINGS BANK A PUBLIC BENEFACTOR

No institution that is of a quasi-public nature, and wliich
must depend upon the good will of the pubhc for its sup-
port, has any right to exist unless it can give a good account
of itself. In the past and in the present, it must show itself
worthy. If it claims to be a philanthropy, it must prove
itself philanthropic; if it claims to be a public benefactor, it
must show^ that it makes "two blades of grass grow where
but one grew before." It must "square itself"' with the
world, or we shall be justified in classing it as a false
claimant for honors and luiworthy of our confidence.

Unless the world is a better and safer place to live, and
richer, withal; unless life is more worth the Hving because
the savings bank is here, it has no right to claim the unre-
munerated services of thousands of good and busy men
whose sole reward is "empty honor," the protection of the
State, and the confidence and monetary support of its mil-
lions of depositors. The hospital is the Great Samaritan;
the school is the Great Teacher; the church is the Great
Temple, and the library the Great Book. Can we not find a
place in this "hall of fame" for the savings bank — and shall
it not be the Great Treasure House?

From the stand])oint of the depositor, the savings bank
is not a necessity, like the bank of discount — it is rather a
luxury. This statement may be tested by asking any hun-
dred business men if they keep a checking account, and if
they could conveniently do business without it, and probably
ninety-nine would answer "Yes" to the first question and
"No" to the second.

But ask any hundred people if they keep a savings bank
account, and if so, could they get along without it, and the
answer would undoubtedly be — leaving aside the question
of safety and interest — a tin box under the bed would do
as well!

Herein lies the difference in banks. The business bank
takes care of the capital, the working balance of the nation
— the savings bank looks after the surplus. Until a man

THE SAVINGS BANK A PUBLIC BENEFACTOR 41

has saved more than he needs in his business, his home, liis
profession, as working capital, he does not need and would
not use the savings bank (speaking of those institutions
which do not loan on personal security, or handle checking
accounts or make collections) however much he may need
the facilities offered by the "business bank." In building
up, therefore, the business of a commercial bank, we may
approach a business man and say, "You need a bank; you
cannot do business very well without one ; you probably now
have an account somewhere — why not bank with us?" Not
so, however, in appealing for the savings bank. You cannot
take it for granted he has money to bank more or less per-
manently at from three to four per cent., and the best you
can do is to say, "When you have some money saved, let us
invest it for you" — wath accent on the when.

The money used in business belongs in the bank of dis-
count; the rainy day fund, the old age pension, the funeral
benefit, idle money awaiting investment belongs in the sav-
ings bank. The reason, therefore, for the savings bank is two-
fold: First, to afford the poor and those of small means a
safe depository for their savings: second, to enable them
by combining small sums to invest them safely and
profitably.

A Collector and Distributor of Wealth.

The services rendered by the savings bank are many and
varied; but as a broad statement it may be said that it acts
first, as a vast collector of wealth, a storehouse, as it were;
and, second, a great distributor of wealth. Like a sponge,
it must first gather in before it can give out. In its ingath-
ering it serves the individual, and in its distribution it serves
the individual, the community and the State. It is, perhaps,
the greatest assembler of money the world knows, and is one
of the chief sources of available capital for municipal and
corporate enterprises.

The Power or Accumulated Littles.

The savings bank is first of all a depository. It is a safe
depository. The idea in starting such an institution, a
century ago, was not that the people might have the benefit
of interest, but, primarily, that they might conserve their

42 THE SAVINGS BANK AND ITS PRACTICAL WORK

principal. The interest rate is, or should be, a secondary
consideration, a minor factor alongside the accumulation of
principal. Savings banks have been all too prone to empha-
size the fact that a dollar at four per cent, is equal to $1.04
at the end of a year, neglecting to emphasize another self-
evident fact that two and two make four. The savings bank
idea is not to offer large inducements in the way of interest;
but to offer large possibilities in the power of accumulated
savings.

As important as the question of interest rate may be in
some instances at tliis time, the success of the savings bank
is not due to the mathematically-correct proposition that a
dollar at interest for a certain time at a certain rate is equal
to a certain amount; but, rather, to the similarly-correct
proposition that a hundred cents make a dollar; and irre-
spective of the interest earned, a dollar deposited weekly
for a year means fifty-two dollars at the end of that time,
and fifty dollars bound together have far greater power
than fifty-two dollars scattered.

The savings bank was never intended to make people
rich by the rate of interest it paid, but, rather, by the accu-
mulation of capital. Safety of principal has ever been the
watchword, and both in England and this country, govern-
ment bonds were the authorized investments until the funds
became so large that other forms of investment had to be
found, and the doors were opened to real estate mortgages
and municipal and corporate securities. The savings bank
says to every man, woman and child, "Here you may leave
your money in whatever amounts you can spare, in full
assurance fhat you can have it again when you will, upon
giving us due notice. Ask us, first, to give you safety of
principal, and afterward only that interest which we can
safely pay.''

That this depository feature is a service of no mean
dimensions is apparent when it is remembered that the aver-
age man has no safe place to keep money, and the news-
papers frequently bring us stories of those who have become
suspicious of the banks and in their distrust have endeavored
to be banker to themselves in some unused stove or garret
to their everlasting sorrow. The stories of the thousands the
savings bank has helped, merely as a depository for their
savings until enough was accumulated to accomplish a
definite purpose, would afford interesting and inspiring read-

THE SAVINGS BANK A PUBLIC BENEFACTOR 43

ing, and in this it has performed a unique and valuable ser-
vice. Suffice for the present to cite a case which recently
came under the author's observation:

The Savings Bank Fulfills Its Mission.

On June 29, 1907, Mary S. opened account with the
Home Savings Bank of Brooklyn with $1, stating at the
time that she was fifty-three years of age and had not saved
a cent, and was fearful that she would die and leave nothing
to bury her with. She w^as going to try and deposit one
dollar per week regularly, for tliis purpose. The teller im-
mediately became interested in her and suggested that she
take a home bank and, when not convenient to come to the
bank with the mone}^ place it in the little bank instead.
This pleased her immensely, and she went home and placed
the little bank on the mantel shelf and began systematic
saving. She found it a constant reminder of her promise to
the bank man and herself, and whenever she had spare
change it went into the bank. The result of the matter was
she "got the habit" and instead of saving a dollar a week,
her account now (jNIarch, 1911) shows a balance of $340.07,
or over three times the amount she set out to save. Only one
withdrawal appears, caused by death in the family. Perhaps
the little bank did it; perhaps it was her determination;
doubtless it was both. She is now a thrifty woman, with
enough not only to bury her decently, but keep her comfort-
ably for some time before that sad event happens. It is one
of the best cases of the savings bank fulfilling its funda-
mental purpose of "promoting habits of thrift and industry"
that has ever come to my notice.

The principle of philanthropy that a man is best helped
when he is given a chance to do something for himself has
one of its best exponents in the savings bank; and when the
savings bank starts out to encourage habits of thrift and
industry, it is in a class by itself. No other institution has
done half so well. In providing a place convenient and safe
where the thrifty man may leave his money \\ith full assur-
ance that it will be safely kept, and profitably invested for
his account, and handed back intact, with a little interest for
good measure, it renders him a service as distinct and bene-
ficial as if it w^ere to buy him a ton of coal or give him a suit
of clothes. Through the school savings bank or through the

44 THE SAVINGS BANK AND ITS PRACTICAL WORK

stamp system the cliild may save a penny ; through the home
bank the youth may save the dimes and the quarters ; through
the dollar deposit feature the seven- dollar- a- week clerk may
save his dollars. It knows no race, no color, no creed.
Money in hand is the only credential, and it will take the
little and the big, combine them into a mass, and, reserving
enough to meet current demands, proceed to invest them
safely for the depositor's account.

Here the widow with her mite or with her dowry; the
legatee 'vvith his inheritance; the worker saving for a home;
the youth struggling for an education; the "saver" laying
aside for old age; the miser with his hoard, pool their sav-
ings, and it becomes a common fund with an uncommon
power ; or to express it in the language of the court :

The general object of the savings bank is to combine
small amounts for the purpose of making the combined
deposits more available for advantageous investment. *

The scientist tells us that the bar of iron is composed of
atoms, infinitesimally small, held together by cohesive force.
As atoms they are of little effect and of little value; but as
a bar of steel they become a force in the physical world. The
single deposit of $10 — even the average deposit for the United
States ($445.20) , is but a small sum in itself, and able to do
but little in the field of finance; but when this is multiplied
by 9,142,908 (the number of accounts) it ^^dll readily be
seen that here is a power to be reckoned with. This is the
money that builds our railroads and bridges, paves our
streets, builds schools, libraries and public buildings, and in
wasteful ISTew York even buys brooms for the street
sweepers.

If the vast accumulation of savings deposits, estimated at
$5,560,837,016, in a compilation made by the Savings Bank
Section, American Bankers' Association, as found on an-
other page,t and representing the entire savings deposits in
banks of tliis country, were simply locked up in vaults, the
country would be the poorer for having the "saving habit"
with us; but when this is scattered to the four winds in the
form of loans on real estate, loans to cities. States, counties,
school districts, to\Mis, railroad and other corporations on
their promises to pay (bonds) it will be seen that it not only

•Lewis V. Lynn Inst for Savings, 148 Mass. 235.
tPage 88.

THE SAVINGS BANK A PUBLIC BENEFACTOR 45

gathers as with a fine-tooth comb but scatters with a gen-
erous hand.

It is no wonder that the savings banks of New York
State are interested in maintaining the credit of New York
City, for they hold no less than $150,000,000 of its securities,
and they are naturally vitally concerned that the intrinsic
value of these shall not be questioned and that the market
shall be steadily supported.

To THE Savings Bank — Debtor.

To the mutual savings banks of the country, Uncle Sam
is a debtor to the extent of $23,538,195 (a small amount in
comparison with other holdings), chiefly because his bonds
are gilt edged and can be sold over night, and not because
they are a profitable investment. The various States, cities and
counties have borrowed $714,821,480 for pubhc improve-
ments. The railroads "found" the savings bank to the extent
of $757,494,315, for tracks and cars, stations, right of way,
and what not, wliile other corporations and communities,
with securities dyspeptic and digestible, have placed $180,-
295,429 in the strong boxes of our savings institutions.

This means much more than a few figures run trippingly
off the tongue, for who can measure the force and effect of
this scattered wealth, and where would these cities and towns
and corporations have gone if not to the savings bank?
Many a municipality has found its credit steadily maintained
and its pubhc ventures made possible by the fact that it had
a savings bank in its midst gathering the savings of the
people, and then saying to its public officials : "We demand
good streets — pave them and we will pay the bills! We
need a library — build it with our (the people's) money, and
give us your promise to pay ten years hence. Our children
need schools, parks, baths, playgrounds — provide them, here
is the money." And every child that goes to a public school;
every adult that walks in a park, or crosses a well paved
street, or rides in a subway, or a surface car, or draws books
from a library, or looks with pride upon a public building,
or in sickness goes to a public hospital, owes a debt not to
the municipality, for he has a right to demand such tilings
as a tax paj'^er, but to the savings bank that furnishes the
money, and by well arranged bond issues spreads the burden
lightly over a generation.

46 THE SAVINGS BANK AND ITS PRACTICAL WORK
Real Estate JMortgages.

It is conceded that every building erected benefits the
community. If it is a home, it benefits the community in a
double sense. And of the thousands of homes the savings
bank has built, space forbids to tell. It is a standing offer:
You furnish one half and we will furnish the other! The
mortgage loans of the mutual savings banks in the United
States aggregate $1,727,170,989, and for the State of New
York the fabulous sum of $900,836,854 (January 1, 1912).

Helping the Masses.

But does it reach the people? Does it encourage habits
of thrift and industry? Do the people make use, and good
use, of this institution, in the way and for the purposes for
which it was organized? Does it get the dime of the cliild,
the dollar of the clerk and the "thrift funds" of the masses?
Witness the follo^\dng: Out of 22o,856 deposits made in the
savings banks of ]Maine during 1909, 169,537 were in
amounts less than $500; and only 4,547 were over $2,000.
In Connecticut, out of 553,247 depositors, 474,637 had less
than $1,000 on deposit; 52,218 had between $2,000 and
$3,000; 25,969 had between $5,000 and $10,000, and only
423 had over $10,000.*

The most complete statistics in this regard are kept by
the Citizens' Savings Bank (deposits $17,731,658) of New
York, a typical "East Side" bank, patronized largely by the
residents of that section. They are most interesting as show-
ing how largely the working classes patronize the savings
bank. From their report, Jan. 1, 1911, the following sta-
tistics are compiled:

Receipts for 1910 from 37,370 depositors $4,630,246-98

Payments for 1910 to 28,706 depositors 4,281,821.75

Average deposit 123.90

Average withdrawal 149-16

•There is no limit to the amount one person may have in a Connecticut sav-
ings hank, and the largest amount due one depositor was $49,520.50 (October 1,
1 909 ) .

THE SAVINGS BANK A PUBLIC BENEFACTOR

Occupations.

Three thousand one
counts were opened durin

Actors .

Agents

Apothecaries

Architects

Artists

Bakers

Barbers

Barkeepers

Blacksmiths

Bookbinders

Bookkeepers

Box-makers

Brewers

Brokers

Builders

Butchers

Cabinet-makers

Carpenters

Carriage-makers

Carriers

Chauffeurs

Clerks

Clergymen

Clothiers

Coal Dealers

Compositors

Conductors

Confectioners

Cooks

Cutlers

Cutters

Dentists

Domestics

Drivers

Dyers

Editors and Publishers

Electricians

Engineers

Engravers

Farmers

Firemen

Florists

Foremen

Furriers

Gardeners

Glaziers

Governesses

hundred and ninety-four new ac-
gthe year 1910, dassified as follows:

10 Grocers 34,

23 GunsmiUis 3

20 Hat-makers 1 1

3 Hotel-keepers 5

3 House-keepers 18

Insurance 4

Jewelers 22

Laborers 51

Laundresses 13

Lawyers 10

Liquor Dealers 7

Lithograpliers 1

Lodges and Societies 35

Machinists l6

Manufacturers 50

17
6
3
3

58
9
4
8
1

33
4

165

35
4
1
6

12
1

55
7

24
6
1

14
4
2

6
6
1

18
7
1
4
I

Masons 5

Mechanics 12

Merchants 35

Milkmen 7

Millers 2

Milliners 24

Moulders 2

Musicians 22

Nurses 13

Operators 152

Opticians 1

Painters 33

Peddlers 83

Photographers 2

Physicians 14

Pianoforte-makers 4

Plumbers 6

• Pocket-book makers 4

Policemen 8

Porters 9

.Printers 19

Provision Dealers 13

Real Estate 26

Restaurant Keepers 31

Salesmen 115

Seamen 5

Seamstresses 100

Segar-makers 26

Shoemakers 28

Shipwrights 1

Smiths . . ._ 2

Soldiers 2

48 THE SAVINGS BANK AND ITS PRACTICAL WORK

Stenographers 30

Stewards 4>

Stone-cutters 1

Store-keepers 120

Tailors . . 256

Tanners 1

Teachers 27

Tinsmiths 7

Tobacconists 3

Trunk-makers 2

Undertakers 2

Upholsterers , . . .

Varnishers

Waiters

Watch-makers . .
Weavers . . ^ . . . .
Wheelwrights . . .
Not described,
Minors, etc. . . .

Women,

S
2

16
2
S
9.

934

3,194

Nationality.

American, United States . . . 706

Africa 1

Asia 24

Austria-Hungary 462

Belgium 1'

Canada 9'

Denmark 4

England 30

France 2

Germany 174

Ireland 35

Italy 79

Netherlands 3

Norway and Sweden 4

Poland 29

Roumania 89

Russia 1,480

Scotland 5

South and Central America 4

Spain and Portugal 3

Switzerland 6

Turkey 6

Wales 3

Lodges and Societies 3b

Number
Number
Number
Number
Number
Number
Number
Number

Number
Number
Number
Number
Number
Number
Number
Number
Lodges,

of Male
of Male
of Male
of Male
of Male
of Male
of Male
of Male

New Accounts — Males.

Depositors under the age of ten

Depositors between the age of ten and twenty. .
Depositors between the age of twenty and thirty
Depositors between the age of thirty and forty.
Depositors between the age of forty and fifty. .
Depositors between the age of fifty and sixty. .
Depositors between the age of sixty and seventy
Depositors of the age of seventy and over

3,194

2
173
630
512
298
178
76
22

New Accounts — Females.

1,891

of Female Depositors under the age of ten 2

of Female Depositors between the age of ten and twenty. . 185

of Female Depositors between the age of twenty and thirty 412

of Female Depositors between the age of thirty and forty. . 269

of Female Depositors between the age of forty and fifty. . 225

of Female Depositors between the age of fifty and sixty. . . 106

of Female Depositors between the age of sixty and seventy 48

of Female Depositors of the age of seventy and over 21

Societies, etc 35

1,305

THE SAVINGS BANK A PUBLIC BENEFACTOR

During the Year IPIO, 37,370 Deposits Were Made in the Follow-
ing Manner:

In sums not exceeding $5 2,320

$5 not exceeding $10 4,657

20 6,008

30 5,155

40 2,411

50 4,060

60 1,164

70 767

80 1,031

90 371

100 2,738

200 2,914

300 1,125

100

200

300

400

500

600

700

800

900

1,000

400
500
600
700
800
900

559
628
223
178
143
74

1,000 293

2,000 370

2,000 and over 181

Total number of deposits of 1910 37,370

Far-Reaching Effects.

In order to appreciate the far-reaching effects of the sav-
ings bank, take the banks of New York City, for example.
Here we find the largest aggregation of savings deposits
($1,050,000,000) in privately managed savings institutions
in this country, if not in the world. It is conceded that the
two principal sources of mortgage money in the Metropohs
are the savings banks and life insurance companies (title
companies sell a large part of their mortgages to savings
banks under a guarantee) . When panic prevails and money
is scarce and the banks are out of the market, not only does
building become dull in the great city, but for miles around
the effects are felt. The carpenter, the mason, the plumber,
the painter, the landlord, the butcher, all know that some-
thing has happened. But more — away back in the moun-
tains where they quarry stone, or dig for cement; along the
Hudson where they make brick; in the Northwest where
they cut timber, they know that something has happened.

50 THE SAVINGS BANK AND ITS PRACTICAL WORK

In a thousand ways and forms the world soon knows that
the New York banks have no funds to loan. It is an endless
cycle; touch it with good and the world rejoices; touch it
with evil and the world mourns.

Mr. Cohex — Successful Merchant.

Perhaj^s no better illustration of the savings bank in the
role of a private benefactor can be given than the case of
Mr. Cohen — Successful JNIerchant. He came from Russia
and was a Jew — that may be the underlying secret; he
worked hard, and that may be the key to the situation; he
"found" the savings bank, and that surely helped his case.
When he reached this land of promise he had barely enough
to buy liim a pack of dry goods. He started out, and liis
savings went into the bank. As the boys grew up they also
took to the road, and their savings went into the bank. In
due time the pack was replaced by a wagon; and the wagon
grew into a store, attended by the girl wliile father and the
boys stuck to the road. Still the surplus went into the bank.
In due time he had enough saved up to buy the most pre-
tentious store in that town. He now thought he could live
decently, and with the help of the bank, bought a comfort-
able home. The mortgage was soon discharged of record.
The best apartment house in town was on the market. ]Mr.
Cohen, with the help of the bank, bought it. JNIrs. Cohen
collected the rents and soon liquidated that mortgage. To-
day no less than five stores are in operation by the Cohens,
whose credit is good for anything they choose to buy.

True, such men are bound to climb, but could they or
would they climb half so easily or quickly if the savings bank
was not their right hand man, first to take their savings, and
then to take their bond? Mr. Cohen will answer.

Herein lies the secret. The man who saves goes to the
bank. The man who would borrow (on good security) goes
also. Through the medium of the bank the one lends the
other, and both are the better for tlie service. Every dollar
Sideposited enriches the community; every dollar loaned
ought to enrich the debtor.

In its ethics sound; in its management able and consei*-
vative; among its patrons trusted and trustworthy; in the
past honored and in the present honorable; in its aims high;
in its benefits manifold and far-reaching, the savings bank

THE SAVINGS BANK A PUBLIC BENEFACTOR 51

is perhaps the highest type of financial institution, as good as
a, mo7iied institution can be.

If he who makes two blades of grass grow where only
one grew before is entitled to rank as a philanthropist, what
shall be said of the institution that builds homes and schools
and railroads and court houses and asylums where none
were built before? A public benefactor indeed, not making
one blade of grass two, but a whole ton of hay!

CHAPTER VI
THE SAVINGS BANK AS AN INSTITUTION

If an investigation as to the best institution for the cul-
tivation of provident habits is apphed to individuals, it will
often be found that some form of insurance is the best;
and it will not infrequently be found that the building as-
sociation is the best. But the institution which seems to
afford a liigh average of advantages, whilst avoiding the
more prominent faults of these, is the savings hank. Per-
haps its greatest advantage, which may indeed in many
cases be a disadvantage, consists in the larger freedom it
allows to its patrons. It encourages saving 'without pre-
scribing in any way the quantity or regularity of doses of
saving; and it leaves the depositor free to invest his sav-
ings at any stage of its accumulation.* "Of all the plans,"
says JNIalthus, "which have yet been proposed for the as-
sistance of the laboring classes, the savings banks, as far
as they go, appear to me to be much the best, and the most
likely, if they should become general, to effect a permanent
improvement in the condition of the lower classes of soci-
ety. By giving to each individual the full and entire ben-
efit of his own industry and prudence, they are calculated
greatly to strengthen the lessons of Nature and Provi-
dence."

The Savings Bank Idea.

If we were to trace the savings bank idea back to its
origin we would, in all probability, find that it had its be-
ginning in the "sick and aid" and other friendly societies
which liave existed for centuries in many parts of Europe;
for the savings bank is simply the culmination of the at-
tempts of thrifty people to provide for the rainy day.
Workmen in all parts of the world have organized societies
among themselves, whose fundamental purpose has been
to save a part of their earnings for slack times, sickness,

•Hamilton Savings Institutions, p. 149.

THE SAVINGS BANK AS AN INSTITUTION 53

old age and death. Such organizations have been formed
with no other purpose than to accumulate a fund to prop-
erly celebrate Christmas and other holidays, or to finance,
in an easy manner, an annual picnic, or similar occasion.
A small amount of dues is usually required, and these con-
tributions, enhanced by the proceeds of an annual ball or
outing, provide the fund from which sick benefits, funeral
funds, etc., are paid. Some of these societies even go so
far as to make a division of the whole amount on hand at
the close of the year and then begin over again. The social
features no doubt form an added attraction inasmuch as
the opportunity for rest and recreation is an inducement
to join. The organization is often, even in this day, con-
nected with a church, and in many instances, if not all, is
productive of much good.

A perusal of the historical chapter will demonstrate the
fact that the first attempts at savings banking were along
this line, and the earliest banks were essentially such organ-
izations. And it will readily be seen that any movement
by which individuals combine their resources for mutual
investment for mutual advantage is, in its essence, a savings
bank. Building and loan associations, industrial insurance,
fraternal societies, labor organizations and pension plans,
are all, in the final analysis but modifications of the savings
bank idea. The difference between the savings bank and
such organizations lies in the fact that the savings bank
never requires any fee for joining, or dues or fines for fail-
ure to contribute. The management is perpetual, and ex-
cept in a few States the members have no voice in the selec-
tion of the managing officials, who do not change except
by death or resignation.

As soon as the earning power of money became mani-
fest, philanthropists began to devise plans whereby these
accumulations could be profitably employed, to the advan-
tage of the community as well as the individuals; and, as
has already been seen, the savings bank as an institution
had its origin in such endeavors, and to the proper working
out of the co-operative investment idea it owes its success
— aided, of course, by the desire on the part of the thrifty
to provide for the future.

54 THE SAVINGS BANK AND ITS PRACTICAL WORK

The Saving Bank as Distinguished From the Bank

OF Discount.

The primary motive of the savings bank is not to make
money, either for those who manage it or those M'ho avail
themselves of its privileges. In this, we notice a marked
distinction between the savings bank and the bank of dis-
count. The savings bank aims to keep money securely for
the benefit of its depositors, and in the keeping, secunty is
the first consideration, while profit is secondary. It lends
its funds only that it may make the safekeeping of these
funds profitable for those who entrust their money to it.
If any profit accrues, it is to the depositors and not to the
bank. The corporation is simply the agent or trustee for
the w^hole body of depositors. The bank of discount, how-
ever, is organized (and properly so) for gain, — gain upon
the capital employed in its operations.

The savings bank works with those unacquainted mth
the ways of business and who could not single handed take
good care of their money, or invest it safely or profitably.
The bank of discount is generally managed by business men
versed in the ways of business, acquainted with monetary
affairs, and able to conduct financial operations with intel-
ligence. They combine their capital in order to make it
effective; the savings bank combines savings in order to
make them capital, and as such to acquire a power impos-
sible to the scattered savings.

The savings bank is for the saver; its funds are invested
permanently, while the business bank opens its doors to
business men and loans rather than invests its funds, and
for a short time only. The latter deals with borrowers
rather than savers, and serves for hire. The one serves best
by keeping — the other by lending. One aims at profit,
while the other never makes (or should make) profit an
end. The savings bank is the receiving resei'voir for the lit-
tle springs, the bank of discount is the distributing reser-
voir for accumulated capital.*

We must get the last idea clearly in mind or we get a
misconception of the savings bank. However much the
element of interest may figure in the management, and
whether we pay depositors 4 per cent, or 3 per cent., or no

*Bolles Practical Banking, 269 (adapted).

THE SAVINGS BANK AS AN INSTITUTION 55

interest at all, the accumulation of interest is not to be
compared in importance with the accumulation of principal.

No man ever acquired riches at 4 per cent. In fact, 4
per cent, upon small deposits is so trifling a matter that it
may be ignored in considering the greater value of the in-
crease of capital. However desirable the accumulation of
interest may be (and this in the course of years is consid-
erable) the chief end and aim of the savings bank should be
the accuuiulation of iirincipah

The savings bank would make all men producers — sav-
ers. It offers the help of the successful and the strong for
those who are weak. It enlarges the number of capitalists,
reduces the number of paupers and tramps, and serves both
the individual and the nation.

Classification of Savings Banks.

We may roughly classify savings institutions into: —
First, mutual (trustee), or philanthropic; second, stock
(including "savings and trust companies") ; third, co-op-
erative, or democratic, as exemplified in the co-operative
banks of Europe. The first are usually managed by a
self-perpetuating body of trustees, who do not share the
earnings; the second are managed by the directors elected
b}^ the stockholders; the tliird are managed by officials
elected by the members.

A second classification may be made into public and
private institutions. The first includes the postal and
municipal banks; the private embraces the mutual, stock
and co-operative. A third classification may still be made
into the "unit" and the chain system. In the unit system
the bank is an independent entity and has no connection
(aside from a managerial standpoint) with any other bank.
The banks of the United States are all, excepting the Post-
al Savings Banks and a few branch savings banks, of this
character. In the second, the bank is but a part of a chain,
as in the postal system, the municipal banks of Germany
and the co-operative credit banks of Europe. We shall
briefly review each system.

Trustee Savings Banks.

The original savings bank is the trustee bank. The
birth of these institutions is described at length in the his-

56 THE SAVINGS BANK AND ITS PRACTICAL WORK

torical chapter; but as Hamilton says, "It stands for the
attempt on the part of the well-to-do to improve the con-
dition of the poorer classes, and involves a self-sacrificing
service on the part of a few in the interest of the many."
While many of the early savings banks partook of tliis
character, others were organized from purely selfish motives
and were characterized by bad management and bad faith
from the start. A study of savings bank frauds* will am-
ply bear out this statement.

The "spirit of commerciaHsm" hereafter spoken of has
invaded the domain of the mutual savings bank and it can-
not in truth be said that some of the newer banks were
organized from any spirit of pliilanthropy, although the
management as a whole may be above suspicion and hon-
orable in the highest degree.

The early English banks were of the trustee type and
were probably due to religious impulses, being in many
places ])art of the church work, and were doubtless in-
tended to ultimately relieve the parish of its burden of pov-
erty.

In the United States the mutual savings bank has never
been able to get west of Buffalo or south of Baltimore, at
least not to an appreciable extent, as a study of chapter
VII will demonstrate. It has "stayed put" where it began
operations in 1816, in the New England and Eastern States.
Just the cause for this is not apparent; whether the idea has
not appealed to the well-to-do in other sections; whether the
form of institution is not adapted to the West and South;
whether it has been true that "nothing succeeds like success"
— and never having been given a good chance to succeed in
those sections, success has not followed, is merely a matter
for conjecture. The mutual bank requires an old commun-
ity, a philanthropic spirit, and sentiment. The South, im-
poverished by a costly war, has been busy with other things,
and has had but little of such funds; while the West was
not, like New England, settled from religious motives, but
for the piH'pose of making money, and has neither the age
nor the sentiment which creates savings banks of the mutual
type. The rugged hills of New England would not seem
propitious for such an institution; but her rugged hills, fur-

*See Lewin's History, Kovcs' History, and "Savings Bank Failures in New
York" l)v W. S. Paine.

THE SAVINGS BANK AS AN INSTITUTION 57

nishing cheap power, has made manufacturing a specialty,
and where manufacturing goes, the savings bank follows.

But, however this may be, the mutual savings bank is a
product of the East and promises to remain so in spite of the
fact that some of the Western States have very good, if
not excellent, savings bank laws.

The distinguishing characteristic of the trustee savings
bank is mutuality. The relationship that exists between the
bank and its depositors is more fully described elsewhei*e;
but for present purposes suffice it to say that all the earnings
of the bank, less reasonable administrative expenses and the
apportionment to surplus or guaranty fund, are divided
among the depositors in the form of interest.

The organization of a mutual savings bank from the
time of its inception to the opening of its doors for busi-
ness is treated at length in another chapter, and need not
be reviewed here; but one or two features of the mutual
bank may be mentioned without repetition, and these are:
First, the investments of such institutions are usually care-
fully restricted, looking primarily to the element of safety;
and as long as the trustees keep their funds so invested
they cannot be held, either in law or morals, responsible for
losses. Second, the predominancy of the mortgage loan.
The nature of the deposits being more or less permanent,
investments of a permanent character may be made without
fear of a sudden demand for their return on the part of
depositors; and to safeguard the banks from such unex-
pected calls, quite generally trustee banks are permitted by
law to require notice, the usual time being either sixty or
ninety days.* In Philadelphia and Wilmington, Del., notice
of withdrawal on all sums is required, running from two
weeks upwards, but in some cases is waived. The third dis-
tinguishing feature is the self-perpetuation of the board of
managers. No amount of money can buy a man's way into
a mutual savings bank. He cannot, as in stock concerns,
buy enough stock to vote himself into office — he can only
gain office as the other men advocate his cause. And on
the contrary, he cannot be voted out of office. Only an act,
such as bankruptcy, (which voids his office), can affect him,

*No bank of discount is permitted to ask notice of withdrawal except on its
"savings accounts," upon the opening of which the depositor agrees to give such
notice; but on checking accounts it must pay on demand. The withdrawal notice
is a distinctive feature of the savings bank.

58 THE SAVINGS BANK AND ITS PRACTICAL WORK

and like a Supreme Court judge, he is appointed during
good behavior.

The greatest weakness of the trustee bank is tliis : Lack-
ing the "essential element" that prompts men to undertake
such ventures, (profit), it does not appeal to the average
man of means unless he is sentimentally inclined; and not
being indispensible to trade and commerce, like a bank of
(hscount, it does not come to be a commercial necessity.
Even in a great State like New York we find (see p. 80)
twenty-eight counties with no savings banks. And in many
of these counties there are large and thriving towns and
cities. Thus the city of Jamestown, with over 30,000 popu-
lation, has no savings bank; while Elmira, with over 35,000
population, has but one, and that with but half a million
assets.

From the viewpoint of intensive results, as tested by
the volume of patronage accorded these institutions, a pe-
rusal of the statistics presented in this volume will demon-
strate that in some places the trustee bank has had a re-
markable record. For instance, in Maine, a sparsely-settled
State, and largely of a rural nature, we find one savings
account to every 3 of the population. More remarkable is
Vermont, the "Green Mountain State," where natural con-
ditions would seem to be much more hostile to such develop-
ment, we find thirty per cent, of the population having sav-
ings bank accounts. New Hampshire has an account for
every 2 1-2, while JNIassachusetts heads the list, with seventy-
five out of every hundred. New York has one to every tliree.
"In seeking an explanation of this remarkable success of
the trustee system," says Hamilton, "we are reminded that
New England is singularly separate and distinct in its cus-
toms, habits and ideals from the rest of the country. Not-
withstanding the large foreign population, the dominant
type is more homogeneous and more Anglo-Saxon than it is
in any other section, and therefore fixed customs have been
more rigid and controlling. Among the ideals behind the
customs and institutions must be noted a stern. Puritanical
sense of simple living, industry and providence, and this
spirit is so strong as to be well calculated to give color and
direction to the philanthropic impulse. There is also an
unusual amount of public spirit, of collective rather than a
neighborly character, as seen in the institution of the town
meeting."

THE SAVINGS BANK AS AN INSTITUTION 59

Stock Savings Banks.

The stock savings bank, where it is a savings bank, and
not a bank of discount under a savings title, differs in no es-
sential degree from the mutual institution. The mutual
bank belongs to the depositors; the stock bank to the stock-
holders. The mutual bank pays dividends to depositors
only ; the stock bank paj'S dividends to both stockholders and
depositors. The stock bank does not pretend to be philan-
thropic in its management. It is purely a business proposi-
tion, and where the investments are of the accepted savings
bank type, it can justly claim to be on a par with its mu-
tual friends, provided, of course, that it measures up to
the standard in its management.

As is imphed in the term "stock," it issues capital shares
and pays dividends thereon. It has, therefore, the added
protection of the stockholder's liability, which, together with
the accumulated surplus, affords the element of strength so
necessary in all financial concerns. It usually pays the de-
positors a stipulated rate of interest, and the profits beyond
tliis belong to and are distributed to the stockholders as div-
idends. ' The partnersliij^ idea is entirely lacking, and the
depositors get what they bargain for, while the surplus goes
to those who invest, not necessarily their savings, but their
capital, and assume all risks of the business. It could
not in law or equity "scale do^vn" its deposits to make good
any losses, — a feature peculiar to the mutual institution.

In this respect one thing is certain: In so far as safety
is concerned, especially in a young bank, the stock bank with
the stockholders' liabihty is surely superior to the mutual,
unless the trustees of the latter are of such high order ana
of such financial worth as to be able and willing to assume
the burden of any losses that may accrue until the surplus
or guaranty fund affords ainple protection. This was the
trouble in the early days of the mutual savings banks in
England. Frauds and defalcations crept in and brought
heavy losses upon the banks, and there being no guaranty
funds of sufficient proportion to make good the losses, and
the protection afforded by the trustees being little or noth-
ing, the burden fell upon the depositors with unusual sever-
ity, in many cases the losses being well nigh absolute. The
same was true of many of the banks that failed in New
York in the seventies. Had the interest of the managers

60 THE SAVINGS BANK AND ITS PRACTICAL WORK

been financial as well as selfish, sentimental or political, it
is quite likely the administration would have been of higher
order. The history of politics amply demonstrates the the-
ory that public funds are often lightly valued, and in a sense
saving deposits are public funds, sacred it may be, but pub-
he funds nevertheless. And the reckless improvidence of
many savings bank trustees has been on a par ^vith the total
disregard for honor and honesty characteristic of politics.
To lose a few dollars to some men means everything ; to lose
honor and good standing means notliing, if in the loss of
honor a few dollars may be easily acquired.

Guaranty Savings Banks.

New Hampshire is the only State in which "guaranty
savings banks" \y\\\. be found. These are a combination of
mutual and stock — a cross between the two. They do not
transact a commercial business, being strictly savings banks
in their functions, yet having "special deposits," which to
all intents and purposes are capital stock. In a letter from
Hon. R. H. Scammon, Bank Commissioner for New
Hampshire, to the author, under date of June 17, 1908,
he states in tliis regard: "The guaranty savings bank dif-
fers from the ordinary mutual savings bank in that it has
capital stock or special deposits, as they are called. It pays
a certain stipulated rate of interest to its general depositors
and any surplus of earnings above this dividend is available
for dividends on the capital stock or special deposits. These
special deposits constitute a guaranty fund for the general
depositors, and the charter ordinarily stipidates that the
special deposits shall always equal ten per cent, of the de-
posits."

The New Hampshire laws of 1893, Chapter 52, provide
that "Savings banks incorporated and doing business upon
the guaranty system* may pay such rate of interest as may
be prescribed or agreed to, and all books issued by such
banks recording fii'st deposits shall state therein the rate of
interest to be paid, and no changes can be made therefrom
until after three months' notice has been given depositors.
The sjiecial dejiositors of a guaranty fund in any savings
bank incorporated and doing business under the guaranty

•New Hampshire also has strictly eleemosynary savings banks.

THE SAVINGS BANK AS AN INSTITUTION 61

system may vote to increase the said guaranty fund at any
meeting of the special depositors called for that purpose.
The amount of the increase or addition to said fund may bo
subscribed for and taken by the special depositors of said
fund in proportion to their special deposits or by other
parties in case of failure of said special depositors to take
and pay for said increase or addition within ninety days.
Said increase or addition to the guaranty fund may be on
such terms of preference over the original fund, as to divi-
dends, and in distribution of assets as shall be determined
by vote of the special depositors at the meeting when
such increase or addition is voted."

In thus agreeing to pay a stipulated rate of interest
upon deposits one of the fundamental principals of mutual
savings banking is violated, and these "special deposits"
are therefore in the nature of capital stock. One of the
underlying principles of the savings bank is this: Interest
to depositors shall only be paid as it is earned, and only
that which is earned can he paid. The laws of New York
expressly forbid savings banks to promise interest in ad-
vance, and no dividend can be declared until it has been
earned, and trustees voting for dividends in excess of the
earnings are liable for the excess. In an opinion rendered
by the Attorney- General of New York in 1887 it was
held that the surplus of a savings bank could not be used
in declaring dividends as this was for the protection of the
depositors, and that dividends could only be paid out of the
current earnings, including accrued interest, less expenses.

This is not to say that such institutions are not savings
banks in every sense of the word, but the strictly mutual
feature is lacking in the specializing of part of the deposits
and paying a higher rate of interest on these deposits. In
New York State savings bank cannot take a "special de-
posit," but in New Hampsliire, in return for the higher in-
terest rate, the special depositors assume all the risk of
loss or depreciation, and, as in the case of stock concerns,
they would be the first to suffer in the event of insolvency.

An amendment to the constitution of New York was
adopted November 3, 1874, conforming all charters of sav-
ings banks or institutions for savings to a uniformity of
powers, rights and liabilities, and "all charters hereafter
granted for such corporations shall be made to conform to
such general law and to such amendments as may be made

62 THE SAVINGS BANK AND ITS PRACTICAL WORK

thereto. And no such corporation shall have any capital
stock, nor shall the trustees thereof nor any of them have
any interest whatever, direct or indirect, in the profits of
such corporation, and no director or trustee of any such
bank or institution shall be interested in any loan or use
of any money or property of such bank or institution for
savings."

Municipal Savings Banks.

No institution of a character similar to the municipal
savings bank is to be found in this country. Such banks
are, however, found in Austria, France, Italy, Denmark,
SAveden and Japan. The best examples are to be found in
Germanj% where they have been in operation for a long
period of years. Hamilton says they are the outgrowth
of the municipal pawnshop. The argument for the muni-
cipal savings bank is this : If it is the function of the muni-
dpality to educate the people; to provide libraries and hos-
pitals; to maintain police and fire departments, is it not the
duty of the public authorities to provide savings facilities
also? The safeguarding of money is as important as the
safeguarding of property; and inasmuch as the municipal-
ity guards the one, why not the other? This is the reason
for the Postal Savings Bank. The excuse in this country
may be sometliing savoring of politics. While Germany
has no postal system, she has in her municipal and co-op-
erative banks not only a good substitute, but it may be a
better one; and to educate the people in the thrift habit is
as commendable an enterprise as to provide ample school
accommodations, efficient instruction, parks, sewers and
clean streets. The reflex benefits cannot but be helpful.
In fact, any agency that makes a man a better man makes
him, at the same time, a better member of society. And it
is with this in mind that the Germans have dcAased their
municipal system of savings institutions.

This form of savings banks properly belongs to a
strong class of municipalities. They can only thrive in
places where the local spirit is strong, the local govern-
ment pure, and, where the local officials are accustomed to
wield a large measure of authority. Accordingly, they have
come 7nto being and met with success in those countries
where the early history of the town made a large measure

THE SAVINGS BANK AS AN INSTITUTION 63

of local autonomy a necessity. Towns of this class possess
the pubKc spirit and the intelligent administration required
for the success of such a public venture. They also possess
a fund of gratuitous public service among the citizens which
may be drawn upon when occasion requires.*

The typical organization consists of a central office and
a system of substations in different parts of the city. The
central office is, as its name implies, centrally located, for
the convenience of the working classes, and the substa-
tions are placed, not necessarily where they will pay, as
must be the case in an independent institution, but where
they are needed, and can do the most good, such as factory
districts, etc. Berlin has over seventy-five substations and
deposits may be made and withdrawn and interest col-
lected at any of them.

In countries where the Postal Savings Bank is in oper-
ation and business may be done through the carrier there
is, of course, a "walking bank" in every postman; but in
order to accomplish the same end the citj'- of Frankfort-
on-the-Main has inaugurated a collection system — a mes-
senger going from place to place for the purpose of receiv-
ing deposits. The success of the municipal system may be
seen from the fact that as many as one-fifth of the popu-
lation in five of the German States; one-tliird in the case
of eight States, and one-half in the case of five States are
depositors in these banks.

A Description or the Central Office.

The central office of the Berlin bank is an interesting
place during office hours. It is of imposing and beautiful
exterior, and is centrally located on the island of Spree.
The second floor is occupied by administrative offices, and
the first floor by the offices for deposit accounts. These
offices present the appearance of an aggregation of banks
rather than a single institution. A series of seven or eight
deposit places, one following the other, and each bearing a
number, and each equipped with a complete complement
of bookkeepers and tellers, are grouped about a large room.
In spite of the numerous substations there is always a

*Hamilton, p. 256.

64 THE SAVINGS BANK AND ITS PRACTICAL WORK

crush at the central stations at the opening hour, and the
new-comer might be bewildered were it not for the excellent
administrative organization. The stranger is ushered to one
of the departments, which thereafter he will seek at once.
Thus the crowd breaks up into as many groups as there are
departments in the office. All rush and confusion in these
httle groups is avoided by a system of numbered checks.
One is given to each patron in the order of his coming,
which preserves his place in lieu of standing in line, and he
may await the calling of liis number in a comfortable chair.
All the waiting is done by clerks, no deposit slips or with-
dratcal orders being required. Mistakes and embarrass-
ments on the part of the depositors are thus avoided. This
provision, while intended for the convenience of the poorer
classes, is open to criticism, in that it exposes the accounts
to a danger of loss by the theft or losing of the books.
The money is paid upon verbal request of the holder of the
book, which is thus rendered as tempting to the dishonest as
cash. The only protection is the provision that no more
than 100 marks may be withdrawn in a single month with-
out special authority.*

Savings institutions exist at present in Germany in great
variety and number, including State or Province Savings
Banks, City Savings Banks, Township Savings Banks,
County Savings Banks, Bezirk Savings Banks, Private
Savings Banks, and Co-operative Savings Banks.

These banks have some 19,000,000 pass books out and
their deposits amount to 13,500,000,000 marks ($3,213,000,-
000). These deposits are practically all guaranteed by the
various municipalities of the Empire, which condition
forms a bulwark of confidence in the security of private
wealth and earnings that cannot be shaken by hard times,
panics, bank failures, etc.

An examination of what might be termed the financial
page of a local daily paper discloses the advertisements of
five different institutions absolutely insuring savings and
trust funds, and paying from three and one-half to four
per cent, per annum interest on the same. These adver-
tisements are explanatory and helpful toward a general
understanding of a condition that is practically universal
throughout the German Empire, and which, so far as the

•Hamilton, page 267.

THE SAVINGS BANK AS AN INSTITUTION 65

establishment of confidence is concerned and the encourage-
ment from this standpoint as well as the receipt of a good
fair rate of interest for money deposited, would seem to
leave nothing to wish for in the way of bringing into use
and circulation the savings and cash possessions of the
whole population. It wll be seen that the municipal or
city government stands good for the deposits with its tax-
ing powers, which puts such deposits on exactly the same
basis, so far as security goes, as a city or county bond, which
is perhaps as good a guaranty as has been devised. At any
rate the thrifty German considers himself well secured by
the guarant}^ of Ms own city.

Guaranty Against Loss.

Of the five mentioned advertisements of savings banks
in the local newspaper, two will serve as illustrative of the
whole :

(1) Open on working days from 8:30 a. m. to 1 p. m.,
and from 3 to 6 p. m.; depositors guaranteed by the ad-
ministration; interest on deposits four per cent.; withdraw-
als on demand; safety vaults rented; family pass books
issued.

(2) Open every worldng day from 9 to 12 a. m., and
from 3 to 5 p. m. ; also on Saturdays, as well as on the first
and last working days of the month, until 6 p. m. ; savings
deposits guaranteed by the city of Hanover; interest three
and one-half per cent. For deposits made on the first five
working days of the month interest is allowed from the
first day of the month; in other cases interest begins on the
first of the following month. On deposits recalled on the last
working day of the month interest is allowed for the month.
As a rule deposits may be withdrawn without term of no-
tice. In addition to the ordinary savings bank pass books,
books for wards as well as time-deposit books and rent
saving pass books are issued.

With one exception — where a city savings bank was
looted many years ago by the director, the defalcation be-
ing at once made good by a special tax — I have failed to
ehcit any information regarding bankruptcy or failure of
any of these savings institutions in Germany. In speak-
ing of the soundness of municipal savings banks, the direct-
or of the Hanover City Savings Bank says : "Failures of city

66 THE SAVINGS BANK AND ITS PRACTICAL WORK

savings banks are now impossible, so tbat losses up to the
present time have been out of the question, either for the
depositor or for the guarantor."

Large Number of Deposits — Profits Applied to
Municipal Uses.

The two municipal savings banks of Hanover carry only-
savings accounts. The total amount of deposits in these
two institutions is 91,257,909 marks ($21,719,382). The
total number of accounts in the two banks is very large,
being 149,615, making the average for each account about
Jj^loO. This figure makes a favorable showing of the econo-
mic standing of the community when the large number of de-
positors is considered in relation to the population.

The profits of these institutions, after the creation of a
reserve fund which shall amount to ten per cent, of the de-
posits, go to the city, and are used for charities and cor-
rections and for beautifying the city streets, squares and
parks. Thus a sense of municipal pride and patriotism is
appealed to; and with the highest form of guaranty of
safet}^ the payment of a fair and liberal rate of interest,
the establishment of numerous branches for receiving de-
posits, and the adoption of hours suitable to the convenience
of working people, the German savings banks set a fine
example to other countries.*

Savings banks (Sparkassen) have been, for many years,
conducted by the leading cities and to\^^ls in all parts of
Germany as well as by many private manufacturing con-
cerns for their employees. These institutions are patron-
ized chiefly by people whose savings are small, and take the
place to a considerable extent of the savings banks, build-
ing associations, etc., in the United States. Those under
municipal control have the credit of town or city back of
them. The conditions as to rate of interest, terms of
withdrawal, etc., are, as a rule, less favorable than those
of the larger savings banks in American cities, but the in-
stitutions are generally well conducted and patronized.

"Latitude is given to the municipal authorities in the in-
vestment of the funds of the banks. The institutions are
municipal institutions and are left chiefly to the good faith

•Report of Consul Robert J. Thompson, Hanover.

THE SAVINGS BANK AS AN INSTITUTION 67

and judgment of the municipal officers. The annual state-
ments and accounts are subject to the examination and con-
trol of State authorities. Of the funds invested at inter-
est in 1906, 48.8 per cent, were on mortgage securities, the
balance in State bonds and other securities, including some
issued by private concerns chartered by the State.

"In 1906 the total number of municipal savings banks
in Bavaria was 359. Many of these are located in the
smaller towns, and are used by the population of a consid-
erable number of neighboring towns and villages. The to-
tal deposits in these institutions at the close of the year 1906
was $120,000,000, as against $105,800,000 at the close of
1904. The average per depositor in 1906 was $126, and
$119 in 1904, while the average per capita of population for
the two years was $18 and $16, respectively. The tendency
in Bavaria in recent years has been for withdrawals to in-
crease at a more rapid rate than new deposits, so that net
deposits have shown a somewhat diminishing rate through-
out the Kingdom. The total number of depositors in 1906
was 946,733, against 889,042 in 1904, or approximately one
depositor to every seven persons in the Kingdom. The
average rate of interest in 1906 was 3.19 per cent., and 3.27
per cent, in 1904. Five banks paid 4 per cent, in 1906, 134
paid from 3 1-2 to 4, and 220 less than 3 1-2. The cost of
management in 1906 was $228,000. The net surplus above
deposits in the savings banks of the Kingdom in 1906 was
$9,972,000, or 8.3 per cent, of the total deposits. Of this
amount $9,210,000 was legal reserve which, under a statute
of 1874, is fixed at 10 per cent, of the deposits, no time be-
ing provided at which tliis reserve is to be attained.

"The City Savings Bank in Nuremberg has been in oper-
ation since 1821. Its depositors at first were limited to cer-
tain classes, such as employees in factories, day laborers,
apprentices, etc. Since 1874 it has been open to all classes
desiring to make deposits in sums from 1 mark (23.8 cents)
to 3,000 marks ($714). From 1875 to 1888 the rate of in-
terest was 3 1-2 per cent.; since 1888 it has been 3 per cent.
On deposits made witliin the first 5 days of the month in-
terest is reckoned as from the first of the month, otherwise
from the beginning of the following month. The total re-
sources of the Nuremberg Savings Bank at the close of 1907
was $6,850,000. New deposits during the year were $1,-
702,000, while withdrawals amounted to $1,914,000. The

68 THE SAVINGS BANK AND ITS PRACTICAL WORK

total cost of management for 1907 was $10,512. To this
is to be added $15,368, representing the interest on the re-
serv^e fund, which is paid to the city as the legally respon-
sible proprietor of the undertaking."*

People's Banks, f

The co-operative banks of Europe, otherwise called
"People's Banks," are essentially savings banks, in that
they depend for their working capital upon the accumu-
lated savings of their members. They are teacliing their
members to look upon money not as a mere possession to
be hoarded, but as an "implement of work," and as such an
implement worth liiring at a price. They reach even the
poorest of the people, and where the combined savings of
their membership is not sufficient to finance the operations
that fall to them, they borrow upon the strength of their
united credit.

The aims of these banks are first economic, to enable the
economically weak to make themselves financially strong by
the power of combination; second, moral, to bring the mem-
bers together in a unity of interests and to develop charac-
ter by making thrift and good habits the groundwork of
their operations; third, educational, to train in business
methods and in the handling of money those whose scope
has been narrow and whose experiences have been few in
this regard.

Co-operative banking appeals to the man who has noth-
ing but good character and can use money at a price and is
willing to pledge his all that he might obtain it. It appeals
to him as a saver because he knows that his savings are be-
ing used in certain ways and can see for himself that the
funds are loaned in a legitimate manner.

The principal object of co-operative banking is to make
association a means whereby credit may be obtained without
high cost, and b}'- those who could obtain it, if at all, only
under difficult and usurious conditions. It also provides a
method by which the saver can loan the borrower to their
mutual advantage, and when the savings accumulations be-

•Consul H. N. Harris, Nuremberg.

t Readers interested in this subject will find much of interest in the works
of Henry Wolff, who covers every phase of co-operative banking.

THE SAVINGS BANK AS AN INSTITUTION 69

come exhausted, to borrow collectively in order that they
might lend individually.

In the estabhshment of these banks, the cardinal rules
have been: Maximum of responsibility, minimum of risk,
maximum of publicity. To secin-e the maximum of respon-
sibihty, unhmited liability has been accepted by the mem-
bers; that is, each one pledging liis all for tlie good of all;
and, second, to secure the minimum of risk, character is
made the basis of membership and good habits the prime
requisite for membership. No investments are made in
speculative enterprises, and the purposes for which the
money is borrowed are closely inquired into and due care
taken that the funds shall be applied for such purposes only.
To secure the maximum of publicity the action of the bank
in all matters is given the widest publicity possible in order
that the work may have public inspection. The district is
more or less restricted, especially in the "village banks,"
and since the qualifications are moral rather than financial,
a high degree of excellence is obtained in the character of
the members. Inasmuch as the integrity of the borrower is
a prerequisite to borrowing, the losses have been exception-
ally few and light. It cannot be otherwise, where the loan
is watched with the closest scrutiny; for the moment the se-
curity becomes doubtful, the loan is called.

The result of these simple rules has been that the poor
have proven as good, if not better, creditors than the rich;
for once losing credit they can never regain it except by
the slow process of years of good behavior.

The great pioneers in the "People's Banks" were Raif-
feissen and Schulze-Delitzsch. They fully appreciated that
any system that would succeed must descend to the level of
its beneficiaries and they have admirably adapted the co-
operative idea of banking. "They knew," says Mary Wil-
cox Brown, in the "Development of Thrift," "that co-op-
eration is something more than merely working together;
that real co-operation means a willingness to subordinate
personal advantage to the general good, and that if co-
operation is to become an economic force it must have some
higher ideal than the mere economic gain — it must be in-
spired by an etliical motive."

The first Baiffeissen loan bank was founded in 1849 in
a little German village, and not until five years later was a
second founded. In 1862 a third venture was made, but by

70 THE SAVINGS BANK AND ITS PRACTICAL WORK

1910 the number of these banks in Europe had grown to be
over 40,000, with 3,000,000 members and a bilHon dollars
of resources. In 1893, the year of the terrible drought,
they proved their great usefulness by the way in wliich they
came to the assistance of the distressed husbandmen, to
whom they were able to render more practical help than was
the State itself. Up to 1896 they could personally boast that
"neither member nor creditor has ever lost a penny through
us."

In tlie formation of such banks the first consideration
is whether each member is reliable. The members as a body,
as well as individually, are interested in protecting the moral
standard of their bank, because they know that each is
pledged to sliare the burden of loss thrown by a defaulting
member on the bank. To assure a thorough knowledge of
the moral standing of every member, the operations of the
bank must be confined to a limited district, and each ap-
plication for membership must be carefully examined. No
distinction is recognized between the different members, but
it has been found advisable to have a few rich men in each
bank, and as they have to bear the brunt of the liability,
they have often been given a principal part in the admin-
istration. A rich man may help a rural bank by contrib-
uting a small gift toward the expense of starting and by
making deposits so as to attract other savers; but his chief
usefulness can lie in sharing the common liability and by
taking part in the administration, provided no spirit of pat-
ronage be introduced and the "cardinal principle" of the
bank, equality, be maintained. The council of such a bank
is composed of volunteer workers, the only paid officer be-
ing the cashier, to ensure whose honest discharge of his
duties a frequent and careful auditing of the accounts is
required. In the formation of these banks it was fully real-
ized that "the poor man has no credit because he is desti-
tute, and he is destitute because he has no credit," therefore
the only i)ledge he can give of his reliabihty is his labor.
As they were intended to reach those who had neither cred-
it nor cash, they issued no shares and had no entrance fee.

Xow, owing to legislative enactment, it is required that
such associations issue shares, but the amount of each share
is so small that it does not debar anyone from membership.
It was, also, the ])urpose of the founder, that there should
be no dividends, because the declaring of dividends might

THE SAVINGS BANK AS AN INSTITUTION 71

tempt shareholders to charge a liigh interest for the use of
their monej'^ and so confute the object of the estabhshment
of the banks. The banks are now required to declare divi-
dends, but, instead of enriching the shareholders, the divi-
dends are placed in a reserve fund, and so strengthen the
banks and lessen the Habihty of the members. If the
reserve fund should become unnecessarily large, a part of
it may be used for some public service. It can be seen
that there is little temptation to charge borrowers a high
rate of interest, the rate having to be determined only by the
amount that the bank has to pay for the use of money bor-
rowed by it. The difference need be great enough only to
meet the cost of administration and of accumulating a small
reserve fund. One advantage of these mutual credit banks
must not be lost sight of, i. e., that they are most valuable
depositories for the savings of their members.

From what has been said, it would seem that borrowing
is made easy, but such is not the case. The principle on
wliich all loans is made is that the money be used for some
productive purpose, not for "stopping a hole." The bor-
rower must clearly state therefore what is the use that he
intends to make of his loan, and he is obhged to use the
money in the way he has indicated. He gives a note of hand,
generally indorsed by one or more securities, and he is re-
quired to pay interest and principal promptly. In rural
districts it is found that a longer time must be allowed for
the repayment of a loan than in cities. Fifteen per cent, of
the loans of the Raiffeissen banks are granted for one year
or less, forty-three per cent, for from one to five years,
thirty-four per cent, for from five to ten years, and eight
per cent, for a longer period of time. If the loan were
made to repair some failure through loss by accident, such
as damage to buildings or to crops, repayment may be
expected in two years; if to purchase live stock, in three
j^ears ; and if to acquire land, or to build, in eight years.

If the council feel at any time that the loan is not being
well used, the money may be called in; but if, on the con-
trary, it is being productively used, the time for which it
was granted may be extended. No one feels a hesitancy in
speaking of the mismanagement of a member who has it
in his power to bring discredit on his bank or loss to it,
so there is no difficulty in getting persons to check the use
the individual makes of his loan.

72 THE SAVINGS BANK AND ITS PRACTICAL WORK

These banks have had no difficulty in getting sufficient
money to meet the demands made on them. What is needed,
in excess of the savings or other deposits, is raised by bor-
^o^^^ng from non-members. Their credit is so good that
they find it easy to borrow either from individuals or from
pubhc banks. In 1866 and 1870, the years of the Austro-
Prussian wars, deposits were withdrawn from other banks
to be ."pressed on the Raiffeissen banks for safe keeping."

The increasing number of banks led to the organization
of a central bank, which derives its strength from the local
association, and encourages the formation of new banks.
Cooperative insurance, and cooperative dairies, cooperative
hop and vine growing, and cooperative buying and selling
of farm products, have been encouraged by the banks, wliich
are especially ready to furnish money for the use of any
such enterprises.*

Cooperative Credit.

Cooperative credit cannot thrive where the people who
are to be its members are not aware that they need such an
institution; there must first be willing hands to establish it
and then willing hands to patronize it, and ^\T[lling hands to
support it; its main support must be from the inside and
not from the outside. There should be no duress or undue
persuasion — no beating of the big drum, as it were — for
membership should be a privilege to be asked for, and not
a gift to be thrust upon unwilling people.

The most distinguished person should be made welcome;
he may be of use; but the humblest should be as welcome,
and both should be on the same footing. The bank, as
Wolff remarks, cannot have wealthy men governing while
others obey; rich men limiting their liabihty, while the poor
man risks his all; rich men permitted to A^thdraw their
liability at pleasure, while the poor man remains still obli-
gated. Such distinctions are not to be tolerated under
either system. AVhether unlimited liability, or share liability,
the chief jJOAver must be vested in the members collectively.
Everyone of them contributes his own share in money or
else in liability; the holdings may differ, but on that account

♦Development of Thrift, pp. 104-112.

THE SAVINGS BANK AS AX INSTITUTION 73

no difference should be allowed, because cooperative bank-
ing is a union not of capital but of persons.

The wealthy member's unlimited liability may mean
more in money than the poor man's, but to the poor man his
own liabilitj' means every bit as much; he will be found as
eager as the rich man to protect it.

The administration is democratic. First, there is a
committee of management, to whom is entrusted the election
of new members, the selection of salaried or non-salaried
officers, fixing the rate of loans, the rate of interest charged
on loans, the rate of interest paid on deposits, auditing
accounts of officers, and general supervision of the bank.
Next comes the Council of Inspection, who are not usually
paid a fee, and whose duty it is to meet frequently and
review the transactions of the society, inquire into the loans
and securities, the position of borrowers, and in every re-
spect to see that the rules of the society have been carried
out. There is next the Committee which carries out the
administrative work; in this respect its duties are similar to
the cashier of a bank; it is an executive head. And lastly,
we have the General ]\Ieeting; the supreme authority of the
society is vested in the General Meeting of its members, in
which everyone has a single vote.

Postal Savings Bank.

The Postal Savings Bank is not a bank, or a banking
system, so much as it is an adjunct of the Government; for
the fundamental idea is that through the post office the
Government holds itself out as willing to accept the savings
deposits of the people, invest them in its own securities and
become absolutely responsible for the safe return of the
funds when called for, with a nominal rate of interest.

Such savings agencies msiy be found in the United
Kingdom, Canada, the United States (since January 1,
1911), France, Italy, Belgium, Russia, Netherlands, Aus-
tria, Hungary, Sweden, Egypt, and the Philippine Islands
— in fact all the leading countries of the world except Ger-
many and Switzerland now operate the Postal Savings Banks.
While the rules may differ in the details, the general scheme
is the same, and a review in brief of the system of Great
Britain will serve to illustrate the methods of operation of
such an institution.

74 THE SAVINGS BANK AND ITS PRACTICAL WORK

The present system was established in England in 1861.
The deposits, at whatever office they may be made, can be
withdi-awn from any other office wliich transacts a savings
bank business. The accounts are kept in London and all
moneys are remitted to the headquarters, where it is handed
over to the Commissioners for the Reduction of the National
Debt, who invest the funds in public securities.

Deposits may be made as low as one sliilhng or multiples
thereof, and the hmit of deposits for an individual is $150
during one year or $650 in all. Charitable societies may
deposit without hmit, and soldiers, wherever stationed, may
deposit their savings. Each individual is limited to one
account. For the benefit of youthful depositors, who have
not a shilhng to deposit, cards are issued upon which stamps
are placed as purchased, and when filled represent one
sliilling, and may be turned in as cash. School managers
are urged to bring this plan to the attention of the pupils,
and it has been productive of good results, over 5,000
schools having adopted this system. The interest rate is
fixed at two and one-half per cent, and never varies. Cal-
culations are made from the first of the month following
the deposit to the last of the month preceding the with-
drawal. After December 1st of each year the interest is
added to the principal.

When the depositor moves, the account may be trans-
ferred to the nearest depository without loss of interest.
Deposits as well as withdrawals may be made through an
office other than the original place of deposit. Withdrawals
may be made by telegraph, which service is furnished by the
same branch of government and is in the same office. Dur-
ing 1908 there were 125,401 withdrawals by wire. Two
methods for such withdrawals are provided, either by tele-
graphing the order to the home office to forward the money,
or to telegraph the warrant and have it paid within an hour
or two.

A system of government annuities is provided for, by
which the depositor is enabled to purchase an annuity
through the postal system. The money is received at the
savings bank and likewise paid through the bank. The bank
also acts as agent in the investment of funds for its de-
positors. Any person desiring to make such investment
can do so through the agency of the Postal Bank at a
triffing expense. He may transfer his deposit or make a

THE SAVINGS BANK AS AN INSTITUTION 75

specific deposit for this purpose. Sales may also be made
through the same chamiel.

At the close of 1908 there were 11,018,251 depositors
'with deposits aggregating $781,795,533. From 1861 to
1895, the reports show a net profit to the Government.
From 1896 to 1899 there was a loss. In 1900, 1901, 1902
there was again a profit, and since 1902 there has been a
steady deficit averaging $500,000 yearly.

From "Notes on Postal Savings Banks Systems," is-
sued by the Monetary Commission, the cause of this is
found to be in the reduction of interest from 2% to 21/^ on
British Consols, in which the funds are chiefly invested.

American Postai, Savings Banks.

The Postal Savings Bank System of the United States,
which began operations January 3d, 1911, by the opening of
a postal savings bank in each state, is under the control of
a Board of Trustees, consisting of the Postmaster-General,
the Secretary of the Treasury and the Attorney- General.

Depositories for the receipt of such moneys are desig-
nated by the Board. An initial appropriation of $100,000
was made to cover the cost of putting the law in operation,
which was supplemented by another appropriation of $500,-
000 in the session of 1911.

Any person over ten years of age may deposit, but no
person shall have more than one postal savings bank ac-
count in his or her own right. Upon making the first
deposit, a certificate of deposit is issued, which is to be sur-
rendered M^hen paid, and canceled; or in the event of
making a subsequent deposit is to be surrendered for one
calhng for a higher amount. The lowest deposit permitted
is one dollar, the limit being $100 in a calendar month; but
to provide for small deposits, a postal savings card is issued
for ten cents, to which may be attached postal savings
stamps, which when filled will be accepted in lieu of one
dollar.

The interest rate allowed is two per cent., credited once
a year, and the highest balance permitted is $500 to one
person. Withdrawals may be made on vdemand.

The funds so received are to be deposited in national and
state banks at two and one-quarter per cent, interest. Five
per cent, of these deposits may be withdrawn and kept in

76 THE SAVINGS BANK AND ITS PRACTICAL WORK

the Treasury of the United States as reserve. Before be-
coming a depository, the bank must furnish as security
accepted bonds, and it is the intent of the law to distribute
the deposits pro rata among the banks quahfying, the limit
being an amount equal to the paid up capital and one-half
the surplus. Not over thirty per cent, of the amount of
such funds may be ^vithdrawn by the trustees for investment
in United States bonds, and it is the intent of the act that
the residue of such funds, amounting to sixty-five per cent.,
shall remain on deposit in the banks in each state and
territory wilHng to receive the- same under the terms of the
act, but may be withdrawn for investment in bonds under
the direction of the President, "when in his judgment, the
general welfare and interests of the United States so re-
quires." Provision is also made for the conversion of sav-
ings bank deposits into United States bonds, at the request
of depositors.

CHAPTER VII
SAVINGS BANKS IN THE UNITED STATES

If a line be drawn from the northern extremity of
Maine to St. Vincent, Minn.; thence to Kansas City, Mo.;
and thence to Richmond, Va., it will include all savings
banks, but one, that conform to the definition found in
Chapter III, page 25. This is not to say that all the savings
banks of the United States are here included; but all the
mutual, except one, are to be found witliin these confines.*

But to leave generalities aside, there are 1,759 mutual
and stock savings banks in the United States, as reported
by the Comptroller of the Currency for the year ending June
30, 1910. t Of these there are 647}: mutual savings banks,
that is to say, without stock, and operated for the benefit of
depositors only. The appended table compiled from official

Mutual Savings Banks in the United States (1910).

(Arranged according to number of banks.) Ratio of De-

state No. of No. of Average positors to

Banks Deposits Depositors Account PopuIation§

Massachusetts 192 $828,078,258 2,100,970 $366.23 75%

New York 142 1,542,933,693 2,907,608 530.65 32%

Connecticut 87 274,161,705 570,065 480.93 51%

New Hampshire . . 55 84,836,589 184,826 459-51 43%

Maine 52 89,938,240 237,813 378.19 32%

New Jersey 26 106,762,662 309,338 345.13 13%

Maryland 22 89,354,005 243,395 367.12 19%

Vermont 21 43,132,268 108,298 398.27 30%

Rhode Island 18 72,334,582 167,998 430.59 31%

Pennsylvania 11 176,194,529 698,885 441.72 .052%

Minnesota 9 24,491,871* 98,338 249-06 .048%

Indiana 5 11,836,495 31,995 369-95 .084%

Wisconsin 12t 6,080,507 25,507 238.39 11%

Ohio 3 See Stock Savings Banks 375. 12t

Delaware 2 9,631,121 25,524 377-34 .125%

West Virginia 1 See Stock Savings Banks.

California 1 See Stock Savings Banks.

*11 Banks. t44 Banks. {Includes 9 Stock Banks. §Census 1910.

*To be geographically correct, the line would have to curve southward in
order to include all five savings banks of Indiana.

fFor later statistics, see bottom page 95.

$This number included eight "guaranty savings banks" in New Hampshire,
which leaves 639 purely mutual; the Comptroller, however, makes it one less.

78 THE SAVINGS BANK AND ITS PRACTICAL WORK

sources will indicate the relative standing of the mutual
savings banks as to number, deposits, number of depositors,
and average amount on each account:

it is noticeable that all but 21 of the mutual savings
banks are in the Eastern and New England states. The
exceptions are: West Virginia, 1; Ohio, 3; Indiana, 5;
Wisconsin, 3; Mimiesota, 8; California, 1.

The resources of the mutual savings banks as given in
the Comptroller's report aggregated $3,652,449,198.40, of
which there was due depositors $3,360,563,842.79.

The principal items of interest concerning these banks
are as follows:

Cash on hand $ 24,463,401.28

Loans secured by mortgages 550,935,126.64

Mortgages owned 976,042,325.30

Loans on demand, unsecured by collateral 9,761,253.11

Loans on demand, secured by collateral 36,182,096.37

"Two-name paper," time loans 47,872,737.31

Single name paper, time loans 3,336,559-55

Time loans with collateral 97,344,141.23

Bonds and securities 1,599,532,371.94

United States Bonds 23,538,195.00

State, county and municipal bonds 714,821,480.80

Railroad bonds 757,494,315.53

Other stocks and bonds, bank stocks, etc 180,295,429.19

The home of the mutual savings bank" is in the East,
and may even be said to be in the Eastern states; for west
of Buffalo and south of Baltimore, we find but 21 savings
banks of the mutual character. Out of 647 savings banks
of the mutual type found in the United States, 593 are
found in Xew England, 'New York and New Jersey; and
over one-half, or 334, are found in the two states of New
York and Massachusetts. Maine, Vermont, Connecticut
and New Hampshire have 215, the total of which accounts
for all but 100 of the mutual savings banks in this country.

The dearth of savings banks in Pennsylvania has already
been commented upon; but it would seem strange that in a
state of such character, where the mutual savings bank had
its first test, and where in individual instances it has been
extremely popular and successful,* the failure of such an

•ITie Philadelphia Savings Fund Society has the largest number of depositors
of any bank in this country.

80 THE SAVINGS BANK AND ITS PRACTICAL WORK

institution to become widespread is unaccountable; but as
has been remarked, Pennsylvania is the home of the build-
ing and loan association (there are over 1,400 in operation)
which seems, in a measure at least, to fulfill the same pur-
pose. From a pamphlet issued by the Dollar Savings Bank
of Pittsburgh in 190.5, the striking sentence is gathered, that
to-day at the end of half a century the Dollar Savings Bank
stands as the only institution of its kind in Western
Pennsylvania.

OCTIJXE 3IAP OF NEW YORK STATE SHOWIKG THE NUMBER OF SAVINGS BANKS IN EACH
COUNTY. THERE ARE NO SAVINGS BANKS IN THE SHADED PORTIONS, WHICH COVER
28 COUNTIES. THIS WELL ILLUSTRATES THE POINT THAT THE MUTUAL SAVINGS BANK
IS NOT SPREADING E\T:N IN A STATE WHERE IT HAS BEEN A PRONOUNCED SUCCESS
FOR NEARLY A CENTURY.

As we go South and West the banks take on a more
commercial aspect, and the saving bank as we know it in the
East is a rarity, and the word "savings" in their title is a
misnomer. This is particularly true of Iowa, where we find
practically all state banks using tliis word, and yet very few
of them are other than banks of discount. The reason for
the large number may be in the economic conditions of that
state, and also the fact that banks may organize with as low
as $10,000 in capital, making it possible to establish a bank
in even the smallest place.

In Ilhnois, for instance, we find no distinctively savings

SAVINGS BANKS IN THE UNITED STATES 81

banks, and in a city like Chicago, where if the same success
had attended the savings banks as it has in New York, up-
wards of a billion dollars would be on deposit, we find no
strictly savings institution other than banks of discount and
trust companies operating savings departments.

Mutual Uanks in the South and West.

The reasons for the absence of mutual savings banks in
the West and South he, no doubt, as Hamilton suggests,
in the fact that these sections were not settled from reh-
gious, but commercial motives; and the "spirit of New
England" being lacking, the savings bank which requires
a peculiar spirit of philanthropy, and age, as well, has not
become a factor in the development of the country. In
fact, the eleemosynary institution, such as the college, the
hospital or the savings bank, the former requiring endow-
ments of money to become successful, and the latter the
endowment of gratuitous management to become possible,
is last to follow in the economic development of a com-
munity. Another reason may be in the preponderance of
agriculture among the employments, which does not, until
the country becomes liighly prosperous, afford much in the
way of idle funds w^hich would go into the savings banks.

The dearth of savings banks in the South is, no doubt,
due to the prostration follomng the Civil War, which left
the country drained of its resources; the general ignorance
of banldng functions, and the improvidence of the Negro,
who "in savagery first and slavery later, was not in posi-
tion to develop an appreciation of property." To these
might be added, in the case of the latter, the disastrous
history of the Freedmen's Savings and Trust Company,
which, under the apparent protection of the Government,
was intended to help and bless the Negro in his new-found
freedom, but through mismanagement and gross abuse of
trust turned a blessing into a curse, and it was years be-
fore the Negro had confidence enough in banks to entrust
his money to even the best of them. Other disastrous fail-
ures have attended banking by and for the Negroes, the
last catastrophe in this line being the collapse of the Sav-
ings Bank of the Grand Fountain, United Order of True
Reformers, which was allied with a mutual benefit organ-

82 THE SAVINGS BANK AND ITS PRACTICAL WORK

ization, a hotel, printing plant, chain of stores, real estate
speculations and a host of side issues which dragged it
down. It failed in the summer of 1911. The trustee bank
would be a most excellent medium in assisting the black
man in liis chmb upward; but suitable persons must under-
take the work for "sheer love of the game," and until the
thrifty black man arrives at this desirable point the work
must be done, if at all, by friends of another color, and
here the question of race prejudice enters to negative such
a possibiUty. There are, however, over forty banks in the
South, savings banks in name, but generally savings and
commercial banks, which are owned and operated solely by
Negroes, and some of them are large and well-managed
concerns.

There are a few States where the law is utterly inade-
quate, either to invite these institutions or to properly safe-
guard them after being established; thus, Kansas has no
savings bank law; neither has Tennessee nor Kentucky.
The new laws of such States as Texas, Maryland, Ohio,
jNIissouri, cover the question with some degree of complete-
ness, wliile a State like West Virginia, which has only one
mutual savings bank, has a very good Savings Bank Act.

Savings banks go where they are encouraged — this can-
not be gainsaid. They must first be made possible by econo-
mic conditions, and then by legislative action. Taxation
must not become a burden. A good institution needs stim-
ulation, protection, supervision and help; while a bad one is
bound to tln-ive in spite of restrictions. In every state — in
fact in every city — there is a need for a well managed, well
protected savings bank, which the lawmakers should recog-
rtJ/.e and legislate accordingly.

In many sections a mutual savings bank would be utter-
ly inadvisable. Conditions which must precede such an in-
stitution are lacking and the same ob.iect nmst be gained
by other methods. New England with its sturdy Puritan
tyjie. New York with its Dutch, Connecticut with the
Yankee, naturally have in them the seeds of the mutual
savings bank. The habits of the people, their environment
and training make the introduction of such an institution
an easy matter, for while physical conditions in many places
may be hard, yet the mere ability to overcome such obsta-
cles as barren soil, rocks and severe climate lays the ground
work for the mutual savings bank.

SAVINGS BANKS IN THE UNITED STATES 83

West and South, we must have the "commercial motive"
to foster any such institution and the stock savings banks
would logically seem to be in place. A study of the in-
vestment laws of the various States is an education in itself
and affords an inviting field for the student of savings
banking, in wliich he may discover the traits and tendencies
of legislators as they have from time to time endeavored to
grapple with this problem.

Savings Bank Investments.

The investments of the savings banks of this country
may roughly be classified into: — First, Government bonds;
Second, State bonds (usually with a provision that default
shall not have occurred within a certain time) ; Third, mort-
gage loans (which are quite universal) ; Fourth, city, coun-
ty, town and school district bonds (particularly of the
State in which the bank is located, and frequently in other
States with stipulations as to the population and the debt) ;
Fifth, railroad bonds; Sixth, street railway bonds; Seventh,
corporation bonds; Eighth, bank stock; Ninth, corporation.*
bonds and stocks; Tenth, collateral loans; Eleventh, per-
sonal loans; Twelfth, commercial paper, and Thirteenth,
miscellaneous investments.

All States legalize mortgage loans. Government and
State bonds, and municipal securities, with collateral loans
upon such security. Most States legalize railroad bonds.
In New England bank stock is a common investment.
Personal loans (three-name paper) are quite general, while
commercial paper is probably the principal asset in the
South and West, the nature of the banks making this the
most likely form of investment. New York and Minnesota
seem to be the only States that do not provide for loans on
personal security of some sort.

One feature is common and that is what may be termed
"local sentiment" — a desire to benefit the locality in which
the bank operates, which is a perfectly natural thing to do,
and commendable; and a savings bank drawing its patron-
age from a certain community should, if possible, cater to
the wants of the neighborhood in making mortgage loans
and other investments. Thus New York banks may only
purchase municipal securities within the State, except in
specific instances. In Massachusetts the restrictions for

8t THE SAVINGS BANK AND ITS PRACTICAL WORK

railroad bonds outside of the State, and in a great many-
instances, the restrictions for municipal securities in other
States are made more rigid than for those in the home State.
In New Hampshire the banks may loan 70 per cent, on
mortgage loans in the State, while out of the State the
hmit is 50 per cent., showing an inclination to favor local
loans, as also does the restriction that only 25 per cent,
of the deposits may be loaned outside of the State. Where
corporation bonds and street railway bonds are legahzed
they are usually restricted to corporations within the State.
In Rhode Island not over 30 per cent, of the 70 per cent,
authorized on mortgage loans may be placed outside of the
State, and notes of gas, electric light, power, and telephone
companies in Rhode Island are legal investments for the
banks of that State. Tliis desire to foster and encourage
local industry is universal and commendable. On the other
hand there are a few States, notably Pennsylvania and
INIaryland, where the law does not closely restrict the in-
vestments. As a matter of fact, in the latter State, there
has been no supervision or even a savings bank act until
1910. And yet, be it said to the lasting credit of the banks
in these States that they are doubtless as strong and as ably
managed as any of their brethren in States operating rigid
investment laws. Being placed '"pon honor," as it were, these
bankers have built up most excellent institutions, and having
a wide latitude in the matter of investments, have made a sci-
entific study of bonds and stocks and have become experts
in this line, — an exnerience which cannot fail to make a
broad-minded and careful banker. Being good from choice
and not from necessity, they are commended for the course
they have taken, and the morale of the banks amply attests
the fact that there may at times be too much legislation even
on the subject of banking.

The State's Part in Fostering Banking Institutions.

In so far as banks and banking is concerned, the State
is responsible for two things : Laws and supervision. And
before there can be good supervision there must be good
laws to enforce. It is a standing wonder that, under the
loose laws that prevail in many States, and the looser
supen^ision, banking in those Commonwealths has been as
successful and attended with as few disasters as it has.

SAVINGS BANKS IN THE UNITED STATES 85

In many of the States, particularly in the South, the laws are
utterly inadequate, and the appropriations for bank super-
vision so meagre that exhaustive examinations are impossi-
ble, even if the officials of State were so minded. The State
that has practically no law at all and examines the banks
"when expedient" as obtains in Delaware, is not doing its
duty, either toward itself, the banks or the people. And the
States that have made practically no provision for the sav-
ings of the people, either by encouraging savings banks or
providing for proper safeguards for savings accounts in
banks of discount and trust companies, are in a large meas-
ure responsible for the advent of the Postal Savings Bank,
which many bankers have so loudly deplored. As a pre-
ventative measure good laws on behalf of the savings ac-
count would have helped the very banks which have op-
posed the introduction of safeguards on the theory of
laissez faire.

Good laws come when the demand manifests itself; and
the introduction of such legislation merely awaits the en-
dorsement and advocacy on the part of the banking inter-
ests. Good supervision is merely a matter of money and
good men. The former can rightfully be made a charge
upon the banks themselves, and the latter is merely a mat-
ter of eliminating politics and careful selection under civil
service rules. New York has no difficulty in obtaining the
services of some of the brightest men in the banldng pro-
fession, simply because the remuneration is ample and the
test educational and not political.

Two examiners for over 400 banks, as obtained a few
years ago in Georgia, simply because the constitution pro-
hibited appropriations sufficient to do the work properly, is a
travesty on bank examination. In such a case the examiner
has more examinations to make than the average preacher
pastoral calls; and it is plainly to be seen that a bank can-
not be examined in the time usually alloted to such visitations
on the part of the clergy.

The growth of savings banks in the United States from
1820 to 1910, as evidenced by the amount of deposits, num-
ber of depositors, average deposit account, and the average
per capita in census years, from 1820 to 1890 and annually
thereafter, is shown in the following table.*

* From Comptroller's report, 1910.

THE SAVINGS BANK AM) ITS PRACTICAL WORK

NcilBER OF SaVIXGS BaNKS IX THE UxiTED StATES, NuMBER OF DEPOSITORS,

Ajiouxt of Savings Deposits, Average Amouxt Due Each Depositor ix the
Years 18J0, 18Jo, 1830, 1835, 1840, axu 1815 to 1910, axd Average Per Capita
IX the Uxited States ix the Years Givex.

Year.

18;?0.
18:;?5.
1830.
1835.
1840.
18-15.
1846.
1847.
1848.
1849.
1850.
1851.
1853.
1853.
1854.
1855.
1856.
1857.
1858.
1859.
1860.
1861.
1863.
1863.
1864.
1865.
1866.
1867.
1868.
1869.
1870.
1871.
1873.
1873.
1874.
1875.
1876.
1877.
1878.
1879.
1880.
1881.
1883.
1883.
1884.
1885.
1886.
1887.
1888.
1889.
1890.
1891.
1893.
1893.
1894.

per capita

Average

in the

Number

Number of

due each

United

of banks

;. depositors. Deposits.

depositor.

States.

8,635

$1,138,576

$131.86

$0.12

16,931

2,537,082

149.84

38,035

6,973,304

183.09

.54

60,058

10,613,726

176.73

78,701

14,051,520

178.54

.82

145,206

24,506,677

168.77

158,709

27,374,325

172.48

187,739

31,637,479

168.46

199,764

33,087,488

165.63

217,318

36,073,924

165.99

108

251,354

43,431,130

5173.78

'.1.87

128

277,148

50,457,913

183.06

141

308,863

59,467,453

193.54

159

365,538

72,313,696

197.83

190

396,173

77,823,906

196.44

315

431,603

84,390,076

195.39

222

487,986

95,598,330

195.90

231

490,438

98,513,968

200.87

245

538,840

108,438,387

201.24

259

622,556

138,657,901

206.66

278

693,870

149,377,504

215.13

4.75

285

694,487

146,729,883

211.27

289

787,943

169,434,540

215.03

293

887,096

206,235,202

232.48

305

976,035

236,380,401

242.08

317

980,844

243,619,383

247.35

336

1,067.061

283,455,794

264.70

371

1,188,202

337,009,452

283.63

406

1,310,144

392,781,813

299.80

476

1,466,684

457,675,050

312.04

517

1,630,846

549,874,.358

337.17

14.26

577

1,902,047

650,745,442

342.13

647

1,993,935

735,046,805

368.82

669

2,185,832

803,363,609

367.07

693

2,293,401

864,556,902

376.98

771

2,359,864

924,037,304

391.56

781

2,368,630

941,350,255

397.42

675

2,395,314

866,218,306

361.63

663

2,400,785

879,897,425

366.50

639

2,268,707

802,490,298

353.72

629

2,335,583

819,106,973

350.71

16.33

629

2,538,749

891,961,142

352.73

629

2,710,354

966,797,081

356.70

630

2,876,438

] ,034,856,787

356.29

636

3,015,151

1,073,294,955

355.96

646

3,071,495

1,095,172,147

356.56

638

3,156,950

1,141 ,,530,578

361.36

684

3,418,013

1,235,247,371

361.39

801

3,838,291

1,364,196,550

355.41

849

4,021,523

1,425,230,349

354.40

921

4,258,893

1,524,844,506

358.03

24.35

1,011

4,.53.3,217

1,633.079,749

358.04

25.29

1,059

4,781,605

1,713,769,036

358.20

26.11

1,030

4,830,599

1,785,150,957

369.55

26.63

1.031.

4.777.687

1,747.961,380

365.86

25.53

SAVINGS BANKS IN THE UNITED STATES 87

Average

per capita

Average in the

Number Number of due each United

Tear. of banks. depositors. Deposits. depositor. States.

1895 1,017 $4,875,519 ,1^1,810,597,023 $371.36 $25.88

1896 988 5,065,494 1,907,156,277 376.50 26.68

1897 980 5,201,132 1.939,376,035 372.88 26.56

1898 979 5,385,746 2,065,631,298 383.54 27.67

1899 987 5,687,818 2,230,366,954 392.13 29.24

1900 1,002 6,107,083 2,449,547,885 401.10 31.78

1901 1,007 6,358,723 2,597,094,580 408,30 33.45

1902 1,036 6,666,072 2,750,177,290 412.53 34.89

1903 1,078 7,035,228 2,935,204,845 417.21 36.52

1904 1,157 7,305,443 .3,060,178,611 418.89 37.52

1905 1,237 7,696,229 3,261,236,119 423.74 39.17

1906 1,319 8,027,192 3,482,137,198 433.79 41.13

1907 1,415 8,588,811 3,690,078,945 429.64 42.87

1908 1,453 8,705,848 3,660,553,945 420.47 41 .84

1909 1,703 8,831,863 3,713,405,710 420.45 41.75

1910* 1,759 9,142,908 4,070,486,246 445.20 45.05

For 1911 and 1912 see bottom page 95.

In the figures for 1896 to 1908, inclusive, but not subse-
quently, are the number of depositors and amount of de-
posits in the State banks of Illinois, having savings de-
partments, but not the number of such banks, by reason of
the fact that general reports from these institutions are in-
corporated in State bank returns.

For the purpose of giving permanency to the most ex-
haustive and careful compilation of the savings deposits
of this country ever made, the following statistics compiled
by the late William Hanhart, Secretary of the Savings
Bank Section, American Bankers' Association, are here-
with given. In submitting his report Mr. Hanhart said:

To reckon onh^ as savings such amounts as are deposited
in the mutual and a few stock savings banks, as given in
the figures published by the Comptroller of the Currency,
is inaccurate and misleading; the actual savings of our peo-
ple may be said to primarily consist of:

1. The amounts deposited in Mutual and Stock Sav-
ings Banks.

2. The amounts deposited in the Savings Departments
of State Banks, Private Banks and Trust Companies.

3. The amounts deposited in the Savings Departments
of National Banks.

4. The accumulations of Building and Loan Associ-
ations; these are plainly savings and are used to help build
homes for the thrifty and industrious.

5. The accumulations of Life Insurance Companies;

* Population estimated at 90,363,000, June 30, 1910.

88 THE SAVINGS BANK AND ITS PRACTICAL WORK

such accumulations will be generally conceded to be savings,
as the greater part comes from the desire of the unselfish and
careful to protect their loved ones in the event of their death.

6. The deposits in School Savings Banks; the amount
of these deposits is included in the deposits in savings banks
where they are usually banked; it may be of interest to state
that on the first of January, 1909, the School Savings Bank
System was in operation in 1,102 schools in 114 cities of 24
States, the pupils having deposited since the beginning
$4,609,431.35, withdrawn $3,864,526.62, leaving a balance
of $744,904.73 due to about 178,000 depositors; this is a
^ood work and should meet with all encouragement.

7. The private investments of small savings in bonds —
called in Wall Street "Odd Lot Investments" — a class in
bujdng conforming to Thos. B. Reed's definition of the
honest politician, as it "stays bought." The records show
that this class of investments is made by people who ac-
cumulate their savings in savings banks, and who become
educated in the science of investing $1,000 or so at a time, in
good bonds, recommended by their bankers; the amount of
such holdings cannot, of course, be estimated, but it has be-
come very large during the past ten years, in the East as well
as in many of the large cities of the West and Middle West.

8. The savings invested in homes and homesteads in
this great land of ours are enormous and without parallel
in EfUrope; indeed, the ownership of the homes of our peo-
ple is the bulwark of the Republic; no estimate, of course,
can be made of the amount of this form of savings of our
thrifty citizens. To mention only the first five items we have :

1,453 Savings Banks, with 8,705,84'8 depositors (as
per annual report of the Comptroller of

the Currency) with savings deposits of $3,660,533,945

15,000 (number estimated) State Banks, Savings
Banks, Trust Companies and Private
Banks (not included in annual report of
the Comptroller of the Currency), holding
in their Savings Departments, savings de-
posits of 1,568,720,391

2,011 National Banks, holding in their Savings De-
partments (not included in annual report
of the Comptroller of the Currency) sav-
ings deposits of 331,562,680 $5,560,837,016

6,459 Building and Loan Associations, with 1,876,967

members and accumulations of 745,993,398

827 Life Insurance Companies, having 33,186,430
policies in force, assuring $22,998,969,881,

with assets of 3,159,581,074

Showing the enormous total of ~ $9,466,411,488

as the actual and visible savings of 80,000,000 people, or over $118 for every man,

SAVINGS BANKS IN THE UNITED STATES

woman and child in the country; this is more than three times the amount of
money (gold, silver, bank notes, greenbacks, etc.) in circulation in the United

States. Truly we may all be proud of such showing, proving the thrift of our
wide awake and enterprising citizens.

The following reports give the detailed figures for the

above mentioned total amounts: savings Actual savings

Deposits in Deposits in the

United States, Savings Banks,

as reported by National Banks,

the Comp- Trust Companies

troller of the and Private Banks

STATES. Currency. In United States.

Alabama 0 $6,744,354

Arizona 0 250,720

Arkansas 0 7,192,051

California $254,695,083 304,443,633

Colorado 3,351,285 9,779,981

Connecticut- 256,372,062 270,440,914

Delaware 8,830,296 11,994,742

District of Columbia 6,054,480 5,119,982

Florida 844,632 6,364,204

Georgia 0 3,692,171

Idaho 0 2,938,306

Illinois 181,361,054 259,106,227

Indiana 11,431,050 46,235,557

Iowa 132,748,558 142,049,879

Kansas 0 14,676,365

Kentucky 0 3,121,025

Louisiana 0 21,583,063

Maine 85,502,202 124,823,024

Maryland 78,469,584 105,778,695

Massachusetts 706,940,596 826,909,642

Michigan 0 163,226,674

Minnesota 21,799,456 73,056,328

Mississippi 0 7,835,132

Missouri 0 72,374,836

Montana 0 8,897,141

Nebraska 2,160,715 23,611,425

Nevada 0 2,510,256

New Hampshire 81,639,166 89,832,745

New Jersey 92,631,487 180,193,785

New Mexico 0 472,926

New York 1,378,232,780 1,571,659,727

North Carolina 5,760,337 4.390,297

North Dakota 0 12,076,738

Ohio 53,930,291 249,437,164

Oklahoma 0 969,485

Oregon 0 16,088,651

Pennsylvania 160,638,670 492,481,316

Philippine Islands 0 1,059,950

Porto Rico 0 490,980

Rhode Island 66,590,142 114,812,570

South Carolina 7,891,789 16,598,722

South Dakota 0 20,349,850

Tennessee 0 25,535,261

Texas 0 1,746,843

Utah 0 12,211,009

Vermont 60,493,727 68,997,402

Virginia 0 24,190,456

Washington 0 27,511,455

West Virginia 1,099,489 27,145,234

Wisconsin 1,085,014 76,581,359

Wyoming 0 1,240,765

Totals $3,660,553,945 $5,560,837,016

90 THE SAVINGS BANK AND ITS PRACTICAL WORK

SAVINGS ACCOUNTS IN NATIONAL BANKS, NOVEMBER 27, 1908.

No. of

STATES. Banks.

Maine 77

New Hampshire 57

Vermont 51

Massachusetts 197

Rhode Island 23

Connecticut 80

New England States 484

New York 425

New Jersey 177

Pennsylvania 775

Delaware 27

Maryland 102

District of Columbia 11

Eastern States 1,517

Virginia 109

West Virginia 94

North Carolina 69

South Carolina 30

Georgia 99

Florida 39

Alabama 76

Mississippi 31

Louisiana 38

Texas 532

Arkansas 40

Kentucky 145

Tennessee 87

Southern States 1^389

Ohio 369

Indiana 246

Illinois 411

Michigan 96

Wisconsin 130

Minnesota 265

Iowa 317

Missouri 120

Middle States L954

North Dakota 132

South Dakota 90

Nebraska 214

Kansas 210

Montana 42

Wyoming 28

Colorado 112

New Mexico 40

Oklahoma 288

Western States 1,156

"Washington 66

Oregon 65

California 144

Idaho

Utah

Nevada

Arizona

Alaska

Pacific States ...

Hawaii

Porto Rico

Island possessions

40
20
10
13

"360
4

United States (total) (i,865

No. Showing

Savings

Deposits.

^108

137

105

408

"^722
46
38
22
12
24
21
19
5

~272

118

137

101

632

~T58

109

~ 0

2^011

Amount of

Savinga"

Deposits.

$12,450,049

958,647

5,592,195

7,715,571

2,322,979

644,828

~$29,684.272

35,049,180

9,719,338

92,860,088

1,133,458

9,688,297

270,063

$148,720,424

13,521,036

2,438,084

1,058,481

2,693,352

3,692,171

3,774,373

2,090,756

172,513

887,904

1,746,843

285,370

1,538,025

2,535,261

$36,435,174

20,700,682

2,292,604

20,666,830

25,415,204

17,025,944

7,100,858

3,462,907

1,469,268

$98,131,300
201,624
471,779
286,425
820,360
2,295,011

81,848
121,576

41,926
319,485

$4,640,038

7,830,085

418,512

4,066,272

214,881

1,165.494

248,076

5,143

~fi3,948;466

$331,562,680

SAVINGS BANKS IN THE UNITED STATES

SAVINGS DEPOSITS IN THE UNITED STATES

As Reported by the
Comptroller of the Currency

1909,

Number Amount
No. of of Savings of Savings
Banks. Depositors. Deposits.

As Reported by
National Monetary Commission

Alabama

Alaska

Arizona

Arkansas

California

Colorado

Connecticut

Delaware

District of Columbia

Florida

Hawaii

Georgia

Idaho

Illinois

Indiana

Iowa

Kansas

Kentucky

Louisiana

Maine

Maryland

Massachusetts

Michigan

Minnesota

Mississippi

Missouri

Montana

Nebraska

Nevada

New Hampshire. . .

New Jersey

New Mexico

New York

North Carolina. . . .

North Dakota

Ohio

Oklahoma

Oregon

Pennsylvania

Philippine Islands . .

Porto Rico

Rhode Island

South Carolina. . . .

South Dakota

Tennessee

Texas

Utah

Vermont

Virginia

Washington

West Virginia

Wisconsin

Wyoming

131

18
4

572

52
48

189
15
11
12

137

13,320 $2,019,712

6
11

28
12

3
21
22
11
11
3
1

5,213

443,334

17,304

544,664

25,380

54,069

6,295

35,163
1,217

32,039

373,906

20,080

17,314

60,887

226,861

247,445

2,002,010

76,129

93,544

7,640

4,067
16,846

178,440

297,926

1,575

2,760,343

44,783

1,157,131
250,915,736

3,895,021
257,696,998

9,139,659
11,101,116

1,168,190

7,832,232
336,486

10,917,991

136,958,093

3,552,705

1,996,554

16,429,181

87,677,255

89,961,898

728,224,477

31,292,353

22,503,156

2,047,270

3,368,991
3,261,165

79.599,246

98,549,807

409,512

1,405,799,067

7,349,823

44 321,809 103,966,942

3,339
452,487

130,231
30,476

7,737
48,003

29,195
104,630

14,685

42,189

6,249

700

1,890,229
166,095,385

69,308,515
9,550,910
1,750,544

14,039,136

8,544,649
39,442,734
9,583,957
4,507,943
8,195,002
1,146,807
222,113

April 28th, 1909,

No. of
Banks.

187
8

40
163
529
233
189

28
110

11
381
141
995
693
1,097
803
454
159
165
183
427
478
781
192
921

96
731

30
116
300

63
831
275
499
801
589
169
1,144

' 7

52
173
450
275

763

91
288
257
190
494

Number
of Savings
Depositors.

50,725

520

4,678

14,187
525,488

62,804
553,901

35,668

87,711

38,380

11,325

99,236

11,263
821,203
271,221
419,546

61,220

59,594

80,733
332,687
346,317
2,049,137
606,989
257,267

31,551
218,555

21,076

67,673

4,657

197,757

641,868

3,930

3,238,890 1.

103,744

23,774
861,516

10,507

37,284
1,270,023

9,490

192,415

66,553

43,012

85,643

34,484

63,901

178,585

126,867

135,729

91,638

324,965

6,819

Amount
or Savings
Deposits.

$7,810,548

645,032

1,266,042

2,933,762

281,338,437

20,086,594

359,717,880

11,628,354

18,892,588

8,572,792

3,665,363

19,816,184

1,971,867

258,314,960

68,884,756

153,979,963

14,936,042

31,373,542

21,356,383

118,779,073

135,676,628

747,150,028

174,437,635

64,936,615

7,433,339

49,180,818

9,773,492

34,177,306

3,399,927

84,059,715

208,548,010

1,747,214

,595,039,940

18,200,868

13,006,295

274,381,930

2,475,379

15,041,663

520,488,711

563,879

116,570,308

18,700,513

13,073,309

21,327,318

9,157,931

16,503,291

65,894,009

43,118,686

35,045,416

23,545,441

79,027,289

2,386,687

1,703 8,831,863 $3,713,405,709 18,245 14,894,696 $5,678,735,379

92 THE SAVINGS BANK AND ITS PRACTICAL WORK

The totals reported by the Monetary Conimisison are divided as follows:

Number of Amount of

Number of Savings Savings

Banks. Depositors. Deposits.

New England States 1,040 3,504,482 $1,393,171,014

Eastern States 2,527 5,620,477 2,480,274,234

Southern States 3,610 883,325 223,254,113

Middle Western States 6,260 3,781,262 1,123,043,969

Western States 3,537 300,815 101,661,124

Pacific States 1,253 783,520 354,101,679

Island Possessions 18 20,815 4,229,243

Totals 18,245 14,894,696 $5,678,735,379

BUILDING AND LOAN ASSOCIATIONS IN THE UNITED STATES,

1907-1908

Number of Total

States. Associations. Membership. Total Assets.

Pennsylvania 1,400 374,950 $146,915,600

Ohio 644 321,780 132,714,147

New Jersey 417 144,876 67,972,108

lllinios 502 100,680 50,074,144

Massachusetts 135 114,705 47,220,074

New York 262 121,381 45,814,138

Indiana 334 117,974 34,010,117

California 110 33,565 19,522,896

Michigan 55 39,958 14,157,529

Nebraska 66 39,898 11,422,890

Louisiana 50 25,437 10,328,307

Missouri 118 20,625 8,839,903

Kansas 51 32,110 8,016,351

North Carolina 81 21,469 5,355,536

Iowa 56 15,950 4,577,214

Wisconsin 52 12,200 4,490,486

West Yirgina 39 10,495 3,834,544

Maine 35 9,345 3,676,453

Tennessee 16 4,808 2,668,936

Minnesota 19 4,243 2,296,961

New Hampshire 16 7,110 1,915,187

Connecticut 13 2,731 1,804,857

North Dakota 7 2,200 1,286,681

Other States 981 298,477 117,048,339

Total 5,459 1,876,967 $745,993,398

LIFE INSURANCE COMPANIES IN THE UNITED STATES, 1908.

Insurance

No. Policies. Assets. in force.

Fraternal Associations 543 7,389,191 $88,492,891 $8,230,217,179

Assessment Companies 124 700,958 18,355,830 706,.343,947

Legal Reserve Companies.. 160 25,096,271 3,052,732,353 14,062,408,755

Total 827 33,186,420 $3,159,581,074 $22,998,969,881

SAVINGS BANKS IN THE UNITED STATES 98

Average Rate of Interest.

The average rate of interest to depositors is as follows :

New England States 3.85 per cent.

Eastern States 3.69 per cent.

Southern States 4.50 per cent.

Middle Western States 3.82 per cent.

Pacific States 3.75 per cent.

For the whole country 3.92 per cent.

Highest rate. West Virginia, (1 bank 4.50 per cent.

Lowest rate, Pennsylvania, (all banks) 3.47 per cent.

The depositors (7,481,649) are geographically dis-
tributed as follo^A's:

New England States 3,331,135

Eastern States 3,832,438

Southern States* 5,630

Middle Western States 232,864

Pacific States (California only) 79^582

New York State 2,907,608

Massachusetts 2,100,970

Connecticut 570,065

Average Account (All Savings Banks).

Average account for United States $445,20

Average account for New England States 396.00

Average account for Eastern States 488.96

Average account for Southern States 250.15

Average account for Middle Western States 366.41

Average account for Western States 206.08

Average account for Pacific States 733.46

Number or Depositors (All Savings Banks).

Number of savings depositors in United States 9,142,908

Number of savings depositors in New England States 3,347,953

Number of savings depositors in Eastern States 3,925,462

Number of savings depositors in Middle Western States 1,026,834

Number of savings depositors in Pacific States 498,789

Number of savings depositors in Southern States 280,905

Number of savings depositors in Western States 62,965

*West Virginia is the only Southern State having a mutual savings bank.

94 THE SAVINGS BANK AND ITS PRACTICAL WORK

Depositors in Stock Savings Banks.

Depositors in stock savings banks numbered 1,661,259
on June 30, 1910, located as follows:

New England States 16,818

Eastern States 93,024

Southern States 275,275

Middle Western States 793,970

Western States 62,965

Pacific States 419,207

Iowa 428,777

California 300,590

Ohio 228,631

Michigan 104,431

Rate of Interest in Stock Savings Banks.

All States 3.56

New England 3.44

Eastern States 3.21

Southern States 3.76

Middle Western States 3.40

Western States 3.65

Pacific States 3.91

Highest, New Mexico 4.50

Lowest, District Columbia 2.93

Stock Savings Banks.

The stock savings banks to the number of 1,121 fur-
nished reports as of June 30, 1910. They are located as
follows :

New Hampshire (guaranty savings banks) 8

Eastern States 15

Southern States 149

Middle Western States 734*

Western States 59

Pacific States 156

The principal items in regard to these banks are:

Capital stock $ 68,320,822.30

Loans 567,246,437.23

Bonds, securities, etc 120,962,406.25

Total resources 829,422,246.50

Cash on hand 26,416,938.95

Deposits 709,922, 103.91

•Of this number 663 are in Iowa.

SAVINGS BANKS IN THE UNITED STATES 95

STOCK SAVINGS BANKS IN THE UNITED STATEiS (1910).
(Arranged According to Deposits.)

Number of Number of Average Population

State. Banks. Deposits. Depositors. Account. 1910.

California 123a $334,963,870 420,172 $797.21 2,377,549

Iowa 663 168,279,873 428,777 392.46 2,224,771

Ohio 46d 126,710,271 337,786 375.12 4,767,121

Michigan 18b 38,841,391 104,431 371.93 2,810,173

Louisiana 8 16,888,080 49,881 338.59 1,656,388

Oregon 12 10,951,201 11,273 971.45 672,165

District of Columbia 14 10,515,201 61,410 171.23 331,069

Tennessee 13 10,244,449 36,608 279.84 2,184,789

South Carolina 25 9,808,101 32,380 302.91 1,515,400

Washington 12 9,496,385 32,421 292.91 1,141,990

Utah 4 9,026,870 31,449 287.03 373,351

Virginia 24 8,179,974 32,217 253.90 2,061,612

Georgia 16 7,929,255 30,984 225,91 2,609,121

North Carolina 24 7,233,261 33,983 212.85 2,206,287

West Virginia 8c 4,125,519 24,129 170.98 1,221,119

Kansas 13 3,507,501 18,294 191.73 1,690,949

Colorado 9 3,315,861 21,729 153.60 799,024

Montana 3 2,927,872 5,990 488.79 376,053

Kentucky 10 2,286,615 15,079 155.64 2,289,905

Mississippi 12 1,751,262 8,558 204.63 1,797,114

Nebraska 17 1,527,538 10,417 146.64 1,192,214

Florida 5 1,294,086 8,109 159.59 752.619

Nevada 1 745,441 1,074 694.08 81,875

New Mexico 11 693,274 2,691 257.63 327,396

Wyoming 3 549,803 1,137 483.56 145,965

Alabama 5 526,451 8,977 58.64 2,138,093

Oklahoma 3 453,813 2,707 167.64 1,657,155

Arizona 1 396,069 652 607.47 204,354

Idaho 4 259,026 1,728 148.18 325,594

a includes mutual savings bank. bDe>«s not Include commorciil banks having
"savings" in their title, c Includes mutual savings bank, d Includes ihree mutual
savings banks.

Statistics Received too Late to Incorporate into the Text.

Comptroller of the Currency Murray has had compiled from returns
submitted as of June 14, 1912, statistics relating to deposits and de-
positors in the savings banks of the country.

Savings bank reports to the number of 1,925 have been tabulated, 630
being from mutual institutions and 1,295 from stock savings banks.
Deposits in these banks aggregate $4,450,822,522 and the depositors
number 10,009,804, the average deposit account being $444.64. Savings
banks reporting in June, 1911, numbered 1,884, with deposits of
$4,212,583,598, to the credit of 9,794,647 depositors, the average de-
posit account being $430.09.

The following statement shows the number of depositors, aggregate
deposits, average to each depositor for the years not given on page 87:

Average Av'ge Per

Aggregate Xo. of Due Each Capita

Tear. No. of Banks. Deposits. Depositors Depositor. In U. S.

1911 1884 $4,212,583,598 9,791.647 $430.09 $44.82

1912 1925 4,450,822,522 10,009.804 444.64 * 1-6.52

* Population estimated at 95,656.0no July 1, If'lf.

CHAPTER Fill

THE ORGANIZATION OF A SAVINGS BANK

Before describing the process of organizing a mutual
savings bank, it ^vill be of interest to become reminiscent for
a few moments and note the contrast between the organiza-
tion and operation of savings banks ninety years ago and
now.

Having obtained its charter,* the board of incorpora-
tion of the Bank for Savings met April 5, 1819, and or-
ganized. On ]May 26, 1819, the board elected Mr. Daniel
E. Tyler clerk, he to serve gratuitously; but in August of
the same year he was voted $125 for his services. He was
for some time the only salaried officer, the tellers^ porter,
etc., giving their services without pay. The bank was open
from 6 to 9 Saturday evenings, and Mondays from 11 to 2.
As the business increased, the hours were extended until the
bank was open daily from 10 to 2, and two days a week
from -l to 6.

The Poughkeepsie (N. Y.) Savings Bank owes its
origin to the fact that in 1829 a colored woman got a posi-
tion in that city, and ha\T[ng a few dollars saved up and on
deposit in the Bank for Savings in New York, and having
more to deposit, sent it to New York with her employer.
He came back "v^dth a "bee in liis bonnet" and organized the
bank. Its first day's business consisted of two deposits —
$40 and $7!

The first salaries paid in the Bowery Savings Bank were
$300 per annum to two clerks, and $50 to the porter. In
1834 it was resolved that "as papers had begun to accumu-
late, the Secretary be directed to obtain two trunks for the
use of the bank." These trunks are still in existence, and are
exhibited with much pride. (See opposite page 16).

In October of the same j^ear, it was decided to keep the
bank open every Thursday from 5 to 8 o'clock, to receive
deposits from females, thus early realizing the fact that it is
the women who do a large part of the savings bank busi-

*See Historical Chapter, p. 16.

90 '

THE ORGANIZATION OF A SAVINGS BANK 97

ness. This convenience was shortly afterward extended to
men, and many of the New York and Brooklyn banks still
open one evening a week — usually Monday.

Some of the trustees having been indifferent to the
interests of the bank, in November of the same year a fine of
twelve and a half cents was imposed upon all who should
absent themselves from the meetings or fail to fulfill the
duties of attending committee. This remained operative
until 1841. In 1845 it was resolved to build an addition to
the banking house, not to exceed $2,000 — less than the cost
of a good vault-door these days. In 1850 the president was
empowered to employ a clerk at $1.50 per night to fill the
place of the secretary on meeting nights, and the secretary
was removed to the desk intended to be filled by the attend-
ing trustees, the trustees to have supervision over the clerks
instead of acting as clerks. In 1852 the building was fur-
ther enlarged, and living quarters provided for the secretary
therein.

The early management of the Bowery cannot but be char-
acterized as unselfish in the highest degree, for "after near-
ly seventeen years of personal service to the details of the
bank's business, and having accumulated a surplus of near-
ly seven per cent, on the par value of assets above the
amount due depositors, they voted to promote themselves
from clerks to managers." In 1858, twenty-four years after
incorporation, the president was put under salary of $3,000,
the first record of any trustee receiving compensation for
his services.*

The "Institution for the Savings of Merchants' Clerks,"
(now Union Square Savings Bank), was located in "Chn-
ton Hall," Beelvman, corner of Nassau St., and from 1848
to 1854 kept open three afternoons a week. The Wilhams-
burg Savings Bank of Brooklyn, now "the largest and
strongest savings bank on Long Island," opened for busi-
ness in the basement of a church and opened for business
three days each week for two hours, and for the first seven
months the trustees conducted the affairs gratuitously,
but the bank was able from profits to repay the expenses
of opening, rent, stationery, etc., within 18 months. It is
said that many of the trustees of this bank were officers in

*History of the Bowery Savings Bank.

98 THE SAVINGS BANK AND ITS PRACTICAL WORK

the church, and in this it followed closely the custom among
the early English banks in making the savings bank a church
affair. In the case of the Erie County Savings Bank of
Buffalo the trustees guaranteed the expenses, which, owing
to the great success of the bank, were not long a charge
upon them.

In the Philadelphia Savings Fund Society each of the
incorporators contributed $10 toward the expense fund, and
the managers took turns in serving as clerks.

Alongside of these modest beginnings of great institu-
tions, present day methods seem extravagant, to say the
least: but times have changed, and "a bank in a cellar"
would no longer be possible. If the sa^nings bank philan-
thropist of other days could arise from Ills grave and see
a two-year-old bank housed in a palace of marble and
bronze, that cost the trustees $100,000: the trunk of the
Bowery turned into a burglar-proof vault costing $10,000;
the ten-dollar contribution of the Philadelphia men expand-
ed to a five-thousand, and a salary list of $3,500 instead of
$650, he would sit up and take notice that the world has
moved forward somewhat in the past fifty years, for the
banldng house which excited wonder then would hardly
be noticed by the passing throng today. But, however this
may be, we have "nothing on them" in the line of success,
for a million dollars on deposit in seven years (Williams-
burgh) ; a million in ten (Dry Dock) ; two million in twelve
(Bowery), and a million in five (Bank for Savings), is
not such bad "going" after all. Some of our newer sav-
ings banks have not done half so well.

There is even in this day a marked contrast between
banking in the country and banking in the city. In the
country the men are all personally known to everybody,
and a counter, a desk, a big book or two and a few chairs
may really be a bank, and a good one, however much its
looks may belie its nature; but in the city it must look like
a bank as well as act like one. The days of cheap city
banks are over. The ]:)eople expect marble and bronze and
mahogany, and to begin as one bank did a few years ago,
with shabby, second-hand furnitui-e, oil cloth on the floor
and a make-believe safe, would be suicide. Going into
such a bank years ago the author commented upon the size

99
Dors,

jank
sses,
!S of
can*-
nent
anks
ings
ana-
than
t of
leet-
•e!

one
ture,
hich
may

the
ving
tock
man
a of
mu-
3ssa-
real

tand
ition
inize
3f a
was
ture,
ffice.
pt a

lat a
de-

after

■ 3' a 5?

-AS?

■m^

V ,,
I

"lit

'5 Jj^ij'^^l

tnh:!:.;i;ii ■

I ■1.1""" ■'1-1 !■?,•,,, -J V

IIIIII 1 1 1 1 1 II

iil, ^ i-iu J J. i

SS*|? ? jj

5!« I' '.f!U

•

THE ORGANIZATION OF A SAVINGS BANK 99

of their safe. Giving him a wink the clerk opened the doors,
and to his surprise they led into a brick wall!*

It cannot be said in truth that the modern savings bank
as a rule originates from any desire to benefit the masses,
or is intended to be a public benefaction. The motives of
the founders are usually of a commercial order, and can-
not boast of being philanthropic, although the management
must be gratuitous. It is true that many savings banks
have sprung up because there has been no strictly savings
institution at hand, but the underlying motives, if ana-
lyzed closely, would be found to be personal rather than
public, and somebody expected to get something out of
the institution besides a comfortable seat at a board meet-
ing, mth a fine of twelve and one-half cents for absence!

The conception of a bank is usually the work of one
man, and naturally one whose interests, present or future,
will be enhanced by such an institution. The motives which
prompt him to undertake this work ma}^ be many, or it may
be a single idea. In the case of a commercial bank the
added prestige, a salaried position, the enlarged borrowing
capacity, the profits arising from the increase in the stock
value, — any or all would be sufficient to explain why a man
would give liis time and attention to the organization of
such a bank; but in the savings bank, especially of the mu-
tual type, many of these controlling motives will necessa-
rily be wanting and we must look elsewhere for the real
secret.

The Motive.

It takes no wide stretch of imagination to understand
that a man greatly desiring a position in such an institution
and failing to find an opening, might set about it to organize
a bank for himself. One instance comes to mind, of a
young man so anxious for a position in a bank, that he was
willing to equip a new bank with the fixtures and furniture,
at a cost of over $2,500, in order to get an executive office.
And another who gave up a lucrative business to accept a
modest tellership in a Xew York sa^dngs bank.

A very plausible reason may be found in the fact that a
savings bank account in a bank of discount is highly de-

*This bank was looted by the clerk mentioned and closed its doors after
seven years, entailing a loss of 25 per cent, on the depositors.

100 THK SAVINGS EAXK AND ITS PRACTICAL WORK

sirable, and it is possible that a business bank might be
tempted to foster a savings bank movement, for the sake
of the profitable reserve account to be had from the savings
institution M'hen it shall have become a "going concern."
Several such close alliances between banks or trust compan-
ies and savings banks may be found, and we can only judge
the motives by the results.

Xo Immediate Financial Gain.

But whatever the motive, the basis of the founder's hopes
cannot be immediate financial gain, or borrowing privileges,
for as an officer he will be barred from using the bank's
funds in almost ever}^ State that has a good savings bank
law. In the State of Minnesota there is a statute forbid-
ding a trustee borrowing directly or indirectly, or becoming
surety or endorser for any loans, and besides, he must file
a surety bond in the sum of $5,000 as evidence of good
faith, and violation of the borrowing prohibition will bar
him from holding office in any savings bank. In Connec-
ticut, they are not permitted to borrow and are liable for
all losses resulting from investments made in violation of
the law. In Maine no loans may be made to trustees di-
rectly or indirectly, or to any firm or corporation of which
they may be a member. In Vermont, they are not permit-
ted to borrow directly or otherwise, or to sign any note
or security upon which any of the deposits may be loaned.
In all these States, fees, commissions, or any other emolu-
ment for influencing loans, investments, etc., are proliibited.
In New Hampshire they may not borrow directly or indi-
rectly without the consent of all the other trustees in writ-
ing, and are liable for losses arising from illegal investments,
but may receive "reasonable pay" for their services. Fees,
or commissions are also prohibited and a fine of $10,000 or
ten years' imprisonment is the penalty for such practices.
In Califoripa borrowing by officers or directors is forbid-
den, as is also endorsing, becoming surety, or obligor, and
violation voids the office. In Massachusetts, they are hke-
wise prohil)ited from borrowing, and the law goes to the
extent that if a mortgage is made on property owned by a
trustee the office becomes void after sixty days, if the loan
is not discharged. Any person in Massachusetts who circu-
lates printed matter containing names of trustees who have

THE ORGANIZATION OF A SAVINGS BdNK; ^ ioi

not qualified is guilty of a misdemeanor and subject to a
fine of $50.00. In New Jersey loans to trustees are prohib-
ited, as well as becoming surety for loans, but trustees in
that State may receive fees for attendance at meetings. In
Indiana a trustee may not borrow for himself, or any cor-
poration or firm in which he may be interested, or become
surety for any loans. Violation of this provision voids the
office. In New York the law provides that "no trustee of
any such corporation shall have any interest, direct or in-
direct, in the gains or profits thereof, nor as such directly
or indirectly, receive any pay or emolument for his services,
except as herein provided; and no trustee or officer of any
such corporation shall directly or indirectly, for himself, or
as an agent or partner of others, borrow any of its funds
or deposits . . . nor shall any trustee or officer of any
such corporation become an indorser or surety, or in any
manner become obligor, for moneys loaned by or borrowed
of the such corporations."

Therefore, being barred from borrowing, and there be-
ing no stock (except in stock savings banks) to increase in
value, and receiving no fees save in a very few States, for
his attendance at meetings, and these nominal, as in the'
law of Rhode Island, being restricted to $3.00 for each meet-
ing, and the salaried office being desirable only after the bank
is firmly established, we must look a little deeper for the
underlying motive that would prompt a good man to under-
take this work.

Banking Past and Present.

Fifty years ago, when life was less strenuous than at
present, and men had time to live and do things benevolent,
we may find, as already indicated, savings banks that were
established through pure philanthropy. Many of the older
banks will point with pride to the time when their trustees
were the attending officers, usually one or two evenings a
week, giving their services gratis. When business warrant-
ed, a clerk was employed, who was general utility man, and
did all the work, ofttimes in connection with some other
business, and between the two managed to eke out a living.
One such bank officer to-day is proud to tell of the time
when he slept under the counter and made the fire!

As an instance of a savings bank still run after this fash-

1^2 T-HE SAyi>XJS BANK AND ITS PRACTICAL WORK

ion, may be mentioned a bank in New York State, in a
modest country town, whose deposits are but $300,000 after
having been in business since 1871, and whose salary list
is the munificent sum of $840 per year.

But the days of shabby outfits and cheap men are gone,
and it is of the modern savings bank, this chapter treats.
In these days of competition, fast and furious, to start a
bank after the old time notions, and in the old time way,
would invite disaster, especially in the larger cities. The
people now-a-days demand fine fixtures and well dressed
men in order to convince them that this is really a bank and
worthy of their regard. The difficulty attending the estab-
hsliment of a modern savings bank will readily be seen
when it is remembered that since 1890 there have been but
25 savings banks organized in the State of New York, and
all but eight are in Greater New York. One bank opened
in a very modest fasliion, and in its first fifteen months,
with teeming life on every side, showed deposits of but
$62,000, while another mth more pretentious quarters had
the creditable sum of over half a million as the result of its
first year's operation.

A Laudable Ambition.

But to come back to the motive. The man we have in
mind, so desirous of starting a savings bank, is generally an
attorney. Herein we have a secret — the secret. He is a
lawyer, and most lawyers like to have a bank among their
cUents, and if no bank can be found that is badly in need
of the services of an able and experienced attorney, what
more simple, and better, than to build one for himself? At
least six out of the twenty-five mentioned were organized by
attorneys. This is strictly proper and no one can charge
the profession with any breach of etiquette. A bank is a
good client, and a savings bank, when it attains its growth,
especially so.

The principal part of a savings bank's business, so far
as the investments are concerned, is in the line of mortgage
loans. And loans of this character are always accompan-
ied by searches, legal ]iapers, etc., and a very profitable line
of business may ])e found in this feature. Then, too, there
is "incidental business," such as cases of administration of
estates, litigation attending the conduct of its business, fees

THE ORGANIZATION OF A SAVINGS BANK 103

of various sorts, notaries' acknowledgments, and probably,
as desirable as any, the clientele that follows honest and
honorable dealing. It is stated on good authority that
the fees of the counsel of a four-million-dollar bank amount
to over $6,000 per year. All this is strictly proper, pei^
fectly legitimate and desirable, withal, and if this be true,
we have found a good motive, aside from the prestige official
connection with a financial institution will carry.

Enlisting Support.

But to want a bank and to get one are two different
things, and widely separated. Having made up his mind
to build him a bank, he will need moral and financial sup-
port. Moral support to make it go with the people, and
financial support to j)i"ovide the "wherewithal" until it be-
comes self-sustaining. Inasmuch as tliis institution is of the
mutual or trustee type, with no stock, the only funds with
which it may do business are those coming over the counter
as deposits, and in competition with older banks, it will be
obliged to pay interest to depositors from the beginning.
It will have running expenses, such as salaries, rent, lighty
stationery, etc., and will of necessity have to be "carried"
until it can walk alone.

The Men.

The savings bank law of New York being recognized as
a model, we shall organize after tliis law, side-stepping to
note differences as occasion may demand. The first thing
needful in tliis line will be men, — good men with clean rec-
ords and widely known, who will trade empty honor for the
use of that good name and record, and a few hundreds of
their surplus money for a few years. Now this is not the
easiest thing imaginable. Men may be found by the score
in every community who would be glad to accept a savings
bank trusteeship, but to get good men who will go in from
the beginning and take some risk, not a little responsibility,
and spend considerable time and some money, is not as easy
as it may appear. It is a standing wonder how some men
who have lent their influence to new savings banks in New
York, could ever have been persuaded to embark. They can-
not possibly get anything out of it for themselves, save !he
honor, and this may be long in coming and delusive after

104 THE SAVINGS BANK AND ITS PRACTICAL WORK

it arrives. The latcs of New York do not require that the
trustees of a neAv sa^-ings bank shall become responsible for
the running expenses until the ])ank becomes self-support-
ing, but of late years the banking superintendent has re-
fused to grant a charter until the trustees file a surety bond,
guaranteeing the running e.rpenses and interest at not less
than 314 per cent, to depositors until the bank becomes self-
sustaining. This means not only moral risk, but financial;
how long tliis burden will be upon them is for the future to
determine. Some banks have taken ten years. Others prom-
ise to do it in half that time.

Trusteeship Desirable.

These positions are sought after when the institution
becomes of goodly size, for it stamps a man as a leading cit-
izen, and not every man can quahfy. A case in point is
that of a trustee of a new sa\T[ngs bank, who, needing the
money he had advanced to the bank for expenses and toward
a building company wliich built the banking house, found
no difficulty in transferring his interest for cash to one who
coveted such an honor. In Xew York he must have had
a clean financial record, for "no person against whom a
judgment for any sum of money shall have been recovered
or shall hereafter be recovered and remain unsatisfied of
record, or unsecured upon appeal, for a period of more than
three months, or who hereafter takes the benefit of any law
of bankruptcy or insolvency, or who makes a general as-
signment for the benefit of his creditors, shall be a trustee
of any savings bank, and the office of such trustee is here-
by vacated." In trustee banks in California, he must be "a
member and a depositor."

As an illustration of the manner in which the law works
in Xew York, may be cited the case of the trus-
tee who became financially embarrassed and went into bank-
ruptcy. Xot understanding the law, great was his surprise
to get a note from the bank, stating that by operation of the
law his office was void. He came in to talk it over and
wept like a child, — it was the hardest blow of all!

The Board of Trustees.

If this lawyer friend of ours lives in Xew York and
would start his bank there he must "persuade" thirteen men,

THE ORGANIZATION OF A SAVINGS BANK 105

two-thirds of whom live in the county where the bank is to
locate, to join in a movement out of which they get notliing.
If his bank is to be in Rhode Island, under the law of 1908,
he will need fifteen to incorporate and nine of them to serve
as trustees; if in far-away Texas, only five will be neces-
sary; if in Indiana, not less than seven who have resided in
the county for five years and own real estate worth $5,000
clear; in Vermont, the corporation must consist of not less
than fif t}" members, of whom seven are trustees ; in Pennsyl-
vania, tliirteen, and as many more as he can get; in Colo-
rado, only three trustees, and $25,000 capital stock; in
Massachusetts, nine; in Xew Jersey, nine; in ]\Iaine, thir-
teen, of whom three-fourths are residents of the county
where the bank is to locate; in Minnesota, he will need
but three.

Completing the Okgaxizatiox.

Having the required number of trustees the organization
of liis bank really begins. The statutes of the State must
be closely adhered to and all the proceedings in due form.
In some States, such as Connecticut, Massachusetts (until
1908), and Xew Hampshire, charters, are granted by spe-
cial act of the Legislature. But in many of the States, def-
inite procedure is prescribed in the formation of the cor-
poration, and Xew York being typical, the steps necessary
to secure charter in tliis State vnll be closely followed.

Applying for Charter.

The first tiling to do is to apply for charter. The usual
procedure is to draw up articles of association, stating the
object, etc., signed by the various members, and forward to
the department having such matters in charge.

Before apph'ing for charter, however, in Xew York, no-
tice of intent to organize must be published at least once a
week for a period of four weeks pre\^ous to filing the appli-
cation, in one newspaper of largest circulation pubHshed in
the city or town where the bank is to locate. If no such
paper is published, then one circulating in the county where
the bank is to operate; if no such paper circulates, then in
the adjoining county. This notice shall set forth the name,,
the location, the names of the incorporators, and if any

106 THE SAVINGS BANK AND ITS PRACTICAL WORK

other savings bank is doing business in the same county,
a copy of this notice must be sent to every savings bank
at least fifteen days before the fihng of the certificate.

In New York State the superintendent of banks has
sole charge of such matters; in Maine, the bank examiner;
in Rhode Island, under the new law, a board of bank in-
corporators, consisting of the banking commissioner, the
treasurer-general and the attorney-gejieral ; in Pennsylva-
nia, the bank conmiissioner ; in Massachusetts, the bank
commissioner (formerly three commissioners, now reduced
to one,) ; in New Jersey, the commissioner of banking and
insurance, etc.

Filing Certificate.

The certificate must be filed in the county clerk's office
in the county where the bank is to locate and a duplicate
filed with the banking department.

This certificate or articles of association must set forth:
The place, and if in a large city, the ward in which the bank
will locate; the name of the bank; the residence and occu-
pation of the incorporators, with full names and declara-
tion that each will assume and faithfully discharge the duties
of the office. In case the bank is permitted to issue
stock (as in some States), the amount, the par value, the
number of shares into which it is divided, and the amount
held by each incorporator must also be stated.

In Indiana this application must be acknowledged before
a judge of the court of common pleas in the county where
the bank is to locate. In Pennsylvania, the application is
made to the attorney-general, who, after approving the
same, sends it to the bank commissioner, who in turn for-
wards to the Governor.

In New York the certificate must be filed with the bank
superintendent within sixty days after the acknowledgment.

Minnesota requires the same publication as New York;
likewise New Jersey; Maine, once a week for three weeks;
Pennsylvania, once a week in two newspapers for three
months.

If the certificate shall not be in due form and comply
Avith tlie law in every respect, the superintendent shall re-
fuse to file the same until the provisions as to acknowledg-
ment, advertising, notice to other banks, etc., are fully com-

THE ORGANIZATION OF A SAVINGS BANK 107

plied with. If the same is in regular form, he shall endorse
the same "filed for examination" over his signature with the
date.

Is THE Bank Needed?

Thereupon, the superintendent shall ascertain from the
best sources at his command: 1. Whether the greater con-
venience of access to a savings bank will be afforded to any
considerable number of depositors by opening a savings
bank in the place designated. (This is usually required in
all states.) 2. Whether the density of population in the
designated neighborhood and the surrounding country af-
fords a reasonable promise of adequate support to the en-
terprise. (The density is not sufficient, as the density may
be very "dense," yet the character of the people such as to
discount the success of the bank at the start. The class of
people to be served will have as much to do with the success
as the number. In some sections of New York, thickly
populated, a savings bank would not pay its gas bills; in
others it would thrive). 3. Whether the responsibility,
character and general fitness for the discharge of the duties
appertaining to such a trust, of the persons named in the
certificate, are such as to command the confidence of the
community in M'^hich the savings bank is to be located.

Is THE MoTR^ Good and Are the Men Responsible?

Here is where the motive will be investigated, and the
character and standing of the men looked into, the terri-
tory looked over, competition considered, etc. A few years
ago a savings bank was proposed in a thickly populated
section of Greater Xew York, to be officered by Poles.
When the business and social standing of the incorporators
was investigated, the following proved to be the facts: No.
I was a private banker, steamship agent, chief promoter,
advisor to the poor, and slated for vice-president. No. 2
was a retired saloon keeper. No. 3 was a night watchman.
No. 4 was the proprietor of a cheap grocery. No. 5 was
bartender in his own saloon. No. 6 was a fireman in an
oil works. No. 7 was a cooper, and claimed to be worth
$50,000. No. 8 was his son, and made no claims. No. 9
was the o^vner of a delicatessen store, and claimed to own
a roAv of brick flats. No. 10 was a tailor on the top floor

108 THE SAVINGS BANK AND ITS PRACTICAL WORK

of a tenement on Second Avenue, New York, and was re-
ported as having saved $5,000. No. 11 was another private
banker, and ran a "building and loan association," with as-
sets of $16,000. A dusty desk and a few broken chairs con-
stituted his "bank." He was slated for casliier. The rest
were Polish priests. No. 1 was rated at from $500 to
$1,000 by Bradstreet, No. 5 at less than $500 by the same
agency, and the rest had no rating whatever. Imagine this
array of talent running a savings bank and ])aying its bills
for three years! It is needless to sa}^ that such men are
not of savings bank calibre and did not get a charter.

Let the Opposition Be Heard.

During this time, opposition, if any, will develop. It is
the custom in New York to give a public hearing, notify-
ing all banks in the territory to come, and if they have any-
thing to say, to speak it now, as in the marriage ceremony,
or forever hold their peace. But usually, if conditions war-
rant and the men are acting in good faith and responsible,
the charter is readily granted. Practically all the States
providing for savings banks require investigation before
granting charters. In Indiana the judge of the court of
common pleas who took the acknowledgment must make
the investigation as to the motives and character, and if
satisfied, forward his decision to the State auditor.

In New York, the superintendent is supreme. There is
no appeal from his decision, in fact nothing can be done, if
he is obstreperous, but to bring pressure to bear, or wait un-
til a change of administration and try again. This is in
keeping with the power granted — or assumed — by the Comp-
troller of the Currency. In Colorado the Secretary of
State has charge of such matters; in South Caro-
lina, like^\ase; in Minnesota, the examiner must compare
the name with existing banks, and if similar, or likely to
lead to confusion in the minds of the public, with other
banks, new names must be submitted until a satisfactory
name is found. In fact in all States, similarity of names is
avoided, as it should be.

Similarity of Names Avoided.

For instance, in Brooklyn, there were two "Home"
banks, the Home Bank and the Home Savings Bank. Dur-

THE ORGANIZATION OF A SAVINGS BANK 109

ing the panic, one, the former, closed its doors, — the other
did not, but by lucky chance, the distance was so great that
none of the latter's depositors were frightened, although the
similarity of names in the paper opened the question and
necessitated some explanations. This should have been
noted by the department before granting charter.

Safeguarding the Depositors.

Before the New York department will issue charter, a
surety bond is now required signed by all the trustees, ob-
ligating themselves to pay expenses and interest as above
noted, initil such time as the bank can carry itself. This has
been found necessary, on account of new banks starting, and
the original trustees dropping out, the department soon
found banks with an entirely new set of trustees, without
obligation to take care of their offspring, — or rather the off-
spring of others, which they had adopted.

If the superintendent shall be satisfied from his own
knowledge ( automobile trips around the neighborhood, etc. )
and information gained concerning the several matters speci-
fied in regard to the population, character of the men, etc.,
that the organization of a savings bank, as proposed, will be
a public benefit, he shall Mdthin 60 days after the same has
been filed with him for examination, issue under his hand
and seal, the certificate of authorization required by the law,
sometimes designated the charter. This certificate is trans-
mitted to the clerk of the county in which the savings
bank is to operate, where it shall be attached to the first
certificate filed, and both recorded in the book of corpora-
tions. The superintendent also files a copy in liis own office
and one with the bank, and this completes the chartering.
If, for any reason, certificate is refused, the county clerk
shall be so informed within sixty days after the filing of
the original application, and nothing remains but to try
again "some other day." Upon due organization, election of
officers, and the filing of the names of the same with the
department, the organization becomes complete and the bank
is authorized to receive deposits and do a savings bank
business. Business must be begun within one year, unless
time is extended by the superintendent.

no THE SAVINGS BANK AND ITS PRACTICAL WORK
Completing the Work.

Having- received the momentous piece of paper, a meet-
ing would naturally be in order for organization, appoint-
ment of committees, adoption of the by-laws, etc. One bank
held an organization banquet, and after the good things had
been served, the "slate" was presented, by-laws read for
information and the organization completed. All tliis will
naturally fall upon the organizer. He can pay for the ban-
quet if he likes, and get whatever "plums" the men may
care to pass his way.

Finishing Touches.

The real work has just begun, and the heaviest liill is
ahead. Quarters will have to be secured, employees hired,
counters, safes, book-keeping outfit ordered, all of which
will necessitate much time and labor. An assessment will
be levied against each trustee; this will form the expense
fund, from which all expenses will come until the bank
becomes a going institution, when these advances will be
returned. How long this will be depends upon the lavish-
pess of the initial outfit, the rent, the salaries, etc., together
with the earning capacity of the bank. One bank in the
greater city, with a board of thirteen men, started off with
a $2,000 mahogany counter, an $8,000 vault, an item of
$1,500 rent, salaries to the tune of $2,500, with interest to
depositors at 4 per cent. Another, in the greater city also,
was fortunate enough to have rent free for the first year,
with unusual success in deposits, high rates of interest for
its money, and at the end of the second j^ear it was pay-
ing all expenses, save an allowance for rent, — an unusual
and noteworthy record. The most notable achievement in
the line of deposits belongs to a Buffalo bank, which se-
cured half a million in deposits during the first year of its
existence. Some of the newer banks have been ten years
in repaying their trustees, and this is easily accounted for
from the prevailing low rates of interest during the early
part of their history.

Almost a Bank.

But even yet, the venture may fall through. One bank
went all through the organization and secured an option on

THE ORGANIZATION OF A SAVINGS BANK 111

the quarters desired, when the summer season came on, and
with it a disagreement as to fittings. One faction wanted
marble and bronze, the other a more modest outfit. Vaca-
tions and election took time and attention away from the
project and the proposed bank, in a splendid location, in
a growing section of thrifty people, with every promise of
success, gave up the ghost and surrendered its precious
piece of paper, — more's the pity!

Opening Day.

Having secured quarters that are roomy and attract-
ive, contracts are let for counters and signs and desks and
safes and books and suj^plies of all kinds. The details will
be multitudinous and it will fall upon an interested few to
look closely after affairs, in order that everything may be
"just right." At length the banking room is complete and
a day can be set for formal opening, for it is usual to
invite the public to inspect the new quarters, allowing them
the freedom of the place.

As the opening day draws near, there will be increased
interest. Book No. 1 will be in wide demand, for senti-
mental reasons. Accounts will be promised and many will
be anxious to be among the first to deposit, insisting upon
"low numbers" near the bottom. One bank opened 168
books the first day, representing $17,000.

The supplies arrive, the charwomen scrub and clean
and dust; the young man favored with the management of
the place will strut around ^\"ith an important air, while
the first assistant and the office boy will be verj^ busy doing
nothing. The notices are sent out, "write ups" prepared
for the papers, invitations to other banks delivered, asking
them to come and see their new competitor; flowers come
in with complimentary and "good luck" inscriptions. The
time arrives, the doors are opened, the crowd comes in, and
book No. 1 goes out, and the bank is in operation. May
its life be long, and success come quickly!

CHAPTER IX
THE MANAGEMENT OF A SAVINGS BANK

Underlying every business and profession is a system of
ethics ; that is to say, a set of rules or principles, written and
unwritten, wliich govern its conduct and regulate its activi-
ties. Thus we have medical ethics and legal ethics, meaning
"the science of right conduct or moral obligations" in those
professions. When we say that a doctor, in advertising for
patients, other than by card ; or the lawyer in openly solicit-
ing clients, violates the ethics of his profession, we mean that
there is an unwritten law against such practices, which, as an
honorable man, he is bound to obey.

The savings bank also has its ethical side. Through a
long and honored history, there has been built up a system
of ethics, with lines as finely drawn as prevail in any other
calling, and in which honor and good conscience play an
important part. Some of these rules — in fact, many of them
— may be found in the judicial decisions involving savings
bank law and practice, and to these we shall have frequent
recourse in endeavoring to determine the underljang prin-
ci])les which govern such institutions. But there are other
rules of conduct w^hich are neither found upon the statute
books, nor in the case law, nor in the bank's own laws (the
by-laws ) , and we shall have to go deeper than either of these
sources to ascertain what they are.

The savings bank man wishing to "feather his own nest"
will find many opportunities to add to his earthly store, and
in the law of the Commonwealth will find nothing to say him
nay; but if he^Avere to look deeper than the statute law he
would find that the question is not, is it lawful, but is it right,
and what is the moral effect if wrong? In the making of
mortgage loans, for instance, there are plenty of brokers
willing to share their commissions in lieu of a wider latitude
in 4iorrowing, or the bringing to bear of that influence which
will secure favorable action. There are insurance brokers
who will gladly make it "worth while" to the savings bank
man who will give them a monopoly of the bank's insurance
— no little item in the course of a year; and yet, who will

THE MANAGEMENT OF A SAVINGS BANK 113

endeavor to prove that the savings bank man, true to the
trust imposed upon liim, and true to the standards of the
past and the etliics of the present, will use his office for the
single end and aim of financial profit to himself?

And who dares attempt to sustain the position that where
a savings bank official accepts commissions for making loans,
the security of the loan and the quality thereof, are always
paramount considerations? Human nature negatives such
an idea.

As in other professions, we shall find the standard high
and the conduct as a rule worthy ; for in spite of the sordid-
ness of present-day business and the tendency to make
money and money only the sole end and aim of life, there are
to-day savings banks and savings bank men "as clean as a
hound's tooth," to whom the thought of any tiling that
savored, however remotely, of graft would be abhorrent

On the other hand, the "spirit of commercialism" which
has poisoned so many callings has found an entering wedge
into the field of savings banking, and as the quack doctor
and the tricky lawyer have brought discredit on their pro-
fessions, so we shall find savings bank men untrue to the
ethical standard of our calling, and institutions rife with
selfishness and self-aggrandizement; but such as these only
go to prove how worthy of honor is the man, the institution,
that has been strong enough to withstand the temptations
that are on every hand.

In a study of these rules and principles, we shall find
them to readily divide themselves into two groups, moral or
unwritten, and legal or adjudicated. The latter will form
the basis for our study, since they include, by implication at
least, the moral, and by reading between the lines, we shall
get a clear and comprehensive idea of what the moral duties
of a savings bank man are. As in the introduction to the
nature and functions of savings banks, we can best begin
with an interrogation, namely. Who may be a trustee?.

Who May Be a Trustee?

No man can buy liis way into trusteeship in a mutual
savings bank. He can only gain this honor by so conducting
his personal and business affairs that his name shall be a
synonym for honesty and integrity, and thereby win for him-
self the right to care for other people's savings. In this it is

]14 THE SAVINGS BANK AND ITS PRACTICAL WORK

distinguished from other moneyed corporations (in-
eluding stock savings banks) wherein stock ownersliip car-
ries with it voting power, and voting power, control. The
man who aspires to bank directorship needs only to buy
enough stock, or control its voting power, and elect himself;
but in the savings bank, the proposition is rather like this:
"Make good and icait until they elect your

Qualifications for Trusteeship.

Except in a few cases, hereinafter noted, the qualifica-
tions are moral rather than financial. Wliile rich men are
desirable, their wealth must be accompanied by
clean hands and an upright character. It has been held with
some degree of reason that a man will give better attention
to the affairs of a corporation in which liis interest is
pecuniary rather than sentimental, and tliis is true of some
men; but there are others who will give the same careful
thought to the institution out of which they never get a cent
in money as if it were their own business. This is amply
sustained by the high degree of excellence of the manage-
ment of many of our eleemosynary savings institutions, a
matter of no little pride to those who see in this the highest
type of financial institution.

In practically every state that has a savings bank law,
provision is made that, before issuing charter, the depart-
ment of government having banks in charge shall investigate
the motives that lie beliind the request for charter, and be-
come satisfied that the men are acting in good faith, and with
worthy ends in view and are "representative men of busi-
ness," whose standing in the community is such as to lend
strength and dignity to the proposed bank. In New York,
the qualifications are negative rather than positive; thus
(a) he must not be a resident of another State;* (b) no
one against whom a judgment for any sum shall have been
recovered or shall hereafter be recovered, and remain unsat-
isfied of record or unsecured upon appeal, for more than
three months; (c) or who takes the benefit of any law of
bankruptcy or insolvency; (d) or who makes a general
assignment for the benefit of creditors, shall be a trustee of

*rt is said that some trustees who live outside of New York and conunute,
maintain sleepinir apartments in New York, in order to legally claim New York
as their residence.

THE MANAGEMENT OF A SAVINGS BANK 115

a savings bank, and if any of these events take place during
his trusteesliip liis office becomes void.* In Massachusetts,
the office of any trustee who takes the benefit of any law
of bankruptcy or insolvency, or of the oath for the relief of
poor debtors "shall thereby be vacated." This strict pro-
vision has no doubt caused some unfortunate good men some
bitter tears, but it has also prevented undesirables from ob-
taining a seat which is, or should be, a mark of honor. In
Indiana, it is required that trustees shall be freeholders, and
residents of the county where the bank is located for at least
five years prior to election, and shall own unencumbered real
estate worth at least $5,000. In Xew Jersey, the trustees
must also be freeholders, and approved by the bank
department.

In Vermont, the "corporation" is composed of not over
fifty members, from which at least seven, but not more than
eleven trustees, are elected. In Maine, the corporation con-
sists of not less than thirty members, of whom five are
trustees.

Trustees ix Ye Oldex Time.

The charter of the Institution for the Savings of Mer-
chants' Clerks, in New York (now the Union Square Sav-
ings Bank), granted in 1848, contained some unique pro-
visions in this regard, namely: Nine of the first managers
should be selected by the Chamber of Commerce of the State
of New York from its own body, and the president and first
vice-president and treasurer of the said Chamber of Com-
merce, and the president and vice-president and treasurer
of the JNIercantile Library Association should always be ex-
officio managers, and the nine members elected by the Cham-
ber of Commerce, together with six ex-officio managers,
should select the remaining nine managers, f

Such proceedings are unusual and do not obtain as a
general rule, the requirements being general, not specific,
although in West Virginia appointments are made by the
Circuit Court. In all cases a trustee must be a resident of
the State. The number varies, from five upwards. In New
York the minimum is thirteen, and no maximum limit. The
Bowery Savings Bank has forty trustees.

♦Section 137, L. 1909.
tPaine's Banking Laws, p. 61.

116 THE SAVINGS BANK AND ITS PRACTICAL WORK

Removal of Trustees.

As has already been indicated, trusteesliip in New York
and many other States is perpetual. Such officer cannot be
removed except by operation of the law disqualifying him.
And unless he makes himself amenable to the law, he can
defy the world to oust liim. A few j^ears ago a measure was
introduced in the New York Legislature providing for re-
moval of undesirable trustees by a two-thirds vote, but it was
killed in committee. It was rumored at the time that the
measure was leveled at an obstreperous trustee who w^as con-
tinually stirring up trouble in his bank, but could not be
forced out of office. He holds it yet. In Massachusetts, by
the act of 1910, if, in the opinion of the bank commissioner,
an officer or trustee has abused his trust, or used his official
position in a manner contrary to the interests of the bank
or its depositors, or has been negligent in the performance of
his duties, he may report the case to the attorney-general
for such action as the situation demands. In Massachusetts,
as in New York, bankruptcy voids the office, but the com-
missioner has the additional power, not granted in New
York, of recommending the removal of any trustee as above
stated. It would seem expedient to have some redress
against the trustee who does not work in harmony with the
rest of the board, and the perpetual feature no doubt is of-
ten a disadvantage.

Duplication of Officers.

It is hkewise the intent of the law to prevent a duplica-
tion of bank officers and managers. The savings bank that is
not connected with some bank of discount by some sort of an
alliance is a rarity — the commercial bank men see to it that
it is,, for the savings bank account is usually the largest and
most profitable account the bank of discoiuit or trust com-
pany carries. When it is remembered that a bank with
$50,000,000 of deposits frequently has over five million on
deposit with other banks, the alliance which can influence
some of that money in certain directions is a most desirable
thing to foster. Such alliances are generally entirely proper,
although often abused. But to prevent one bank "control-
ling" another by force of numbers in the board (which is not
to say that banks are not thus controlled irrespective of the

THE MANAGEMENT OF A SAVINGS BANK 117

number of duplications) it is usually found that some efforts
are made in the law to make such dupHcation of management
difficult, if not impossible. In California, in designating
depository banks, the vote of a majority of the board ex-
clusive of those who are officers, directors or trustees of the
depository bank is required.

Thus, in New York, the statute provides: "Whenever
any trustee of a savings bank shall by becoming a director
of a bank or national banking association, cause a majority
of the trustees of such savings bank to be directors of any
one bank or national banking association, his term of office
as trustee of the savings bank shall thereupon end." At the
1909 session of the Legislature a bill was introduced abso-
lutely forbidding an officer or director of one bank from
being connected with another, but this was so utterly unwise
that it was abandoned.

In Vermont: "No person shall hold office in two such
corporations at the same time; and no president, vice-presi-
dent or treasurer or assistant treasurer of such corporation
shall at the same time, hold office as president, vice-president,
casliier or assistant cashier in a bank of discount. State or
national, or a trust company in this State; nor shall a
majority of the trustees of any such corporation be directors
in a national or State bank or trust company."

In Massachusetts no president, vice-president or treas-
urer of a savings bank may be a like officer of a national or
State bank or trust company.

In Maine: "No casliier in a national bank or trust and
banking company shall be treasurer of any savings bank,
the deposits of wliich exceed one hundred and fifty thousand
dollars; and if the treasurer of a savings bank, having de-
posits not exceeding one hundred and fifty thousand dollars,
is casliier of a national bank or trust and banking company,
the board of trustees of such savings bank shall not include
more than one director, nor more than two stockholders in
the national bank or trust and banking companj^ so con-
nected therewith."

Thus there will be found a tendency, and rightly, to
divorce the savings bank from the commercial. There may
be instances where the relationship would be beneficial to
both, and just and fair to all the interests involved, but
human nature is all too prone to be biased when personal

118 THE SAVINGS BANK AND ITS PRACTICAL WORK

profit is in view, and the more marked the line of separation
can be made the better it will be for the savings bank.

It is concluded, therefore, that not every man can be a
trustee of a savings bank, especially in those States where
the savings bank has had its best test ; but once in office he is,
as a rule, a "fixture," the })ody to which he belongs being
self-perpetuating, since it is quite general to permit the
trustees of savings banks to select men to fill vacancies in
their own organization, restricted, of course, as above; but,
otherwise, they are a permanent bodj^; they frequently die,
they seldom resign, and never get rich from the emoluments
of their office.

The Trustee^s First Duty.

Having been elected, the trustee's first duty is to take
the customary oath of office. In many States the name must
be reported to the banking department, and the oath there
filed. In jMassachusetts, the department thereupon trans-
mits to him a copy of the savings bank act. The oath is not
required in all States, and has been in force in New York
only since 1908, but is coming to be more common as the
laws are revised. Having duly qualified, his first duty is
to attend the meetings, which are usually held monthly,
although in a few States, as in Vermont and INIassachusetts,
meetings are required but quarterly. This attendance is
compulsory, and continued absence for any length of time,
unexcused, voids the office. Thus in Massachusetts, absence
from two consecutive annual meetings or six monthli/ meet-
ings vacates the office upon vote of the corporation to tliis
effect. In New York absence from six consecutive meetings,
without having been previously excused, voids the office
•without action on the part of the board. The New York
Banking Deiiartment is particular to see that this provision
is enforced.

In Texas, failure to attend six successive meetings, with-
out valid reason, like New York, voids the office. In ]Minne-
sota, the same rule obtains. In Indiana, nine omissions
vacates the office. In Missouri, three. In Maine, two suc-
cessive absences from annual meetings voids the office unless
re-elected by the board. In New Jersey, the New York rule
apphes. In Ilhode Island, failure to attend six meetings
or "to perform the regular duties" vcfids the office, upon vote
of the board.

THE MANAGEMENT OF A SAVINGS BANK 119

It will thus be seen that the intent of the law is not only
that the man shall have his name and influence loaned to a
savings bank — lie must attend its affairs in person. He must
knovf something of the course of events, the loans, the gen-
eral pohcy, the investments and the modus operandi of the
institution. He cannot be a "dummy"; he is not expected
to be a silent partner, but to have a hand in all that is done.

Committee Duty.

In an opinion rendered by the Attorney- General of New
York in 1879 it was held that "Committee duty is a duty de-
volved upon a trustee as such by the board and in pursuance
of law. If a trustee attends no meetings or performs no
committee duties for six successive months, liis office becomes
ipso facto vacant. Neglect to perform duties is equivalent
to a refusal to serve and a continuance of such neglect for six
months is, in the purview of the statute, a permanent refusal
to serve. The law requires active fidelity in the execution of
such trusts and does not tolerate passive indifference."*

Fees for Attendance at Board INIeetings.

The story is told of a corporation in New York w^hich
had a rule by which those who were absent from meetings
forfeited their fees to those in attendance. On a certain
morning, when a blizzard was raging, one of the directors
made up his mind that on account of the storm there would
be a small attendance, and he would "scoop the pot." At
great discomfort he managed to reach the office, when to his
astonishment he found a full board assembled — they had all
come to the same conclusion as he! Suffice it to say it was
not a savings bank, and even if it had been, the pot would
not have been worth scooping ! In New York, the trustee is
allowed no fees tvhatever. In Rhode Island, not over three
dollars per meeting; in New Hampshire, reasonable pay for
his services; in Indiana, when the surplus amounts to
fifteen per cent, of the deposits, they may receive not over
three dollars; in New Jerse5^ they may receive fees for at-
tendance at meetings "to be determined by the board." In
Texas, nothing is allowed.

*Paine's Banking Laws, p. 309.

120 THE SAVINGS BANK AND ITS PRACTICAL WORK

It will therefore appear that if any emoluments accrue
to him, it will not be from "scooping the pot" at a board
meeting.

The Remuneration of a Trustee.

The mere fact that a trustee is not permitted to receive a
fee for attending the meetings is not to say that he does not
and should not be repaid for his services; but this com-
pensation is never given liim as trustee (meaning the cus-
todian of other peoj^le's money) , but as an officer or commit-
teeman; wliich may be a "distinction without a difference".

It is but just that the man who gives his time to such an
office should be paid Avhat the service is worth — a laborer is
worthy of liis hire. Where he is in constant attendance as
president he generally is, and should be, well paid.

Neither savings bank law nor savings bank ethics has
anything to say to the savings bank manager who uses his
office in honorable ways to add to his income ; but the trouble
is the honorable ways, aside from adequate salary, are so
fcAv and far between, while on the other hand, the question-
able ways are so many.

If ius moral perception is biased, and he cannot see the
"fine line of demarkation" where ethics begin and profits
end, he will have all sorts of temptations to add to liis eartlily
store at the expense of his conscience. There are of a cer-
tainty savings banks unspotted in this respect; and, again,
there are those where fees, commissions and other emolu-
ments are not frowned upon — in fact, they are invited. But
the official who must "be seen" in order to get a good loan
through, or must receive a commission on bonds bought for
his institution, is out of his element in savings banking. If
he likes to be seen, let him join the chorus of a musical
comedy! If he must get his tip or the applicant gets ])oor
service or n6ne at all, let him get a job as waiter in a Cliild's
restaurant — the savings bank is on a higher plane than this.

The law therefore steps in and says: Mr. Trustee — If
you cannot give good sei'vice gratuitously, then don't give
any. If you have an "itching palm" — get out! If you can-
not run an honoi-able institution strictly '])on honor — there
are others who can and will.

Following tliis thought, the laws of Indiana provide:
"Nor shall any trustee, officer or agent receive directly or

THE MANAGEMENT OF A SAVINGS BANK 121

indirectly, any commission or reward for procuring a loan
from such savings bank, or for selling to such savings bank
any note, mortgage, chose in action or property of any kind
whatever." Vermont has it thus: "No officer, trustee, direc-
tor or employee of a savings institution, savings bank or
trust company shall receive any fee, present, benefit or com-
mission, directly or indirectly, from a borrower or applicant
for loan, or from any one negotiating securities at the in-
stitution or companj^ of which he is an officer, trustee, direc-
tor or employee. Nor shall he receive anj^ fee, benefit,
present or commission, directly or indirectly, for a loan made
or securities bought or sold by such institution or company,
excejjt the benefit or jwofit lie may derive in common with
other depositors or stockholders, and the compensation
allowed by such institution or company for sejvices and
expenses/'

Cahfornia: "Any officer or employee who asks or con-
sents or agrees to receive any commission, emolument, grat-
uity or reward, or any money, property or tiling of value or
of personal advantage, for procuring loans, purchase or dis-
count of any paper, note, etc., or permitting overdrafts, is
guilty of a felony J"

Massachusetts puts it a little stronger and adds a penalty,
as follows: "Such corporation or a person acting in its be-
half, shall not directly or indirectly negotiate, take or receive
a fee, brokerage, commission, gift or other consideration for
or on account of a loan made by or on behalf of such cor-
poration, other than appears on the face of the note by
which such loan purports to be made; hut the provisions of
this section shall not apply to a reasonable charge for ser-
vices in the examination of titles to real estate, and the prep-
aration of conveyances to such corporation as security for
its loans. Whoever violates a pro\H[sion of tliis section shall
be punished by a fine of not more than one thousand dollars
or by imprisonment for not more than one year or by both
fine and imprisonment." Maine has substantially the same
provision, except the penalty is one hundred dollars. In
New York: "No trustee of any such corporation shall have
any interest, direct or indirect, in the gains or profits thereof,
nor as such, directly or indirectly, receive any ]:>ay or emolu-
ment for his services except as hereinafter pi'ovided/''

In New York they are, however, allowed such fees for
examinations and real estate appraisals as the majority of

122 THE SAVINGS BANK AND ITS PRACTICAL WORK

the board, exclusive of the trustee affected thereby, shall
deem just and reasonable.

In AVisconsin, trustees are not allowed to borrow or to
become surety for loans, and are forbidden to receive money
"or any valuable thing" for negotiating, procuring or rec-
ommending a loan, or for buying or selling stocks and bonds.

The service of a trustee, therefore, is to be of a philan-
thropic nature, similar to that rendered by the officials of a
church or a school district. The element of personal gain is
foreign to the office and "What do I get out of it?" wdiolly
outside the vocabulary of the savings bank trustee who serves
in keeping ^\ith the spirit and letter of the law.

The difference between receiving a fee or bonus for in-
fluencing loans and a fee for spending half a day looking
at a piece of real estate upon which a loan is desired, or a day
checking up the bond investments, is apparent; and
while the first is "tabu" in well managed savings banks,
the latter is entirely just, and obtains quite generally,
although in some goodly sized banks this is still a gratuitous
service. But before looking into the remuneration the
trustees may lawfully and in all honor accept, let us go
back for a few moments to an old law in Massachusetts that
might well be in force to-day. It is commonly known in
some places that to get a mortgage loan through the bank,
one must "know how" ; and the knowing how^ consists in ap-
plying through the proper channel. Whether or not any-
thing remains in that channel is another matter; certain it is
that it should not be so.

In 1872 the JNIassachusetts Legislature decreed, that "No
savings bank, or any person in its behalf, shall negotiate,
take or receive any fee, commission or brokerage, for or on
account of any loan made by or in behalf of such bank, either
to his own use or to the use of the bank, other than shall
appear on the face of the note or contract in which the loan
is made, except the expense of examining titles, etc., and no
officer shall refuse to consider an application for a loan he-
canse presented hy or coming directlif from the borrower;
and if such application is rejected when there is sufficient
monej'- in the treasury to meet it, and the security offered is
ample, and the same is afterward considered on application
through a broker or third party, the officer so violating the
provisions of this act shall be deemed ineligible to fill any
position of honor or trust in any savings bank." The penalty

THE MANAGEMENT OF A SAVINGS BANK 123

was twice the amount illegally taken. This law does not
seem to be in force now — at least not as part of the present
savings bank act. It was evidently passed to cure certain
evils, and no doubt the evils still exist in some places.

Where the president is an attending officer, or where the
time consumed in appraising real estate loans is consider-
able, and where the periodical audit is a lengthy affair, a
just reward is eminently proper, and usually allowed;
although there are instances where no fees of any sort are
paid, and the best of care is given to the affairs of the bank
without even a thought of monetary reward. It may seem
like a Utopian tale, yet the author knows of a bank where
upwards of five hundred mortgage loans were made in the
course of twenty years, and the average expense, including
title search and drawing papers, was twenty dollars; and
in the appraisal of the property not a cent was paid to the
funding conmiittee, nor was any commission paid to any
broker* for negotiating the same — the work was for the
greater part done over the counter.

Some authorities in New York go so far as to hold that,
under the law, a trustee may not share in the earnings of the
bank, even as an ordinary depositor, and will not permit the
'bank to open account with any trustee; but others equally
high in authority take issue on this point. In New Jersey
the law is plain, for "No manager shall have any interest
whatever in the gains or profits thereof, except as a
depositor."

In New York, all charters of savings banks previous to
1850 contained provision that "The trustees or managers of
said institutions shall not directly or indirectly receive any
pay or emolument for their services." The first authoriza-
tion to receive pay, when acting in any capacity, is found in
the amendment to the charter of the Troy Savings Bank,
where it was enacted that "It shall be lawful for the man-
agers to pay the president of the institution such compensa-
tion as they shall deem reasonable, for superintending the
business and concerns of said corporation, either wholly or
with the aid of such clerks as the managers may from time
to time appoint." (1850.) Again in 1858, the law was
changed, making it lawful for the trustees of institutions for
savings in New York and Kings counties and Buffalo "to

*By the borrower — and of course not by the bank.

124 THE SAVINGS BANK AND ITS PRACTICAL WORK

pay their respective presidents such com^^ensation for their
services as shall in the opinion of the trustees be reasonable."
In 1863, the Poughkeepsie Savings Bank was permitted to
pay its president a reasonable comi3ensation "out of the sur-
plus earnings."* The Law of New York now provides that
no trustee shall have any interest, direct or indirect, in the
gains or receive any 2)ay or emoluments, except as provided.
Section loo of the Eanldng Law j^rovides that together with
those officers who give their personal attention to the bank's
affairs, and whose duties require regular attendance at the
bank, trustees appointed as a committee to examine the
vouchers and securities, and the appraisal committee, as
aforesaid, "may receive just compensation as in the opinion
of a majority of the board, shall be just and reasonable."

In Vermont, trustees may receive such compensation for
their services as is fixed by the corporation at a regular
meeting.

In New Jersey, "Any savings bank may pay its man-
agers for attendance upon meetings of the board, or for ser-
vice uj)072 committees, such reasonable compensation for such
attendance or service as shall be from time to time fixed by a
two-tliirds vote of the board of managers."

In JNIissouri, "It shall be lawful for directors acting as
officers of such corporation, whose duties require and receive
regular and faithful attendance at the institution, to receive
such compensation as the majority of the board of directors
shall deem just and reasonable; but such majority shall be
exclusive of any director to whom such compensation shall
be voted. But it shall not be lawful to pay the directors, as
such, for attendance at the meetings of the hoard."

In Indiana, "It shall be lawful for any savings bank
that has accumtdated a surplus of not less than five per cent,
upon its deposits, to pay trustees who render special personal
service (beyond the ordinary duty of attending meetings and
serving on committees other than of examination) such com-
pensation as may be determined upon by the board of
trustees and approved b}^ the Auditor of the State. The
trustee or trustees for whom such compensation for special
service is voted, shall have no voice in the decision of the
question. But no such compensation shall be voted by any
savings bank to any trustee until the Auditor of the State

*Paine's Banking I>aws, p. 52.

THE MANAGEMENT OF A SAVINGS BANK 125

has made or caused to be made an examination of the affairs
of such savings bank, and certified to its possession of the
required surplus. And if such surplus shall thereafter be-
come impaired, so as to be less than five per cent, of its
deposits, such compensation to trustees shall cease until such
surplus is again restored to five per cent."

The salaries in Indiana are regulated by law, on a grad-
uated scale, depending upon the amount of deposits. In
Massachusetts, "The board of trustees shall authorize the
compensation, if any, to be paid to committees of said board.
At each regular meeting of the board the treasurer shall re-
port in detail all amounts paid by the corporation since the
last regular meeting for services, fees or otherwise, to a mem-
ber of the board of trustees or to any attorney of the
corporation."

In Texas, "It shall be lawful for directors acting as
officers of savings banks, whose duties require their regular
and faithful attendance at the institution, to receive such
compensation as the majority of the board of directors shall
deem just and reasonable; but such majority shall be ex-
clusive of any director to whom such compensation shall be
voted. But it shall not be lawful to pay the directors as
such for attendance at the meetings of the board."

As before stated, the president is quite generally a sal-
aried official, as he should be. Many banks have a "real
estate man" — an appraiser of propertj^ under salary also,
wliile in others there is a committee for this jjurpose to whom
an allowance is made, to be divided equally among them.
Some banks charge for the appraisal, and this may either go
to the committee direct or to offset an appropriation to them.
In all cases the attorney is allowed legal fees for searching,
sometimes going through the bank's books and in others not
appearing on the records at all. But these loan fees are
always paid by the borrower, the law in many States so
stipulating.

To illustrate how finely drawn is the line of distinction
as to the emoluments of a trustee, in New York, thfe follow-
ing opinion of the Attorney-General is cited in full. In
February, 1887, the Superintendent of Banking addressed
the following questions to that officer for opinion:*

*Paine's Banking Laws, p. 213.

126 THE SAVINGS BANK AND ITS PRACTICAL WORK

1. Is it illegal for the trustees of a savings bank to accept a guar-
anty of title of property upon which the bank loans money, from a title
guaranty company in which one or more of the trustees of the savings
bank are stockholders ?

2. Is it illegal for savings banks to accept policies of fire insur-
ance when one or more of the trustees of the bank are directors or stock-
holders of the fire insurance company, which contracts to pay the loss
occasioned by fire to the bank as mortgagee?

3. Is it illegal for a savings bank to deposit money with a discount
bank or trust company when one or more of the savings bank trustees are
stockholders or directors of such discount bank or trust company?

4. Is it illegal for trustee of a savings bank who acts as counsel to
issue certificate as to the validity of the title of borrowers to real estate
upon which the bank loans money?

In the opinion rendered February 16, 1887, this official quoted the
section 142 as above, and said: "This is the only section of the law
M'hich appears to prescribe the powers and duties of the trustees in re-
spect to matters to which the questions relate.

"It is the duty of the trustees to satisfy themselves as to the validity
of titles to real estate upon which the money of the institution is loaned.
The manner in which they shall proceed to ascertain the validity of such
titles rests in the discretion of the trustees; and if in the sound use of
such discretion they deem it advisable to have the title investigated and
guaranteed by a corporation engaged in such business^ I do not think
there is anything in said section (142) which can be construed into a
prohibition from such services being performed by a corporation in which
one of the trustees of the bank owns stock. This would not give such a
trustee 'any interest, direct or indirect, in the gains or profits of the
bank/ nor would the services rendered by the corporation in searching
and guaranteeing the title, strictly speaking, be considered services ren-
dered by a trustee. Even were it so construed the act does not prohibit
the rendition of such services by the trustees, but simply forbids such
trustees receiving compensation therefor. It is not borrowing money
from the bank, nor is it becoming endorser or surety by a trustee, or an
obligor for moneys loaned by or borrowed of such bank.

"Second question. A person owning real estate is at liberty to in-
sure it against fire in a fire insurance company, irrespective of who or
what the directors in such company are. The fact that the property is
subsequently or previously mortgaged to a savings bank cannot abridge
this right. The title to the property is not in the savings bank. The
loss, if any, may be pa3^able to the savings bank as mortgagee. This
does not affect the riglit of the insured to choose his own company. A
trustee of a savings bank, who may be a stockliolder in the company in
which the property is insured upon which the bank has a mortgage, re-
ceives no benefit, direct or indirect, from the bank. The contract is not
witli the bank, and is not necessarily made with a corporation designated
by the bank. The profits derived by the insurance companj'^ do not come
fiom the bank, but from the owner of the property b^' whom the pre-
miums are paid.

"Third question. The section under consideration forbids a trustee
of a savings bank, either for liimself or as agent or partner of others,

THE MANAGEMENT OF A SAVINGS BANK 127

from borrowing any of its funds or deposits. Is a deposit in a discount
bank or trust company of which one of the trustees is a director or stock-
holder such borrowing as is meant by the statute? There is a well-
recognized legal distinction between a loan or 'borrowing' and a deposit;
and the rights and responsibilities of parties under these different species
of contract are quite different. 'Receiving deposits,' said the vice-chan-
cellor, in Leavitt vs. Yates,* 'as understood in the practice of banking is
different from borrowing money in the ordinary acceptation of that term,
and agreeing to allow interest on monej's deposited with a bank, and
giving notes or certificates or any other evidence of debt therefor does
not constitute the doing so an act of borrowing.'

"I think the word 'borrowing' as used in this section, was intended to
be employed in its ordinary legal signification, and does not include de-
posits of money with banks of discount, and that when a savings bank
deposits its funds with said bank of discount the latter cannot be said
to be a borrower; and the fact that one of the directors being a trustee
does not, therefore, bring it within the prohibition of section 112.

"Fourth question. A trustee may act as counsel in investigating and
certifying the validity of titles to real property upon which the bank
desires to loan money, subject to the prohibition from receiving any pay
or emoluments from the bank for his services. In my opinion, therefore,
the above questions should be answered in the negative, subject to the
qualifications above stated." i

The Trustee's Right to Borrow.

If a trustee maj^ not, as a rule, receive a fee for attend-
ing meetings; if he may not (lawfully) receive a bonus or
fee in the matter of investments; if he may not be on the
salary list except as he renders special service, nor get any
pay for his work unless he works — may he in any other way
find a loophole by which the office may be of monetary value
to him? — In other words, mav he use the institution for bor-
rowing purposes?

It is accepted as fact that manj^ men are rich largely be-
cause of their ability and facilities to borrow. In banks of
discount, trust companies, stock savings banks, and savings
banks in name only, it is the presumption of the law that
they will borrow, and due provision is made as to the amount
that may be loaned to interested parties. But in savings
banks such borrowing is generally forbidden.

In New York, "No trustee or officer of any such corpora-
tion shall, directly or indirectly, for himself, or as agent of
others, borrow any of its funds or deposits, or in any manner
use the same, except to make such current and necessary

*14 Edw. Ch. 165.

128 THE SAVINGS BANK AND ITS PRACTICAL WORK

payments as are authorized by the board of trustees; nor
shall a trustee or officer of any such corporation become
endorser or surety, or become in any manner an obligor for
monej^s loaned by or borrowed of such corporation."

In Vermont, "A trustee or officer of a savings bank shall
not directly or indirectly, either for himself or as a partner
of others, borrow or use its funds or deposits, or sign any
note, as surety, upon wliich any of such deposits are loaned."

In the State of Wasliington, "No officer or employee of
any corporation transacting a banking business in this State
shall be permitted to loan to himself any of the funds of the
bank upon his own note or obligation, without first having
obtained the approval of a majority of the hoard of directors
of the hank, and the approval, if obtained, shall be made part
of its records. And if the directors of any bank shall know-
ingly permit any of its officers, directors or employees of such
bank to borrow its funds in an excessive and dishonest man-
ner, every director who participated in and assented to the
same shall be held liable in his personal and individual capac-
ity for all damages wliich the corporation, its shareholders,
or any other person shall have sustained in consequence of
such violation."

Xew Hampshire is quite liberal, for "No savings bank
shall make a loan to any of its officers, nor accept any of its
officers as surety or guarantor upon any loan, unless all the
trustees of the bank have consented thereto in writing."

In New Jersey, his borrowing propensities will lose him
his office, for "When a manager of a savings bank shall here-
after borrow, directly or indirectly, any of the funds of the
savings bank of which he is a manager, or upon becoming
surety or guarantor for any money borrowed of, or loan
made by, such savings bank * * * the office of such
manager shall immediately become vacant." The law of
Missouri is substantially the same. Likewise in California.

In Indiana, "No trustee of any savings bank shall di-
rectly or indirectly receive for his services or otherwise, any
pay or emolument except as hereafter provided, and no
trustee, officer or agent of any savings bank shall directly
or indirectly, for himself or as agent or partner of others,
borrow any of the funds of the bank or its deposits or in any
manner use the same, except to pay the necessary expenses,
or to make investments, or to deposit for safety, as directed
by the board of trustees; nor shall any officer, agent or

THE MANAGEMENT OF A SAVINGS BANK 129

trustee of any savings bank be an indorser or surety for
loans to others, nor in any manner be an obligor for money
loaned by such savings bank ; nor shall any trustee, officer or
agent receive, directly or indirectly, any commission or re-
ward for procuring a loan from such savings bank, or for
selling to such savings bank, any note, mortgage, chose in
action, or property of any kind whatever."

The law of Texas covers about the same ground as
Indiana.

The law in Ohio states that, "No loans shall be made to
any officer or member of the executive committee, directly
or indirectly, unless duly authorized by a majoiity of the
7iie7nbers of the hoard of directors^ which authorization shall
be recorded on the books of the bank ; and such loans shall be
secured in the same manner as required from other persons."

The Liability of the Trustees.

In the by-laws of certain savings banks will be found a
clause to the effect that "the trustees undertaking their duties
without the expectation of emolument, and pledging them-
selves to an upright and conscientious discharge of their
duties, are not to be held responsible for any losses which
may happen from whatsoever cause, ecvcejJt their willful, cor-
rupt misconduct J" Others put it this way: "As no trustee
can receive any compensation for his services, none of them
shall he responsihle for any loss whatever/'

The first section quoted is in keeping with the law; the
latter is not. Herein lies the difference between a savings
bank and a bank of discount, insofar as the management is
concerned. The directors and stockholders of a bank of dis-
count are responsible to the extent of their stock, and gen-
erally to an amount equal to their holdings in addition, no
matter what may have caused the loss. But the savings
bank trustee has no such liability. And this explains why
the office of trustee is preferable to that of director or stock-
holder, for the former is holden only in the event of violating
the law. The loans and investments of a commercial bank
are not closely restricted and are largely a matter of discre-
tion ; but the savings bank law generally laj^s down hard and
fast rules, and the trustee need concern himself only that the
law is kept in order to avoid responsibility. He may buy
certain bonds. Mortgages may be taken upon certain con-

130 THE SAVINGS BANK AND ITS PRACTICAL WORK

ditions. The disposition of the available fund is usually
provided for in the law. Losses, if any, can only come
through error in judgment ^ against which there can be no
safeguard. The trustee is presumed to use the same good
judgment and care in the investment of the funds of
the bank that an ordinarily prudent man would use in his
own affairs, and as long as he does this he will not, nor can-
not, be responsible. The depositors are in a sense partners,
and as partners must share the gains and losses alike.

In an opinion of the Attorney General of New York,
rendered Jan. 11, 1882, that officer said: "The general rules
applicable to trusts apply with equal force to trustees of
savings banks. The law permits such institutions to exist as
places of safe deposit for the accimiulation of limited
amounts. They are generally patronized by people of small
means and the law takes cognizance of the fact. It means,
therefore, that savings banks shall be safe and secure, and in
order to so provide, it has hedged them about with pro-
visions of the law, * * * The law clearly points out the
path to be pin-sued by its officers in the discharge of their
trust. Being creatures of the statute, as well as trustees, the
officers of such institutions are not permitted to deviate from
the express rules laid down by statute for their guidance.
* * * After trustees of a savings bank have invested the
moneys received on deposit they are accountable to deposi-
tors for the actual proceeds of such investment as trustees,
but not personally , if acting prudently and in good faith."

In an action brought to recover from trustees of a sav-
ings bank money lost by reason of illegal purchase of North
Carolina bonds, the trustees gave bonds to the bank depart-
ment, together with other securities, to meet any deficiency
in its assets. Upon trial it was found that the entire loss
resulting from the illegal purchase of said bonds had been
made good by the obligors on the bond, and it was held that
they were released by such payment of damages sustained
by their illegal acts.*

The savings bank movement had no more than nicely
gotten under way when gross and inexcusable frauds de-
veloped, largely because of the inadequate supervision and
laxness on the part of the management. In a case that arose
out of the Carnarvon fraud, in 1824, a strong opinion was

•Hun, Receiver, v. Van Dyck et al, 26 Hun. 567 (N. Y.).

THE MANAGEMENT OF A SAVINGS BANK 131

rendered against the trustees, the judge saying: "This case
cannot be made too public," and he "trusted that it would
operate as a warning to the trustees of savings banks gen-
erally." The court was of opinion that "it should be borne in
mind that deposits are made by parties, not on the faith of
the persons acting as receiving officers, but upon the faith
of the gentlemen who acted as trustees, and where such per-
sons neglected the duties which were incumbent upon them,
their conduct was deserving of censure; and if the clerk was
guilty of peculation, they were likewise." This is good logic
and good law, and the trustee not wishing to "stand for it"
can surrender his seat to those who will. In this country,
however, the rule is not so harsh.

A Leading Case.

In the case of Hun vs. Carey,* one of the best citations
on this subject, the facts were as follows: When the de-
posits of the savings bank conducted by the trustees in suit
were only $70,000, the trustees bought a lot for $29,500,
erected a building thereon at a cost of $27,000 and gave a
mortgage for $30,500. At the time of the purchase the in-
come of the bank did not equal its expenses, and had not
for some years, as the trustees well knew. The court found
that the facts justified a finding that it was a case of gross
improvidence and mismanagement and held the trustees
liable. The court said: "The relation between a savings hank
and its trustees or directors is that of principal a7id agent,
and that between the trustees and depositors is similar to that
of trustee and cestui que trust. If such trustees transcend
the limits placed upon their powers in the charter of the
bank and cause damage to the bank or its depositors, they
are liable. They are also bound to exercise care and pru-
dence in the execution of their trust in the same degree that
men of common prudence ordinarily exercise in their own
affairs. When loss is occasioned by the failure of a trustee
to exercise ordinary care and judgment, he cannot excuse
himself by claiming he did not possess them; by voluntarily
taking the jjosition he undertakes that he does possess and
will exercise them, and it is immaterial that the services are
rendered gratuitously."

*82 N. Y. 65.

132 THE SAVINGS BANK AND ITS PRACTICAL WORK

The statutes of Connecticut are quite explicit in tliis
matter, and state that: "The directors, managers or trustees
of any savings bank, assenting to a violation of any pro-
vision of law relating to savings banks, shall be jointly and
severally liable for any loss that may result therefrom." And
in New Hami^shire, besides the legal penalty for violation
of the law, trustees and other officers are held liable for
losses resulting from illegal investments, as they no doubt
would be in any State. In New Jersey, trustees maldng
illegal investments are guilty of a misdemeanor. Thus, if
an investment be made that is legal, and depreciation in value
brings loss to the bank, the trustees are not responsible, either
in law or in equity, for they could not foresee the future;
but, had the investment been of the sort not sanctioned hy^
the law J, any loss resulting therefrom would be clearly a lia-
bility on their part.

Trustees Presumed to Know.

Trustees are presumed to know what is going on in their
bank. As a r\ile all States require periodical examinations
by committees of trustees.* The thoroughness of such audits
is left to their own judgment. It may be complete, or may
simply consist in counting cash and checking up bonds and
mortgages.

In the case of Paine, Receiver, vs. Mead,t a transaction
was entered on the books of the bank by the officers, and
was i)^^C''^umed to have been with the knowledge of the trus-
tees, who are responsible for the acts of the officers whom
they place and retain in position, the court sa\ang, "They
(the trustees) are legally chargeable with notice of acts of
the officers, especially when those acts are entered upon the
books of the bank. And if the trustees desire to escape lia-
bihty, they must desist from illegal or improvident actions
and try to remove officers who do them."

Savings bank officers cannot therefore assume responsi-
bilities or enter into contracts or transactions so as to bind
the bank, unless such acts are clearly incidental to the duties
imposed upon them. J

•Which see under the subject of "audits".

159 How. Pr. 318.

JGrerly v. Nashua Savings Bank, 63 N. H. 145.

THE MANAGEMENT OF A SAVINGS BANK 133

The true rule is that such trustees are bound to the ex-
ercise of ordinary care and prudence, the degree of care and
prudence that men prompted by self interest generally ex-
ercise in their own affairs,*

The trustees must bring to the discharge of their duties
ordinary competency, together with reasonable vigilance and
care.f The trustees of savings banks are personally respon-
sible for frauds and losses resulting from gross negligence
and inattention to the duties of their trust. They must
know the fundamental law controlling the bank, and can
only be excused when, after taking due care to understand
the provisions of the law, they honestly mistake them.j:
The managers of such institutions occupy the position of
holders of a public trust of a benevolent and charitable
nature, and it is their duty to preserve and foster the object
of that trust with a reasonable zeal.^

Good faith ; faithfulness ; knowledge of the law ; due care
in the keeping thereof, but only reasonable care in the per-
formance of their trust — that care which a prudent man
would exercise in his own affairs — these would seem to be the
distinguishing characteristics of the savings bank trustee.
He has assumed a public, and a sacred trust — one that in-
volves the happiness and the peace of multitudes. Let him
with due diligence and careful thought fulfill the trust both
to liis own honor and to the lasting benefit of those who have
entrusted their money to his keeping.

Are the Trustees Liable for Embezzlements?

The numerous cases of embezzlement that adorn ( ?) the
pages of savings bank history naturally have raised the ques-
tion, "How far in such a case is a trustee liable?" There
are instances where the neglect has been so gross and inex-
cusable as to invite the criticism of the Legislature. This
was true in 1910 of a bank in Maine. But the neglect has
usually been in over-confidence in the integrity of one man
and a wilKngness to let him "run things" rather than gross
inattention to the bank. There are, on the other hand, cases

*24 Am. and Eng, Ency. of Law, 1248, 2d Ed.
tWilliams v. McKay, 46 N. J. Eq. 25.
JMarshall v. Farmers Savings Bank, 85 Va. 676.
§Barret v. Bloomfield Sav. Inst., 64 N. J. Eq. 42,5

134 THE SAVINGS BANK AND ITS PRACTICAL WORK

where the loss has been practically beyond the control of the
trustees, as where the perpetrator has been clever enough to
cover up his tracks, or, as where a country savings bank had
a large part of its deposits in farm loans, which, owing to
real estate depreciation, brought about a state of insolvency,*
in spite of and not because of the manner of conducting the
bank.

As we have seen, the affairs of a savings bank are en-
trusted to a self-perpetuating body of unpaid trustees, whose
acts are closely restricted by law. They are, in most States,
given explicit directions as to what may be done with the
money that has been placed in their keeping. They may
take mortgage loans up to a certain limit of value, and in
certain localities. They may buy certain bonds; they may
deposit the balance in certain banks, and make certain loans
on personal security.

It is clear that they ought not to be held legally liable
for doing what the law permits, and even requires; but if
they break a clearly defined law, they should be held to the
limit — for the law is for their protection ! There are cases of
theft where the effects have been so disastrous that, waiving
their legal liabilitj^ the trustees have come forward Avith a
fund to make good the losses. This was true in Connecticut
in the Walker affair, a few years ago. The responsibility
is moral rather than financial; but overstepping the moral,
the legal responsibility will and should be visited upon them.
No doubt, in small banks, should loss stare the depositors in
the face, the trustees would quickly determine to bear it
themselves rather than have the stigma attached to their
names ; but many banks are so large that any loss that would
affect the depositors would be so large as to make such a
course impracticable.

The frauds in the early days in England demanded better
attention on the part of the trustees, and in 1848 it was pro-
posed to make the trustees responsible for a certain amount,
which Mould be large enough to insure reasonable attention,
but not large enough to frighten them into resigning. The
sum was fixed at 100 pounds, and in some quarters was re-
ceived with "mingled feelings of pain and alarm," but in
one case at least the losses were fully borne by the trustees,

*See chapter on "Insolvency."

THE MANAGEMENT OF A SAVINGS BANK 135

who were principally rich noblemen, and bore the loss as a
matter of honor.

In an opinion of the Attorney-General of New York,
rendered in 1879, he stated: "The trust (speaking of trus-
tees' liability) , as thus defined by law, is to receive deposits,
to invest them only in the manner prescribed, and to return
the principal and interest to the depositors. The whole fund
is protected by careful provision of the law. For the pur-
pose of executing this trust every bank is required to have
a board of trustees, etc. In addition to the compensation of
officers, clerks, attorneys, expenditures may be made law-
fully from the income for the incidental and necessary ex-
penses of the institution. * * * Expenditures for those
purposes fall within the legitimate duties of the trust; but
neither the deposits nor the income can be lawfully used or
expended for other purposes. They cannot be used to pay
trustees compensation for services upon committees; nor the
chairman of a regular standing committee for services as
trustee in acting as such chairman ; nor to pay for an annual
supijer or entertainmeiit for the trustees; nor to pay for a
service of plate donated to a local organizer of a railroad en-
ter jirise; nor to make contributions for charitable, benevolent
or sanitary objects;* nor to make gratuitous appropriations
to the widows of deceased officers; nor to pay costs and ex-
penses to get bills tlwough the legislature to pay interest on
illegal loans ; nor to make gratuities to officers for past ser-
vices, who had been paid regular salaries, nor to lobby agents
to procure general legislation relative to savings banks.
Payments from the money of depositors for all such jjur-
poses are clearly illegal, and render the trustees who author-
ize or consent to them pe7'Sonally liable for the diversion of
the funds. * * *

"This case presents the alternative that heavy losses must
be visited either upon the multitude of depositors in a sav-
ings bank, or upon a small number of trustees to whom the
management of the bank was intrusted. Whatever the event
there is unavoidable hardsliip. The bank itself was merely
a trustee. Its function or office was declared by the charter
to be the 'receiving of deposits and investment of them for
the use, interest and advantage of the said depositors.' From

*ln some of the early reports of New York State savings banks, such items
tv'ill be found among the payments.

136 THE SAVINGS BANK AND ITS PRACTICAL WORK

the time when its doors were first opened for business until
they were closed by the decree of this court every transaction
was under their trust rcsponsihility. * * * But we
must rest content with the plan and provisions wliich the
legislature has seen fit to prescribe. By that plan the
trustees were charged vAi\\ the duty of keeping the deposits
duly invested, and they were clothed with ample power and
discretion for the discharge of this duty. In the exercise of
their discretion within the prescribed limits it would be mani-
festly oppressive to hold them liable for every loss or mis-
fortune happening to the fund. To such an injustice the
reasoning of Lord Hardwicke would apply: 'For as a trust
is an office necessary in the concerns as between man and
man, and which if faithfully discharged is attended ynth no
small degree of trouble and anxiety, it is an act of great kind-
ness in any one to accept it. To add hazard or risk to that
trouble and to subject a trustee to losses which he could not
foresee would be manifest hardship and would deter every
one from accepting so necessary an office.' And this lan-
guage is peculiarly applicable to the office of unpaid director
or gratuitous trustee.

"The degree of skill and diligence required of such a trus-
tee, serving without compensation, is not so easy to define.
The general requirement that it must equal that of a man
of ordinary capacity and prudence in the management of his
own affairs, is, perhaps to be qualified, in view of the gratui-
tous character of the service. * * * But whether an un-
paid trustee is responsible for only gross, or for a less degree
of negligence, there are certain rules of liability which admit
of no question. There must be strictest good faith, and there
must be strict observance of the restraints established or ap-
proved by the courts, and of special conditions or directions
whenever they are affixed to the trust. If a trustee passes the
hounds set for the eocercise of discretion, no degree of care,
diligence or good faith will protect him."*

The Available Fund and the Trustees' Right to
Borrow Fro:m It.

Of necessity a savings bank must keep on hand or on call
with other banks a sum sufficient to meet the ordinary de-

*Paine's Banking Laws, pp. 241-243.

THE MANAGEMENT OF A SAVINGS BANK 137

mands of its business. These demands are spasmodic, being
heaviest at interest periods. Runs, unforeseen and hable to
occur upon sHghtest provocation, call for ready cash. Ordi-
nary demands can, to a certain extent, be anticipated, and it
is for this purpose the available fund is kept; but when ex-
hausted through a long siege of withdrawals, the securities
must be sold or pledged to obtain the wherewithal to meet
pressing needs.

To keep such an amount of cash idle in vaults would be
a waste of good money. Other banks can use such money
to advantage and are willing to pay for its use. In fact the
scramble for the reserve deposits of savings banks has led
in some instances to payment of excessive rates of interest
— to the profit of the savings bank, to be sure, but at no
small cost to the depository bank. It has even been hinted
that savings banks have been organized for no other pur-
pose than to act as feeders to commercial institutions, closely
alhed. The bank that can secure the largest and weightiest
representation on the board of a savings bank will naturally
get the most desirable account. Hence the ambition of the
commercial bank man to secure such a seat. If one man is
the dominating character in two institutions, it is an easy
matter.

The Available Fund in New York.

The first authority for the keeping on deposit of such a
fund in New York was in 1830, when the Bank for Savings
was authorized to deposit temporarily in any of the banks
of New York City and receive such interest as should be
agreed upon.

"What they had done previous to this authorization,"
says Keyes, "does not appear. Whether they kept their
monej^s in safes or vaults of their own, or deposited them in
banks of discount merely for safe keeping, but it is probable
that the latter was the more common procedure. This salu-
tary provision enabled them to make such deposits under
sanction of the law, and to derive some profit however small,
from what must have been an embarrassing acumulation of
idle capital."

In 1846, banks were authorized to hold an available fund
not to exceed $50,000, which Avas permitted to be kept on
deposit or on interest or "otherwise," in such institutions as

138 THE SAVINGS BANK AND ITS PRACTICAL WORK

the trustees should direct. In 1853 the amount was limited
to 10 per cent, of the capital stock, paid in, of such deposit-
ory banks, provided that such fund should not exceed 20 per
cent, of the deposits of the savings bank making such de-
posit. In 18.53, this was limited to $100,000 in one bank.
In 1871, it was provided that deposits made in banks and
trust companies must have the vote of a majority of the trus-
tees exclusive of those who were directors of such bank of
discount. By this act the amount was also limited to 20 per
cent, of the capital of the depository bank and 10 per cent,
of the deposits of the savings bank. At present the amount
of such deposits is limited to 10 per cent, of the deposits of
the savings bank (total available fund in all banks and on
hand must not exceed this proportion) and the amount in
any one bank or trust company restricted to 25 per cent, of
the capital and surplus of such depository bank.

In a large city bank, with capital and surplus running up
into the millions, this provision is not likely to be violated,
but in the smaller banks in country districts, it is quite an
easy matter. This feature is given due attention by the New
York Banking Department, both in the semi-annual reports
and at the time of examination.

The laws of Massachusetts provide that 2I/2 per cent, of
the deposits may be left with banks or trust companies locat-
ed in Alassachusetts, not to exceed $500,000 nor 25 per cent,
of the capital stock and surplus of the depository bank.
Indiana hmits the available fund to 20 per cent, of the
amount of deposits and such depositories may be any bank
in Indiana or any national bank in the United States. New
Jersey limits the amount to 10 per cent, of the deposits,
placed with any "solvent" bank in New Jersey, or on call
with any "solvent" trust company in New York, New Jersey
or Pennsylvania, as a majority of the managers may direct
by resolution.

It will readily be seen that the intent of the law is that
no great amount of idle savings bank money shall find its
way into favored banks of deposit. In the case of banks
having attained their growth, it is usually a highly desirable
account — permanent and profitable.

The question naturally arises, if the trustee cannot bor-
row of a savings bank direct, may he, by mamjmlating this
available fund into the bank from which, under the law he
can borrow, obtain the use of the funds Avithout violating the

THE MANAGEMENT OF A SAVINGS BANK 189

law in any sense? This may be "splitting hairs to raise an
issue" but nevertheless worth while looking into.

To prevent "entangling alliances" with commercial insti-
tutions, the laws of many states have had something to say,
and this subject has already been treated. The intent is
generally to prevent "undue familiarity" between the two
institutions. Suffice for present purposes to quote the New
York law, which reads: "It shall not be lawful for a
majority of the board of trustees of any savings bank to
belong to the board of directors of any one bank or national
banking association. Whenever any such trustee of a sav-
ings bank shall, by becoming a director of a bank or national
banking association, cause a majority of the trustees of such
savings bank to be directors of any one bank, Ms term of
office as trustee of the savings bank shall thereupon end."
Violation of this provision forfeits the franchise of the sav-
ings bank.

Savings Bank Deposits in Banks of Discount.

That a deposit by a savings bank in a bank of discount
is not a loan is amply sustained in law. A deposit by a
savings bank of its funds in a national bank is not illegal
where such deposit is not shown to exceed ten per cent of
their deposits, although the terms of such deposits secure to
the savings bank a payment of interest upon its amount, as
such agreement to pay interest does not convert the deposit
into an unauthorized loan.* "Receiving deposits," said the
vice-chancellor in Leavitt v. Yates, 4 Edw. Ch. 165, "as un-
derstood in the practice of banking, is different from borrow-
ing money in the ordinary acceptation of that term, and
agreeing to allow interest on moneys deposited with a bank
and giving notes or certificates or any other evidence of debt
therefore does not constitute the doing so an act of bor-
rowing."

In an opinion filed with the banking department by the
attorney-general of New York, February 16, 1887, that
officer held: "I think the word 'borrowing' as used in this
section, was intended to be employed in its ordinary legal
signification, and does not include deposits of money with
banks of discount, and that when a savings bank deposits

*Erie County Savings Bank v. Coit, 101 New York 533.
10

140 THE SAVINGS BANK AND ITS PRACTICAL WORK

its funds with said bank of discount the latter cannot be said
to be a borrower; and the fact of one of its directors being a
trustee does not, therefore, bring it within the prohibition of
section 255 (now section 142).*

It would therefore seem to be true that no matter how
much a trustee, who is a director in another bank, may bor-
row of that institution, and even though the money he bor-
rows may be the identical money wliich the savings bank has
deposited fifteen minutes before, he has not borrowed of the
savings bank, although if the transaction were to be closely
analyzed, he did borrow of the savings bank, through the
medium of the deposit of the available fund. The commer-
cial bank is debtor to the savings bank, and the borrower is
debtor to the commercial bank. At the moment of deposit
the funds became the property of the bank of discount, and
,it may loan them to whomsoever it will. The relationship
existing between the borrower and the previous owner of the
funds is none of its business.

It is very clear that to so control the affairs of a savings
bank as to be able to turn the available fund where one wills
is a most desirable power to possess ; and to be able through
the funds so placed to borrow^ from the depository at will, is
a privilege not to be frowned upon ; but to make such use of
trusteeship is hardly in keeping with the ethical princij^les
of the savings bank. Be this as it may, it is done every day
and will be as long as the savings banks keep an available
fund — which will be until the people never get frightened
and make unusual demands upon the bank, which only coin
of the realm can satisfy.

Entangijng Alliances.

Many of the savings banks organized after the Civil War
were fathered by banks of discount and intended to act as
feeders to them. In fact so close was the alliance that the
business was frequently transacted under the same roof and
often in the same room, and even over the same counter. In
small neighliorhoods where it was thought a savings bank
might be of service it was found that the patronage secured
would hardly be sufficient to warrant the ex])ense of an inde-
pendent establishment. Economy would therefore be pro-

'Paine's Banking Laws, p. 311.

THE MANAGEMENT OF A SAVINGS BANK 141

moted by transacting the business of the savings bank in the
office and through the officers of an ordinary bank. A small
addition to the salary of such officers would compensate them
for the services rendered, and the bank would be at no addi-
tional expense, and the slight inconvenience suffered by the
accommodation thus afforded would be compensated by the
balance of the savings bank funds left with it for deposit
and use. But the tendency of such connection was to make
the affairs of the savings bank subordinate to those of the
bank of discount.

Whenever the affairs of the savings bank became pros-
perous, and its business profitable, these would be made to
inure to the benefit of the stock corporation. A large pro-
portion of salaries would be apportioned from the savings
bank profits, rent for the accommodation furnished would
be charged and allowed, and the heaviest possible line of
deposits from the savings bank would be carried or held by
the bank of discount. In short, the interests of the bank of
discount would be in conffict with the interests of depositors
in the savings bank, and in this conffict of interests, with the
power of control all in the hands of one of the parties, it
was plain enough to see which party would fare worst in the
strife.*

In the report of the bank commissioners of Massachu-
setts for 1861 a separation of these institutions was recom-
mended, and the fact that there were twenty-seven such
banks located in the same room and managed by the same
officers strongly condemned, for they had found besides the
evils mentioned above that "the books of the savings ])ank
were sadly in arrears, because the treasurer was too much
occupied with his duties as cashier to keep them written up."
"Nothing," says the committee "is of more dangerous tend-
ency than a neglect to keep the transactions of a moneyed
corporation properly entered and posted." I quite agree
with them in this, and what is more such neglect should not
be tolerated for a moment, and probably is not as a general
rule today.

In a report on this subject to the Xew York I^egislature
in 1868 it was pointed out that the danger in these entangling
alliances was that: (a) The savings ])ank would keep too
large a proportion of its money witli the bank of discount;

*Keyes, page 64, vol. 1.

142 THE SAVINGS BANK AND ITS PRACTICAL WORK

(b) that the trustees of the savings bank indisposed to tax
themselves with the management of the bank might contract
with the bank of discount to receive and pay money for them
and so subordinate the savings bank to the bank of discount;

(c) that through duphcation of officers the two institutions
would practically become one, and the savings bank quite
likely to be the "other one."

It was sought at that time to prevent such happenings
by prohibiting any trustee from becoming a director of a
bank of discount. JNIention is made by Keyes of the case
of the ^Manufacturer's Savings Bank of Trov, whose depos-
its decreased from $129,569 in 1861 to $22,714 in 1867.
Presumably this was a liquidation process ; but it was found
to be no such tiling. All the trustees were directors of an-
other bank, and true to their instincts as such directors, ad-
vised their depositors to make deposits directly in the
national bank and take interest-bearing certificates. The
reason for this was that by depositing directly in the national
bank the tax imposed by the government was avoided.
Enough has been said on this subject to demonstrate that
such alliances existed, and savings banks were often under
the "vulturous protection of national banks" as Keyes puts
it. Space forbids the tracing of the efforts to cure the evil;
suffice it to look for a moment at the law as it now stands
to prevent such complications.

New York not only forbids a majority of the trustees of
a savings bank to belong to the board of directors of another
bank, but the designation of depository banks must be by vote
of a majority of the trustees exclusive of the trustees who
are officers, directors or trustees of the depository bank; nor
shall any savings bank do business in the same room or in
any room communicating with any bank or national banking
association.

But in New Hampshire the mingling of the two corpo-
rations is permitted, subject to the condition that the treas-
urer of the savings bank shall cause a committee of the
directors of the national bank to endorse upon the reports
of the examinations of the affairs of the savings bank re-
turned to the bank commissioners, a certificate under oath
that they have made an examination of the national bank at
the same time the savings bank was examined and found
them correct — hardly a preventative measure.

THE MANAGEMENT OF A SAVINGS BANK us

Other restrictions of similar nature may be found in the
laws of the New England states, but the tendency is to

reX'tn " " '?* *"«°"^' «'• Perhaps to speak md're cor-
rectly to separate" them, so that while they may be con-

'^ta^^t *^ "^"^^^"'^"*' *'^^^ are^outwLdly.°at

CHAPTER X
THE BY-LAAVS

The by-laws of a savings bank are of more importance
than at first sight they would seem to be. In fact, no sin-
gle feature of savings bank management should receive
more careful thought than the rules and regulations under
which the affairs of the bank are conducted.

The law generally allows a wide latitude, and banks are
permitted to make their own regulations, limited only by
the law of the commonwealth. As long as a bank works
in harmony with the law, it may make all reasonable rules,
but they must be reasonable.

There is a marked similarity in the by-laws of these
institutions, caused, no doubt, by banks using each other's
by-laws as models in framing their own; but usually some
slight differences will be found, due to individual taste and
opinions.

In the present chapter it is intended to present the sub-
ject of by-laws, topically, the design being that a bank de-
ciding to change its by-laws may here find suggestions and
suggestive wordings. At the close there will be found a
complete set of by-laws in force in a large savings bank in
New York, singularly complete and comprehensive.
The following are taken from savings banks of all kinds
and in all parts of the country, and the State is in many
instances indicated. It will be noted that frequently two
or three wordings are given for the same subject.

In the preparation of this part of the work, upwards of
one hundred sets of by-laws have been carefully read, in
order to get a composite set of rules that will be represen-
tative of the American savings bank. Where differences
exist they have been noted by repeating the subject in its
altered form.

The By-Laws Before the Bar.

As long as no question arises in banking procedure, the
rules and regulations may seem of little moment, but once

THE BY-LAWS 145

litigation begins, as it has frequently in the past, these rules
will at once become a factor and will be strictly and liter-
ally construed.

We shall see that the act of making a deposit in a sav-
ings bank and accepting a pass-book constitutes a contract
— a valid and enforceable contract between the bank and
depositor.* This contractual relation is represented by the
pass-book and this instrument in all cases contains the con-
ditions of the agreement. Many banks also issue the com-
plete by-laws in pamphlet form, thus acquainting the de-
positor with the full details of the management; but that
part wliich immediately affects the depositor is sufficient to
satisfy the law. But whatever this contract may be, the
courts will hold strictly to the letter of the agreement, as in
all matters of contract. If the bank promises to use its
"best efforts" to prevent fraud and loss, the court will ask
"Did it use its best eiforts?" If only ordinary care is prom-
ised, only ordinary diligence will be expected. Due care
should therefore be taken that the by-laws are plain, ex-
plicit and just to both parties interested.

The Conduct of the Bank.

We shall first consider the management of the bank.
This resolves itself into three departments, administrative,
executive and clerical. The general administration is en-
trusted to a board of trustees. This body is created at the
time of organization by the granting of charter by the De-
partment of State that has charge of banks and banking,
usually the Banking Department, the Department of State,
and in some cases the Insurance Department. Thereafter
the board of trustees is generally self-perpetuating.

The executive work of the bank devolves upon com-
mittees and officers. The committees have general oversight
of the business, but the conduct of the bank really rests
upon the officials. While the investing of funds and mak-
ing loans is a function of the finance or funding commit-
tee, and the periodical examinations are made by auditing
or examining committee, the executive work falls to the
attending officers.

In the early days of savings banks in this country,

*See full discussion in Chapter xii.

146 THE SAVINGS BANK AND ITS PRACTICAL WORK

ifc was the custom to appoint "attending committees,"
whose duty it was to attend the bank in person, and
supervise the actual work of the institution; not only to
supervise it, but do it. This was true of the Bowery
Savings Bank of New York for seventeen years during its
early history, and of many others. In the infancy of savings
banks, when they were looked upon as charitable institu-
tions, the members of the board of trustees attended in ro-
tation at the bank; but what they did beyond lending a
general air of elderlv benevolence has never been asco
tained. AVhere this custom is in vogue they almost invari-
ably sign their names in a big book, and this is probably
the most important of their functions. Such attendance
inevitably degenerates into a farce.* With the growth of
savings banks and the practice of making the president a
salaried officer, this custom has become obsolete in many
places, and where it still obtains it is a perfunctory service.
Many banks, however, still embody this in their by-
laws, the intent being to acquaint the full membership, by
rotation in office, with the practical workings of the bank.
It is an excellent idea, but in many places quite impossible
to operate successfully under modern conditions.

The executive officials consist of a president, treasurer
and secretary, and in a few banks a comptroller. t Some
banks combine the offices of secretary and treasurer;
while some add a cashier, whose duties are similar to
those of the comptroller, or secretary. The clerical force
of the large city banks may be said to begin with the chief
clerk, auditor, or cashier, who acts as the administrative
head of the accounting system, followed by the head book-
keei)er, tellers, ledger clerks, assistants, filing clerks, etc.,
down to the janitor, guards and night watchman.

^Ianagement of the Bank — Trustees.

NUMBER. This bank shall ])e under the manage-
ment of twenty trustees (New York). (The number va-
ries according to locality, running from seven up to fifty,
but usuallv under twenty).

RESPONSIBILITY, (a) The trustees undertaking

*Bolles Practical Banking, p. 316.

tin some banks the comptroller is next in office to the president

THE BY-LAWS 147

their duties without the expectation of emolument, and
13ledging themselves to an upright and conscientious dis-
charge of them, are not to be held responsible for any loss-
es which may haj)pen from whatsoever cause, except their
willful, corrupt misconduct; in wliich case those trustees
only who were present, and guilty of such misconduct, shall
be answerable for the same (Mass.). (b) No officer or
trustee shall be responsible for any loss whatever, except
what may happen from his own willful and corrupt mis-
conduct (Mass.). (This is in keeping with law — the
next two are not.) As no trustee can receive any com-
pensation for his services, none of them shall be responsible
for any loss whatever (New York). The directors having
undertaken to transact the business of the corporation
without pay or reward, neither they nor any member of the
corporation will be hable for any loss or losses which may
occur (Conn.).

DUTIES. Two members of the board of trustees
other than the niembers of the board of investment shall
visit the bank monthly and inspect the books relating to the
deposits and withdrawals, and their findings shall be re-
corded in a book kept for that purjjose (Mass.). Note:
The by-laws of the Bank for Savings, the oldest New York
savings bank, require substantially the same. It was the-
intent at the beginning (1819) that the trustees should
supervise the bank in person, rotating in this work, and
this practice still obtains, although since the making of the
president's office a salaried one, the work of the trustees
in this regard has been more or less perfunctory, but it is
still a part of the bank's management.

TRUSTEES' REMUNERATION. No trustee shall
receive directly or indirectly any pay or emolument for his
services except for such services as shall be rendered contin-
uously or periodically in a distinctively defined function im-
posing duties and responsibilities relating to the adminis-
tration of the bank in addition to those which devolve by
law or otherwise upon the board of trustees as a whole
(New York).

TRUSTEES NOT TO BORROW. No trustee or
employe shall borroAV directly or indirectly, anj^ of the
funds of the bank nor become surety or guarantor for any
loan from the bank, nor shall any loan be made which is
secured by any mortgage on any real estate in which at the

148 THE SAVINGS BANK AND ITS PRACTICAL WORK

time of the loan any such person has any beneficial inter-
est (New York).

ATTENDANCE AT MEETINGS, (a) If any
trustee fails to attend the meetings of the board or perform
any of the duties devolving upon him as such trustee for
six successive months without having been previously ex-
cused, the office of such trustee shall immediately become
vacant (New York). (This follows the New York law
literally.) (b) Any trustee omitting to attend the regu-
lar meetings of the board for six months in succession, may
thereupon, at the election and discretion of said board, be
considered as having vacated his place, and a successor may
be elected to fill the same (Maine).

GENERAL AUTHORITY OF THE TRUSTEES.
The trustees may, by vote of the majority of the whole
number, at any time, pay off any or all of the depositors,
or divide the whole of the property among the depositors
in proportion to their respective interest therein, upon giv-
ing three months' notice thereof; and they shall also be at
liberty to refuse any deposits at their pleasure.

Meetings of the Board.

REGULAR. There shall be stated meetings of the
board of trustees on the second Thursday of every month,
to be held at its banking rooms, or such other place in the
City of New York, as the president or a majority of the
trustees may direct, if for any reason it becomes necessary
to change temporarily the said place of meeting (New
York).

MEETINGS— HOW CALLED, (a) By deposit-
ing notice to them in the post office at least six hours be-
fore the meeting (New York), (b) The secretary shall
seasonably notify the members of all meetings of the cor-
poration (N. H.). (c) A written or printed notice for
each meeting shall be sent to each manager (Pa.).

SPECIAL MEETINGS, (a) Special meetings may
be called by three of the trustees by giving twenty-four
hours' written or printed notice of the same (New York),
(b) Special meetings may be called by the president or sec-
retary, or upon request of five trustees (New York), (c)
Special meetings may be called by the president, of which
twenty-four hours' notice shall be given, or by either of the

THE BY-LAWS 14!^

vice-presidents, or three of the trustees, of which forty-eight
hours' notice shall be given. Notice of special meetings shall
be given in writing and left at or mailed to the residence or
place of business of each trustee, stating the object of the
meeting (New York).

QUORUM. A quorum at any regular, special, or ad-
journed meeting shall consist of not less than seven trus-
tees, of whom the president shall be one; except when he
is prevented from attending any meeting by sickness, or
other unavoidable detention, when he may be represented
in forming a quorum by the first vice-president, who, in
case of his absence from like cause, may be represented by
the second vice-president, but less than a quorum shall have
power to adjourn from time to time, or until the next reg-
ular meeting (New York). Five members shall be a quo-
rum to transact ordinary business, but for the election of
executive officers, filling vacancies, either in the executive
officers or in the board or altering the by-laws, two-thirds
of the board shall be present (North Carolina).

ORDER OF BUSINESS. At all stated meetings the
following shall be the order of business.

1. Reading the minutes of the last stated, and any sub-
sequent meeting of the board.

2. Reading the minutes of the funding committee

3. Treasurer's report and general statement.

4. Reports of committees.

5. Unfinished business.

6. Communications from banking department.

7. New business.

MINUTES OF THE MEETINGS. The secretary
shall attend all such meetings, keep a record of the doings
of the same, and perform such other duties as may by law
be required of him. The minutes shall be read previous ia
adjournment and also at the next regular meeting for ap-
proval.

VACANCIES— HOW FILLED, (a) Every va-
cancy among the officers or trustees of the institution,
whether occasioned by death, resignation or otherwise, and
every vacancy to occur by reason of a resignation to take
effect at a future date which has been accepted by the
board, shall be filled by ballot at any stated meeting of the
board; but no election to fill such vacancy shall be held

150 THE SAVINGS BANK AND ITS PRACTICAL WORK

without three days' written or printed notice given to the
trustees, specifying the vacancy to be filled, excepting that
if at a stated meeting when such notice has been given, an
officer is elected to fill a vacancy, and another vacancy is
created to take effect then or thereafter as a result of such
election, such resulting vacancy may be filled at the same
meeting without further notice. A majority of all persons
present and voting shall be necessary for a choice at all
elections, and at least eleven affirmative votes shall be nec-
essary for the election of any trustee or other officer of the
board (Xew York), (b) After proposals of names for
new trustees or for the filling of vacancies, the president
shall appoint a committee of five to consider the propriety
of electing the proposed members and report to the board
at the next meeting (New York). Names of proposed
trustees must be presented at a regular meeting (New
York). No name shall be presented to the board of trus-
tees to be acted upon for membership until such name shall
have been referred to the executive committee and reported
upon at the next regular meeting (New York). Each
name proposed must be on a separate piece of paper and
signed by a majority of the trustees (New York). The
names of all persons intended to be proposed at any meet-
ing as members of the corporation shall be posted in the
president's office for twq weeks at least before such meet-
ing (Mass.).

Officers.

The officers shall be a president, two vice-presidents,
secretary, and treasurer, who shall be elected by ballot from
the board of trustees, and such other officers and assistants
shall be appointed as the board of trustees may deem nec-
essary, who shall hold their offices during the pleasure of
the board.

The title officer or officers as used in these by-laws shall
mean the president, vice presidents, secretary or treasurer.
(Note: Some banks designate the attending officer "Sec-
retary," others "Treasurer" and still others "Cashier,"
while in many cases the three are combined in one. In
large banks all three may be found, in addition to others.)

A counsel shall also be appointed, who shall not be a
trustee.

The attorney shall attend the meetings of the board,

THE BY-LAWS 151

when requested, and the board may regulate his charges
for services (New York).

Duties of President and Vice-President. -

{a) The president shall have the general charge and
superintendence of the bank, its management, securities and
obligations. He shall have power to execute, in the name
and under the common seal of the bank, such releases from,
or conveyances, assignments or transfers of, the property
or securities of the bank as may be authorized by the board
of trustees. He shall also have power, upon receipt of
principal and interest due thereon, to execute assignments
of bonds and mortgages and satisfaction pieces of mort-
gages.

In the absence of the president either of the vice-presi-
dents may discharge any or all of the duties of the presi-
dent. In case any conflict of authority or duty shall arise
between any of the officers or emploj^ees of the bank the de-
cision of the president shall be conclusive until overruled
or modified by the board of trustees. (New York.)

(b) The j)i"esident shall have a general supervision and
direction of the business of the institution, subject to such
action and regulations as may from time to time be adopted
by the board of trustees.

He shall, in conjunction with the treasurer, have charge
of the common seal, also of all bonds and mortgages, stocks,
securities and other property belonging to or held by the
institution.

All satisfactions of mortgages, releases and conveyances
shall be signed by the president or one of the vice-presidents
and secretary or treasurer.

He shall preside at all meetings of the board of trus-
tees, and appoint all committees, unless otherwise ordered,
and shall perform such other duties as usually devolve on
the chief executive officer of like institutions. ( New York. )

It shall be the duty of the first vice-president to consult
and advise with the president in all matters and affairs of
the institution, to assist the president in the discharge of
his duties, and to perform all the duties of the president in
his absence or inability to act, and in concurrence with the
president, to have a general oversight of all the business
and affairs of the institution. (New York.)

152 THE SAVINGS BANK AND ITS PRACTICAL WORK

It shall be the duty of the second vice-president, when-
ever requested by the president or first vice-president, to
perform all the duties devolving upon the first vice-presi-
dent in his absence or inabihty to act. (New York.)

Duties of Treasurer.

(a) It shall be the duty of the treasurer to attend at
the bank during banking hours, and at such other times
as may be necessary; to keep or cause to be kept, an ac-
count of all moneys received and paid out; to make, or
cause to be made, the necessary entries in the pass-books
of the dealers; he shall receive the funds remaining in the
hands of the teller, or on hand; provide the necessary sup-
plies and other articles, books, blanks and stationery re-
quired in the prosecution of the business of the bank, and
pay such salaries to the employees of the board as he may
he by their vote directed when due; and in connection with
the president he shall have charge of all bonds and mort-
gages and other securities and property of the bank, ex-
cjepting bonds given by the employees of the bank. (New
York.)

(b) It shall be the duty of the treasurer to keep an
account of all moneys received and paid out, and shall re-
port the same in detail at each monthly meeting of the
board; he shall also make out and prepare in due time all
such reports and returns, or other statements as the insti-
tution is required to render in compliance with the statutes,
and perform such other duties as the board may by resolu-
tion require. (New York.)

(c) The treasurer shall be ex officio clerk of the cor-
poration and of the board of trustees and shall keep a true
record of the proceedings at all their meetings and publish
notice of meetings as prescribed in these by-laws.

It shall be the duty of the treasurer, with such assist-
ants as he may be authorized by the board of trustees to
employ under fixed compensations, to attend at the bank
during bank hours to enter all deposits and payments made
to depositors in the books of the bank, and a duplicate of
each entry in the book of the depositor. He shall keep,
deposit, and invest the money and property of the bank as
directed by the board of trustees. He shall pay all debts
due from the bank, make all transfers of securities, and

THE BY-LAWS 153

collect, receive and enforce all debts and obligations due to
it, and upon payment thereof shall acquit and discharge the
same and surrender or discharge all security held therefor,
and shall transact the other ordinary business of the bank
and present to the board of trustees, weekly, an exhibit of
the state of deposits, habilities and investments of the bank.
The treasurer shall have charge of all the securities.

Discretion of Treasurer.

The treasurer is hereby authorized to procure all need-
ful books and stationery for the use of the bank, and to pay
for the same without audit; also to pay all other just and
legal claims against it of known and fixed amounts, as rent,
taxes, salaries, etc.

Duties of the Secretary.

It shall be the duty of the secretary to conduct the cor-
respondence of the bank, to receive all mortgage applications,
and submit them to the appropriate committees; he shall
notify the trustees and committees of all meetings required
to be held, and be present and keep the minutes of such
meetings if so required.

General Duties of the Treasurer and Secretary.

The treasurer and secretary shall, under the general di-
rection of the president, superintend the daily transactions
of the bank; make, or cause to be made, the necessary en-
tries in the pass-books of the depositors; collect the prin-
cipal of, and the interest and income arising from, all se-
curities or property held or owned by the bank, as the
same may become due; cause the same and the money re-
ceived from depositors to be deposited daily in such bank
or banks as the board of trustees may direct, except a sum
sufficient to meet the ordinary demands of depositors from
day to day, which sum shall, after banking hours, be kept
in the vault of the bank ; cause all policies of insurance upon
buildings mortgaged to or owned by the bank to be re-
newed at or before their expiration; provide all necessary
books, blanks and stationery, and cause all salaries to be
paid when due. In the absence of the treasurer his duties

154 THE SAVINGS BANK AND ITS PRACTICAL WORK

shall be performed by the secretary; and in the absence of
the secretary his duties shall be performed by the treasurer.
(New York.)

The Comptroller.

The comptroller shall daily audit and revise the accounts
of the tellers at the offices of the society and verify their
reports of receipts and payments, and the postings thereof
in the ledgers. He shall, under the direction of the presi-
dent, have the care and management of the society's invest-
ments in real estate; and he shall also perform such other
duties as may be assigned to him by the president. (Pa.)

Surveyor and Appraiser.

The surveyor shall sui-vey and appraise property for
mortgage loans, and sign orders for payment by the pres-
ident or treasurer of instalments on mortgage loans. ( New
Jersey. )

Committees and Their Duties.

It shall be the duty of the president to appoint annually
at the regular annual meeting of the board of trustees in
January, subject to the approval of the board, the follow-
ing committees: Finance committee, consisting of five
members; examining committee, consisting of three mem-
bers; executive committee, consisting of three members;
appraisal committee, consisting of three members; attend-
ing committee, consisting of six members, and also an
attorney, together with such other committees as may from
time to time be authorized by the board. (Note: In many
banks a nominating committee is also included, whose
duty is to suggest names of trustees, officers and com-
mittees, in place of the president as above.)

Finance or Funding Committee.

(a) There shall be a committee of five members of
the board to be denominated, the funding committee. The
president and treasurer (who are hereby permanently ap-
pointed as part of said committee) and three other trustees

THE BY-LAWS 155

taken in rotation, the terms of office of one of whom shall
expire each year, shall constitute said committee, whose
duty it shall be to invest the money received, under such
limitations as are prescribed by law, subject to the approval
of the board, at each monthly meeting; to examine the
books, accounts, securities and management of the bank,
and report thereon to the board at the monthly meetings
in June and December, and at the same meetings to recom-
mend a rate of interest dividend to be declared.

Each appHcation for mortgage loan may be approved
by said committee, after the same shall have been investi-
gated by one or more of their number or a member of the
board and such investigation certified to, as to the value
of the premises to be mortgaged, according to their best
judgment. The report of such investigation shall be filed
and preserved among the records of the bank.

Annually at the meeting in February, there shall be
elected for two years, one member of such committee, to
fill the places of those whose terms of office expire at that
time. Members of said cormnittee retiring therefrom by
expiration of their term or by resignation, shall be ineligible
for re-election until after one year from the time they shall
so retire.

. In case of the inability by sickness, absence, or other
unavoidable detention of any member to attend the meet-
ings of any committee, the president may designate any
member of the board of trustees to act as a member of said
committee during such inability.

Three members of said committee shall constitute a
quorum. (New York.)

(b) The finance committee shall hold stated meetings
at the bank on the last Tuesday of each month, at 10
o'clock A. M. They may also hold special meetings, and
adjourn from time to time. They shall appoint a chairman
and secretary, and keep a record of their proceedings.

They may consider applications for loans, make invest-
ments, which (when ratified by the board) shall be valid,
and transact any other business allowed to the monthly
meeting of trustees; and whenever said monthly meeting
shall fail of a quorum, said committee may organize and
act in its stead. (New York.)

May settle and adjust claims against the bank and con-
sult counsel. (New York.)
11

156 THE SAVINGS BANK AND ITS PRACTICAL WORK

{c) It shall be the duty of the finance committee to
meet as often as circumstances require, and to superintend
and direct all loans and permanent investments of the funds
of the institution. They shall examine all applications for
loans on bond and mortgage, or other permanent invest-
ments, and particularly all real estate that may be offered
to be mortgaged to the bank as security for loans, and
ascertain its value and sufficiency for the proposed security.
And if, after loans are made, they shall at any time doubt
the sufficiency of the security, they shall call in so much of
the loan as will render the remainder well secured, or re-
quire additional security. They shall keep a record of
their proceedings, and make a report thereof, in writing, at
every stated meeting of the board of trustees. They shall
make a special examination of any or all real estate and
premises on which the bank holds a mortgage whenever
they think it necessary or advisable to do so, or whenever
required by the board of trustees, with the view of ascertain-
ing its then present condition and value, and report the
result of such examinations at the next stated meeting of
the board thereafter.

This committee, with the president and secretary, shall
have power to adjust and settle all claims against the bank
where the amount involved shall not exceed five hundred
dollars, and they may employ and consult counsel. They
may likewise decide and grant applications for a release
of part of mortgaged premises, in cases when such appli-
cations or claims cannot conveniently be referred to a meet-
ing of the board. (New York.)

Examining Committee.

{a) There shall be annually taken by rotation an exam-
ining committee of five members of the board of trustees,
who shall carefully examine the books, accounts, securities,
bonds of officers and employees, and management of the
bank, and report thereon to the board whenever deemed
necessary. (New York.)

(h) There shall be elected at the regular monthly
meeting in June and December of every year a committee
of three, whose duty it shall be to make a thorough exam-
ination of the vouchers, books and assets held by the in-
stitution, and report to the next regular monthly meeting

THE BY-LAWS 157

of trustees the state of the books, and a detailed state-
ment of all the various assets, liabilities and business of the
institution. The reports to the Superintendent of the
Banking Department of the assets of the institution shall
be based upon the examination to be made bj^ the com-
mittee on the last days of June and December in each year.
A synopsis of the committee's report shall be printed for
the use of the institution and its depositors. The commit-
tees may emploj^ accountants or such other assistance, in
fulfilling their duties, as they may deem advisable or neces-
sary. (New York.)

(c) It shall be the duty of the auditing (examining)
committee to examine the cash funds on hand at least once
each month and to examine all vouchers and audit all ac-
counts and bills and the expenses of the institution.

The examining committee shall have general supervision
of the bank during the recess of the board, make loans,
appraise the value of real estate; may suspend any clerk
or employee and supply his place until the regular meeting
of the board.

Attending Committee.

{a) It shall be the duty of the attending committee,
or one of them, to attend at the bank at least once a week
during the month when it shall be open for deposit and re-
payment of moneys, and to inform themselves of the opera-
tions of the bank; if, however, one or more shall be unable
to attend, it shall be his duty to procure the attendance of
another trustee in his stead. They shall also, each day that
they are in attendance, make careful examinations of the
books of the bank and see that all monej^s which may have
come into the hands of the treasurer shall have been de-
posited in bank or otherwise properly accounted for. In
case any member of either standing committee cannot per-
sonally attend to his duties on said committee, he may
appoint any other trustee a member of said committee pro
tern in his stead, whose acts shall be equallv binding. (New
York.)

(h) A monthly attending committee, embracing all
the members except the president and vice-presidents shall
be appointed, whose duties shall be to attend at the bank
in rotation and have general supervision of the business of
the corporation and its employees.

158 THE SAVINGS BANK AND ITS PRACTICAL WORK

(c) Monthly attending committees, embracing all the
members of the board, except the president and two vice-
presidents, may be appointed, each of wliich committees
shall in rotation have a general charge and supervision of
the business of the institution and its employees.

Executive Committee.

An executive committee consisting of three members
shall be appointed annually who shall have general over-
sight of the affairs of the bank. They shall ascertain the
balances due from other banks, and where deposited and on
what terms, and report monthly. They shall perform all
duties of an executive nature that shall necessitate action
during the recess of the board and report at the next
meeting.

Nominating Committee.

A nominating committee of three members shall present
all names of proposed trustees and officers, and no action
shall be taken on any name for any position until it shall
have been favorably reported to the board by the nominat-
ing conmiittee.

Records to Be Kept.

Each of said committees shall keep, in books for that
purpose, a full record of its proceedings, which shall be
signed by the members of said committees, respectively, and
be reported in full at each meeting of the board, and at any
special meetings, when called for by a vote of the board.

Employees.

All employees shall hold office at the pleasure of the
board.

Oath of Office. All employees before entering upon
their respective duties shall take the following oath of
office:

I do solemnly swear (or affirm) that I will, to the best
of my abilities, perform all such duties and services as shall
be given me in charge by virtue of my appointment to the
office of of the Savings In-
stitution of the city of New York; and that I will faith-

THE BY-LAWS 159

fully apply and protect the funds and property of the in-
stitution, and account for the same, under the control of
the president or board of trustees. (New York.)

Duty of Assistants.

It shall be the duty of the assistants appointed by the
board, to attend at all times when the bank is open, at the
banking-house, and perform such services as may be re-
quired of them under the superintendence of the president
and treasurer. (New York.)

To Give Bonds.

The several officers and clerks receiving salaries from
the board shall, before entering upon their respective duties,
execute, severally, a bond or bonds in such penal sums, and
with such surety as may be required by the board, con-
ditioned for the faithful performance of the duties assigned
them, and for the security of any funds of the institution
which may come into their hands, respectively, such surety
to be approved by the funding committee. (New York.)

No trustee shall become surety or go on the bonds of
officers or employees. (New York.)

The surety bonds of officers and employees shall be in
custody of the president. (New York.)

Privacy of Accounts.

All transactions between the depositors and the bank
shall be strictly confidential, and no information in regard
to the account of any depositor with the bank shall be re-
vealed to a third party, except when ordered by the court,
or when requested by the depositor, or when directed by the
president or treasurer. (Conn.)

All business confidential. No officer or employees shall
disclose anything in relation to the account of any person
except in obedience to the order of a competent court.

Salaries.

No motion to change the salary of any officer or em-
ployee of the bank shall be entertained unless notice of the

160 THE SAVINGS BANK AND ITS PRACTICAL WORK

proposed change shall have been given at a previous
meeting.

The clerks of the bank and janitor of the bank building
shall be under the immediate control and su2:>ervision of the
president and treasurer.

Limit of Deposits.

(a) Deposits in sums from ten cents and upwards to
$3,000 will be received, but in order to retain the pass book,
a balance of one dollar must remain on deposit. No in-
terest will be allowed on accounts where the balance is less
than five dollars. (New York.)

{b) Deposits of five dollars and upwards to the
amount of $3,000 may be received from one individual.
(New York.)

But in no case will fractional parts of a dollar be re-
ceived on deposit. (New York.)

(c) Deposits, to the amount allowed by law, may be
received on one account, and all receipts and payments shall
be in specie or in bills taken in deposit by the incorporated
banks of the city of New York at par. But no new ac-
count shall be opened with a deposit of less than five
dollars.

Depositors Must Subscribe to the By-Laws.

(a) Each depositor on making his or her first deposit
shall be required to subscribe liis or her assent and agree-
ment to be governed by the by-laws and regulations of the
bank. (New York.)

{b) Upon inaking a deposit, the depositor shall be
required to subscribe his name, signifying his assent to the
regulations and by-laws of the bank, and to all such altera-
tions thereof as may be duly made. (Maine.)

(c) On making the first deposit, depositors must sub-
scribe to the by-laws, and tlie acceptance of the book is
such assent.

(d) If for any reason the depositor does not subscribe
to the by-laws in writing, lie will be bound unless he returns
the j)ass book or withdraws the money xdthin ten days.
(New York.)

ie) But if this (the signature) has not been made at the

THE BY-LAWS l6l

time of making the first deposit, the fact of making the
first deposit shall of itself he regarded as intended by the
depositor as signifying his assent and agreement to the said
by-laws and regulations and shall be deemed sufficient evi-
dence of such assent. (New York.)

(/) Every person desirous of becoming a depositor
shall, at the time of making the first deposit, receive a de-
posit book containing the following rules and regulations
printed therein; and by receiving the book the depositor
shall be considered as agreeing to be bound by the by-laws.
One book only will be given out in the same name.
(Penna.)

(g) Depositors evidence their consent to the rules and
regulations herein contained bi/ acceptance of this book,
(Conn.)

(h) If the depositor is unable to write, or is 7iot pres-
ent at the time of opening the account, or for any other
reason is unable to make such subscription to the by-laws,
the acceptance of the pass book shall be taken and be
deemed to be an agreement by the depositor to be bound
by and subject to the by-laws and rules as they then exist
or may thereafter be lawfully altered or amended. And
any agreement or contract or condition inconsistent with
the by-laws of the institution which may be alleged to have
been made with any such person making a deposit shall be
void unless the same shall have been in writing and in the
pass book and been signed by some duly authorized officer
of the institution before its delivery. (New York.)

{i) Depositors on making their first deposit shall sub-
scribe to the by-laws and give such information touching
themselves as shall enable the officers to identify the parties
whenever said parties may wish to withdraw the funds.
(New York.)

(j) Deposits of one dollar and upward not exceeding
$3,000 may be received from any one depositor. On mak-
ing the first deposit, the depositor must appear at the office
of the savings bank and declare by his signature his assent
to the rules and regulations of the bank. The depositor
shall receive a pass book in which all deposits and with-
drawals are to be recorded, and it shall be the duty of each
depositor, before leaving the bank, to examine the entries
in his or her pass book, or the bank will not be responsible
for any claim afterwards made. Only persons not residing

162 THE SAVINGS BANK AND ITS PRACTICAL WORK

in this city may open accounts in writing, lawfully attested.
The bank will not be responsible for any money sent to
depositors at their request.

Agreements Invalid.

No employee of this bank other than the president or
treasurer shall make any agreement, oral or written, with
any depositor, involving this bank, beyond the ordinary
entries made in the pass books of depositors inclusive of
entries creating joint accounts and trust accounts.

Deposits — How Entered.

(a) All deposits shall be regularly entered in the
books of the bank, and also in a book to be furnished to the
depositor, which shall be kept by him or her as a voucher
for his or her deposits.

[h) No money shall be received, nor shall any money
be paid out, except at the hank, in the presence of either
the president, treasurer, secretary, a trustee, or the teller or
other assistants.

(c) Deposits shall be regularly entered in the books
of the bank and posted daily * * * and the amount
written in full length and in figures and signed by an
officer of the bank. (North Carolina.)

(d) Deposits shall be entered in the book of the de-
positor who shall then examine the same.

Other Deposits.

Special deposits with prescribed conditions may be
made, which conditions shall be entered upon the books of
the corporation and of the depositor; and the money thus
deposited shall in no case be withdrawn, except in conform-
ity with those conditions. (Maine.) (New York cannot
accept special deposits other than joint, trust, society and
court accounts.)

Any depositor may designate at the time of making a
deposit the period for which he desires the deposit to remain
in the bank, and persons for whose benefit the same is
made; and such depositor and his or her legal representa-
tives, shall be bound bv such conditions voluntarily an-

THE BY-LAWS 16S

nexed to the deposit; and in case of a dissolution of the
corporation, the same shall be paid to the person legally
authorized to receive it. (Maine.)

Miscellaneous Provisions Concerning Deposits.

When money is brought to deposit, it must be carefully
counted, laid straight, all one way, and the teller informed
of the amount. (Penna.)

Checks, 07' drafts, when credited as cash, will only be
received for account of the depositor, and at the depositor's
risk, and every depositor will be held responsible as an in-
dorser upon all checks, or drafts, so deposited. The num-
ber of the deposit book must be noted on all checks, or
drafts, deposited for credit therein. (New York.)

Deposits will be received subject to such conditions as
may be stipulated by the treasurer.

Each depositor is required to sign a certificate of de-
posit, of which the following is a copy: We, the under-
signed, have (on the day designated by the date) deposited
in the Portsmouth Savings Bank, the amount set against
our signatures, for the person in whose name a book of
deposit has been issued, which deposit has been entered on
said book; and the whole or any portion of this deposit
may be withdrawn by the person who may present the said
book, and give a receipt therefor to the bank. And we
hereby signify our assent to the regulations and by-laws of
this institution. (Maine.)

All deposits shall be made in specie, or funds current
at the banks in the city of Utica, and all payments shall be
made in like funds. (New York.)

All deposits must be made in the banking rooms to be
valid.

The first deposit must remain at least thirty days before
withdrawal will be permitted. (New York.)

All checks for deposit must remain thirty days.

Withdrawals — Notice of Withdrawal.

(a) This institution will as a rule pay all depositors
on demand, but shall not be liable to pay any money to
depositors except on sixty days' previous notice in writing
to the treasurer. The intent of this rule being solely to

164 THE SAVINGS BANK AND ITS PRACTICAL WORK

protect the institution and its depositors in times of public
excitement and danger. (New York.)

(b) No money shall be withdrawn as a matter of right
without ninety days' previous notice to the bank, in writing,
of the intention to withdraw it; as a matter of indulgence,
however, the officers of the bank may allow moneys to be
withdrawn without such notice on any day for the reception
and payment of dejDosits without thereby waiving the right
of the bank to such notice, and time of ])avment. (New
York.)

(c) No depositor shall be entitled as a matter of right
to ^vdthdraw more than $100 without giving such time
notice to the treasurer of his purpose to make such draft
as may have been at the time decided by the trustees as ex-
pedient, of not less than ten nor more than sixty days.

This rule is enacted for prudential reasons to protect
the interests of depositors. As a matter of fact the treas-
urer lias ahcaifs paid depositors on demand, without re-
quiring the notice — without prejudice, however, to his right
to require it, if, in the judgment of the officers of the bank^
the occasion calls for it.

{d) Notice of withdrawal will be required as follows:

For sums of $25 and less, 10 da5^s.

For sums of $2.5 to $100, 30 days.

For sums over $100, 60 days.

(e) Ten days' notice of withdrawal may be required
for all sums. On amounts of $100 and over, two months"
notice will be required. The trustees will keep a fund on
hand sufficient to meet all ordinary'- demands, and the notice
will be enforced only to protect depositors. (Ohio.)

(/) On all sums from $25 to $500 sixty days' notice
will be required. When the notice of withdrawal is given,
the interest will cease from the first day of the quarter in
which notice is given. (Minn.)

Interest due is excepted from withdrawal notice.
{(j) No money shall be drawn except on two weeks'
notice, and if the sum pro])osed to be drawn exceed two hun-
dred dollars, one week's further notice must be given for
every additional hundred dollars or fractional })art thereof;
and for all sums over sixteen hundred dollars, four months'
notice will be required. Notice will not be received at one
time for the drawing of more than one amount, and a sec-
ond notice shall be considered as waiving the pending^

THE BY-LAWS 165

notice. Interest, however, will be paid on demand at any
time within six months after the dividend has been de-
clared. On giving notice, the book must be left at the ])ank
and the treasurer informed how much money is wanted;
and if the money be not drawn within ten days after the
time for drawing has passed, the notice will be considered
as withdrawn, and a new notice will be required. (Penna.)
(h) Withdrawals may be made (1) personally, or
(2) by order m writing (if the bank have the depositor's
signature) or (3) by letter's of attorney duly authenticated.
In case of death, payment will be made to the (4) legal
representative. (New York.)

Withdrawals — How Made.

{a) Depositors alone shall be responsible for the safe
keeping of their books. And all payments made to persons
producing the deposit books, whether with or without an
order or letter of attorriey, purporting to be signed by the
depositor, shall be deemed good and valid payments to
depositors respectively and shall fully discharge the institu-
tion therefrom, unless notice of the death of the depositor
shall have been given to it. (New York.)

(b) Payment may he made to depositors in jjerson,
or to their attorneys, or on the written order of either of
them; and shall he deemed good, and valid when made to
any one presenting the pass book, or a duplicate thereof.
(New York.)

(c) Depositors must see that their bank books are
neither lost nor stolen. The hank will use all care in the
payment of moneys, that the rightful owners shall receive
them; yet sums paid in good faith to a person presenting the
bank book, and using the depositor's signature, shall be
deemed valid, and shall exonerate the bank to the amount
paid.

•{d) The bank will not be responsible to any depositor
for frauds committed on the bank by producing the pass
book and drawing money without the knowledge or consent
of the owner.

{e) As officers of the institution may be unable to
identify every depositor transacting business at the office,
the institution will not be responsible for loss sustained
where payment has been made upon the ])resentation of the

166 THE SAVINGS BANK AND ITS PRACTICAL WORK

deposit book. In all cases a payment upon presentation of
a deposit book shall be a discharge to the corporation for the
amount so paid; provided j upon satisfactory proof of the
loss or destruction of a book, the board of investment may
order the payment of the amount due without the book;
and provided also, if they tliink proper, they may require a
bond to indemnify the institution therefor.

(/) The possession of the pass hook shall be sufficient
authority to the bank to warrant any payment made and
entered in it, and all payments made to persons producing
the pass book shall be deemed good and vaHd payments to
the depositors respectively. The bank, however, will always
endeavor to prevent frauds on the depositors.

Miscellaneous Provisions Concerning Withdrawals.

No payments of less than five dollars will be made
unless to close the account.

If not called for within one week after the expiration of
the notice, the notice will have no effect.

Persons unable to write must be identified.

And if drawn by order the bearer of the order shall
have the right to sign the name of the depositor to the
receipt and the receipt shall be as binding as though signed
by the depositor. (New York.)

The secretary shall endeavor to jjrevent fraud but pay-
ments made to persons presenting the pass book shall be
deemed valid payments to depositors.

The bank will use its best efforts to prevent fraud * *.

Withdrawals by attorneys in fact, and orders upon the
society for payments in withdrawal, can only be made upon
blanks provided by the society.

No deposit will be paid from the fifteenth day of Feb-
ruary to the first day of March, and from the fifteenth day
of August to the first day of September, and no interest
will be allowed on any sums withdrawn for the time which
may have elapsed since the last dividend. (Conn.)

• The treasurer is authorized to pay depositors the whole
or any part of the amount of their deposits and divide- ids,
at any time when called for, reserving, however, the right,
to the board of investment, should the interests of the in-
stitution require, to instruct their treasurer to pay only on
the first Monday of February, May, August and Novem-

THE BY-LAWS 167

ber, and to require two weeks' notice in writing, of their in-
tention to withdraw. (Rhode Island.)

Drafts by Mail.

Drafts upon the bank, sent by mail or otherwise, will
not be entitled to payment unless the depositor's book is
produced and the depositor sends by letter, accompanjang
the draft, correct answers to the questions asked when the
deposit was made in the bank. Upon payment in cuirent
funds in such manner as the said depositor may in such
draft or letter direct all responsibility therefor on the part
of the bank shall cease.

Joint axd Trust Accounts.

(a) Deposits in the name of one person as trustee for
another may be withdrawn by such trustee, and in case of
death, if no written notice of the existence and terms of a
valid trust has been given to the bank, the cestui que trust
may withdraw the deposit. (Conn.)

(b) Every deposit made by one person for the benefit
of another person shall be expressed to be 'Hn trust"; and
no deposit shall be received, or be expressed to be received,
from one person "by"' another person, or by one person
"for" another person. The trustee, or his legal representa-
tive or successor, shall alone be entitled to receive payment,
and liis, or their, receipt, w^ith the production of the deposit
book, will be a full discharge to the society. (Penna.)

(c) When an account stands in the names of two per-
sons as co-depositors who have authorized the addition of
the words "to be drawn by either or the survivor," or other
words to the same effect, then payment to either depositor
shall be a full and valid discharge to the bank whether the
other co-depositor be living or dead. (New York.)

(d) No account shall be opened in the names of more
than one person except by a co-partnership, trustees, or
man and wife. ]\Ioney will not be paid to agent or upon
power of attorney without proof that the principal is living.

Married Women and Minors.

Deposits of married women cannot be drawn out by their
husbands.

168 THE SAVINGS BANK AND ITS PRACTICAL WORK

JVIarried women shall be allowed to deposit and with-
draw as if unmarried.

Deposits made by married women or minors cannot be
drawn by husband, father or guardian.

Any deposit made in the name of a irdnor, either by
himself or by another, for his benefit, may be paid to such
minor without the intervention of a guardian and any such
payment shall be as valid and effectual as though made to a
person of full age.

In case of deposits made by parent for infant, paj^ment
may be made to either parent or child on production of
pass book.

JNIoney may be deposited by any person for the benefit
of a minor and not to be withdrawn until the minor be-
comes of age if it is so ordered at the time of making the
deposit. (Oliio.)

JMoneys deposited by or in the name of a minor may
be repaid to such minor (although no guardian shall have
been appointed for him), on his personal receipt for same,
but no money deposited by one person "in trust" for an-
other shall be paid to the person for whom it is in trust,
during the lifetime of the trustee, but after the death of
said trustee it may be so paid. Deposits, when made in
more than one name "payable to either or survivor" may
be paid to either of the depositors named, whether the
other is livins; or not.

Lost Pass Books.

{a) If a savings bank book be accidentally destroyed or
lost, and the owner makes affidavit of that faet and of its
circumstances, and gives a receipt for money drawn on
such account, such money will be paid unless the case be
such as to afford reasonable ground of suspicion or fraud.
In all cases of loss or destruction of any savings bank
book, any officer of the bank via// require a bond, with suf-
ficient sureties, conditioned to indemnify the savings bank
from loss by reason of making such payments, before the
same shall be made. (New York.)

(b) If a pass book is lost, tJie depositor should imme-
diately notify the bank, and if after a reasonable time the
book is not found, and the balance thereon is not over ten
dollars, a receipt shall be taken for the balance, stating

THE BY-LAWS l69

that the pass book is lost. If the balance due on the book
is more thmi ten dollars and not exceeding fifty dollars,
the depositor shall make an affidavit as to the loss of the
book and give a receipt for the balance. If the balance
due is more than fifty dollars, the depositor shall execute
to the bank a bond of indemnity for twice the amount of
said balance, with sureties to be approved by the officers
of the bank. In all cases of lost books, the accounts shall
be closed, and the balance, if not withdrawn, shall be trans-
ferred to a new account, under another number. (New
York.)

(c) If a depositor shall lose his, or her, deposit book,
immediate notice of the loss must be given at the office
from whence the book was issued, and a new book will be
issued to the depositor upon satisfactory proof of identity,
and after the depositor shall have advertised the loss of the
book in one daily newspaper piihlished in the city of Phila-
delphia, and after the depositor shall have given to the Soci-
ety satisfactory indemnity against any loss to the Society in
respect of the book so lost. (Penna.)

{d) In case of the loss of the pass book, notice there-
of shall be given at the depositor's expense, at least once a
week for four successive weeks, in one or more of the daily
newspapers of the city of St. Paul. The pass book may
then be considered void and of no value, and after two
weeks have passed from the last advertisement, the bank
may make payments without having the pass book pro-
duced. Adequate indemnity must, however, be furnished
the bank before payments are made. (JNIinn.)

(e) In case of the loss of a pass book, notice thereof
shall be given, at the depositor's exjDcnse, once a w^eek for
two consecutive weeks, in one or more of the daily news-
papers of the City of New York. The pass book may then
be considered void and of no value, and the bank may, after
two weeks have passed from the last advertisement, make
payments ^^dthout having the pass book produced. The
bank may, moreover, demand satisfactory security. (New
York.)

(/) The funding committee may order duplicate books
to be issued for lost books, under suitable regidations for
the protection of the bank against frauds and losses there-
by. (New York.)

170 THE SAVINGS BANK AND ITS PRACTICAL WORK

Pass Book Regulations.

Books must be presented at the bank at least once each
year, for entry of interest.

Books must he surrendered when all the money is with-
drawn.

Keep this book in good order; do not fold or roll it.
If lost or mislaid, give immediate notice to the bank.

Transfer of Pass Books.

(a) No transfer of pass books shall be binding upon
the bank unless approved by the treasurer and such ap-
proval endorsed on the pass book.

(b) No transfer or assignment of a deposit, or any
part thereof, will he recognized by the society. (Ohio.)

(c) Transfer of pass books shall only be valid when
entered on the books of the bank and on the pass book,
which must be presented for that purpose by the original
depositor, accompanied by the person to whom the depos-
itor desires to make the transfer.

(d) No assignment of such bank book shall be made
to any other person. To render any transfer of such money
effectual, the money must be withdrawn by depositor and
receipted for in the regular way.

(e) No gift, assignment, or transfer of the whole, or
any part, of the amount due a depositor shall be valid, un-
less such gift, assignment, or transfer be made in writing
signed by the depositor and duly acknowledged or proved
before an officer legally authorized to take acknowledge-
ments or proofs of deeds. No gift in contemplation of
death shall be made in any such manner as to prevent the
bank from discharging itself of all liability b}^ payment
to the executor or administrator of the deceased depositor.

(/) No assignment of any depositor's account will be
recognized by this bank unless notice in writing of the same
is given the bank and its assent thereto entered in depos-
itor's book. (Washington.)

Undesirable Accounts.

{a) Under direction of the finance committee, any
account may be closed or deposits refused, by giving one
month's notice of the same. (Minn.)

THE BY-LAWS 171

(b) Any account may be closed by giving one month's
notice, after wliich interest ceases. (New York.)

(d) The trustees shall be at liberty to refuse to receive
any deposit at their pleasure.

(e) The officers of the bank are authorized to close
the account, or to refuse to receive the deposits of any indi-
vidual, whenever they may deem it expedient, and the
board of trustees shall be at liberty to return the amount
of all or any part of the deposits, on giving one month's
previous notice of their intention to do so. All notices re-
lating to deposits or depositors, published daily for one
week, by order of the board of trustees, in one or more of
the public newspapers printed in the Borough of Brook-
lyn, shall be deemed and taken for all purposes as actual
notice to each depositor. (New York.)

(/) This bank may refuse to receive a deposit and
may return the whole or any part of any deposit. The in-
terest on any deposit will cease upon giving to the depos-
itor personal notice or such other notice as may be provide-!
for by the rules and regulations of this bank. The bank
may retain any pass book and issue a new pass book in
place thereof; but in such case the pass book so retained
shall not be destroyed, nor shall any alteration be made
therein, but the same shall be preserved and be subject to
the reasonable inspection of any person interested therein.
(New York.)

Dormant Accounts.

(a) All accounts on which no deposit or draft shall
have been made for twenty -two years shall cease to be en-
titled to any further interest after twenty-two years from
the last deposit or draft. (New York.)

(b) All accounts on which no deposit or draft shall
have been made for twenty years shall cease to draw inter-
est, except endowments for children and others.

(d) After ten years * * * shall cease to be en-
titled to interest unless by special agreement * * *'

172 THE SAVINGS BANK AND ITS PRACTICAL WORK

(e) Accounts of depositors whose jDass books have
been presented at the bank for the entry of interest within
the period of twenty-two years, shall not be deemed dor-
mant.

(/) The board of trustees may discontinue interest on
accounts of depositors on which no deposit or draft has
been made for twenty successive years, nor shall any divi-
dend be declared or any interest be credited upon any dor-
mant account; that is an account in wliich no entry of de-
posit or withdrawal shall have been made for a period of
twenty- two successive years; nor shall the deposit or \vith-
drawal of any amount from such account after the expi-
ration of twenty-two successive years require the credit of
any interest for any period of time jmor to the date at
which such entry or withdrawal takes place; but where
such deposit or withdrawal is made after the expiration of
a peiiod of twenty-two successive years, dividends shall he
declared on and interest shall be credited to the account
subject to all the provisions of these by-laws, in the same
way as if such account had been opened at the date at
which such last mentioned deposit or withdrawal may he
made. (New York.)

Interest.
When Interest Is to Be Credited.

[a) The board of trustees shall, hy resolution, order
to be credited to depositors on the first days of January
and July in each and every year, payable to them on or
after the twentieth day of said month (unless the same
shall fall on Sunday or a legal holiday, in which case, then
the next succeeding day on which the bank shall be open
for the transaction of business) such rate of interest, in
conformity with law, as the earnings of the hank may jus-
tify, on all sums of five dollars and upwards, which shall
have been on deposit for the six months next preceding the
period at which such interest shall be credited; and the same
rate of interest on such sums, as shall in like manner have
remained on deposit for three months next previous to the
aforesaid time; and interest may also be allowed for the
full terms above named, on deposits made not later than
the tenth day of January and July or the third day of

THE BY-LAWS 173

April or October; but no interest shall be allowed on any
sum withdrawn previous to the first day of January and
July, for the period which shall have elapsed since the last
dividend; nor shall interest be paid on the fractional parts
of a dollar. (New York.)

(b) The board of trustees will semi-annually apportion
to all depositors a dividend of all the earnings of the institu-
tion; reserving only such portion as in their judgment pru-
dent management would require as a guarantee fund, as pro-
vided by statute. Such dividends shall be payable to de-
positors on the first ]Mondays of April and October in each
year. In making such dividends of net earnings, the trus-
tees reserve the light to discriminate in favor of depositors
of sums not exceeding one thousand dollars, by paying a
rate of dividend not exceeding one per cent, per annum
higher than to depositors of larger sums.

(c) All moneys deposited on the first day of any
month shall draw interest from the date of such deposit.
All deposits made during any month after the first day
thereof shall draw interest from the first day of the succeed-
ing month, excepting that deposits may be taken during the
first ten days of April and October and during the first
three days of other months, to draw interest from the first
days of those months respectively.

{d) At whatever time money may be drawn out, in-
terest thereon shall be credited only to the last previoiis div-
idend day. All interest not drawn out will be added to the
principal, and will draw interest from date of the dividend
crediting it. (New York.)

{e) Interest is estimated by calendar months. No in-
terest is allowed upon any sum withdrawn before the end
of the month following the date of its deposit excepting
deposits made on or before the twenty-first day of Janu-
ary, or on or before the fifth day of any other month, which
will receive interest from the first day of the month in
which such deposit is made; and excepting also, that after a
deposit has remained undrawn more than one calendar
month, and is withdrawn on or after the sixteenth day, but
before the last day, of the month following, it will receive
interest for one month and a half; and if the deposit is not
withdrawn before the first day of the next month, it wiU
receive interest to the day preceding such first day. (Penn.)

174 THE SAVINGS BANK AND ITS PRACTICAL WORK

(/) After the first day of Februarj^ in each year, every
deposit hook shall he presented at the office, or agency,
from whence issued, and M'hen so presented, interest as ac-
crued to the tliirty-tirst day of December of the preceding
year will, at the depositor's option, either be credited as an
addition to the principal, or will be paid to the depositor.
(Pemi.)

{g) All dividends not called for within three months
after being declared shall be added to the principal of the
depositor, and draw interest from the time they were de-
clared at the same rate as the principal. (New York.)

{h) Interest shall be credited for such time as it shall
have been on deposit, but no interest shall be paid for frac-
tional parts of a month, nor for fractional parts of a dollar.

(i) Xo interest will be entered upon the book until
after the first days of February and August.

(j) Interest not withdrawn will be added to the prin-
cipal.

(h) Interest will be forfeited if money is withdrawn
before the first days of January and July.

(l) Depositors shall share their just proportion of all
dividends that may be declared. (Conn.)

Accounts or Deceased Persons.

(a) Upon the death of any depositor his deposit shall
be paid to his legal representative, but if the sum shall not
exceed one hundred dollars the same may be paid to the
husband, widow or next of kin at the discretion of the treas-
urer, without any letter of administration, and such pay-
ment shall discharge the corporation. (Mass.)

(b) The amount due on any account shall be payable
to the depositor, his or her order, or his or her administrat-
or, executor, or assign, except where special arrangements
shall be made otherwise by the depositor, or by the terms
of any order of court. In the event of the death of any
depositor, the bank may, if it sees fit, pay any sum to the
credit of such dej^ositor direct to his or her heirs, without
requiring the appointment of any administrator or execu-
tor, and such payment shall discharge the bank: but be-
fore making such payment, the bank may require from such
heir or heirs such indemnity as the bank may deem satis-
factory. ( Washington. )

THE BY-LAWS 175

{c} If any depositor shall die without heirs, any bal-
ance to the credit of such depositor not othej'wise disposed
of hy decedent shall not escheat to the State, but shall be-
long to the bank, and be carried into its reserve for the
greater j^rotection and security of the savings dej)ositors of
the bank. (Wasliington.)

{d) Upon the death of any depositor, the money
standing to his credit shall be paid to liis legatee, or heir-
at-law, or legal representative conformably to the laws of
the State; and, if the sum shall be under fifty dollars, the
same may be paid to the legatee, or next of kin, or legal
representative, without the expense of an}^ probate of will
or letter of administration, and it is agreed that such pay-
ment shall discharge the corporation. (JMass.)

(e) After the decease of any depositor and on notice
to the institution of said decease the amount standing to
the credit of deceased shall be payable to his or her legal
representative, except in the case of an account in trust for
another; in the event of the death of the trustee, the total
amount to the credit of the deceased shall be payable to the
person for whom the deposit was made — unless other fur-
ther notice of the existence and terms of a legal and valid
trust shall have been given in writing to the institution —
and in the event of the death of the trustee and the person
for whom said deposit was made, the amount thereof shall
be payable to the legal representative of such person.

(/) Any depositor, with the consent of the board of
trustees, may designate in writing the time the sum depos-
ited by him shall remain in the bank and the i^erson to
whom the dejDOsit and dividends thereon shall be payable,
and ma}^ prescribe any other special conditions of deposit,
which directions and conditions shall be observed by the
bank and shall be binding on the depositor and his legal
representatives. (INIaine.)

{g) Upon the death of any depositor, should the
amount standing to the credit of such depositor be less than
one hundred dollars, it may be paid to the legal heirs with-
out expense of probate, and it is agreed such payment shall
discharge the corporation. (Maine.)

(h) Any balance to the credit of deceased depositors,
not exceeding two hundred and fifty dollars, may in the
discretion of the president or treasurer be paid to his, or
her, next of kin, without requiring them to take out letters

176 THE SAVINGS BANK AND ITS PRACTICAL WORK

of administratio7i, upon delivery to the bank of an indem-
nity bond, the form and amount of such bond to be ap-
proved by the president or treasurer of the bank. (New
York.)

{i) A book shall be kept at each office, or agency, of
the society, in which every depositor shall be at hberty to
appoint some person, or persons, to whom, in the event of
his, or her death, the money shall be paid, if not otherwise
disposed of by will. (Penn.)

Society Accounts.

(a) Deposits may be made by any person as trustee
for the benefit of another, or of any unincorporated society
or association, at the discretion of the treasurer. In all such
cases the deposit shall be made in the name of the trustee
"in trust for" such person, society or association. Said
trustee, or liis successor, shall alone be entitled to receive
payments, and his receipt, with the production of the book,
shall be a sufficient discharge. Provided, however, that in
case of deposits for the benefit of another person, the cor-
poration ma}^ at their discretion, by a vote of the execu-
tive committee, make payment to such person on the pro-
duction of the book, which payment shall also be a suffi-
cient discharge. And provided, further, that in case of de-
posits for the benefit of any unincorporated society or as-
sociation, a certificate signed by the secretary and under the
seal of such society or association, that a new trustee has
been appointed, shall be sufficient evidence of such appoint-
ment, and a payment to such new trustee shall be a suffi-
cient discharge. (Penn.)

{b) Deposits by, or on behalf of, any unincorporated
society, or association, shall be made only in the name of
some person, or persons, ''in trust for" such society or as-
sociation; and in every such case, the trustee, or trustees,
only will be entitled to receive payment, and his, or their,
receipt, with the production of the deposit book, will be a
full discharge to the society. If the society, or association,
in trust for whom the deposit has been made shall appoint
a new trustee, or trustees, such appointment must, be made
according to law, and written notice thereof fded with the
society. ( Penn. )

THE BY-LAWS 177

Checks on Depository Banks.

(a) All checks shall be signed by the treasurer or pres-
ident and countersigned bij a teller.

(b) All checks shall be drawn by the president or treas-
urer or secretary and everj'- check shall be made payable to
or specialized by endorsement to the parties entitled to re-
ceive the same.

(c) All checks, drafts or orders for the payment of
moneys by the institution, shall be drawn by the treasurer
and countersigned by the pfresident, and made payable to
the order of the person in whose favor the same may be
drawn. (New York.)

{d) All checks or drafts for the sum of $3,500 or over
shall be signed by two of the folloAving officers, viz.: The
president, the treasurer and the assistant treasurer. In
case, however, of the absence from the city or disqualifica-
tion of the above officers, or any of them, the board of trus-
tees; or, during the interval between the meetings of such
board, the executive committee may, b}^ resolution duly
passed and entered in the minutes, temporarily authorize
other officials or employees of the bank to so sign. (New
York.)

(e) All checks shall be drawn by the treasurer or sec-
retary, countersigned by the president; or, in case of his
absence, by a vice-president, or by a trustee. In the ab-
sence of the treasurer and secretary, checks may be drawn
by a member of the fwiding committee, and countersigned
by the president, vice-president or a trustee. All checks
when signed shall be made payable to the order of the
party entitled to receive the money, except that in case of
mortgage loans, the check may be made ijayable to the or-
der of the attorney of the bank.

Examinations and Audits.

{a) The judges of the District Court for the county
of Allegheny may, at any time, on the application of two
trustees, or three depositors in said corporation, and on
reasonable cause shown therefor, to the satisfaction of said
Court, appoint two or more persons to examine into the in-
vestments thereof, and its affairs and business generally.

178 THE SAVINGS BANK AND ITS PRACTICAL WORK

The books, papers and business of said corporation shall be
open and subject to the examination of such persons; and
the trustees, officers and clerks thereof, or any other per-
son, may be examined on oath by such persons; and the
said Court may confer such other powers on the persons so
appointed as they may consider necessary for more thor-
ough and perfect protection. (Penn.)

(h) The trustees shall have the entire supervision and
management of the affairs of the institution, except as
other\^ise provided by these by-laws; they shall, in the ex-
ercise of their best judgment, see that the funds of the cor-
poration are safely invested according to law. It shall he
their duty at least twice each year to make an examination
of the affairs of the hank and of its assets and settle the
account of the treasurer. (New York.)

{c) The auditing committee, consisting of three mem-
bers, shall examine all funds, securities and property of the
institution monthly, or oftener, at the option of the com-
mittee; they shall have power to employ experts to make
or assist in making examinations, and shall report at each
regular meeting of the board of managers. (New York.)

Common Seal.

(a) There shall be a common seal, to be kept in the
bank under the charge of the i)resident, and to be used
only by authority of the board of trustees, or as hereafter
provided.

(h) The corporate seal of this bank shall consist of a
circular design having in the center a picture of the pres-
ent banking house with the word "Economy" below the
same, and in a circular band about said picture or design
the following inscription: "Albany Savings Bank — Incor-
porated 1820." The above to be cut in metal in such a way
as to give a clear impression of the entire design upon any
instrument to which it may be affixed. (New York.)

Miscellaneous Provisions.

Expenses and Supplies.

No bill for expenses or supplies shall be paid unless in
pursuance of a resolution of the board, until the same shall
have been audited by the president or treasurer.

THE BY-LAWS 179

Tax Receipts.

Receipts for taxes and assessments upon property mort-
gaged to the bank must be shown at the time of payment
of the December interest.

Securities of the Bank.

The securities of the bank shall be kept under the charge
of the j)resident, treasurer and secretary, in the safe or vault,
and access to the same shall only be had by the president,
the treasurer, the secretary, the examining committee and
the funding committee, except by special vote of the board
of trustees. (New York.)

Publication of By-laws and Where Obtained.

The by-laws and regulations, defining the rights and
duties of the depositors, shall be exliihited in the hank and
copies thereof may be obtained from any of the officers of
the bank, and such by-laws shall be incorporated in the pass
book of the depositor. Whenever any alteration or amend-
ment to these by-laws shall be made which in any way af-
fects the rights of the depositors, the bank shall publish in
one or more of the daily newspapers of the Borough of
Brooklyn a notice thereof, and state that a copy of the
by-laws as amended can he obtained by calling at the office
of the bank. (Xew York.)

Transfers of Stocks and Bonds, Etc.

(a) All transfers of stocks, releases, satisfactions, as-
signments, etc., shall be signed by the president and coun-
tersigned by the secretary, but no transfer beyond $5,000
shall be made without authority of the board of trustees.

(b) No transfer of securities, or assignment of any
mortgage shall be made ecvcept by authority of the board
of trustees, regularly recorded on the minutes of the bank.
Such transfers shall be made by the president or one of the
vice-presidents.

Transfer of Mortgages.

{a) Every satisfaction piece or assignment of any
mortgage or security held by this bank, every conveyance

180 THE SAVINGS BANK AND ITS PRACTICAL WORK

of its real estate, release of any part of any real estate cov-
ered hif a mortgage held hi/ it and every extension or mod-
ifieation of anij mortgage held by it, shall be executed by
either the president or treasurer, and by no other officer or
employee.

{h) In no case shall a mortgage be assigned unless by
special authoritif of the board of trustees.

Investments.

{a) The investing committee shall have the disposal of
all the money of the hank and make investments. No loan
shall he made on property hut snch as is actually ijroduct-
ive, or wliich it is estimated by the committee will yield,
exclusive of all other charges, an amount annually above
the interest on the money loaned. (North Carolina.)

ih) Xo investment shall be made without the consent
of the president and the ohjection of any one of the com-
mittee present shall prevent the investment. (North Car-
olina.)

(c) Xo loan that has been rejected shall be reconsid-
ered without the consent of the trustees objecting thereto.
(Xew York.)

Deposits in Other Banks.

{a) Deposits in other institutions must be made by
vote of a majority of the hoard.

ih) All deposits in other banks shall be in the name
of the hank.

Application for Loans.

All applications for loans on real estate shall be in writ-
ing, and shall state the location, boundaries and value of
the same, together with such other information as shall en-
able the board to form a reasonable estimate of its value;
and ,'ill expense of searches, drawing of papers, and exam-
ination of premises, shall be borne by the party asking
the ]r)an.

THE BY-LAWS 181

Repeaj. of Existing By-laws and Amendments.

{a) Amendments shall be binding froin the time of
their adoption.

(b) Amendments shall be binding when published.

(c) No alteration shall be made in the by-laws of the
bank unless a notice specifying the proposed alteration
shall have been given at the previous regidar meeting and
entered in the minutes of the board, and a like statement
shall be made in the notice mailed to the trustees of the
meeting at which the alteration shall be acted upon. (New
York.)

(d) No alteration of these by-laws shall be valid un-
less at least nine trustees shall vote in favor thereof. For
such purpose the motion for such amendments must have
been made at a previous stated meeting of the board of
trustees and a special written notice of the object of the
meeting, at which the same may be considered, shall be
given. (New York.)

{e) No by-laws shall be altered or repealed, nor shall
any new by-law be made, unless a majoritjf of the whole
number of trustees be present, and the alteration, repeal, or
new by-law, as the case may be, shall have been proj)osed
at a previous meeting of the board.

(/) The trustees may, at any regular meeting, or at a
special meeting called for that purpose, make such further
regulations or by-laws or alterations of those already made,
as they may deem necessary, provided notice of the inten-
tion to alter or enlarge the by-laws shall have been
given at the next preceding regular meeting of the trus-
tees or at a special meeting called for that purpose; pro-
vided, that the said action of the trustees shall be laid be-
fore the corporation at their next meeting for their appro-
bation or rejection. All such regulations and by-laws and
alterations shall be equally binding on all depositors as
those by them subscribed, after the same shall have been
duly made known to them, or until their rejection by the
corporation.

Notice to Depositors.

Pubhcation of notices affecting depositors printed in a
public newspaper circulating in the vicinity of the bank for

182 THE SAVINGS BANK AND ITS PRACTICAL WORK

ihree zceeks consecutively and posted hi the banking room,
shall be notice to all. Or, a letter addressed as per the ad-
dress given on the signature book, shall be deemed actual
notice to each dci)ositt)r in ])erson.

(Time varies from six days to one month.)

MODEL SET OF BY-LAWS.*

Trustees,
Number.

Monthly
meetings.

Annual
meeting.

Special
meetings.

Quorum.

Attendance.

Vacancies.

Election.
President.
1st and 2d
Vice-Presi

dents.
Recording
Secretary
of the Board.

Secretary.

Treasurer.
Counsel.

Assistant
Treasurer.

Vacancies.

Duties of

officers.

President.

ARTICLE I.

TRtTSTEES.

Sectiox 1. J'hc Board of Trustees shall consist of twenty
members.

>; -2. The Monthly Meetings of the Board of Trustees shall be
held on the third Wednesday of each montli.

The Annual Meeting shall be the regular meeting held in De-
(■enil)er of each year.

Special Meetings may be called by the President, or in his
absence by one of the Vice-Presidents, upon a written request of
five or more Trustees.

Seven Trustees, provided the President or one of the Vice-
Presidents be among the number, shall constitute a quorum for
the trniisaction of business.

§ 3. If any Trustee shall fail to attend the meeting of the
Board, or to perform any of the duties devolving upon liim as
sucli Trustee, for six successive months witliout having been pre-
viously excused by the Board, the office of such Trustee shall
thereupon immediately become vacant.

S 4. No election for Trustees to fill a vacancy shall be held
unless a nomination tlierefor shall have been made at a regular
meeting one month previous to the election, and no person shall
be eligible for election as Trustee unless his name shall have been
so placed in nomination.

ARTICLE II.

EI.ECTTOX OF OFriCFRS, ETC.

Sectiok 1. At the Annual Meeting there shall be an election,
by ballot, for a PursmENT, First and Secoxd ^^ICE-PRESIDENTS,
and a Recobdixg Secretary of the Board, whose term of office
shall commence on the lirst day, of January following.

§ -2. There may be elected at the Annual Meeting a Secretary.
Tre\surer, and also an Attorney and Couxsei,, who shall not be
a Trustee, and such other persons as may be required for the
transaction of the business of the Institution, who shall hold their
offices iluring the ])leasurc of the Board of Trustees.

S .3. An As.sistant Treasurer may be elected when, in the
judgment of the Board, such appointment would be to the in-
terest of the bank.

§ 4. A vacancy occurring in any of the aforesaid offices may
be filled by the Board at any regular meeting or at a special
meeting called for the purpose.

ARTICLE III.

POWERS AXD DUTIES OF OFFICERS.

Section- 1. The President shall have a general supervision
and direction of the business of the bank, subject to such action

•By courtesy of the late Col. C. E. Sprague, j^resident Union Dime Savings
Bank, New York.

THE BY-LAWS

183

and regulations as may from time to time be adopted by the
Board of Trustees.

He shall, in conjunction with the Treasurer, have charge of
the common seal, also of all bonds and mortgages, stocks, se-
curities and other property belonging to or held by the bank.

All satisfactions of mortgages, releases and conveyances shall
be signed by the President or one of the Vice-Presidents and
Secretary or Treasurer.

He shall preside at all meetings of the Board of Trustees,
and appoint all committees, unless otherwise ordered, and shall
perform such other duties as usually devolve on the chief execu-
tive officer of like institutions.

§ 2. It shall be the duty of the First Vice-President to con-
sult and advise with the President in all matters and affairs of
the bank, to assist the President in the discharge of his duties,
and to perform all the duties of the President in his absence or
inability to act, and in concurrence with the President, to have
a general oversight of all the business and affairs of the bank.

§ 3. It shall be the duty of the Second Vice-President,
whenever requested by the President or First Vice-President, to
perform all the duties devolving upon the First Vice-President
in his absence or inability to act.

§ 4. It shall be the duty of the recording Secretary to keep
the minutes of the proceedings of the Boai-d of Trustees, and
perform such other duties as the Board may prescribe.

§ 5. It shall be the duty of the Secretary to see that account
is kept of all moneys deposited or paid out, and the necessary
entries made in the books of depositors ; to provide and have
supervision over all books of account of the bank; to give notice
of the meetings of the Board, and of all committees to the mem-
bers thereof, and to present to the Board, through the President,
a report of the proceedings of the committees, together with a
monthly statement of the affairs of the bank pertaining to his
department.

He shall give bonds, with two good and sufficient securities,
to be approved by the President, in the penal sum of ten thousand
dollars, conditioned for the faithful execution of his trust.

§ 6. It shall be the duty of the Treasurer, in conjunction with
the Secretary, to take charge of all funds remaining at the
close of each session of the bank; collect the interest on loans,
and all debts due the bank, and deposit the same in such bank
or banks or trust companies as shall be designated by the Board
of Trustees; and either the Treasurer or the Secretary is au-
thorized to receive and receipt for all moneys due and payable
to the bank, and to indorse, in its name and on its behalf, for
deposit to its credit, any checks, drafts or orders payable to its
order.

He shall, under the direction of the President and Finance
Committee, have the general charge of all papers relating to the
real estate, mortgage, and temporary loans, receive and examine
aU applications for investing the funds of the bank, and present
them, with a report in writing, for the approval or rejection of
the Finance Committee.

He shall give such security for the faithful performance of
his duties as the Trustees may from time to time require, and
perform such other duties as may be assigned him by the Board
of Trustees or by the Finance Committee.

When an Assistant Treasurer has been appointed, it shall be
his duty to assist the Treasurer and the Secretary in all duties
devolving upon them under these By-Laws, and in case of the
absence of either Treasurer or Secretary he shall perform the
duties of snch officer. He shall give bonds as prescribed for the
Secretary.

§ 7. It shall be the duty of the officers to prepare and submit
to the State and Citv authorities, and the Board of Trustees, all

First Vice-
President.

Second Vice-
President.

Recording-
Secretary.

Secretary.

Treasurer.

Assistant
Treasurer.

Reports of
officers.

18 1 THE SAVINGS BANK AND ITS PRACTICAL WORK

statements or reports called for by the present laws or laws
liereafter enacted, applying to the bank, and also at everj-^ annual
meeting submit to the Board of Trustees a complete statement
of the affairs and business of the bank.

§ b. The Treasurer, Secretary, and such other persons as may
be required for the transaction of the business of the bank, shall
attend daily at the bank during business hours, and shall be held
responsible' for the proper care of all moneys and propertj' which
shall come into their hands or be intrusted to them. They shall
give such security for the faithful performance of their duties
as tiie Trustees may from time to time require, and before enter-
ing on the duties of their office, respectively, shall take and
subscribe the following oath or affirmation:

Oath of
office.

I do solemnlv swear (or affirm) that I will, to the best of my abilities, perform
all such duties and services as shall be given me in charge by virtue of my ap-
pointment to the office of of the ; and that I

will faithfully apply and protect the funds and property of the bank, and account
for the .same, under the control of the President or Board of Trustees.

Committees.

Finance
committee.

Auditing
committee.

Examining
committee.

Monthly
committees.

Minutes of
committees.

ARTICLE IV.

COJIMI'lTEES.

Section 1. There shall be an Investment Committee consist-
ing of five members, to include the President, Treasurer and three
members of the Board of Trustees, to be elected at the annual
meeting in December of each year, the Committee to meet or
consult as occasion may require as to the purchase or sale of stock
and securities.

§ 2. An Auditing Committee of three Trustees shall be
elected at the annual n)eeting in December of each year.

It shall be the dut}" of the Auditing Committee to examine
the cash funds on hand at least once during each month, to
examine all vouchers, and audit all accounts and bills and the
expenses of the bank.

§ 3. There shall be elected at the regular monthly meeting in
June and December of everj' year a committee of three, whose
duty it shall be to make a thorough examination of the vouchers,
books and assets held by the Institution, and report to the next
regular monthly meeting of Trustees the state of the books, and
a detailed statement of all the various assets, liabilities and busi-
ness of the bank. The reports to the Superintendent of the Banking
Department of the assets of the bank shall be based upon the
examination to be made by the committee on the last days of
Jime and December in each year. A synopsis of the committee's
report shall be printed for the use of the bank and its depositors.
The committees may employ accountants or such other assistance,
in fulfilling their duties, as they may deem advisable or necessary.

§ 4. Monthly Attending Committees, embracing all the mem-
bers of the Board, except the President and two Vice-Presidents,
may be appointed, e.ach of which committees shall in rotation
have a general charge and supenision of the business of the bank
and its employees.

§ 5. Each of said committees shall keep, in books for that
purjwse, a full record of its proceedings, which shall be signed
by the members of said committees, respectively, and be reported
in full at each meeting of the Board, and at any .special meetings,
when called for bv a vote of the Board.

Bank
sessions.

ARTICLE V.

BANK SESSIONS.

■Jhe bank shall be open daily, except Sundays and Holidays.
The hours of business shall be "as follows: on Mondays from 10
A. M. to 7 1'. >i.; on Saturdays, from 10 a. m. to 12 m.; on other
days, from 10 a. .m. to 3 p. m.

THE BY-LAWS isr,

ARTICLE VI.

DEPOSITS AKD DEPOSITORS.

The following shall be the regulations under which deposits
in this Bank shall be made, any of which regulations may be
waived in favor of the depositor in exceptional cases by the
attending officers only.

Regulations.

Section 1. Deposits of one dime and upwards, not exceed- ?®^°^*\^'q*
ing $3,000, may be received with the consent of the attending "^
officers; but the first deposit shall not be less than one dollar,
nor shall the account be kept open with a less balance than one
dollar,

§ 2. All deposits shall be regularly entered in the books of How
the Institution and also in the book to be furnished to the de- ^^ ^^^ •
positor, which shall be kept by him as a voucher for his deposit.
If checks be received for the accommodation of depositors,
nothing shall be paid thereon until thirty days after deposit.

§ 3. On making the first deposit, the depositor shall be re- ^"^*,^
quired to subscribe to the Regulations and By-Laws of the bank, ^^
and no payment shall be made on the account until the first de-
posit shall have been held for thirty days.

§ 4. The Trustees shall be at liberty to return the whole or Return of
any part of the deposits whenever they think proper. deposits.

§ 5. Drafts may be made personally, or by the order in Drafts,
writing of the depositor (if the bank have the signature of the
party on their signature book), or by letters of attorney, duly
authenticated; but no person shall have the right to demand any
part of his principal or interest without producing his or her
bank-book, that such payment may be entered therein. The ^i^.'^y Jays'
bank shall not be liable to pay any moneys to depositors except '^° ^^^'
on sixtj- days' previous notice in writing to the Secretary or
officers in attendance at the bank; but moneys may be voluntarily
paid by the bank daily, and without such notice, and without there-
by waiting the right of the bank to such notice and time of pay-
ment. No less sum than five dollars of the capital of any de-
positor shall be withdrawn, unless the whole sum deposited be
less than that amount. All moneys received shall be in funds
taken on deposit by the banks of the city of New York, and all
pajTnents shall be made in like funds.

§ 6. After the decease of any depositor and on notice to the Deceased
bank of said decease, the amount standing to the credit of de- '^'^P^^^ °^^-
ceased shall be payable to his or her legal representative, except
in the case of an account in trust for another; in the event of the
death of the trustee, the total amount to the credit of the
deceased shall be payable to the person for whom the deposit was
made — unless other further notice of the existence and terms
of a legal and valid trust shall have been given in writing to the
bank — and in the event of the death of the trustee and the
person for whom said deposit was made, the amount thereof
shall be payable to the legal representative of such person.

§ 7. All notices in relation to deposits or depositors, pub- Notice to
lished by or under the direction of the Trustees, in one or more depositors,
of the daily public newspapers in the city of New York, six days
successively, shall be deemed and taken as actual notice to each
depositor.

§ 8. Depositors alone shall be responsible for the safekeeping Responsibility
of their books. And all pajTnents made to persons producing of depositors,
the deposit books, whether with or without an order or letter of
attorney, purporting to be signed by the depositor, shall be
deemed good and valid payments to depositors respectively and Payments to
shall fully discharge the bank therefrom, unless notice of the §uc!ng%as3-
death of the depositor shall have been ^ven to it. books valid.

186 THE SAVINGS BANK AND ITS PRACTICAL WORK

Pass books
lost or de-
stroyed.

Inactive

Accounts

§ 9. When an account stands in the name of two persons-
as co-depositors who have authorized the addition thereto of the
words "payable to either or to the survivor'' or words to the
same effect, then payment to either depositor shall be a full dis-
charge to the bank, wliether the otlier co-depositor be living or
dead.

§ 10. In case of loss or destruction of the pass-book, a new
book may be issued after the public has been notified by adver-
tisement, publislied in such daily newspaper, and for such length
of time, as the President may direct, calling upon any person
having a claim to the missing book to present the same to the
bank, or submit to having the pass-book declared cancelled or
extinguished and a new book issued in lieu thereof. The depositor
or his or her legal representative, shall file with the bank a
satisfactory affidavit, showing the loss or destruction of the book.

§ 11. AH accounts to which no deposit and on which no draft
shall have been made for twenty years in succession, shall be
closed; nor shall the amount deposited nor the interest that has
accrued thereon, draw any interest thereafter.

Moneys to be

immediately

invested.

To be depos-
ited and in-
vested in
name of In-
stitution.
Checks by
whom signed
and to whom
made payable.

Mortgage
loans.

Collateral
bond.

Taxes, etc.,
on mortgaged
property.

Dividends.

When and
how payable.

Amendments.

ARTICLE VII.

IXVESTMEKTS AXD DISBURSEMEXTS.

Section 1. AU monej's deposited in the bank, except such
sums as may be deemed necessary to reserve for immediate pur-
jioses, shall be invested in the manner prescribed by the existing
acts of the Legislature, or in such other manner as may hereafter
be provided l)y law.

§ 2. All moneys shall be deposited and invested in the name
of the bank, and no transfer of securities shall be made without
the order of tlie Board of Trustees.

§ 3. All checks issued by the bank must be signed by the
President (or, in his absence, by one of the Vice-Presidents) and
the Treasurer, and countersigned by the Secretary, and drawn
to the order of the parties to whom the money is payable.

§ ■!•. No loans on mortgage shall be made except upon the
certificate of a Committee of two or more members of the Board
of Trustees certifying to their estimate of the value of the
property submitted after a personal examination and appraisement.

% 5. A collateral bond shall be required whenever a change
occurs in the ownership of property mortgaged to the bank.

§ 6. Receipts for taxes and assessments upon property mort-
gaged to the bank must be shown at the time of payment of Maj^
interest.

ARTICLE VIII.
nn'^iDENDS.
On the third Thursday of January and July of every year,,
there shall be paid such interest as by decision of the Trustees
the profits of the bank will allow on ail sums of five dollars and
upwards, which shall have been deposited for three or six
months previous to the first day in January and July, but no
interest shall be paid on the fractional part of a dollar, nor
shall any interest be allowed on any sum withdrawn previous
to the first day of January and July, for the period which may
have elap,sed since the last dividend. The interest accrued and
entered to the credit of depositors on the first day of January
and July shall be added to the principal from those dates, re-
spectively, the same as an original deposit.

ARTICLE IX.

AMEXDMEVT8.

The Trustees may at any time alter or amend these by-laws,
provided such alterations and amendments be not inconsistent

THE BY-LAWS jg^

with the provisions of the General Savings Bank T «w n« -^-u

me ijoara ot Irustees at least one meetino- h«-fni.^ f i,^ o
parsed upon; and they shaU not be acTed u"ln except^t aTe'etW
when a majority of the whole number of Trusses is present! ^

ORDER OF BUSINESS.

Reading the minutes of last regular and everv Or/i.. o
subsequent meeting of the Bofrd. """"^ SinesI

Reading the reports of Secretary and Treasurer

^^^StJe'js/^^^ '' ^^^"^- -'^ SP-Si
Dividends to Depositors (May and November).
-. Nominations and Elections. ^

6. Bond and Mortgage Investments.

7. Other Investments.

8. Miscellaneous Business,

2.
3.

4.
5.

CHAPTER XI

THE FIRST DEPOSIT

111 the preceding chapters we have organized a savings
bank of the mutual type, or at least "gone through the
motions," and it stands with open doors, its charter neatly
framed and hanging in the lobhy as evidence that it really
is a bank, not only ready, but authorized to receive depos-
its. The men are in their places, and the officials stand
around eager to extend the "glad hand" to all who may
come in, whether on business or out of curiosity. A bank
is made hij its friends, and its best advertising medium will
be the comment of the public and the recommendation of
its patrons.

If this bank was of the stock tyj^e, similar in this re-
spect to the bank of discount, there would be on hand, or
on deposit with its depository banks, the capital stock
fund, which would provide an immediate source of income
and a working balance with wliich to do business. But in-
asmuch as this is a mutual concern, its only funds will be
those received from depositors; its till is empty and the
depository banks, reserve agents in name only.

Preliminary Work.

Preceding the auspicious moment when the first deposi-
tor steps to the "new account" window and makes his first
deposit, a vast amount of preliminary work lias been done,
as was shoAVTi in a previous chapter. The banking site has
been selected with much care as to location, light, tides of
travel, prominence, convenience, neighborhood and rental
rates. After much discussion with landlords and agents
and much dickering over terms of lease, etc., the contract
has been drawn and signed and the quarters are ready for
the mechanics and craftsmen. The vaults, counters, fix-
tures, desks, bookkeeping outfit, stationery and incidentals
have all been provided with much labor and careful thought
both as to ada])tability and cost. The 0])ening announce-
ments have i2:one forth, l)oth ])y mail and through the press,
and the bank is off on its hunt for monev.

the first deposit 189

Running Expenses.

As already stated, the bank has no funds on which to
draw for support, and deposits will be its only stock in
trade. Being proliibited from using any of the depositors'
money for running expenses, in order to provide for the
expenses until such time as the bank can pay its own way,
the usual way, and in New York the comimlsory way, is
for the trustees to subscribe to an "organization fund," out
of which the running expenses are met, to be in due time
returned to them. This plan is not of modern origin, for
as long ago as 1816, when the Philadelpliia Savings Fund
Society was started, the contingent expenses were provid-
ed for by the voluntary contributions of the managers, in
the sum of $10 each, which, of course, were not on a scale
commensurate with those of today.

The return of these advances is not a legal obligation on
the part of bank, but moral only. But in order to keep
the bank solvent at all times, the assets must equal the liabili-
ties, and to use the depositors' money for expenses would be
neither wise nor lawful. In the case of one bank in Greater
New York, the trustees came forward with upwards of $15,-
000 in order to provide the equipment and running expenses
for the first year. Another bank was fortunate in obtain-
ing the quarters of a defunct commercial institution at a
nominal cost, but even so their expenses for the first
six months were over $6,000. Another was equipped, after
a few years, with a handsome home by a syndicate, and
paid as remuneration a fair rental on the amount invested.
How long it will take a bank of this character to "get on
its feet" depends upon the volume of business, the prevail-
ing rates for money, the expenses and management. The
Williamsburg Savings Bank of Brooklyn (1851), repaid
such advances together with all expenses and interest to
depositors at six per cent, at the end of the first eighteen
months. As the margin of profit in ordinary times and
under usual conditions will not be more than from one to
two per cent., a bank having a running expense of $5,000
^^ill need upwards of half a million before it can begin to
repay the trustees. One new institution organized just
before the panic of 1907 was able to place its money to
such good advantage that the margin of profit was nearly
two per cent., and it will become self-supporting in about
one-half the usual time.

190 THE SAVINGS BANK AND ITS PRACTICAL WORK

No. 519478 Deposits Drafts Balance

24N0V:i908RE(rD^f $<x^<>14 3
25NOV:i908RE(rD\ %<^tiSQ9
25 NOV 1008 B^D m %<^<^<^6.t 2

FOHM 1. DEPOSIT BOOK OP THE UNIOK DIME SAVINGS BANK, NEW YORK, IN WHICH

ALL ENTB1E8 AHE MADE BY SPECIAL MACHINE. (See page 229.)

THE FIRST DEPOSIT Ipl

His Money.

In previous chapters the ethics of the savings bank have
been thoroughly discussed; the thi'ift habit advocated, and
the benefits of the savings bank to the individual and to
the community presented at length. Having found a man
of thrifty habits "looking for a bank and found ours" we
will proceed to open a new account with him, — his first de-
posit and ours.

There are three quite plausible reasons why this deposi-
tor has made up his mind to open a bank account: First,
he knows that as long as the money is in his own keeping
he will be tempted to spend it. This is amply demonstrat-
ed by conmion experience in every man's hfe. Second, he
knows that in keeping his own money he takes the chance
of fire, theft or loss. This, also, is a self-evident fact, as
the daily press will demonstrate. Third, he would like to
make his money now work for him as he had to work for it,
but he does not know how to begin or where to go to in-
vest it, especially if the sum is small. Just how the savings
bank will do tliis for him he perhaps does not know, nor
even, in many instances, care, as long as he gets the
interest at the appointed time. He may even have the er-
roneous notion that his money is laid away in the strong
vault, and by some sort of magic grows while protected by
six inches of steel. But at any rate he has made up his
mind to take it to a savings bank and he is here, and in
opening this account the savings bank has accomplished
its mission in this instance, for it has (1) Prevented waste
(in maldng it difficult for him to spend) ; (2) Prevented loss
(by safeguarding against fire and burglars) ; (3) Afforded
profit (by combining his deposit with other money and in-
vesting it) .

He would do well to have a care how he hands in this
money, for in some banks they are "mighty particular."
The truck driver who had a wad of bills rolled up like a
ball, crushed and crumpled into a hard mass and tucked
up his sleeve; or the depositor with three cigar boxes full
of silver — all loose — would have found a cold reception at
some counters. Likewise the countryman who offered as
his first deposit a motley collection of coin and bills that
would have delighted the heart of the numismatist. He
had been hoarding for thirty years, but finally decided to

192 THE SAVINGS BANK AND ITS PRACTICAL WORK

^Ew Bedford Institut.on j ^^ ^^_^ ^_. ^ 'S-ft^

FOR Savings. \

VVv(XjW/

I'ti-L.a.'Tti'. l>iTii

DATt. Dr.poarrxD. Dividend. WirnitaAWM BAl.AifCB-

<:5 C^\\\cMvtVV\ <rC\K<K\<^V

THE WESICRI S1VIII6 FUND SOCIEH OF PHIUOELPHI/

STRAFFORD SAVINGS BANK, /„aa,unfwM

SITED DIVIDEN

HDflAWN BA

IriKreMt will be credited witb Rvd Iiil

Folio /<5^., Oto.^oLf.

Tie Oneida Coity SaTinjs Baiii of Rome. .•..<.cci uH^■, *!(YV<\;r^\vv V^ooCv\,^;;i.?Z...

DATE. Witbdrawii. DcposlUjd. BalaKe. DATE. Withdrawn. Deposited. Balance.

Jh€ f/Iiddletown Savings Banl^ **

Drr^:?iTSANO Paymen

THE DIME SAVINGS BANK OF NORWICH,

Deposited Wl

A'o.

5.4 ^Pp

39>JL 2ll^As\' Gr5^vyv«s»«v ..

E>r. GERMANIA SAVINGS BANK, ,„ .«■, .,« Svc^). a^^*.v (KA.c\\Sot.ve.'<^. cr.

KINGS COUNTY.

DEPOSITS

Dr. The Dime Savings Bank ot Brooklyn

. to )\: , J. ■ ..\o>'VA^vOA'V/

Cr.

liulance brought forward.

KORM 2. — VARIOUS FORMS OF PASS BOOK RULINGS.

THE FIRST DEPOSIT 193

bank with a bank and not in a garret. Doubtless at many
bank counters he would have been directed to the coin col-
lector's, but inasmuch as this bank takes "any kind of money
that's good," such depositors need have no scruples.

What Kind of an Account?

With money in hand the new depositor is directed to the
"new account" or "signature" window, where his pedigree
will be taken and pass book issued to him. He will be asked
what manner of account he would like to open, and the
obliging clerk will explain that the bank opens "joint ac-
counts," "trust accounts," "single name accounts" and
"society accounts," and the character of each will be made
plain to him.

A single name account will be his sole property during
life, and at death the balance due thereon will be paid to
his legal representatives. In Pennsylvania, a book is kept
in the bank in wliich the depositor "shall be at liberty to
appoint some person or persons to whom, in the event of
his or her death, the money shall be paid if not otherwise
disposed of by will;" but this is not a common practice.
It undoubtedly hurts the law business! The joint account
'will be payable to either during life, and in case of death
of either, will belong to and paid to the survivor. The trust
account will be under his control, as in the single name ac-
count, but in case of death the balance due thereon will be-
long to and paid to the beneficiary for whom the account
was made. This is the New York rule, and sanctioned by
the highest court, and is coming to be quite general in sav-
ings bank practice. Ordinarily savings banks ^vill not go
beyond the limits of these three forms, except society ac-
counts. Some banks will not accept the latter and some
will not take the trust account. Others refuse the joint
account, and still others mil not open accounts with per-
sons who cannot write.

His Signature.

The single name account seems to fit his case, since he
hasn't made up his mind what to do with his money after
death, or perhaps has no one in particular to leave it to. A
signature card is handed him containing the number of the

194 THE SAVINGS BANK AND ITS PRACTICAL WORK

latankt win ba endlttd with nd isk.

HnuaJF CITY SiVISSS IHSTITUnOU, U accimiit WIO - Jf^ .

fUr^

WITHDRAWN

DEPOSITED

AMOUNT OF DEPOSITOR DRAFT WRITTEN OUT

rOEM 3. THE CUSTOM OF TyMTINO OUT THE AMOUNTS, AS IN THIS FORM, IS DYING OUT.

pass book, which he is to receive. This is more than a
record of the total nuraber of books issued; it is
the "key" to all future deahngs 'vvith this depositor.
The amount, date and other information is also
taken, which \v\\\ be explained presently. While he
is . writing liis name, the clerk will make out a
ticket with the number, amount, and afterwards the name.
In some banks the procedure will vary somewhat, the
receiving teller taking the money and passing it along
to the new account clerk with ticket calling for a new
book, putting the transaction through as a regular de-
posit. In others, notably the larger banks, depositors wish-
ing to open new accounts, are turned over to the new ac-
count teller, who takes the money and issues the pass book,
and at the end of the day turns the amount so received
over to the paying teller.

No14182

SoUar ^autngB ISank.iu artt

mttif

SS^X^^C^AX ^fNj;xXNNJPst>s<XA\/

DATE.

ITEMS

WITHDRAWN.

DtPOSITCD.

BALANCE.

/ o

/ 9C
t Go

3 ^ on

1-J <9 0

roam 4. — thf, balance pass dook is rapidly coming into general use.

THE FIRST DEPOSIT 195

These methods will be dwelt upon at length later, in
quoting the sj^stems of larger banks. But this is a small
bank, where the same clerk receives the money and pre-
pares the pass book. In handing in the money it is the
universal rule to require the depositor to state how much
he wishes to deposit, and generally savings banks do not
require the depositor to make out his own ticket, owing to
the fact that many are unfamiliar with banking methods
and would be sure to get it wrong. This statement, how-
ever, is disputed, for upon being told that the depositors in
a certain bank could not make out their own tickets, be-
cause one in three depositors could not write, a savings
bank man inquired if the proportion was made by count
or by guess; and being informed that it was a rough guess,
he advised a count and the result showed that only one in
nineteen made a cross on the signature book.

Coming back with his card duly signed, in many banks
he would also be required to sign on the signature book
thus giving a permanent record and at the same time
permitting the card to be sent out by mail for signatures
where the deposit is not made in person. The cards are
more quickly available for comparison of signatures and are
coming to be universally used for this purpose, as will be
seen in discussing payments to depositors, subsequently.

Owing to the fact that this man may not come back in
years, and being one of those who do not write often enough
to develop a regular signature and stick to it, it may be need-
ful to have some test questions to put to him, in event of
not being able to identify him by his handwriting. These
will also be valuable in case the account becomes "dor-
mant," when it will be necessary, at least advisable, to
trace him through his family connections.

Test Questions.

The problem is to ask enough to have several lines of
identification, and at the same time, not too much detail
to be wearisome and in appearance inquisitive. The usual
questions are: Age, date of birth, father's name, mother's
maiden name; whether married or single; occupation, place
of birth; residence (street and number), and sometimes
husband's or wife's name, and the number of children. The
value of the latter is questionable for obvious reasons. A

196 THE SAVINGS BANK AND ITS PRACTICAL WORK

bank debating tliis question can make its own selection; I
have given all the usual and leading test questions to be
found among the banks. If the signature book and card
both are used, all the book need contain is the name and
address. It is better to have too much than too little, but
some people dislike to be questioned, while others become

No. 1169

:iS^^y$m^^^m-

The actofmakingthefirstdeposit entered in
this book constitutes assent by the depositorto
all By-Laws oFthe Bank. 5ee By-Ldws. Section /2.

TAKE CARE OF THIS BOOK.

If you lose or mislay it give immediate
TOtice to the Bank.

This insfirution will not be responsiblefor loss sustained
Ttirough payment- of this deposit, in wholeorinpart tothe
person presenting the book.uniess the depositor has previously
given notice thatthe book has been lost See By-Laws.Section 13

rORBI 5. PASS BOOK COVER. XOTE THE CLAUSES JUST BENEATH THE WRITTEN MATTER.

suspicious that due care is not taken if too few questions
are asked.

Where the signature book alone is used, and there are
many such cases, a slip similar to Form 11, page 208, may be
used when the depositor does not come in person. This
is generally gummed on the back, and is pasted in the book
when properly signed. In such instances, of course, the

THE FIRST DEPOSIT 197

full details would be taken in the book. The trouble with
the book is the "dead wood" that is bound to accumulate,
making a search for signatures troublesome and lengthy on
that account. Cards can be sorted out and filed away
when the account is closed and are strongly recommended.
They are at immediate command when wanted and are in-
finitely superior to any book.

His Bank.

A little girl w^ent into a savings bank one day and
said, "Mister, I Avant to join the bank. Here's a dollar."
She was right. The new depositor "joins the bank." This
man by subscribing his name to the card or signature booh
has joined our bank and is henceforth a member of the
corporation. He mil be governed by the by-laws, rules and
usages of tliis bank. It is hereafter "his bank," and he will
be indirectly affected by every loan and every invest-
ment and every success and every failure of "his bank."
The legal relation hereby established is fully treated else-
where, suffice it to say here that he has entered into a con-
tract with the bank and the bank with him. The terms of
that contract are to be found in the pass book which he will
receive, — tliis is universally true.

Particular attention is called to the cover of the pass book
of the Chelsea Savings Bank, reproduced hereMdth, wliich
contains on its face a clause to the effect that the acceptance
of the book is sufficient to establish the fact that the de-
positor agrees to be bound by the conditions to be found
therein. This is hterally and legally true. The book is the
contract between the bank and himself, and if he does not
wish to leave his money subject to the conditions of that
contract, let him return the book and get his money. That
he speaks another language than that in which the contract
is printed will not excuse him, — let liim get someone to ex-
plain it to him. That a bank deals with people speaking
twenty different languages, is not to say it must print its
rules in twenty different tongues, although the Union Dime
Savings Institution and the Citizens' Savings Bank of
New York print their by-laws in three languages, EngHsh,
German and French; but this is not compulsory. So says
the law and so says common sense. He must acquaint him-
self with the bv-laws, and failure to do so is at his own

198 THE SAVINGS BANK AND ITS PRACTICAL WORK

peril. They are just; they are reasonable; they are for his
protection as well as the bank's, and he will be required to
abide by the contract into which he has entered and so ^^dll
the bank.

Identificatiox IJelps.

In the event of tliis man being unable to write (and
many savings bank depositors are unable to do so), he will

v^ to Keep

tl^is • bool^

e iiy <s)

^ood order

AIMD DO IVSOT FOLD
OR ROLL IT.

PLEASE PRESENT THIS BOOK AT THE BANK
AS OFTEN AS ONCE IN EACH YEAR, TO
ENTER THE INTEREST AND COM-
PARE THE BALANCE WITH
OUR BOOKS.
NOTIFY US OF CHANGE OF RESIDENCE.

FOUM 6. BACK OF PASS BOOK COVER. SUBJECT MATTER GOOD; AERANOEMENT BAD.

be asked to make his mark, or perhaps bring some one to
identify him. And in such cases in addition to the usual
questions, the color of his eyes, hair, facial characteristics
are sometimes taken, and if possible a distinguisliing
mark, or a scar, which is usually a good proof. In the case
of foreigners, many have pocket stamps, private marks,
used as a "trade mark," and these may also be taken. But a

THE FIRST DEPOSIT 199

scar, if permanent, is often a valuable help, and in law, a
bank taking all such reasonable precautions to ascertain
the identity of its depositors will be protected.*

The methods of proving the correctness of the new
accounts will be treated under "posting and proving
methods" and at the same time descriptions of the systems
used in large banks for this purpose will be given, and we
proceed with the issuance of the pass book.

His Pass Book.

The evolution of the pass book would afford as inter-
esting a study as the evolution of the depositors' ledger,
which it has closely followed in form. It should be a dupli-
cate of the ledger account. In other days, the debit and
credit page was largely used, and is j^et in many places,
but the balance form, providing for extending the balance
at each transaction, is coming into universal use. In large
banks, where the volume of business is heavy and deposits
multitudinous, the old form seems popular, as it obviates
the chance of making errors in hurried extensions, and an
error in the balance is often fruitful of misunderstanding, as
the depositor is apt to get the notion that this is the balance
in the bank; and where error has been made in extending
it is difficult to explain at times. But some of the large
banks are now using the balance form successfully by pass-
ing the book through a process of verification before it is
returned to the depositor. Several ideas to check the ex-
tensions are found in the forms given. One method is to
take the balance on the deposit slip, and have it verified
in posting; this of course would permit a book to get out
for a little time with a wrong balance, but could be rectified
by mail. Some banks take the pass book balances on the
sheets used in connection with the "coupon system" of post-
ing, while others make the posting from the pass hook to
the ledger and compare extensions, and this is perhaps the
best method of all, although necessitating a larger force
than other systems. Where this form is used, it is a very
good idea to insert a clause in the pass book in a promi-
nent place, to this effect: "The balance shown in
the balance column is memorandum for the convenience of

*See Chapter on Finger Prints.

200 THE SAVINGS BANK AND ITS PRACTICAL WORK

deimsitors only. It is not guaranteed to be correct, unless
the book is presented at the bookkeeper's window and the
amount shown therein verified by comparison with the
ledo-er account." Tliis will avoid misconceptions of its
purpose.

Savings bank pass books have hard usage and should

■^-' NORWICH CONN. S5 Co

*^^- " NORWICH CONN.

IN ACCOUNT WITH

Qa -^CVA'^C^O ^ YX-vvVV./^

Take care of this Book

IF YOU LOSeOR MISLAY IT GIVE IMMEDIATE NOTICE

•OTHEBANK. AS IT MAY GET INTO IMPROPER HANDS.AND

YOU BE DEFRAUDED

FORjr 7. PASS BOOK COVER DIGNIFIED AND IX GOOD TASTE.

be made with this in view. The cover should be of light but
strong material that will bend without breaking. Boards
should never be used, unless of extra weight, but this adds
to the bulk, and the same end can be gained by using a
light, tough material. Sj^ecial attention should be given
to the openinr/ qualities, as some books otherwise good go
to pieces after a few months' use. They should be well
stitched or wired, ])referably the former, and should be
made by an experienced firm, as the average printing
house does not do enough of this work to "know how."

THE FIRST DEPOSIT 201

Experimenting in tliis line has cost one bank more than
its share of trouble in the pass book line. Get good ones
and go where they know how to make that kind, and pay
a little more if necessary for good work.

Varieties of Pass Books.

As to size, it is a matter of judgment, but it is well to
have the book small enough to go in an ordinary maihng
envelope, and of the number of samples at hand, the most
desirable size would seem to be 3y2x6 inches, wliich gives
room enough for working space and yet leaves the book
small enough to be mailed without special cover. A bank
in Connecticut has its books the same size as an ordinary
bank note. Some of the New York banks have books so
large that a trip to the stationery store is necessary if it is
to be sent through the mails. The book of the Union
Dime Savings Institution, shown p. 190, is about as
small as a book can well be, 3x4y2 inches, and is rivaled
only by that of the State Savings Bank, Topeka, Kansas,
which is but 2%x3V2. All entries are made in the Union
Dime Savings Bank by adding machine, a feature quite
distinctive in savings bank work. (See Form 1.)

Manipulating the Pass Books.

Some years ago a clever rogue opened two accounts,
one for a small sum and the other for a larger. This was
before the day of close comparison of pass books and
ledgers, and before the large numbers on the pages came
into general use. By manipulating the leaves of the two
books he was able to "beat the bank" out of the difference
between the two books.* This could not happen in the
average bank to-day, for all balances are verified before
payment. But such swindles have had much to do in per-
fecting the savings bank pass book as we find it to-day, and
also installing better methods of accounting in such in-
stitutions.

Pass Book Suggestions.

The custom of wiiting out the amount of deposit seems
to be dying out, if the hundred samples at hand are to be a

*To guard against this possibility, the Williamsburgh Savings of Brooklyn
has the book number on every page.

20-2 THE SAVINGS BANK AND ITS PRACTICAL WORK

criterion in this regard. The protection afforded thereby
is questionable, although it still obtains in many places.
The entry, however, should alucays be initialed by the clerk
making the same. The name is sometimes written on the
cover, as well as inside, but this is a matter of taste. The
book should in every instance contain those sections of the
by-laws and regulations affecting depositors. This is very

Number

Signature
1

1 he

reby agree to be bound by the conditions printed on reverse side

Date

1
Residence

Amount

Occupation 1

Age 1 2

Father 1

Married 1 2

" 2

Single 1 2

Mother 1

Widow I 2

" 2.

Remarks

Birthday 1

lORM 8. SIGXATURE CARD ARRANGED FOR SINGLE-XA3IE OR JOIXT ACCOUNTS.

essential, as previously indicated. The interest rules, hours
of business, and other information should also be given,
and if subject to change, on a separate leaf, to be inserted
in the book. The officers are frequently changing and
trustees die or drop out and it is no unusual tiling for a
bank to find itself, where the books are purchased in quan-
tities (as they should be for economy's sake) with a lot of
books having dead men's names or those not connected with
the bank, thereon. As this is being written a case comes to
notice of a savings bank which has just moved into its
handsome new building, and to celebrate the occasion
changed its pass books. A fine engraving of the building
adonis the front cover, and the book is a most creditable
piece of work. The new books had been used but two
months, when three of the officers listed on the back were
changed, and the bank finds itself with a large number of

THE FIRST DEPOSIT 203

books on hand which do not contain the correct hst of
officers and trustees. A Kttle forethought would have
avoided tliis. As a remedy, it is suggested that this part be
kept separate and added by an insert, or the books can be

BOOK

NO.S Q^'P % PATE OF SIGNATURE ci^^^

u u

a K
< II. .

»-« s

>.3 z
a 3 ^

K O O
UZO

««<
"It

o >.
t-m

S^
* H
O

«CL^^:{yv<?*?^>^^^ VAAJtJdr.u

^ sJ^/SrOfJif^y^ ^..

G>/pJLoxrex

AGE^^o BIRTHPLACE Ji>oe.;s..v^:^.\...w^aAA^J^^

FATHER'S NAME..j(NV<)£^^^>l^ -

££wy::

NAME

POST OFFICE ADDRESS

BUSINESS..

MOTHER'S NAME.

NAME OF HUSBAND „

NAME OF WIFE.O.VVXVV/...,

FOKM 8a. SIGKATUHE CABD,

made up, all but the cover containing the officers, etc., and
completed in lots of five hundred or a thousand, as the needs
demand. This will keep the list fresh and up to date, a
desirable feature.

CHAPTER XII
THE BANK AND ITS DEPOSITORS

In the simple act of signing his name to the signature
card or on the "big book" and accepting in heu of his
money a bank book with credit for like amount, the de-
positor has done more than leave the money with the bank
for safe-keeping; he has entered into contract with the bank
and the bank with him, and the pass book is that contract.*
The terms of this contract are usually, if not quite uni-
versally, found in the pass book in the form of the by-laws,
or so much of them as affects the depositor. Where the
depositor upon maldng liis first de^^osit in a savings bank,
signed an agreement to be bound by the by-laws printed in
the pass book given him, the by-laws become a material
part of the contract of deposit.! He has not only joined
the bank, but also agreed to do certain things and the bank
hkewise, and tliis contract is enforceable in law. Courts
have recognized this as a valid contract and have held both
parties strictly to the letter of their agreement.

It would be well if savings banks generally followed the
lead of the Chelsea Savings Bank of Norwich, Conn.
(Form 5) and called the attention of their depositors to the
fact that the acceptance of the book constitutes assent to the
by-laws, urging them to acquaint themselves with the rules
and regulations under which their deposit was received. By
so doing misunderstandings would be avoided. Such notice
could be printed in several languages, suggesting that if im-
able to read English the depositor get someone who could,
to explain them to him. Ordinarily a pass book is a pass
book ; but when it gets into court, it becomes a contract.

It will afford an interesting and profitable study to
inquire into this matter at length, for it is vital, and see how
the courts have construed this question, for much depends
upon tliis contractual relation and the manner in which such
instiniiifnts have been interpreted. The study of this ques-

'Wahrus vs. Bowery Sav. Bk., 21 N. Y., .543.
■; IJrown vs. Merrimac River Savings Bank, 67 N. H., .549.
204

THE BANK AND ITS DEPOSITORS 205

tion resolves itself into two parts, viz.: (a) What the bank'
owes the depositor, and (b) What the depositor owes the
bank.

The Legal Relationship.

It is a principle of law and of banking that the rela-
tionship between a savings bank and its depositors is:

1. Not the relationship of partners.

2. Not the relationship of bailee.

3. But it is that of trustee for the depositors.

4. It is that of agent for the depositors.

5. It is that of debtor and creditor*

The relation between a savings hank and its trustees or
directors is that of principal and agent, and that between
the trustees and the depositors is similar to that of trustee
and cestui que trust (one holding property for the use and
benefit of another).! The very term "trustee" indicates
tliis, and it is commonly accepted that the trustees have not
and cannot have any interest in or title to the funds of the
bank, except for the use of the beneficiaries, or depositors.
The whole fund belongs to the depositors, surplus and all.
The highest court in New York has so ruled, and the stat-
utes of New Jersey so state.

With respect to any ordinary deposit, the contract be-
tween the savings bank and its depositors, in the absence
of any by-law or rule limiting the liability of the bank, is
the ordinary one of debtor and creditor. J

Debtor and Creditor.

The primary relationship is one of debtor and cred-
itor, which is to say, this man has surrendered his money
and his legal title thereto and taken in lieu thereof a credit
with the bank evidenced by his pass book. He has not
loaned the bank his money, nor left it for safe-keeping ; nor
left it with the bank as trustee, to hold for the use and
benefit of the depositor, but given it to the bank absolutely
and unreservedly. This is common law. As creditor he

*Am. & Eng. Ency. of Law, p. 1246 (2d ed.)

tHun vs. Gary, 82 N, Y., 65.

JFowler vs. Bowery Savings Bank, 113 N. Y., 450.

206 THE SAVINGS BANK AND ITS PRACTICAL WORK

has the right to demand repayment at such times and in
such amounts as he may desire, but the hank reserves the
right to malxC reasonable rules and regulations in this re-
gard, which will bind him the moment he accepts his book.
In other words, the relation of debtor is limited and re-
stricted by contract, and the pass book is this contract.
These restrictions and limitations and regulations must be
in keeping with the statute law of the State, and must be
reasonable. In the event of the bank failing, he cannot
say: "Give me back my money" — ''inij money" does not
exist any longer; it is the hank's money now, and he can

mU . Dnfi Ilia tW loUcwtac '<>«*• w ti. MM withiA* PiM-Book.

190

THE EAST SIDE SAVINGS BANK OF ROCHESTER.

00 NOT USfc

r Bearer.

DoUvs.

wddkimio

Do not Write on this, nor Tear it out,

B-j! Copy IhU FORM OF ORDER, on a itfitiM papet.

Droffklyn, N. V. .?™°f.'il /p.

EAST BROOKLYN SAVINGS BANK,

Pay to !?*!_°'?!i!J^.'!*^.°-''.'.°.?f?'-'?'"°°.'r-i or Bearer,

^!!:^.'^.}f^.J!^^).^.^.i^Z':l _ __ Dollars,

and eharge Book No .'?;!lfi!.'^.°!.?^?.0'.~'i!...-

[To b« t'tcned by the ftwMr m Pu..6Mk.]
^ tAnmnt i. fisvK..) _ _^_ ^ ^ ^^_^

FORM 9. DIHECTIOXS FOR DRAWING MONEY, INSERTED IN TFIE PASS BOOK,

only say in language of the Holy Writ, "Pay me that thou
ow^est" — but he must take his chances with others such
as he.*

The Rules and Regulations.

In many States it is required that, aside from printing
the rules in the pass books, they must be conspicuously dis-
played in the bank lobby, so that all may read w^ho run.f

As suggested above, they must be legal and reasonable,
and the depositors must he 'placed in such position that they
may, if they 'will, become acquainted wath them. The courts
have decided that if a man cannot read his contract him-
self, he jnust get someone to explain it to him. It need not
be printed in the language he speaks. The fact that the
depositor is illiterate and cannot read the rides in the pass
book does not excuse him from their binding force if they

•See eh.'ipter on insolvency.
tThis is the law in New York and rn.-mv other States.

THE BANK AND ITS DEPOSITORS 207

are reasonable rules * This alters the matter and makes
liim, not simply a creditor, but a party to a contract. The
bank man should make no promises he does not intend to
keep,t and the depositor should not leave liis money if he
does not wish to abide by the contract as he has received it,
for a savings bank pass book is not a mere pass book or
statement of account; it is issued to the person in whose
name the deposit is made and with whom the bank has
made its contract of deposit; it is the depositor's voucher,
and the only security which he has evidencing the amount
of his credit at the bank.J

Pass Books Xot Negotiable Instruments.

It is also a rule of law that a pass book is not a nego-
tiable instrument, but a savings bank book is generally re-
garded to be worth "what is on it," and wliile this is true
in the main, it is open to quahfications. It is worth what
is on it to the owner, but in other hands the statement will
not hold true. Most savings banks require the book to be
presented at each transaction, and this being true, the book
will show the exact state of the depositor's account at all
times, and many commercial banks will loan upon such
security without hesitation. The purchaser of a savings
bank pass book to whom such book is delivered obtains an
equitable title to the fund w^hich it represents, as does also
the donee of a book.§ A gift of a savings bank deposit by
delivery of the pass book is a valid and complete gift of the
money represented by it. J

Care in the Payment of Deposits.

Among the regulations to be found in the pass books
is one to the effect that possession of the book will be evi-
dence sufficient to sustain the bank in making payment of
money to the holder, which is both legal and reasonable, but
many banks in an effort to be over-zealous in protecting
their depositors have added a qualifying clause to the effect

*Burril vs. Dollar Savings Bank, 92 Pa. St., 134.
tGrerly vs. Nashua Sav. Bk., 63 N. H., 145.
JiWhalen vs. Milholland, 98 Md., 199.
§ Pierce vs. Boston Savings Bank, 129 Mass., 425.

208 THE SAVINGS BANK AND ITS PRACTICAL WORK

that the bank will "endeavor to prevent fraud," or Mdll use
its "best efforts" to that end, but nevertheless ^vill paj^ upon
presentation of the book, which has been the cause of fre-
quent loss and htigation. A bank is required to use due
diligence and ordinary care, but, further than this, it need
not obligate itself ; but having contracted to do more than
this, the courts Avill hold it strictly to the letter of its con-
tract. As a general rule, the respective duties of the bank
and its depositors toward each other are defined by by-laws,
rules or regulations, but these do not relieve the bank from
its general duty to exercise ordinary care to 'prevent the pay-

^^^-^ts^

guj2.p^iAl. ^GL^es^R^

FORM 10. THIS BAXK HAS SEVERAL BLANK

CHECKS BOUND IN EACH PASS BOOK.

SIGNATURE SLIP

The above is my signature for the signature book
of The Bowery Savings Bank, New York.

FORM 11. SIGNATURE SLIP USED IN CON-
NECTION WITH SIGNATURE BOOK.

ment of the deposit to the wrong person* Regardless of
by-laws, the bank is bound to exercise ordinary care and
diligence in ascertaining the identity or authority of the
person presenting the pass book.f

Mutual Consent.

Having found the by-laws to be the contract between
the bank and its depositors, and that they must be legal, and
reasonable, and placed within the reach of the depositor,
who must have assented to the same (a contract is formed
where two minds agree to and assent to the same proposi-
tion) the receipt of the pass book and the signature of this
man on the card record, or signature book, will bind both
him and the bank to this agreement.

•Kimball vs. Norton, 59 N. H., 1.

tKummel vs. Germania Savings Bank, 127 N. Y., 488; Brown vs. Merriraac
River Savings Bank, 67 N. H. 549.

THE BANK AND ITS DEPOSITORS 209

Assent May Be Implied.

The assent to the by-laws may be implied, even though
the by-laws require that the depositors subscribe to a cer-
tain book.*

He is supposed to know the terms of his contract. The
adoption of rules and regulations and conditions respecting
the relation between a savings bank and the depositors may
be shown by long usage. The signature of the depositor to
the book containing the rules and regulations is not the only
method by wliich he may be bound. The agreement may be
evidenced by his conduct, such as leaving his deposit at the
bank after obtaining his pass book containing the rules and
regulations..!

The contract is usuall}?^ this: The bank acknowledges
the receipt of the money and will repay the depositor, or
on his or her order, or power of attorney duly attested, or
when dead to the legal representative. The money de-
posited in a savings bank can be legally demanded by and
received therefrom only by the depositor or his attorney. |

Possession of Pass Book No Evidence or Ownership.

While possession and presentation of the pass book is
universally required in order to draw funds, the mere pos-
session is not sufficient to warrant payment, even though
it is so expressly stated. Due care must also be used.

The possession by a stranger of a depositor's pass book
constitutes no evidence of a right to draw thereon. To
make payment to one having no other evidence of authority
to draw than the possession of the book a protection to
the bank, it is necessary for the bank to show some special
contract with the depositor authorizing such mode of pay-
ment. In a pass book issued by defendant to a depositor
was printed a by-law, "All payments made by the bank
upon presentation of the pass book and duly entered there-
in, will be regarded as binding upon the depositor. Money
may also be drawn upon the written order of the depositor
or his attorney, when accompanied by the pass book."

*Gifford vs. Rutland Savings Bank, 63 Vt., 108.
tLadd vs. Augusta Savings Bank, 96 Me., 510.
JEaves vs. Peoples Savings Bank, 27 Conn., 299.

210 THE SAVINGS BANK AND ITS PRACTICAL WORK

1 bfreby ut to op»n tn iceoant with the Hennepin Coonly S«ving» ^/yn

Bjnk 01 Minneaoolu. To (h»t end I h«ve «ne»«red the following SHEET NO— ii-ML.
i]ue«uone truly. ' 1 >m uquunwd with tiie rx.'gul>tiou< o( >aid bank
aflecting dep<vitor». and agree to be bound tljereh^

^C^ /

II ID ITO6<, lor whom ^

Your residence ^o S C^^C-*-*^ >^^

Your birthplace {J.'':^,'i^)^^ e^^^/^C^ {'J^^A')'^^ f/.
Your birthday J<** -*^ '■ Occupation ^ i' ^ z^^*^^ ^

Your Fathet>^aroe J^/i <^ ^^ Your Mother's y^a-» t-^
Your Wife's or Husband's name /—^^CJ''L

-^ — **!

imv iiiinr rffifciiw

f^£,

FORM 12. SIGNATURE AND TEST aXTESTIONS TAKEN ON THE LOOSE LEAF LEDGER SHEET.

Held: The by-law contemplates two modes of payment,
one to the depositor in person, and the other upon his
written order, hoih requiring the 'presentation of the book,
as a condition thereof; and it did not authorize or protect
the bank in a paj^ment to a stranger whose only evidence
of authority to receive payment was possession of the
book.*

Rules May be Waived.

The right to draw money is generally explicit, and if
not qualified, and the bank agrees to pay to the holder of
the book and "the book is the order of withdrawal" there
is no question but that the bank will be amply protected
in payments made without gross negligence according to
the tenor of its contract, but, if otherwise, the payment is
at its own peril. The reservation that "notice of with-
drawal will be demanded," running from a few days in
some States for lesser amounts to ninety days in others, and
for greater sums, is both legal and reasonable, but the bank
may make daily payments without waiving the right to
enforce this rule, which is for the protection of the de-
positor as well as the bank. The bank through its appro-
priate officers may waive the right to notice of withdrawal
stipulated in the by-laws. t

*.Smitli vs. Brooklyn Savings Bank, 101 N. Y., 58.
tHudson vs. Roxbury Savings Inst.. 176 Mass., 522.

THE BANK AND ITS DEPOSITORS 211

Payment on Presentation of the Book.

In support of the position that the bank will be jiro-
tected in making payments in accord with the contract it
has entered into, the following is offered: "In most sav-
ings banks there is a rule that payments made to the per-
son producing the book shall discharge the bank. Such a
by-law is reasonable and discharges the bank when it ha$
exercised care in payment, even though the presenter was
a thief * The case of Schoenwald vs. Metropohtan Sav-
ings Bankf is in point. Here was a German girl who had
saved a hundred dollars. The money went into the bank,
and the bank book into her trunk, where it should have
stayed, but did not. The bank bargained with her that "it
would use its best efforts to prevent fraud, but would pay
ujjon presentation of the pass book/' The book was stolen
from the trunk and $60.00 withdrawn upon an order pur-
porting to be signed by her. In court, she testified that
"the writing looked like hers," but she was certain that
"she never signed a paper like that." The higher court
reversed the judgment in her favor, and held that if the
bank paid upon a forged order, it was as if there had been
no order at all and the bank therefore paid upon presenta-
tion of the book, which it had a perfect right to do. It is
an open question in this instance if the bank used its best
efforts to prevent fraud,\ as it bargained with her to do,
but it won its case nevertheless.

A bank by-law providing that the bank will not be
liable for loss sustained when a depositor has not given
notice that his book has been lost or stolen, and the deposit
is paid upon presentation of such book, is a reasonable and
proper regulation for the protection of the bank, and will
protect it except where it fails to exercise reasonable care
under facts sufficient to excite the suspicion of a prudent
man and put him on inquiry. § A payment on a forged
order bearing a signature similar to that of the depositor,
accompanied by the pass book, will discharge the bank
where there was nothing to arouse the suspicion of the

*5 Cyc. 508.

t57 N. Y. 418.

JThis case has been criticised in subsequent decisions.

§Gifford vs. Rutland Savings Bank, 63 Vt. 108.

21-2 THE SAVINGS BANK AND ITS PRACTICAL WORK

ricttj for §nmn]^

In the Citu of Clcocianb,

Otlla Houn. «flO <■ m. to J<W p

,A2^

In Ai < mini Wllh

v\lt.

0 ^' -^

German Savings Bank

COR. 4th AVE. AND I4iu ST.

DFFEN TAGLICn

lOR.M 13.— ^PASS BOOK COVERS, PLAIN AND ORNAMENTAL.

THE BANK AND ITS DEPOSITORS 213

teller or put hifii on inquiry, as a reasonable and prudent
man, that the signature was forged.* But if a comparison
by the officers of the signature of an impostor, presenting
the pass book, with the signature of the depositor on file
in the bank would prevent the fraudulent imposition, then
payment without comparison and without requiring proof
of identity other than possession of the book, is no defense,
even though a by-law authorizes payment to the holder of
the pass book.t

The case of Appleby vs. Erie Co. Savings Bank,J is of
like tenor. The bank promised only ''to endeavor to pre-
vent fraud.'' In this case the book was stolen and pre-
sented at the teller's, window by one assuming to be the
owner. He signed his name at the customer's desk, and
the teller carefully compared the same Avith the one on file,
and finding notliing to excite suspicion, paid over the
money. The payment was sustained.

These instances and quotations will suffice to establish
the point that a bank making reasonable rules and using
reasonable care in the payment of money, will be amply
protected.

What Is Due Care?

To establish reasonable care the following would seem
to be requisite:

1. Possession of the bank book.

2. The signature must agree with the bank's file.

3. The test questions must be answered correctly.

4. Failing in these definite and complete identification
should be required.

5. Nothing to excite suspicion and place the bank on
inquiry.

6. If payment is by order, the signature must corre-
spond with that recorded and the payee should be identified.

7. If by power of attorney, due care must be exer-
cised to see that it is correct and authentic, and pertains
to the particular transaction, and that the principal is still
living.

*Langdale vs. Citizens Bank, 121 Ga. 105.
fLadd vs. Augusta Savings Bank, 96 Me. 510.
$62 N. Y. 12.

214 THE SAVINGS BANK AND ITS PRACTICAL WORK

The Depositor's Side.

Turning next to the depositor's side, we shall find that
the usual conditions of the contract are:

1. That good care be taken of the book.

2. If lost or stolen, immediate notice must be given
to the bank.

3. The book will be presented at every transaction.

4. The provisions of the by-laws are accepted and the
depositor agrees to be boiuid thereb3\

The depositor undertakes to preserve the hook he re-
ceives as the evidence of his deposit, to jjresent the same
or send it tchenever he calls for a payment, to give notice
if it he stolen or lost, or failing to do so, to claim as against
the institution, nothing which shall have been paid in good
faith, and in the ecvcrcise of reasonahle care, to any one
presenting it.

On the other hand, a payment to the wrong person,
upon presentment of the book, even before notice of loss,
if it were presented under such circumstances or in such a
manner as would tend to excite the suspicions or put an
ordinary man of prudence upon inquiry, would not exoner-
ate the institution. Its officers are held to the reasonable
exercise of care and diligence.*

The payment of money by a bank, on a pass book
presented by a stranger, without inquiry as to his identity,
and without comparing his signature with that of the real
owner, is negligence tchich is not excused hy the owner's
negligent loss of the hook.f

A by-law providing that the bank will not he liahle for
loss sustained when a depositor has not given notice that
his deposit hook has heen lost or stolen, and the deposit is
paid on such presentation, is a reasonable and proper reg-
ulation, for the protection of the bank, and will protect it
except where it fails to exercise ordinary care.

In the case of Gearns vs. Bowery Savings Bank,:]: pay-
ment was made upon letters of attorney which proved to
be false, and did not pertain to the payment in question.
The court hold that "Payment by a savings bank of a

•Sullivan vs. I.ewlston Savings Bank, 56 Me. 507,
tBrown vs. Merrimac River Sav. Bk., 67 N. II., 549.
JNcw York Savings Bank Cases. No. 35.

THE BANK AND ITS DEPOSITORS 215

deposit to a j^erson not entitled to receive it, even though
he may have possession of the book and present it, will not
discharge the bank if at the time of payment a fact or cir-
cmnstance was brought to the knowledge of the bank offi-
cers calculated to excite suspicion and inquiry by a careful
person"; and in this instance they failed to make inquiry
and to use due care, and the deposit had to be paid t^vice.

Of like import was the case of Allen vs. Williams-
burgh Savings Bank,* in wliich the account stood in the
name of the husband, while the book was presented by a
female, his wife, with a forged order. This was prima
facie notice that the book did not belong to the one pre-
senting it, and would have placed a careful man on in-
quiry. Failing in this, they assumed the risk of forgery
(always operating against the bank) and paid the check.
The signature resembled that of the real depositor, but was
enough at variance to excite suspicion. Here the bank
agreed '^'^to use its best efforts to prevent fraud/' which the
jury seemed to think it had not done, and gave verdict ac-
cordingly, and the higher court sustained the finding. Hav-
ing paid on a forgery, it certainly did not pay the deposi-
tor in person, nor on liis order, nor to liis attorney, and
had to settle the same debt again. In full accord with the
last, is the case of Kummel vs. Germania Savings Bank,t
where the bank agreed to pay only the depositor or his
attorney, but added, "the bank ^vill not be responsible for
fraud committed upon its depositors in producing the pass
book and drawing money without the knowledge or con-
sent of the owner." Here was another German who had
a bank account and the book got into other hands. The
first payment was made by the casliier, who simply asked
the man where he lived. In the other payment, a differ-
ence was noted in the signature and the man was asked
if he could not write a better hand, to which he replied that
he "was not feeling well." Not using the care that a care-
ful and diligent man should, this bank, like the WilUams-
burgh, lost its case.

Having found the relationshij) between the bank as a
corporation and its depositors, and vice versa, let us in-
quire briefly into the relationship established between the

*New York Savings Bank Cases, No. 34.
tl27 N. Y. 488.

-216 THE SAVINGS BANK AND ITS PRACTICAL WORK

trustees as individuals or managing officials and the depos-
itors.

Trustees axd Their Liability.

The position of the managers of the bank is somewhat
as follows: — Savings banks officers cannot assume respon-
sibilities or enter into contracts or transactions so as to
bind the bank, unless such acts are clearly incidental to
their duties.* The true rule is that such trustees are bound
to the exercise of ordinary care and prudence, — that degree
of care and prudence that men prompted by self interest
generally exercise in their own affairs. t The trustees are
bound to obsene the limits placed upon their powers in the
charter (or in the statute) and if they transcend such lim-
its, and cause damage, they incur liabilitj^ If they act
fraudently and do a wilful wrong, it is not doubted they
may be held for all damages they cause to the bank or to
the depositors. But if they act in good faith within the
limits of the powers conferred, using proper prudence and
diligence, they are not responsible for mere mistakes or
errors of judgment. J Trustees must bring to the discharge
of their duties ordinary competency, together Mdth reason-
able diligence and care.S

'to*

Responsible Only When Negligent.

The trustees of savings banks are personally responsi-
ble for frauds and losses resulting from gross negligence
and inattention to the duties of their trust. They must
know the fundamental law controlling the bank and can
be excused only when, and after taking due care to under-
stand the provisions of the law, they honestly mistake the
same.lj The trustees and directors of savings banks must
observe good faith and ordinary prudence in executing the
trust imposed in them.H The managers of such institutions
occupy the positions of holders of a pubhc trust of a be-

•Grcrly vs. Nashua Savings Bank, 63 N. H. 145.

|24 Am. and Eng. Ency. of Law, 1248. 2nd ed.

tHun. vs. Gary, 83 N. Y. 65.

gWilliams vs. McKay, 46 N. J. Eq. 25.

!l Marshall vs. Farmers Savings Bank, 85 Va. 676

TiUnion Nat. Bank vs. Hill, 148 Mo. 380.

THE BANK AND ITS DEPOSITORS 217

nevolent nature, and it is their duty to preserve and foster
the object of their trust with a reasonable zeal.*

So far as the trustees are concerned they say to the de-
positors: "We are not the bank (if it is a mutual con-
cern), you are the hankj, and we are your representatives,
your managers, your benefactors. Leave us your money
and we will take good care of it and put it where it will
not be stolen or burned. We will not keep it idle longer
than necessary, but invest it according to law, and our best
judgment. We will pay it back to you according to the
terms of our contract, but if losses attend through error
of judgment in investments, or otherwise, and we have not
been negligent in any wise, — the loss is yours and not ours.
Whatever profit may attend the investment of your money,
will come back to you as interest, or may be held in a sur-
plus fund for your benefit and protection. We cannot (ex-
cept in stock savings banks) share the profits, it is not just
that we should bear the losses, save by betrayal of our
trust."

As long as the trustees of mutual savings banks keep
within the law their responsibility is moral rather than
legal. In Minnesota, the savings bank trustees are re-
quired to file bonds in the sum of $5,000 each with the
banking department as evidence of good faith, but this is
the exception. In most of the States, oaths of office are
required, but even in New York, with the best savings
bank law in the land, this formality was not required until
the year 1908.

In some States, as in New Hampshire, the trustees are
liable to the bank and depositors for "any loss that may
attend an illegal investment which has had their sanction."

Enough has been cited in authority to demonstrate:
That the relationship is contractual. That the bank must
use due care in making pajmtient of despositors' money.
The bank man must be careful not to make a contract that
he does not expect to fulfill. He must be mindful of his
terms and, while in all good intention to protect the de-
positor, not attempt the impossible, nor assume too much.
The depositor owes something to the bank, and that is to
take all due precaution that his book, his contract, does not
get into evil hands, and if so to give prompt notice to the

'Barrett vs. Bloomtield Savings Inst., 64 N. J. Eq. 425.

218 THE SAVINGS BANK AND ITS PRACTICAL WORK

bank that they may be on gnard, — otherwise he is per-
fectly protected.

Having therefore found a mutual responsibility, it is
indeed a mutual institution. The depositor stands in a pe-

THIS ORDER MUST BE FILLED IN WETH tNK

Book No._, ^r^yoVk^rv.'^" - 190

I Here wrile the number of the book) ( lit re write the date)

The Dime Savings Bank of Williamsburgh, win piease

(OO NOT WRITE IN NAME OF BEARER)

Pay to bearer Dollars,

(wcne wniTC im LETTERS Twe amount to be drawn)
In case balanc- of accotinl is wanted and exact amount is not known, write "THE HLT,!, AMOUNT."
In case INTHKICST is wanted and exact amount is not known, write in space above for wliat periods of time
In casi^ all money over a certain nmmint is wanted, indicate it plainly in space aljove

and charge to above numbered Bank Book.

(Sign your name on this linei

( Addinir "TRl'STF.K" incase of a trust account).

Now residing at No.

Wk . Ril^ I _JAs- ; p. B.Eutr>

THE BANK BOOK MUST ACCOMPANY THIS ORDER

FORM 13a. COMPLETE INSTRUCTIONS FOR FILLING IN WITHDRAWAL BLANK.

culiar position to the bank and it to him. He has more
than a passing interest in its welfare, for it is in fact "his
bank" and he is vitally interested in all it does.

CHAPTER XIII

DEPOSITS

The savings bank teller, in fact, any bank teller, is an
important personage. No one in the roster of the bank is
more vitally concerned in the success of the institution than
he. The httle window at which he stands in receipt of cus-
tom is the pivotal point around which the work of the
whole bank revolves. It is the meeting place of the bank
and its patrons. The president may be buried under a stack
of bonds and stocks, and the secretary absorbed in the
mysteries and intricacies of a report, but the teller cannot
be hid. Wliile one customer meets the president and two
the secretary, the multitude comes into personal and inti-
mate contact with the man in the cage. It is he who makes
friends or enemies for his institution. If a patron goes
away from the window with a smile and kindly feeling in
his heart, it is because he has been pleased with the treat-
ment of the "man behind;" if he goes away with a feeling
of enmity, it may be and often is, the fault of the man
who received or paid his money. How important, there-
fore, is this man, and how essential that he have the qual-
ities that make for success! When we remember that the
savings bank is not a necessity like the "business bank";
that its depositors visit it infrequently; that it draws its
custom from miles around and that people not only can
afford to, but do, travel long distances in order to deposit
with the bank of their choice, the w^ork of the teller in both
building up and holding the clientele becomes of no Httle
importance.

The Teller^s Qualifications.

It is not the purpose at tliis time to go extendedly into
the teller's qualifications. That is an old subject and more
or less threadbare. Suffice it to say that in a savings bank
he should be a man of tact and patience, for he deals with
a class of people unacquainted, as a rule, with the ways of
business and banking, and he must often "show them," as

020 THE SAVINGS BANK AND ITS PRACTICAL WORK

if they came from INIissouri. He should have courteous con-
sideration for their shortcomings and "remember their
bonds." In large banks he will need to work under
pressure at times, and must have a cool head, a steady
hand, and a physique that will stand a strain. Rapidity
and accuracy will be much in demand at interest time when
the rush is on and the multitudes are storming the banks,
for in some places, notably New York, during the ten-day
interest periods in January and July ])olice protection has

Depositors Will Please Fill Qui TMs Slip

DEPOSITED BY

5Vn JL . .Q/V\Aa-<K.*»^

VwO.VWVNX W

Pui Book No..

Oneida GooQty SaYiogs Bank

Roun. N. Y.,.A^>^V...\ 190 <j.

Billt...
Specie..
Check*

>^LMo\

FORM 14. DEPOSIT TICKET.

to be invoked in order to handle the crowds. It therefore
falls to the lot of the teller to meet this "run," and coolly,
not by putting up a 60-day notice, but by being "on his
job" sixty minutes in every hour. In smaller banks where
life is less strenuous, he will have the time to gossip with
patrons, and will be the advisor and confidant of the
masses. Their troubles, trials and tribulations, domestic,
business and "otherwise," will be told into liis attentive ear,
and he will })e expected to be well posted on matters of pol-
itics, finance, love and morals. He will, in fact, be the
])ank\s "Department of INIercy."

DEPOSITS

A Busy Morning.

221

As a sample of what the teller who handles all the
counter work of a savings bank, must undergo during a
day's work, the following incident, "selected" from a day's
routine, is offered. It is not overdrawn, as any man who
has worked at the counter of a country savings bank well
knows.

It is the interest period and the rush is on. The lobby
is crowded with patrons, bent on all sorts of missions. Mrs.
Smith steps to the window and says sweetly and with a
smile, "Good morning, Mr. Teller, fine morning, isn't it.
How do you feel this morning? Pretty well? That's

FORM 15. DEPOSIT TICKET.

good. So do I. This weather just agrees with me. How's
Mrs. Teller? I heard she was sick. I hope she is better.
Now, Mr. Teller, I want to pay mj^ interest, how much is
it, please?"*

The teller takes the mortgage ledger and after look-
ing in the index, turns to the account and finds it to be
$29.00, and advises the good woman to this effect. "But
how can that be, haven't you made a mistake? Mr. Smith
said it would be $28.50. We figured it out at the break-
fast table this morning. The mortgage is only $950 now,
jT^ou know." "Yes, I know," "sweetly" responds the teller,

*Some banks receive interest on mortgages, write up pass books and handle
the usual semi-annual rush at the same time, while others arrange to have in-
terest fall due some other time and write up interest only after the rush is over.
The latter is the best plan.

222 THE SAVINGS BANK AND ITS PRACTICAL WORK

"you paid fifty dollars last March," as he scans the ledger
and hastily figures it again. "The interest on that fifty
dollars at 6 per cent, is fifty cents, and that's just the dif-
ference between your figures and ours." She pays it and
gets a receipt, and he hands her the change.

"Xow I guess I'll pay fifty dollars more on the mort-
gage and the interest on the fifty dollars," says the fair

DEPOSITED BY

^^t^.. Mpy^?/pyv<!r\':t

IN THE

Albany Exchange Savings Bank

XL8ANV, N. v.-

AccoDDt l(i.:fP7£'> ^rr-rlf^^r^.S? ^fOX-

PLEASE LIST EACH CHECK SEPARATELT. ,

Dollars,

Cents.

Gold,. .,..„:.,■•

Silver, etc;,..- , ,. , ...

Checks. . ......„•. ....

9 ^

l^yTl^^ ^O

FOaSI 16. DEPOSIT TICKET.

lady. Mr. Teller figures the interest on $50 for eight days
and makes out two more receipts. She then hands liim
five ])ass books with the request to "add the interest please,"
which he proceeds to do. JNIeanwhile the waiting crowd
shifts from the left foot to the right and sighs a long sigh.
Coming back with the five books, he advises her of the
amount on each. She will draw the interest on her
book and also on John's. How much A\all it be? Eighteen
dollars and ninety-eight cents. Xo, she doesn't need all

DEPOSITS

228

that. "Leave one hundred on mine and five hundred on
the large book, please." Two more drafts.

"Now, how much has little Johnny?" "Fourteen dol-
lars and thirty cents." "Very well, — I'll make it just fif-
teen dollars for Johnny. And Willie, how much has he?"
"Seven dollars and sixty-five cents." "Well, I'll make his
book eight dollars. You see the children like even amounts.
And Httle Marv, — how much has she?" "Three dollars and

THE MIDDLETOWN SAVINGS BANK,

MiDDLETOWN, CONH.

Received^zl

Deposit No. ^^ *»^ .

7L£ o

Interest No. 'ys^

$-__ ,tO-_ . — 190 ^

Bills Rec./^>^ No. /.g'<& ft -^ ^ ^

Rent.

Dollars.

Cents

Trans.,

Rilk

Specie,

Check,

2^0

FORM 17. RECEIPT TICKET ADAPTED FOE SEVERAL PURPOSES.

ninety-five cents." "I'll make that just five dollars, please,
so it will draw interest, — ^five dollars draws interest, doesn't
it, Mr. Teller? Now I want a book for the baby. Two
dollars for little Jimmy. And make it so either John or I
can draw it in case 'anything happens' to the baby." The
crowd shifts back again to the left foot and heaves another
sigh while Mr. Teller makes out a joint-trust account (the
most comphcated account to open) and gathers up his
memorandum and puts it in his hip pocket in case his cash

224 THE SAVINGS BANK AND ITS PRACTICAL WORK

is off (as it probably will be) and wraps up the six books
in a newspaper and snaps a rubber band around them.
The gentle lady bids him a cordial adieu, expressing regret
for having kept all these people waiting and wishing him
a pleasant vacation and ^^ith regards to all the folks, etc.,
she surrenders the counter.

Half an hour out of a busy morning; nine transactions,
— all practically different, and if the cash is not askew
that night and the slip in the hip pocket of the teller does-

DEPOSITED IN THE

CORTLAND SAVINGS BANK

TO THE CREDIT OF

byJ§M^5w^AiJw $ 5o-

Cortland, N. Y. CORTLAND SAVINGS BANK

CIa^'^ 0<] Per- ^-^C^

This slip is merely a memorandum; it is not transferable and the amount deposited can be drawn only
by the party to whose credit it is placed, and upon presentation of the pass book.

FOajI 18. DEPOSIT RECEIPT GIVEN WHEN PASS BOOK IS NOl* PRESENTED,

n't come into play, it will be as much good luck as good
management. The author has handled just such proposi-
tions.

His Money and the Bank's.

It is an acknowledged fact, that to the bank man, money
in the till has a different meaning than that in the pocket.
His cash on hand is merchandise, — valuable and expensive
merchandise, to be sure, but nevertheless a conmiodity, —
stock in trade. As one teller puts it, "A dollar in my
pocket feels as big as a stove lid, while a dollar in the till
is no })igger tlian a tin whistle." But over this, "whistle,"
he must hnvc a constant and careful thought. It is his

DEPOSITS 225

bug-a-boo. It is with him in sleep as well as in his waking
moments. Did he lock the safe? Did he leave out the sil-
ver? Did he set the time lock properly? No great dam-
age if he did forget the silver, but if he missed the time, or
left the vault door open it might stamp him as careless and
carelessness is no part of a bank man's outfit.

The Art of Counting Money.

Counting money is a fine art and one of the teller's
main assets. It should be done quickly and gracefully and
without fatigue. It can best be learned by practice, but a
few general directions may not be out of place. Accord-
ing to M. F. Bauer, paying teller of the American Ex-
change National Bank, New York, "The beginner should
watch and study his movements while counting bill after
bill; he should count carefully and slowly and try to execute
every movement with precision and economy, and let his
aim be to be accurate and precise, even if a slow, counter.
Speed will develop unconsciously, and also the other qual-
ities. . . . Almost every one when starting as a money
counter has the idea that a big swing of the arm is proper
in order to draw the bills from the hand on the besk before
him ; this, however, is a waste of both energy and time. The
newcomer in our department is taught counting, — and in
order to become expert at it — to take up a lot of bills
about an inch thick and hold them in the palm of his
left hand between the thumb and extended four fingers,
three, or at the very most, four inches above the desk. He
places the bills so that the thumb is about over the middle.
In order to j^roceed with the counting he shoves the top-
most bill forward with the left thumb over the edge of
the lot, while with a slight bending motion of the other four
fingers restrains the other bills of the lot. The bill is
at once seized with the thumb and index linger of the right
hand and by the same pulled away and deposited on the
desk. During the pulling the left hand moves a little to
the side away from the right hand, so as to expedite the
process of separating the bill from the lot." Tellers as a
rule count by units — that is to say taking five as a unit, a
ten would be two units; a twent}^ four units, etc., and this
avoids the possibility of skipping a hundred in verifjang

226 THE SAVINGS BANK AND ITS PRACTICAL WORK

The Dime Savings Bank,

Norwich, Conn.

AUG I 7 !90S

Dollars

which we 'have credited on your Deposit Account No. '^/.y 6/

Treasurer.

FORM 19. — RECEIPT FOR DEPOSIT GTVEN* WHEN BOOK IS NOT PHE8ENTED.

packages of money. Packages are usually put up in fifties,
—thus fifty I's, fifty 5's, fifty lO's, etc.

The Teixee and His Task.

The work of the savings bank teller resolves itself into
three parts: First, he must make an accurate record of all
he takes in or pays out; second, he must have a corre-
sponding entry in the depositor's pass book; third, he must
have the cash this record calls for.

No matter how extensive the business, or how compli-
cated the system, the books of a bank or mercantile house
can be kept in perfect balance. It is merely a matter of

Deposit^

Book No. 8 ^ t I ^
Tran*.Ccom

JUN.17 1008 10

282

Book No. %S. *f I (o

Wj-

DEPOSITED

ckd. y

Connecticut Savings Bank

of New Haven
ZSS ^^* Haven. Coftiti'I_±_

Transfer from

/s.

-L^i^^-Cd—^

FOH.M 20. -DEPOSIT TICKET WITH STUB.

DEPOSITS 227

bookkeeping. But with the cash it is different, an error
once getting through undetected, is either a "short" or
an "over" and the teller must act accordingly. If the teller
has a credit slip for every deposit, and a debit ticket for
every withdrawal, and his cash and tickets tally, he need
lose no sleep over overs and shorts, but he sometimes makes
a miss, — hence that worried and absent look.

The transactions in a savings bank with depositors are:
First, deposits; second, drafts; third, interest; to which
might be added transfers, wliich are essentially drafts and
deposits.

In many banks the teller's work is divided into receiv-
ing and paying departments, and the two kept separate,
as are also the interest payments and other details which go
to make up the cash, but for present purposes it will suffice
io consider the department as a whole and we shall treat first
the receiving of a deposit.

The details of issuing a pass book to a new depositor
have already been treated at length. After the pass book
is issued, the depositor with money in hand will be directed
to the receiving teller's window.

Many banks endeavor to train their depositors in proper
banking methods, and request them to keep the bills flat,
right side up, denominations separate and placed in the pass
book, face up. Some banks will not take odd amounts
(cents) and others refuse or closely restrict deposits by
check, the acceptance of which entails considerable risk as an
endorser.

Dealing as it does with a heterogeneous mass of people,
some illiterate and others unacquainted with the ways of
banking, it is not the rule to require depositors to make out
their own tickets, although some banks encourage this prac-
tice. Speaking on this subject before the New York
Chapter, American Institute of Banking, President Chas. E.
Sprague of the Union Dime Savings Institution of the
same city, stated that his bank makes it a practice to re-
quire depositors to fill out their own tickets and is slowly
educating them up to this point, with good results. No
doubt it is good banking to require this; but in many in-
stances, especially in the case of foreigners, it would be
impossible to enforce the rule. It is, however, the general
custom to verify the amount by word of mouth, but the
-written instrument in the depositor's handwriting would,

228 THE SAVINGS BANK AND ITS PRACTICAL WORK

Hudson. //■ r..

» te credited ot Book No. --i^^^j^
IK name of

Jj^ars. (t. '^<g'^;

?l$uliBi]n Olttg dofaingfi ilnBtiluticn

firrritoeii frmn

?-g^<./-y

.DoUarz (i^C^

. to be credited on Pass Book Ho. W,]/^7

upon presentation of said Pass Bxk and Me surrender of this receipt. /

HUDSON ClXtSAVINGS IJSSTITIJTION.

FORM 21. RECEIPT FOR DEPOSIT WITHOUT THE BOOK. STUB FORM OF DEPOSIT TICKET.

in law, be much better. In the Onondaga County Savings
Bank of Syracuse, depositors are required to make their
own tickets and after two years' training do so most suc-
cessfully. The guard helps those who cannot write and
goes down the line giving depositors pads of deposit tickets
and indelible pencils.

"The first step," says Bolles' Modern Law of Banldng,
"in making a deposit is to enter the items ... on a
slip prepared for that purpose by the bank. These entries
are made hy the depositor himself or his agent, and not hy
an officer of the hank, and, being original, are the highest
evidence in any subsequent disjmte. But a hank that re-
ceives a deposit without such a ticket is none the less liable/'

The deposit tickets of savings banks are in as wide va-
riety as the neckties in a haberdasher's window. They may
be found in all shapes and colors and sizes and with a large
variety of ideas intended to act as a check upon the work.

DATE

THE PATERSON SAVINGS INSTITUTION.

DEPOSIT.

.Ao . BOOK Ho../9.f'.*^f=><S

N AME. «r^:&^^?±;?< .^^ ^ C&^<^

AMOUNT. $ Sooo<t

POSTED.
ENTERED.

CLERK AT DESK,

FORM 22. DEPOSIT TICKET WITH POSTING CHECKS.

DEPOSITS 229

The usual data is, number of account, name, date, items
and total amount deposited, with such additional matter
as experience would suggest. Of the many at hand, but a
representative few are herewith shown.

Making a Deposit.

Handing the money to the teller, the depositor is asked
"How much, please?" and the mill begins to grind. In or-
der that the entry about to be made on the book may tally
with the ticket and subsequently with the deposit ledger
of the bank, manj^ systems have been devised. They
are as varied as savings banks are numerous. It goes with-
out saying that whatever the sj^stem, it should not be some
scheme of duplication. Of what avail is it to make two
tickets, which may both be wrong? The logical method
is to devise a plan which will act as a check. Doing the
same work twice, it may be, but doing it the second time
some other way.

In the Paterson Savings Institution (New Jersey) the
tellers never make an entry on the depositor's hook. The
bookkeepers receive the pass books, compare them with the
ledgers, make out the ticket, make the entry on the book,
and initial the deposit slip under "Clerk at Desk." (Form
22.) The clerk makes the same initial on the pass book.
The pass book is then passed to one of the tellers, who re-
ceives the money from the depositor, who in turn receives
his pass book with the proper entry. The teller, for the
purposes of his mone}^ ])roof, enters in a book conveniently
ruled, the number of tlie pass book and the sum received
as indicated by the pass book entry. The deposit slips are
taken by a junior clerk during the day and copied in an-
other book, and this clerk places liis initials after the word
"Entered" on the shp. The total shown by this book at
the close of the day must agree with the teller's list of the
same transactions. No instance has ever been known in
this bank where teller and the bookkeepers have made the
same mistake.

A Mechanical Teller.

Without doubt the nearest absolute check upon a receiv-
ing teller is the "mechanical teller," which has been in use

230 THE SAVINGS BANK AND ITS PRACTICAL WORK

in the Union Dime Savings Bank of Xew York for over
ten years. It is really a special adding machine which
makes its own entry in the pass book of the depositor.
And wliile it credits the depositor it debits the teller, and
he must account for all that he credits in the pass books.
As the money comes in with a ticket properly made out,
the book is placed in the machine and the number keys
are pressed and likewise the amount keys, and upon press-
ing an electric button the wheels revolve, making the en-
try on the book, in the macliine and on a tape. The tape
is cut apart at the end of the day and pasted into a book,

-4 2 FEB 18 1909
DEPOSIT

PORTSMOUTH SAVINGS BANK

>//. /y i-

/ O O |o «=

Too

Name on Book

)n Book . y'

OvO-

I'bave this day deposited in the Portsmouth Savings Bank the amount hereon, for
.the 'person above named; and the whole or any portion of this deposit may be with*
drawn by the person presenting the pass book, and giving a receipt UierefoT to t)ie
Bank. And I hereby signify my assent to the By-laws oMhe Bank.

Sign here.

b^ signify my assent to the By-laws op<he Ba

Ubiuv B.T..BC23M8

FOEM 23. DEPOSIT TICKET WITH ASSENT TO BY-LAWS.

and this becomes the teller's receipt of cash, for which he
must account to the institution. By taking from the
amount at the close of the day that which the machine
called for at the opening of business, the amount received
from depositors is shown, and this added to the cash on
hand at the opening of business is the amount required.
(See form 25 for this proof of deposits.) In making pay-
ments the same process is gone through, although the fig-
ures are further to the right. (See form 1 for reproduc-
tion of a pass book of tliis bank.)

As stated by President Sprague in a letter to the com-
mittee on auditing of the American Bankers' Association,*
Savings J5ank Section, "The teller is charged with and is
res])onsible for: 1. The debit entry in the depositor's pass

*Pagc 25, report for 1907.

DEPOSITS 231

book, which the depositor may be trusted to verify. 2. The
entries on the tape, which, when cut, and pasted in a book,
form a journal of the amounts to be credited to the de-
positor's accounts. 3. By the total over which the teller has
no control and which must be corroborated by the bookkeep-
er's work."

Triangular Method.

In the Greenwich Savings Bank, (N. Y.), transactions
with depositors are proven triangularly. The money is re-
ceived by one teller or his assistant, and by such person is
kept until the end of the day. The entry is made by that
clerk in the pass book of the depositor. A ticket is also
made out. The pass book is given to the journal clerk,
whose duty it is to copy upon a form of journal sheet the
entry as he maj^ find it on the bank book, not knowing
whether such entry made by the teller is correct as to
amount or as to character of transaction. The journal
clerk simplij copies what he finds there entered. Then he
(the journal clerk) initials such entry on the pass book,
and passes the book to the chief teller. When the receiv-
ing teller passed the book to the journal clerk, he passed
the ticket made out by liimself to the chief teller's lesk.
The chief teller, or liis assistant, ha\ang listed this ticket,
now compares it and the listing with the pass bcok entry,
and the transaction being verified by the depositor, the
bank book is returned to him. The money is in tlie liaiids
of the person who first waits upon the customer. The
copy of the hank hook entry is on the journal sheets. The
copy of the ticket is listed at the chief teller's desk The
receiving clerk also keeps a list, with which +he moneys in
his hands at the end of the day should tally. The triangu-
lar proof being made, the journal sheet is divided at tlie
line of perforation, the stub remaining containing simply
the number of the account and the name of the depositor.
The portion taken off contains columns of deposits and
drafts.*

Deposits in the Bowery Savings Bank.

In the Bowery Savings Bank (New York), the depos-
itor hands in liis pass book with liis deposit, to the teller,

*From letter by James Quinlan, president.

232 THE SAVINGS BANK AND ITS PRACTICAL WORK

who enters on a ticket the number, name and amount,
makes the proper entry on the pass book and passes both
hook and ticket to the cash book clerk, who sees that the
entries on the ticket and pass book agree, and asks the de-
positor his name and the amount deposited, before return-
ing his book. By this system of passing the transaction
through the hands of a second man, a check is maintained
as to the teller's correctness, and he is enabled to work with
an easy mind, knowing that should an error escape him

.yg/g^—

AMOUNT 8

^^o-

/ o

XRAVCITRR Zoo

FBOM tin Sf- Sfo
CHECK ^ O

rorrpoKH

/'-Z^o

<3t:> '.

T^o-foy^f

BERKSHIRE COUNTY SAVINGS
BANK

DEPOSIT

<Vov\-0v7wv/0«^w yvCc\..^vv,vwov\e\v

FORM 24. DEPOSIT TICKET WITH STUB.

it will be detected and rectified before the pass book leaves
the bank.

A Boston Plan.

The Wildey Savings Bank of Boston has the following
system :

a. The receiving teller takes money and deposit book,
counts money and states to depositor the amount, which the
depositor verifies by assent.

h. Enters on slip the book number, name of depositor
and amount of deposit.

c. If the last dividend is entered on the book, it is
assumed to be correct, and the balance shown thereon is
entered on slip; otherwise, the book is compared with ledger
card and written up to date before the balance is entered.

d. The slip is added, deposit and total entered on book,

DEPOSITS 23S

book returned to depositor and slip hung on hook at tel-
ler's window.

A Baltimore Idea.

In the Eutaw Savings Bank, Baltimore, the receiving
teller ascertains the amount of deposit, receives book and
money, and verifies amount named by depositor; enters
amount, number of pass book, and depositor's name on
ticket; enters in scratcher from ticket, number of book
and amount, and passes book and ticket to his assistant.

Totals of his scratcher must agree with totals of assist-
ant's sectional sheets.

The assistant receiving teller receives pass book and
ticket from receiving teller, and asks depositor amount of
deposit; enters amount and his signature in pass book;
enters in sectional register f?'om pass hook, number, name
and amount, and hands book to depositor.

Another Triangle.

The New Bedford (Mass.) Savings Institution uses
three windows for receiving deposits, with three clerks to
handle the work. The depositor presents his pass book
at window No. 1, where the clerk takes it and adds the in-
terest, if any is due, and makes out the deposit slip, with
date, number and the amount the depositor says he wishes
to deposit, and passes the book and slip back to the depos-
itor, who takes them to window No. 2, where the receiving
teller takes the book, slip and money, checks the slip, and
enters the amount in the pass book, which he passes to
the clerk at window No. 3, who copies the number and
name and amount in the journal of deposits, and returns
the book to the depositor. The receiving teller retains the
slip with the money until he can count it again, when he
checks the shp and still later checks the journal from his
slips.

The following is a pen picture of a large metropolitan
bank's teller's window during a normal day:

Tarry a moment here and watch the operations of the
desk, which it takes experienced hands less time to per-
form than it does to relate. The teller receives the money,
makes out a deposit ticket, enters the amount in the pass

234 THE SAVINGS BANK AND ITS PRACTICAL WORK

book, notes the same on a numbered blotter, stamps the
ticket with a '"date and number stamp" and then gives book
to journal clerk and the ticket to the paying teller. The
depositt)r is asked to be seated for a moment until the last
mentioned have taken account of the transaction. The
pass book is then returned to the depositor, who is obliged,
as a matter of verification, to state the amount deposited
to the teller. In case pass books come to the tellers
-snth interest not entered or in want of balancing, the teller
places the book in a small compartment within arm's reach.
A goodly number of interest clerks at once charge them-

UNION DIME SAVINGS INSTITUTION m account with depositors,

H)r.

on tbe Mornin? of AUG 4 1908 > before tbe Beginning: of business.

ToUl ngiatcred by
Mkchine No. i...

Total registered by
Machine No. 3....

Total Deposits received
since organization

Total Interest Dividends ;<
credited since orj^anization. I .

^/o^yc^bo

..fe?..

i/s Mi^A 'X::&T.t li \/:,

078

325

80 1

Total registered by
Machine No. 4

Total Drafts paid
since organization.

Balance

due Depositors

f.^..3ji ^pi\3n

Balance due Depositors beglnnlsc of Montb

KORM i?.5. I).\ILY PKOOr OF DEl'OSri-S USED IN CONlTECTIO^r WITH THE 'iMECH AXICAL

teller" described ox page 229.

selves with writing uj) these books. In the busy season
the interest and balance work on pass books is begun be-
fore ten o'clock, M'hile the depositors are seated, and is
contiimed in the same manner during business hours, so
that every book coming to the teller's desk is ready for the
day's transaction.*

In Philadelphia.

The Philadelphia wSavings Fund Society, which has up-
wards of 2.50,000 depositors, furnishes the following de-

•Charles L. Seibert, teller Greenwich Savings Bank, in the "Bookkeeper."

DEPOSITS

235

scription of its method of receiving deposits, both new
and subsequent:

New accounts are taken at a special desk, where all
information is given before opening the account. The teller
receives the deposit, enters the amount on a slip bearing
the printed number of the new account; a short slip with
the number only, is given to the depositor, who hands it to
a clerk, where the signature and other particulars are taken
on a card of the same number. The name is then printed
on depositor's book and deposit slip (carbon copy) at the
same time by typewriter and deposit entered in book. An-
other clerk verifies the book and entry before giving to de-
positor.

All subsequent deposits are received at the regular re-
ceiving department. The teller enters the amount only on
the deposit slip, places slip in the pass book; an assistant
gives credit for the amount in the book and passes the
same to a clerk who writes out a duplicate ticket with
the number of the account and the initials of the depositor
and lists the amount on adding machine No. 1, which
serves as the cash book, while a third clerk enters the name
of depositor and the number of account on the original
deposit ticket, examines the entry and verifies it before it
is handed to the depositor.

These deposit tickets are now listed on adding machine
No. 2, compared with the addition of machine No. 1, and
with the duplicates handed to the bookkeepers for post-
ing. From the duplicates the postings are verified.

k'aao'gos

No //^

Deposited in

CAYUGA COUNTY SAVINGS BANK

/y OO —

Bills

DOLLARS CK.NTS

For Credit of

Soecie

^-Qt^^j/ "M CUO^

0 ^i

^P/i^O^

■0epo3it "iade^ /X

TOTAl. *

c/^tpo

— —

FORM 25a. DEPOSIT TICKET WITH PROOF OF BALANCE. (FIGURES "$400" 3IEAX THE

BALANCE AFTER THE ENTRY HAS BEEN MADE^-HERE A NEW ACCOUNT).

CHAPTER XIV
WITHDRAWALS

The foregoing systems relate to deposits only. Receiv-
ing is easy as compared with paying. In receiving, no
questions are asked as to whether the money is "tainted"
or not; whether it was honestly earned or stolen; whether
the holder is an honest man or a crook; whether he be Jew
or Gentile, rich or poor, thrifty or spendthrifty, good, bad
or indifferent. JNIoney in hand, and good money, right side
up, denominations separate, is the only credential. If he
has no pass book, — give him one; if he has a book in his
hand, take it for granted that he is the owner.

And here it is that the distinction comes in between the
savings bank and the bank of discount. In the latter, in-
troduction is often required, as a guarantee of good be-
havior afterward, while the savings bank asks nothing but
the pedigree of the depositor.* The commercial bank deals
largely with men of affairs and acquainted with the ways
of business. The savings bank deals in the main with those
partially and often totally ignorant of banking rules and
principles.

The trouble lies right here: The depositors go out of
the savings bank with evidences of debt in their hands that
are of value and easily negotiable, and frequently the cause,
or the medium, of forgery and fraud. It therefore be-
hooves the man in the cage who hands out the money to
have a care that he does not pay the wrong person. Due
care must be used or the bank will be liable. What is due
care depends upon circumstances, and in a previous chapter
this subject has been treated at length. Suffice it to say,
that the test questions which were recorded at the time of
opening the account are for the identification of the depos-
itor. These must be asked and signature compared with
signature on file, and if any discrepancy is noted, payment

•In some of the early English banks, before the depositor was allowed to open
account, his pt'difjree was closely investigated, and if acceptable, the rate of
interest the bank would ])ay him was determined. — I.ewin's History of Savings
Jianks in hhigland and Ireland.

WITHDRAWALS

237

Write In this corner the amount you wish to draw, In plain figures;
dollars above the word " Dollare," cents above the word "Cents "

We cannot

pay without

the Book.

The Number
^ Is on the Cover
? of the Book.

- Write here tae
*£ ▲mount

»% very plainly in
S WORDS.

Always Bign
aa you did at
first.

C« 5

olo o

O' 9XeM>6i|orfi,..5^Vx^ S 190^1 L

Union Dime Savings InstiMioCj eca^onwi^moS^i^^^

Broadway, 3?d St.^ 6th Ave.. J ' «•_ .|-+--«-..u

£.

-^*th tfei> ofx

Prenoiu Balance, Paid by

* loo- T-

, — J - -

Present Address, 3^ V - J^-'l ^a ."

'^oitazA^ to vnuitcti oz- ^eaztz

lodwidually or as Trustee, aa the book reads.

Entered by

'"'{c!"'

FORM 26. WITHDRAWAL ORDER. NOTE FULL INSTRUCTIONS AND POSTING CHECKS.

must not be made until the bank is certain and satisfied
with the identification of the party presenting the book.

To THE Teller: Take Care!

The usual rule, to be found in almost all savings bank
books is that "payment will be made to the one presenting
the pass book." And many cases have been fought out
along this line of defense; but in a majority of the in-
stances, the bank was bound to show it had used due care
in making the payment, a position which it could not sus-
tain. The teller therefore cannot hand out his money to
whomsoever passes in a book and says, "Give me my
money!" It may not be "my money."

Rochester. N. K. CJ^AAJyvC- ^ O igo^

Received of

The East Side Savings Bank of Rochester.

DOLLARS

Being withcMiwii f/om the amount standing on the books of said Bank to the credit of

-yyiyself and -AA> \ ^^ or either, and I do hereby certify that

said last tnentionea person is now living.
Pass Bfok No.%'\^^

,3^

r eXeA- Ji\ o c\ t.Ov<-^

FORM 27. WITHDRAWAL FORM USED IN CONNECTION WITH JOINT ACCOUNTS. NOTE

THE CERTIFICATE.

238 THE SAVINGS BANK AND ITS PRACTICAL WORK

■IRcceivc^

— OF —

20 im

UJ--

No. /j:^<A!L

CAYUGA COUNTY SAVINGS BANK.

FIVE DOLLARS $5.

Withdrawn from the amount standing to my credit on the books of said Bank.
Witness.

ySinM^.^^'^'W^^ ...

FORM 28. WTTHDHAWAL BLAKK WITH AMOUNT PRINTED IN. (DIFFERENT COLORS ARE

USED FOR DIFFERENT AMOUNTS THOSE JtOST FREQUENT IN SAVINGS BANKING.)

ON ACCOUNT OF BOOK NO. I Q <^ i S O 4?

S I OO —

PiTTSFIELD, MaSS.._

RECEIVED FROM THE

BERKSHIRE County Savings bank

DOLLARS

SIGN HERE ta-.

^,.?yv.iA Ra<C^ "

FORM 29. WITHDRAWAL BLANK AVITH STUB.

ft)

...'^. 190^ $../<2'.

To' THE HUDSON CITY SAVINGS INSTITUTION.

OF HUDSON, N. Y.

Dollars.

and charge my Pass Book No. .'^./^.■.^7-7sent herewith.
SIGN HERE^rr::::^^^^^^^
Witness to Signature

FORM 30. A SIMPLE AND CONCISE WITHDRAWAL BLANK.

WITHDRAWALS 239

As a general rule, savings banks the country over con-
tract with their depositors to pay, first, to the depositor in
person; second, on the depositor's order; third, on the order
of a duly authenticated attorney of the depositor; fourth,
at death, to the legal representative of the depositor. And
in all cases the joossession of the book is necessary. But in
over-zealousness to be philanthropic, some banks have also
agreed^ to use "best efforts," "due care," "every precaution
to prevent fraud," etc., but would, as stated above, pay
upon jDresentment of the book. But in overdoing the mat-
ter, many have "fallen down." Payment on the book is
good idth due care; but without, it rarely will stand in
court* To continue this phase of the subject would afford
a most interesting study, and one vital to savings bank
management, and in itself, would make a book, — but the
writing of many books is not our present purpose. There-
fore, with his signature cards in a cabinet numerically ar-
ranged (having been previously alphabetically indexed)
the teller opens his little window and the crowd begins to
move.

A Clever Sw^ixdle.

But even with this equipment before him to make sure
of paying the right money to the right party, he is liable to
be deceived and pay erroneously. Let us pause and consider
such a case. The first man up is, or claims to be, Owen Ken-
ney. He could not write when he opened his account, but
subsequently learned to write his name, and came to the bank
for that purpose and placed his signature on the signature
card. But this fellow is not Owen Kenney, but one by the
name of Farley, who rooms with Owen, and who knows
Owen's signature and can imitate it, and is also conver-
sant with Owen's family history. He makes a fairly good
piece of work out of the signature and answers all the ques-
tions correctly. He does this seven times before Owen dis-
covers that his book is missing (and Farley, too,) and goes
to the bank, only to discover that both he and the bank
have been deceived in Mr. Farley. But under the circum-
stances, the bank was sustained, for what more could it do
than it had done? A bank is not bound to know the face of

*See citations under "The bank and its depositors." Chapter 12.

240 THE SAVINGS BANK AND ITS PRACTICAL WORK

Xq.7^'^>^^'^

2258

Received from THE BOWERY SAVINGS BANK

Cash, $ / ^,^ ^

Re-deposit,

Balance^

Interest,

His

Name of
Depositor

Witnessed by

..^!^..^?r?^!!<<>^ X'

Qc:Czr<ic<.^:cc^. ^-^^c^^^i^^^

Mark

F0R3I 31. NOX-SIGXIXG DEPOSITORS' WITHDRAWAL BLAXK.

every depositor, and must rely upon its records. It is not
bound to use more than ordinary care to identify its people,
and tliis it did, and the fact that Owen had a boarder who
stole his book and drew his money is Owen's misfortune
and not the bank's.*

The test questions may be many or few, but there should
be enough to properly identify the depositor. Some banks
take full details, such as color of eyes, hair, etc., while
others take merely the names of parents, age, birthday, etc.
Tliis is a matter of choice. But banks in large cities, be-
ing unable to personally know all their people, must deal
with each man and woman as a stranger, while in smaller
places the personal equation may be brought into play.

The Paying Teller.

As the money comes in, care need only be taken that it
is good money, and the proper amount credited to the pro-
per account; but when it comes to paying that money out,
it is essential that not only the proper amount goes out,

•Kenney v. Harlem Sav. Bank. N. Y. Sav. Bank Cases, p. 118.

WITHDRAWALS

241

but that the proper person gets it. The Jew must not get
the Gentile's money, nor the crook be allowed to work a
fraud upon the honest man. Here is where tellers are
really made.

As this is being written comes the story in the daily
papers of an attempt to snatch the money of a woman in
one of the large Xew York savings banks, and when the
thief was caught and searched, a pass book, raised from
$20.00 to $20,000 was found on his person. No good teller
would ever have paid on such a blunder, for the limit is
$3,000 in Xew York, and no "good bad man" would ever
have tried to work such a fraud.

In order to minimize errors, some savings banks hold
the tellers responsible for all shortages, but do not permit
them to retain the overs. This naturally penahzes careless-
ness; but whether it is better to penahze than to work '"pon
honor," is an open question. One of the largest of the New
York savings banks has recently abandoned tliis practice

g@=- Write in this corner the amount you wish to draw. In plain figures: g@°- jN
dollars above the word "Dollars," cents above the Word "Cerits." »^l

We cannot
pay without the
: Book.

' The Number Is
on the Cover of
f the book.

5. Write here the

Always sign :
as you did at I
first.

New York, J\S/S^% J\. _.190C\ ^

Onion Dime Savings InstitufioD,

Broadway, 32d St. & 6tli Ave.

' 5 \ Pay on Book No. \oeotV
to bearer D.VvA.. ^\sj^skS9^k^.rr>^-<-^~^:--r--rr--.Dollars,

and I his shall be your receiit. A,{

SIGNATURE. -V-Irfs'

WITNESS.

Yc^.?.c.yv.Vvvi.t.NnL.o\).t.cv^\c^^^ ^a.

individJiilx or as ftusirr, us the book rta^^

ious Balance.

Paid by

-JL.

Entered by

Sig. exd. by

V o o

State I

The Pass-book mUsl be presented with the above d'a/i, and the si.^nature ^-.vhether by wrtiitig or mark) must be made be/ore a
/Votary Public, who wtit sign and seat the foUou/ing Certificate.

0/ >r^Jt,^« VAr«r.?k..._ , County (/i^1l*Ai_Ml O y\c/. si :

I certify that the above draft was signed, in my presence.

f^ ..WftAA/f Vk J^ A/ar\AA<v^, , , who is personally known to we, and

was fully identified to me as the depositor named in said pass-book. K.<ao.,..Q I \» ■.

SE.\L)

FORM 32. WITHDRAWAL FORM WITH NOTARY'S ACKNOWLEDGEMENT.

242 THE SAVINGS BANK AND ITS PRACTICAL WORK

THE PATERSON SAVINGS INSTITUTION.

DRAFT.

DATE *iA^€v^ V* PJ^ BOOK No.-^SZSZ^

NAME o?a.v\'v\jc(LL uc>u\'^'v>pboysJ _

AMOUNT. $ Sfl.^O

CLERK AT DESK,

POSTED, /^
ENTERED, ^^:^C^

FORM 33. NO MISTAKING THIS FOR A DEPOSIT SLIP.

and refunded to the tellers all shortages charged against
them.

The work of paying teller in a small bank resolves it-
self simply into drawing up the check or receipt for the de-
positor (savings banks usually fill out their own checks),
having it properly signed and paying over the money. In
such })anks comparison ^vith the signature record is not
always required, as the depositors are more or less well
known to the bank officials, or soon become so. There is
no red tape nor any necessity for the routine required in
larger, banks.

However this may be, whenever there is any doubt, the
signature should be compared carefully, and the test ques-
tions asked. This is amplv sustained in law, and is not only
good law, but equally good banking.*

Some institutions use receipts; others, regular checks.
Which is the better is a matter of opinion. The one
is an order, while the other is an ordinary receipt. One
would not require endorsement under any conditions, while
the check, if drawn to any other person than bearer, would
require endorsement to be complete.

It is quite a common practice to give a proper form of

*See Geltelsohn v. Citteens Sav. Bank. N. Y, Sav. Bank Cases, p. 117.

WITHDRAWALS 243

withdrawal in the pass book, for the guidance of depositors
who cannot come in person, and yet in spite of such in-
structions, many quaint and humorous, orders to pay are
received. Here is one, written on wrapping paper, in lead
pencil. It is needless to say Mrs. Elsback did not get
"what money she had in the bank on a-count of sickness,"
until she signed a proper receipt.

FORM 34. A "home-made" OHDER. EXACT SIZE.

Another sick lady wanted a dollar, and this is the way
she went at it :

Dear Sir

please be kind Enough to

give my daughtei

• $1.00 and Keep

the book up in the bank on

account Of me

laving the small

Bank that will leave $1.00 as

I am not able

To call myselve

on account of Being sick.

By Doing So oblige.

MRS

WITBEK.

FORM 35. A ''home-made" ORDER ON A SAVINGS BANK CALLING FOR ONE DOLLAR.

Jit THE SAVINGS BANK AND ITS PRACTICAL WORK

Mew York,_..hMsS^. ^.. 190 f

THE BOWERY SAVINCiS BANK.

28 and 130 BOWERY, NEW YORK.

Fay to I je/i!C^:.._..._.C.......C.AO_^. CAT _..... or Bearer.,

and charge to my account Jfo.%,oo..?WQ%

$ \ Q - ,^'

S\.Li^ftsVv..^& s3...y>^..^.:Lt

STATE OF^^ftMj j\oY\t^

County of. .^A\eA*....\\.Q.y..S<;-..

On this 3! V\aAa\- day o^:^. .'>lAA,X<Vv...r>;rr^rr. one thousand

nine hundred andsjVwWvIL*'. before me.^^A^V.ft Vv. ...^f\.£,.C.<¥V. ,

a Notary Public in and for the County of ^rV.!....V\.<(.)f.L. State of....ySX^o..V^oy VO

personally appeared ..IX.\Xl.CU>/VAA.-<>^:.....>^A'>A.a.^^

to me known and known to uie to be the individual described in, and who execut-
ed the foregoing order on The Bowery Savings Bank, and acknowledged to
me that he executed the same for t!ie purpose stated therein ; and further, ac-
knowledged that ...V\.JL. was unable to write .vtVS.fe. — signature because of

j!5L!?.ol^.!iJA^ Cs^VWr: ....._ ...._

In Witness Whereof, I have , hereunto set my hand and affixed "my
official seal, on the day and year above written.

"<^^/t //^yt^

COUNTY CLERK'S CERTIFICATE MUST BE ATTACHED.

FOnjI .36. WITIIDRAWAT, ORDER WITH NOTARY'S ACKNOWLEDGEMENT.

WITHDRAWALS 245

As in previous chapters it has been the intention to show
how the work is actually done in various institutions of this
kind, rather than to advance any theory or pet schemes in
the matter, the work of paying money in several represen-
tative institutions is herewith given in detail.

The Bowery Savings Bank.

"When a depositor comes to withdraw money, he is
directed to the signature test clerk's window. The clerk
makes out a receij)t for the amount required, stamping
in the corner of it a number, and giving to the depositor
a small card, correspondingly numbered. (Form 39.)
This small card is retained by the depositor, and instead of
being called by name, he is called by number, when his
money is ready for him.* In busy times tliis does away
with much confusion and facilitates the handhng of a large
crowd of people. While the depositor is signing the re-
ceipt, the clerk turns up the proper signature card in the
case behind him, and is ready to compare the signature
instantly, and to ask the test questions, the whole operation
taldng but a few seconds. The signature clerk has within
six feet of Mm between 70,000 and 80,000 signatures which
can be referred to instantlj^ When one thinks of the old
method of keeping the signatures in books, and of the waste
of time and effort in hunting them up, it seems as though
a monument ought to be erected by grateful bank men to
the genius who first thought of apijlying the card system to
banh worh. In case there is any reason that an account
should not be paid — for example, in case of a lost book or
an injunction — the signature card is replaced by a red
card, or "danger signal," Avith a memorandum of the facts.

The signature being correct, and the test questions hav-
ing been answered, the depositor is invited to sit down for
a few minutes, and the pass book, with the draft enclosed,
is carried by a boy to the bookkeeper in whose ledger the
account is. The bookkeeper balances and enters the amount
of the draft on the pass book and jjosts it on the ledger.

*The Bowery, as well as all large banks, has abundant sitting accom-
modations for depositors waiting for their "grist" to be ground. The appearance
of this crowd on a normal day is like a church service. In busj' times it looks
and acts like a bargain sale at a department store. The Bowery calls their
waiting room "The Chapel."

246 THE SAVINGS BANK AND ITS PRACTICAL WORK

DOLLAR SAVINGS RANK

Pay TO Bearer and charge Passbook No. .^.P-.<^y!^.«

Dollars

Date

Signature

Depositor's Present Address
Depositor

^^_ <^_ZZ7.^^^

•S AGE....rZ.^_FATHER'S FULL NAMEyrrr:r:2!^^!?l!j:?r:fr^^

Birtbdav

^^^:../. Mother's full maiden NAME..ja??rl<f;;2'C<!C<..*« ^''rr^Sr'i^-^^..

NOTE— This order Is only to be used by Depositors who cannot come to the Bank and are unable to write. Some one who can write should

His Her

fill out the check and write in the Depositor's name like this— Samuel Smith or Mary Smith.

Mark Mark

The Depositor should then sign the order by making an X mark In the middle of the name In the presence of two
responsible neighbors or persons known to the Bank, who should certify the fact to the Bank on the form below:

We hereby Certify to the Dollar Savings Bank,

1st, That we saw the Depositor sign the above order on the date written.
2nd, That the Depositor named and described was fully identified to us.
3rd, That the Depositor was of sound mind at the time and knew the nature and
amount of this or^^J^ /^ ^

MAME ^^1'^^^^^......;^^^:^^ -

My Passbook No. '^^■0'7 ■^ Address .«^.'^......<^* /<f^J.....<^'^:^..:. ^r^^..

Name

..^..^^!^ >^^ ^ - -

Mv Passbook ^^ ^ ^ ^f a,,kess J^l ^.-^^Z.>^ J^^.

FOBM 37. WITHDRAWAL ORDER WITH CERTIFICATE OF WITNESS.

The Bank Book must be sent with tuis Okdeh.

The Hidaleto'wn Savings Bank, MiddletoHvn, Conn. When presented with book JNo.'f i^- 'f^'f
^'^llo'"yr.r!t"'!A^'^^<^^^ fc^ (^iocAC/ and charge said account

dollars and ^"^-^ cents

Have some other persoo than the | Owner of the book

one who is to get the money for >■ siKn here,

'you, sign as a witness. )

WITNESS:

''^vAT^wv^l/

c^Oja>JV(WVv r W-ioiJu

AI<I)ltK-^y\I,L LKTTEH8 TO
THE MIDDI.KTOWN HAVINOM BANK.

FORM 38. WITIIDHAWAI. OUDKR WIIKN DEPOSIIOR DOES NOT COME IN PERSON.

WITHDRAWALS 247

The pass book and draft are then carried to the draft cash
book clerk, who sees that the entry has been properly made
in the pass book, and that the balance is correct, whereupon
he enters the number, name and amount on his cash book
and classifies the entry on a sheet in all respects similar to
the deposit classification slip, after which the pass book and
draft go to the paying teller, who calls up the depositor
hy mmiber and pays over the money. The drafts are
checked out from the ledgers exactly as are the deposits.

If time and space permitted, it would be easy to go
into details as to the working of the different departments

IDENTIFICATION CHECK

Book No. f.^.^ — ,.,

Present to PAYING TELLER when your
name is called.

FORM 39. SOME BANKS SEAT THE DEPOSITORS AND CALL THEIR NUMBER WHEN THE

TELLER IS READY TO PAY. IDENTIFICATION CHECK.

of the bank — and as to the impression made by the men
at the different windows upon the depositors with whom
they come in contact. For in a savings bank, much more
than in a bank of deposit, it rests with the worldng force
to make a favorable or unfavorable impression upon the
depositor, and to make or mar the reputation of the bank.
But one thing must be said, and specially to the young
men who are just starting out in this branch of the pro-
fession, and that is that "courtesy pays." It is a good in-
vestment. Many of the depositors in our savings bank are
people who know but little of the business world and its
methods. They may be a little awkward, but that is be-
cause they are not quite accustomed to their surroundings.

248 IHE SAVINGS BANK AND ITS PRACTICAL WORK

DATE.

^\y^Q><^ V S o<\

SLIP NUMBER.

A 85500

WiLDEY Savings Bank.

WITHDRAWAL.

Book No. T, b "^ O <^

Check
Number.

Balance,

S7b

f ^

Withdrawn,

1 ^

f ^

New Balance,

X oo

—

Received the sum entered above as '^withdrawn.**

Teller's List.

Posted.

Fonai 40. — withdhawax order with proof of balance.

SO'S'.

.,>-.^f^<7 /. e><^

:. i^: -7^/ f

mOT NCCOTIABLE PAYABLE ONLY TO-UAY AT DESK NO. g.
$ So cr\ Prtacl|>.L ^y,
^ Intoot. Phil,vV/phln <3\aVC-<; \ . \ '^ 0*i3

% S o £\ Tool

SctdYoi tm %\^t ^iS^Usttm ^atolng ^unD ^otirtp of ^IjflaDelptHa

OFFICE "A"

cJTwe CvvA^yvtXx cc\> X VM e/ - — -~- — • fy^,.

of tfM ffuncYs ctondJne to my credit, oo my Depooit BooJc Wp 7 ^. y Z ^ y

FORM 41. AVOTHKII WITHDRAW AI. ORDKR WITH STUll. ( For USe of stllb SCC p. 251.)

WITHDRAWALS 249

A kind word costs nothing and makes the wheels move
more smoothly and run with less friction. It sends the
depositor away pleased and makes a friend for the bank,
and the best advertisement for a bank is a depositor who
receives uniformly courteous treatment. And it goes with-
out saying that the clerk who keeps his temper and goes
about liis work quietly will finish the day's work fresher
and happier than the crusty individual who always starts
with a chip on his shoulder and grumbles all day long.
Besides wlich the old Irish woman was pretty near right
when she turned on a short tempered teller with, "Arrah,
keep a civil tongue in your head — sure it's the hkes of me
that keeps the likes of you where ye are."*

Baltimore.

In the Eutaw Savings Bank, of Baltimore, the assistant
paying teller ascertains the amount desired by the deposit-
or; enters number of pass book and amount on ticket, and
hands to depositor for liis signature; deducts amount with-
drawn from pass book; enters on sectional register from
pass book number, name and amount, and passes book and
ticket to paying teller.

The parang teller receives the pass book with ticket
order from his assistant, verifies signature, pays out all
money, enters amount of payment in scratcher from ticket.
In settlement, the footings of scratcher must agree with the
totals of the assistant's sectional sheets.

Boston.

In the Wildey Savings Bank of Boston the system of
withdrawals is. as follows: The paying teller takes deposit
book (with order, if any,) and after verifying book by com-
parison with ledger card (verifying signature also, by com-
parison with signature card, if withdrawal is by order),
enters on slip the book number, balance, and sum to be
withdrawn, strikes new balance and hands slip to depositor
(or person authorized by order) for signature.

While depositor is signing, counts money to be paid and
on return of slip verifies signature, enters withdrawal on

*From an address of W. E. Knox, Comptroller Bowery Savings Bank.

250 THE SAVINGS BANK AND ITS PRACTICAL WORK

The Passbook must be presented with this order
If a trustee account, add the word "trustee" after the signature.

DOLLAR SAVINGS BANK.

Pay to Bearer and charge Passbook No.- •^'7^. C:>d y

t::^^ ^--/c^^^^^n^^-iL'CJl....

Signature .

Dollars

Depositors Present Address "^ -^ ^ >•■' < .^ "-* ^vC/-V^- ■ yv '

Depositor's AGE .<!=^ "7 Father's full ^KyLV.^\lcf-<^t:-<'^ .,-C^^^^--*'^-'V:J^-:^^-<fr^?Vj^.

Birthday jci^'-^'' -*• Mother's fuix iiAiDEN NAM^-r-<2^^?''%X-^t-<_,«L. ^--'2S*--^^_^<5'^^

State

or 2^<^'^£^^.. o. '-'^(^-^^^(^

On this /^^ day of <^J^^^r^.:. 19/<^ tlie Depositor above described

was fully identified to me and signed the above order in my presence, and at the time
was of sound mind and knew tlie nature and amount of this order.

notary's

SEAI,

.^::;^-<C^ ^^t.-<cC^^^^^>^^^

NOTE— This order is only to be used by Depositors who cannot come to the Bank and are unable to write. It should be filled out
by a Notary Public-

FORM 42. notary's certificate, with PROVISION FOR TKST QUESTIONS.

We. the undersigned, acknowledge to have received of the BANGOR SAVINGS BANK, of
Bangor, Maine, the amounts set against our names respectively, in payment, in part or in full,
of sums deposited in said Bank in our names or subject to our control.

'■'-J

Dollat* Cl»

-<?^

7^tC-,

Amount brouebl iorward

So -

loit.M i.'i. — soMi: HANKS I Si: A "iiiG hook" in making pay:mi;nts. hkue is one.

WITHDRAWALS 251

deposit book and hands book and money to depositor. The
shp is then hung on hook at side of window. The with-
drawals are listed, posted and proved the same as the
deposits.

All entries on the slips (except signature of depositor
on withdrawal slip) ar'e made hy the tellers, to avoid the
different varieties of handwriting (especially in figures)
and the errors that might be caused thereby. (Form 40.)

New Bedford.

In the New Bedford, Mass., Savings Bank, the depos-
itor desiring to withdraw money, presents his pass book
at window No. 4, stating the amount he wishes to draw.
The teller, or clerk, takes the book to the ledger for com-
parison and entry of dividends, if any are due, and writes
a receipt, with stub attached. The teller detaches the stub,
and hands the receipt to the depositor for signature, upon
the return of which it is compared with the signature on
file. If correct, the teller initials, compares it with the
charge in the book and hands both receipt and book to the
depositor, who presents it at ^\dndow No. 7, where the as-
sistant treasurer pays it. Meanwliile another clerk has
taken the stub to the ledger and posted it, and placed it
before the assistant treasurer for comparison with the re-
ceipt presented by the depositor. (This will give a clear
idea how the stub forms are used.) In some large banks
all the work of comparing book with ledger, signature with
files, entering on book and paying out the money is done
by the tellers, and the depositors are kept in hue. On a
busy day the wait is about tliirty minutes.

Notice of Withdrawal.

Inasmuch as all savings banks reserve the right to ask
notice before payment, and some banks, notably in Penn-
sylvania and Delaware, enforce this rule, the manner of
keeping track of such notices will be interesting. We quote
from the Philadelphia Savings Fund Society, the oldest
savings bank in the United States, and whose accounts
number over two hundred and fifty thousand:

"Two weeks' notice is required for the withdrawal of
money. Depositors desiring to give notice of withdrawal.

252 THE SAVINGS BANK AND ITS PRACTICAL WORK

present their pass book at notice desk, stating amount
wanted, or send notice by mail, for which blank forms are
furnished. The notice clerk fills out duplex payment sKps
(carbon copy used) for the amount, number of account and
date when due. These slips are arranged numerically, com-
pared with ledger account and filed in paying department,
ready for payment when due.

"At the expiration of two weeks the depositor presents

In Consideration oftLesamof dZLt-

. ' — ■ — . -~.^., . Dollars,

\o me in hand paid, theraceipl whereof thereby /acknowledged^! do hereby assign, set over, transfer.

and deliver to^-Cl-J^-/^^'"^;^^-*-^ -^ of„.<V-C-<_. y^S-.-C^-c^/i^ State ol

New Jersey, all n^-llght, title ami interest a

ID and to all moneye now on deposit \i(yi6 name of the said ^<— v

y-^'t^^i'-xi.e^ v_— :':^^^^4(*.^t^ ,. late of ^tC^^'t'^^-^ . /<==^/

in the Hoboken Bank for/S»ving8,
TAoaU' (TaCl of aajd Bank.

of the Estate ot

in the City of Hoboken, N J, and represented by Bank 6ook

Dated ak?-:^X*c^ >^^^^^^tLis -^^<-^/^^^^ . day ol---:1^*^^?fi^^^ i/'7

Onlhia w:^^<^<^^r7,._. , da^ of*— ''^^'^-^-Jf-^^^r*^ of'^f'^f'

before me came£:'y~-<'^<-^-^^<-^-'^< — ^ — ^^T-'^^^^^-^ ^..^ _ ^ ^ known to me and

to me known to be the person described in anA^ho executed the foregoing instrament, and acknowledged
that '^e executed the same for the purposes therein set forth.

Notary or Commissioner must attach Certificate of his appointment.

FORM 44. ASSIGX.'VrEXT OF SAVINGS BANK PASS BOOK.

his bank ])ook at i)aying desk, the already prepared pay-
ment slij) is handed for the signature, while the detached
duplicate is initialed by clerk, who takes the receipt, and
from tlicse diii)licates the debit postings are verified; post-
ings are made from tlie originals.

"If the de])ositor wishes to clo.se the account (draw
the full amount), the procedure is about the same, with the
exception tliat tlie book has to be left for the addition of
interest, a card bearing the number of the account is given

WITHDRAWALS 253

the depositor, who presents it when payment is to be made.
"After the receipt has been signed and the amount en-
tered in book, the depositor presents the same at paying
teller's window, and is paid the money. All receipts are
stamped numerically with the initial of teller and listed on
an adding machine, which serves as paying teller's cash
book. From these the debit postings are made and veri-
fied by the duj)licates as stated above."

Good Suggestions.

The foregoing systems are representative of those in
operation in the large banks, and wliile it is admitted that
the small banks do not require so elaborate a routine, there
are many good suggestions embodied therein that may bo
adapted to small banks. On account of the cost necessi-
tated by additional clerk hire, the passing of a deposit or
draft through more than one hand is quite out of the ques-
tion in the country bank, but in the city bank, with the mul-
titude of transactions, it is essential if errors are to be avoid-
ed, especially in the rush periods. The system should be
complete and comprehensive, but not so much so that it
becomes unwieldy, and the mill should at all times grind
smoothly.

No. i>.%h.$.l\p, . Boston, Mass. . .(XaML . .\ .^. Q.<^ . .

Received of the HOME SAVINGS BANK

$50.

FIFTY • Dollars

Sign here

^c/beA-X ^JaaJL^cw/

LIBRARV BUREAU G21760
FORM 45. — SIMPLE, PRECISE WITHDRAWAL.

254 THE SAVINGS BANK AND ITS PRACTICAL WORK

In every withdrawal the points to be emphasized are as
follows :

First, the signature should be compared and test ques-
tions asked unless tlie depositor is personally known to the
teller and known to be the owner of the book.

Second, the pass book ought to be compared at every
entry and the balance verified with the ledger.

Third, tlie entry should be made with great care and
compared with the draft or receipt, hy another clerk,
if possible, and the extension of the balance, if a balance
book is used, as is now becoming the rule, should be veri-
fied in some way to avoid misunderstanding and annoyance
later.

The importance of the second and tliird points will be
seen in the following instance: Upon making an entry,
the teller of a savings bank extended the balance $500 too
much. It was not detected at the time, and the pass book
appeared among the depositor's effects at liis death, short-
ly afterward, and the erroneous balance was inventoried in
the Probate Court. By a curious coincidence, a like error
was made by another bank on a book belonging to the same
depositor. This was also inventoried without verification
by the bank, and subsequently, upon presenting the book
for the entry of interest, by the administrator, the error, —
in fact, both errors were detected. The chagrin and an-
noyance caused by these two mistakes can readily be imag-
ined. And while the administrator finally became recon-
ciled to the lesser balance, which could have been easily
proven hy himself, he has never become quite convinced
but that somehow and somewhere the banks have defrauded
him. That is the worst feature, and perhaps the only crit-
icism, on the balance pass book. The depositor is apt to
consider the amount sliown in the balance column to be cor-
rect, and an error in extending is likely to cause trouble.
For this reason if is essential that the balance be verified
before returning the book.

No two men think alike, and no two act alike, and
bank men are no exception. The foregoing systems are giv-
en merely as descril)ing in brief the manner of handling
debits and credits, and not to advocate any one of the sys-
tems outlined. Bank men desiring a change of method or
system are prone to go "shopping 'roimd" among their

WITHDRAWALS 255

friends and brethren, and when they find a scheme that suits
their fancy, adopt it without further investigation. In some
instances they get good results and in others are disappoint-
ed in the end. What meets the need of one bank may not
work so well in another. The better way is to get a com-
posite idea of what others do and then adapt it to fit the
existing system. Evolve rather than revolutionize. A big
bank needs one system; a small one, another. What
would work well in the Bowery would be too costlj^ and too

WITHDRAWAL

PORTSMOUTH SAVINGS BANK

V5. S-0,^~

^ 3SZ

lOO

Name on Book

^"WO^XVOC ^SW^OVNfVS

Received of the Portsmouth Savings Bank the amount hereon, withdrav/n from
above account in accordance with the terms upon which the same was deposited.

Sign here.

o/liaJLLC^ ..A^lJL.cl^zxj-^t^

Ubrarv Bureau GiJMg

Foaai 46. — cakd form of withdrawal, 3x5 inches.

elaborate for the modest country bank, which must use one
man in many places and for many purposes. But other
men's brains are mighty useful, and he is a wise man who
lets the other fellow tliink for him and boiTows brains
to liis own profit. This is a big world, and the savings
bank men are generally "big brothers." If I have anything
good, you are welcome to it; if you get a good thing, — look
out, or I will steal it from you! If there is anything sug-
gestive in this book, use it; if it is otherwise, forget it — you
are dictators in your own realm.

CHAPTER XV

MISCELLANEOUS DEPOSITS AND DRAFTS

In our treatment of the deposits and withdrawals in a
savings bank, thus far, we have considered only those ^vhich
are regular, that is, the depositor appearing in person with
the pass book and the transaction being made in cash. But
inasmuch as a great many transactions are w4iat may be
termed irregular, a clear idea of the procedure in such cases
is necessary. The term "irregular" will include deposits
by check, deposits without the book; deposits and withdraw-
als made by other than the depositor, deposits and drafts
by mail (not including banking by mail, which will be
treated separately), transfer of accounts, and deceased per-
sons' accounts. The latter will be touched upon but inci-
dentally, as it is of enough importance to merit extensive
treatment by itself.

"Home Made" Orders.

In spite of the fact that many savings banks are now
including in the pass book a form of withdrawal, to be
used by the depositors not coming in person, many "home
made" orders are received, on all sorts of paper, and in all
sorts of shapes and sizes. It would not seem to be a diffi-
cult matter to follow a plain, simple set of directions for
properly making out an order on a savings bank, yet many
of the sort shown on page 243 are received, and in order to
avoid being arbitrary, and put the depositor to unneces-
sary trouble, they are honored. A savings bank in ]Michi-
gan (Form 10) not only gives the proper form, but has
several blank checks in the back of the book, perforated,
for such cases, and this would seem to be an excellent idea,
although adding somewhat to the cost of the book. It is
not, however, customary among savings banks to encourage
this "absent treatment" (to borrow a term from Christian
Science), but rather to encourage over-the-counter-banking
in person. But the Utica Savings Bank has a most excellent
idea (Form 57), in this regard, in the form of an envelope

MISCELLANEOUS DEPOSITS AND DRAFTS 257

about the size of an ordinary check, in which such home
made orders may be filed without using pins or paper chps.
The receipt of the one presenting the order is taken on the
outside, and for fihng it is much better than any idea yet
come to the author's notice. As will be seen from a study
of the form, it can be used for filing the original order,
where an unlimited order is filed, and also for all subse-
quent orders. But this would not apply where banks are
in the habit of filing by months, and not by account num-
bers.

Another bank has the same idea; but in this case the
envelope is transparent and the order can be inserted and
read through the cover, while notations may be made on the
outside, as needed. This, too, is a good idea.

The Notary^s Certificate.

As has been stated before, a savings bank, unlike a bank
of discount, is 7iot hound to know the signature of its de-
positors, but is bound to use ordinary care that payment is
made to the proper person. And what is ordinary care
will depend upon the circumstances. It would probably be
true that the signature of the average savings bank depos-
itor would not, alone, be a safe guide, for many such de-
positors have not yet learned the commercial value of stick-
ing to one form of signature. To them, "Mrs. Smith" is
as good as Mrs. Evelyn Brown Smith, as she originally
signed herself. Here it is that the test questions become
valuable and identification is not a difficult matter. But
there are times when it is impossible for the depositor to
come in person, or to fill out an order that will pass muster,
as in sickness, accident, signature by mark, etc.

To meet such emergencies many good forms have been
devised, and one is shown herein (Form 36), used by the
Bowery Savings Bank, New York, which is a combined
order and Notary Public's certificate of the inabihty to
write.

In case such an order should be questioned, it is quite
likely the bank would be amply sustained, as it had used
due precaution to prevent fraud (the book accompanying
the order), and the only ground upon which the plaintiff
would have to stand would be that of fraud in the execu-

258 THE SAVINGS BANK AND ITS PRACTICAL WORK

tioii of the instrument, and he would have to prove that he
was not neghgent and did not make it easy and possible
for the fraud to be committed, and even then he would not
have a very good case, for what more could the bank do
than it liad done?

Form 32 embothes the same idea, and is used by the
Union Dime Savings Bank, New York, and also Forms
37 and 42 of the Dollar Savings Bank, also in JNIanhattan.
The latter will be found to include the pedigree of the de-
positor, and would seem to be an extra precaution and a
very good suggestion. Of course, it is not to say that one
who can answer the test questions correctly is the dejiositor.

y^S>vWL *b..\ i9ot\... $...6..(0...

Providerce Institution for Savings.

Pay i)V. Aa \v) ocAoV ^::::'--<r::'^>rrr:-^^ Bearer.

of Accmint No. ^Q<:\.<\ -

fSigyt herf.)

S\>f)\ao rix.\ve.vxA

min.»: 0}>JC\<SL A^AAAi'C^

FORM 47. SICK PEUSOK's ORDER. REVERSE OF FORM 48.

One illustration was given on page 239. Another occurred
some years ago in the Emigrant Industrial Savings Bank,
in which instance the one perpetrating the fraud xvrote the
dcjiositor a letter, asking the information necessary to an-
swer the bank's queries. Knowing the depositor's pedigree
and being able to imitate his signature, payment was duly
made and sustained.*

Tlie l^rovidence Institution for Savings, Providence,
R. I., provides a physician's certificate for withdrawal in

•Wall vs. Emigrant Ind, Sav. Bank 64 Hun. 249.

MISCELLANEOUS DEPOSITS AND DRAFTS

259

case of sickness, the certificate being printed on the reverse
side of the order, making a compact and complete docu-
ment. (Forms 47 and 48.)

PHYSICIAN'S CERTIFICATE.

Prov!denie,)^^OjKh^ ^l igo Q

I hereby certify^ that I saw tJieywithin natned

affix V\aS signature, mark' upon the withitt

order, thai I read said order to VVvSAV/ , and that

in my opinion. X^JLr, ivas at fhe time of sound

J)
mind, and understood 'what.'\/\Si/ was doing,

and wished said order to take effect.

Sign herei

Owe V\^\A.A-5e^

Received 7mder the within order from
Providence Institution for Savitigs 07i
Acct and Bank Book No.^.P^Jf

FORiw 48. — physician's certificate, reverse of form 47.

Deposits Without Book.

It is the custom in some banks to refuse to make any
transaction without the book, except in cases of lost books,
where the presentation of the book is impossible; but in
order to accommodate depositors who have forgotten the
book or cannot obtain possession of it, many savings banks
have proper blanks for such cases. The routine of the bank

260 THE SAVINGS BANK AND ITS PRACTICAL WORK

is upset somewhat on account of the necessity of obtaining
the depositor's number from the indices. With the card
system, this is not difficult. The usual procedure is to issue
non-negotiable receipt for the amount, and in some banks
note is made on the ledger that the deposit is not on the
book. The surrender of the receipt is usually required
before the entry will be made on the book. (Forms 18,
19.21.)

The coupon receipt shown in Form 21 is the most de-
sirable, as the stub can be detached and form the deposit
ticket, and at the same time indicate to the posting clerk
that the deposit is irregular and due note made opposite
the entry. Such a form will answer in cases where deposits
are made by one person for another. Such deposits are
frequently made as birth-day gifts, etc., and the book being
in possession of the donee, evidence is desirable that the
deposit has been duly made. Withdrawals should not be
permitted without the book, unless the reasons for so doing
are most urgent and of sufficient importance to warrant
the breaking of a rule which should, in so far as possible,
be strictly adhered to.

CHAPTER XVI

DEPOSITS BY CHECK

Deposits by check will not be received by some banks
under any conditions, while in others such deposits are Hm-
ited to checks drawn to the order of the bank direct, or to
depositor and endorsed over to the bank.

Quite generally, care is taken not to pay out funds
until collection of the check has been made, and to avoid
risk, such deposits must remain for from five to thirty
days. Some banks only take checks drawn on local insti-
tutions, as for instance banks clearing through the New
York Clearing House. Each bank may make such rules
as seem wise in the light of experience, but whatever the
rule, a record should be kept of every check handled, and
should be complete enough to describe the check so that in
case of loss it may be replaced by a duplicate.

It is also a good idea to so mark the deposit by check
that it will be quickly distinguishable by the teller; as for
instance, placing the words "check — days" opposite the en-
try, and the time can be filled in according to the time
consumed in making collection. In some places, as New
York, three days would be sufficient, while out-of-town
checks will take longer. The importance of having check
deposits marked for identification is well illustrated by the
following instance: Upon receiving a deposit of this char-
acter, no mark was made opposite the deposit, under the
rule that no payments would be made on new accounts
under thirty days. The depositor went out and assigned
the book for value to an innocent party, who had no notice
of the restriction. The check was protested and charged
back. In due time the assignee presented his book with
proper assignment and demanded his monej^ The bank
of course refused to pay, and was only protected by its
other rule that assignments to be valid must be ratified by
the bank. But here was an innocent holder of an appar-
ently genuine document which said that there was a certain
amount standing to the credit of a savings bank depositor
for which value had been given — a rather delicate situ-

262 THE SAVINGS BANK AND ITS PRACTICAL WORK

2 !5 E

?"f5

^-^ ^

<: <>.

• 0 ,0 .(^

vl^

P^. 5 V-

ation! This matter of check deposits is usually covered in
the hy-laws, or sliould l)e, representative wordings of which
will he found in chapter X.

The AVilliamshurg Savings Bank of Brooklyn accepts
checks in the same manner as cash, requiring only that

DEPOSITS BY CHECK 263

they be drawn to the order of depositor or to the hank di-
rect. The Eutaw Savings Bank of Baltimore also freely
accepts checks, exercising due care that payment is not
made before collection. So, also, the Connecticut Savings
Bank of New Haven, Western Savings Fund Society of
Philadelphia, and others. The Provident Institution for
Savings in Boston, however, has a rule that check deposits
must remain at least thirty days. The Bowerj^ Savings
Bank requires check deposits to remain at least five days.
Such a rule is entirely just and is in force in many institu-
tions throughout the country. One bank in New York
has a by-law as follows: "Checks or drafts, when credited
as cash, will only be received for the account of the de-
positor, and at the depositor's risk, and every depositor
will be held responsible as an endorser upon all checks or
drafts so deposited. The number of the deposit book must
be noted on all checks or drafts deposited." The usual
custom is to deposit such items in banks of discount for
collection and not make collections direct.

The importance of having a record of all checks han-
dled, the restriction as to the number of endorsers and the
in advisability of accepting checks pi'oniisciiously will be
seen from the following cases, of recent happening in
New York savings banks: A check bearing several en-
dorsements was received on deposit by a savings bank, and
dul}^ credited to the depositor and sent for collection in the
due course of business through the depository bank, with
endorsement guaranteed, with instructions to advise pay-
ment. Upon receipt of favorable advice the bank permit-
ted the depositor to close the account. A few days later
advice came from the drawee bank that the first endorse-
ment was a forgery, as the check had been stolen from the
mail, and the bank would demand reimbursement from the
savings bank. The savings bank having lost its hold upon
the depositor and being unable to locate him or prior en-
dorsers, must stand the loss.

Another instance was as follows: A woman deposited
a check with but one endorsement, w^hich was put through
the usual course, but was lost in the mails. The collecting
bank asked for a duplicate. The savings bank having no
other record than the name of the depositor from whom
the item was received, went to her and asked for assistance

264 THE SAVINGS BANK AND ITS PRACTICAL WORK

in locating the maker. She knew nothing of the check,
save that her hushand had given it to her, and neither he
nor she coukl reniemher whose check it was. Without go-
ing into tlie legal status of either case, suffice it to say, the
latter bank would have been saved considerable trouble and
annoyance if it had had a complete record of the check,
and the former woukl have saved itself some money had
it more closely restricted check deposits from persons not
well known.

If an elaborate sj^stem of check records is not deemed
necessary, the maker or first endorser can be taken on the

CHECKS ON OTHER BANKS AND

//•^f

JUT

PZ^i

/tf>/ 2.

^ a o o

/ o o o

/ ^ o o o

S'eyS

/ o o o o

OTHER ITEMS RECEIVED AS CASH

FROM WHOM RECEIVED

No. or %

HOW DISPOSED OF

"^^

/3 /3 x^^-«.a^

/•^7 7/.
/cr.yij

/t^ta- 7C<>-i>. /J.o^

• ^''^57

FOR.-XI 50. CIIKCK KEGISTER. LOW'EIl POUTIOX GOES OPPOSITE UPPER PORTION.

deposit slip, and the party depositing and the bank drawn
on can be taken on the duplicate deposit ticket when de-
posited in the collecting bank. The Providence Institution
for Savings, Providence, R. I., has a system of this kind,
which operates as follows:

"When the amount is in check form, we make out ticket
under the word 'Deposit' by filling in present address of
depositor; the name of maker of check; on what bank
drawn ; to whose order drawn ; and the amount of check.

"Initials of clerk who looks u]) endorsement are placed
under 'End. (). K.'

"When check is made to the order of a person other
than the de))()sitor. we accept it for dei)osit, provided we
know the endorscnicnt, and when we verify endorsement

DEPOSITS BY CHECK

26L

b}' signature from an account in this institution, we put the
number of that account on Kne under 'Old Acct.'; if that
person's account is still open, we cross out the word 'Old.' "
(Form 51.)

The check register shown herewith (Form 50) is very
good. It gives a complete history of every check han-
dled by the bank, and while it is attended with some labor,
and the information contained therein not often required,
the readiness with which checks can be traced when neces-

Datk, ^r<Vo^\Q.ocy

No.Jfe_o_S^5-.5:^

Name.

Jj(X_\iLILjS.JC>w.V3Aj5v-

<N<<^

^01

c,9J

,^'J?'

$X.O-,^^^"'

.■^■

.^^'

DEPOSIT.

Residence. ^ i <g£^^ CLog.

End. 0. K

VQavv-

Order ..C)^Cs... O.o v)^jfvJ>_

Amt ,~. -0.0,9.

Old Acct.

FOR3I 51. DEPOSIT TICKET WITH PROVISION FOR MEMO OF CHECKS RECEI\TED.

sary more than repays for the labor involved in making
the daily records. As one banker who uses such a register
remarked, "We do not often have to fall back on our
record, but when we do, we fall mighty hard."

In using Form 49, as the checks are received on deposit,
the number of the account is noted on the back for the
purpose of listing on the check register, and no other record
need be made than the number of the account, as the de-
posit slip will verif}^ the transaction in case verification

266 THE SAVINGS BANK AND ITS PRACTICAL WORK

should become necessary. If desired, the deposit ticket at
the right of the perforations can be transposed and the
checks set opposite the items in the main sheet, and extend-
ed at the same time; or, it can be arranged to fold under
and used as a carbon sheet and the two records made at the
same time. But as this was intended Drimarily for a check
register and incidentally as a deposit ticket, the standard
form of the latter was followed.

BOOK NO. $ 0<^ U>
WOONSOCKETT. R. I-

Received OF IBnonBDrkpt SuHtUutton for i>aiJings.

OF MONEY STANDING TO MY CREDIT.

wrrjJEfis;

")^VJJV^V^CA^ S^oqA

BOOK NO S^J\ U

Paying Teller,

SJtSj

FROM THlt-

ttassasaAtt Itmtiliinaa for frairtnga.

PAYABLE THIS DAY

FORM 51a. WITHDRAWAL RECEIPT, TO BE PAID THROUGH ANOTHER BANK SEE STUB.

Withdrawal

.UMA

Book No. 7^^7>^

Name.

^Oa^Uiy^ ^c^ .

Trans, to

Paid by

Xl^

JUN 17 1908

/9_

182

Book Number J/^^^l/kyL^^-rr^ $ [ ^ I o| 4 4

Acct. /3.a^js^f^-e^.pT'^''^^'nn.j^S:^-Sy/. '■

RECEIVED OF

Connecticut Savings Bank/^-"-

Ckd. ^—-

182

OF NEW HAVEN

Transfer to.

Y-:::^t^t^^'^''^^^.t,.*^<yCy-^<>^

Dollars

Sign here-

yV^ e<.^<^ /c ,^c.o ^/ ■

New Haven, Conn.

JUM17 1908

FORM 51b. WITHDRAWAL RECEIPT WITH STUB.

CHAPTER XVII

GENERAL ORDERS AND IDENTIFICATION

"The man with a camera eye," who, having once seen
a face never forgets it, and who will pick his man out of a
thousand, and whom disguises and the changes resulting
from age cannot deceive, makes a good detective; but that
"camera eye" would make him an equally good hotel clerk
or bank teller, especially a savings bank teller, whose
function it is to deal with the multitudes and not get his
people mixed. The teller in the bank of discount deals
with a limited few, and frequently; the savings bank teller
deals with thousands, and infrequently; and to photograph
mentallj'^ every depositor would be a feat only for those
with camera eyes; and these worthy gentlemen are scarce.
In fact, the savings bank does not ask its tellers to iden-
tify the depositor in ijei'son, for back of him is a cabinet
full of little drawers, and the drawers full of cards, and
with such an outfit he is ready for all comers.

It has been suggested by some that a scheme of pho-
tographing every depositor be devised so that, unconscious-
ly, the new patron, while signing his name, would also have
his picture "took." Tliis method is being used by large
concerns like the electric light and telephone companies,
which furnish their men with cards upon which appear their
signature, the seal of the company and a photograph of
themselves, so that in making collections, the authority is
clear and unquestioned. Finger prints have also been
advocated, similar to the manner used by the police, and
it is undoubted that eventually they will be used in
banks, especially in dealings with foreigners.*

Identification.

There are other and frequently better methods of iden-
tification than the mere signature, as important as tliis may
be. The family history is a valuable help, for the one

*See chapter on Finger Print Identification.

18 267

268 THE SAVINGS BANK AND ITS PRACTICAL WORK

who would and could forge the signature might not be able
to furnish the other details of family record. One large
bank in New York requires all depositors upon withdraw-
ing money to give the present residence at the bottom of
the order. When the signature is compared, this is noticed,
and if the address has changed, note is made of the same.
Tliis is a very good idea, for while several cases are on
record where money was fraudulently drawn by answering
all the test questions and signing the name correctly, it is
extremely doubtful if the holder of the book in these in-

THE BOWERY SAVINGS BANK

128 & 130 BOWERY

New York, P^. cKj^-^^'^.../^.^...igo ^

This is to certify thc^ the signattire qiven below,
correspo7ids with signatur^ on our hooks as shc^^ by
account No./^f-7f'^-^. ^ ^ ^^ .n^

Sif;n(iturc of Depositor, JQ

'<^^e^>C^^.

Comptroller.

FOUJI 53. VERIFICATIOX OF SIGN^ATURE.

stances could have given off-hand the former addresses of
the depositor, especially if they had frequently changed.
The fellow who obtained possession of James Wall's book
on the Emigrant Industrial Savings Bank, and by writing
to AVall, ascertained his pedigree, even going so far as to
ask the name of the ship he came over in, (which formed
part of the identification questions), and thus fortified,
managed to get Wall's money by his familiarity with these
facts, Mould have had difficulty in telling where James
Wall had lived if he had moved frequently.

There are little tricks in identification that often are
safe, and save the de})ositor considerable trouble. In the
first place, where the depositor cannot write, if he has a

GENERAL ORDERS AND IDENTIFICATION 26a

scar of any sort that is permanent, this is a good test; also
if there is a peculiarity about him that is noticeable. Reg-
istered letters addressed to the depositor, initials in hat,
marks on clothing, monograms on jewelry, etc., often play
important parts in the process of identification.

But frequently other and better tests are desirable, as
where the signature is radically different (as is often the

A'. ^ ^r<r7A.

Union Bime Savings Institution,

Broadwaj. 32d Street & Sixth Avenue.
New Yoi-k, N, Yv--'''^^^^ /'<? tff /
A CertificaU is rrtjueilid from

^^^<<y^

as to the correctness of the following sif^nalnre of

.'r ,, .hereby certify thai the above signature

-••'''^^2i--t_<^-^Cz-«^.

:2^:z^.-^^^ x<:%^<v<

FORM 53. VERIFICATION OF SIGIfATURE.

case), and where other lines of identification are unsatis-
factory or im^^ossible. In such cases it is customary to ask
other banks in which he might have account to verify his
signature, and recognizing that they may also ask Hke fa-
vors, the request is usually granted. Some banks have
proper forms for this purpose, as will be seen from Forms
52 and 53. A simple illustration -will suffice: Mr. B. has
a deposit in a savings bank, and for some reason or other
the bank has not obtained liis signature, as often happens
unless accounts are refused where this cannot be furnished.
He wants to draw some money. Upon comparison, the

270 THE SAVINGS BANK AND ITS PRACTICAL WORK

teller finds no signature recorded, or a discrepancy, and
advises JNIr. B. that he will have to furnish credentials.
Upon being advised that a bank identification is the most
desirable and often the easiest to obtain, he goes to another
bank in which he has deposits and asks them to certify to

CITY INSTITUTION FOR SAVINGS.
kOWCLL. MASS X?^

PCNMANCNT OROEH

FORJI 54. BLANKET ORDER FOR DIVIDENDS.

his signature. Tliis they willingly do. His signature is
taken in the proper place and he has no further trouble.
The same is true among banks of discount in vouching for
the character of new depositors wishing to open accounts.
But money in hand being the only credential with savings
banks, such introduction is not required.

General Orders.

There are numerous reasons why two names should be
on a pass book. Reasons connected with death, sickness,

Q^eu. ^e<//c^^, ?l..^r<^.. 4..

^t -leua^i^c^n ufAecjL t^ taU^t/na, <^ eni-Ae,uiei

^<^<^ *?==r^1^rr<^r<''C^^^ A c/iatu anc/ ieceM Ai, i^

n^leuu and ^A^. A€iuie4, /fz eto^ -f/tuig-^ a/xa can/t-

Witness,

-<^:^'f1^

jZ^f:;?>^^^^t^

FORJI 55. OENERAI, ORDER FOR WITHDRAWAL.

GENERAL ORDERS AND- IDENTIFICATION 271

absence from home, convenience, gifts of money, etc. And
the pubHc has been duly educated up to the value of such
accounts. There are also reasons why the owner of the
property should retain absolute control over the same as
long as he lives. There are likewise good and sufficient rea-
sons why one having a single name account should permit
another to draw practically at will against it, yet not have
any interest in the funds on deposit before or after death.
Frequently old people or those living at a distance from
the bank prefer to entrust the drawing of money to some
member of the family, a relative, or an attorney.

In order to vest another with power to draw money
from a savings bank, one of three courses may be taken:
First, the change of the account to a joint or trust form,
by closing the old and opening the new account. Second,
to file a general or unlimited order with the bank. Third,
and similar to the second method, is by power of attorney.
A bank would not, in law, be bound to recognize a simple
blanket order and allow the holder to draw at will, but
would be obhged to recognize such a wish by a power of
attorney properly drawn.

A general order is to all intents and purposes an order
for the balance in full, payable as directed by the one au-
thorized to draw. The order is, of course, revokable. At
times, a depositor will be convenienced by giving another
power to draw dividends only. (Form 55.) In Massa-
chusetts, under the insurance law, the banks are permitted
to charge the premiums against the depositor's account.
This, of course, would not need authority from the depos-
itor to make the charges.

Powers of Attorney.

But in the matter of power of attorney, the bank is
hound to know that the jmwer is revoked by the death of the
depositor, and such orders are necessarily accompanied with
some risk. In the case of Hoffman vs. Union Dime Sav-
ings Bank (New York Savings Bank Cases, p. 62), prob-
ably the best power of attorney case, so far as savings
banks are concerned, in the New York courts, it was held
that unless the holder of the power was vested with some
interest in the fund that caused it to survive the death
of the principal, the power was revoked instantly upon the

272 THE SAVINGS BANK AND ITS PRACTICAL WORK

Depositor No. '7^7 *^/ *^^^ ^^^ Western Saving Fdnd Societt of Philadelphia,

have made, constituted and appointed, and by these presents do make, constiiuie and appoint
*~'^^/L^^C^-/C/^.y.^2..-£.^^^ y^'^::^---*''-'*^^— ^^ ^* '^^^ true and

latcful attorney for ^<^'-<^ and in Z^^name to ask, demand and receive from the said Society,

standing to 7^-^ credit on the books of the said Society, and vpon receipt thereof, or any part
thereof in Ai<w name to execute and deliver to the said Society good and mifficient receipts or
acquittances Jor the same.

IN WITNESS WHEREOF, V have hereunto set z^hand and seal
the -^^^^^^ZC/ZZ^:^^ — <iay of -<:^k.^7ZII^>^t^ A.D. 190^

(Depositor sigD bere.)

Sealed and deliverctl in the presence of us:

WiLneraa to 1 '■.

depositor'! ]

al^ature \

■ign bere. j

N. B. — The pass-book of the depositor must be presented at the office at the time of demanding payment,
unless previously left thereat for settlement.

FORM 56. — POWER OF ATTORNEY.

death of the depositor. The bank, therefore, should have
made inquiry if the princi'pal was alive before making pay-
ment, and in faihng to do so, assumed the risk of establish-
ing in the holder such interest as caused the power to
survdve.

After a long contest in the courts the bank was able to
show such an interest, and payment was finally sustained,
but the case twice went against the bank. When such or-
ders are filed, more than ordinary care should be taken to

GENERAL ORDERS AND IDENTIFICATION 273

ascertain the fact that the depositor is still alive before
making paj^ment.

The proper thing to do in the matter of powers of at-
torney is, of course, to make notation on the signature card,
"Power of Attorney in WilHam Smith. See files." Filed
among the powers of attorney will be this document. Banks
not having to refer to the signature at every transaction
could make notation on the ledger account. And in all
cases tliis might be done on the pass book in lead pencil.
The signature of the one holding the power should also
be taken, as a matter of identification. Where the account
is closed by one transaction, proper identification only
would be necessary.

Where a general order is filed in "home-made style," as,
for instance, "Please let mv sister Emma draw whatever

PASS BOOK MUST BE PRESENTED WITH THIS RECEII

UTICA. N. Y.. e/)~e^ /O O-^
^3^^^ RECEIVED FROM

THE SAVINGS BANK OF UTICA

.^■f'^<-^ . /O o

^^-/^"^T^-^::::^::^^

: Dollars. $_?kJo_

'^. :^

/<Z- . «^t-.g^-^<__-

FORM 57. — ex\t;lope for gen^eral and "hojie-made" orders.

money she wants on my account, and oblige, etc.," and the
bank cares to recognize such orders, an envelope the size
of the ordinarj^ check would come into play, and the order
could be inserted therein, with reference to the same on
the account. Where the filing is done by accounts and not
by months and days, the general order may be filed in its
proper place and all subsequent orders attached thereto.

On account of the annoyance caused by these general
orders, manj^ banks refuse to honor them, and insist upon
changing the account. Powers of attorney, in the fight
of the Hoffman case, surely ought to be avoided as much
as possible. A httle argument is all that is necessary to
show the depositor the wisdom of doing some things, and
they are usually agreeable to anything that will accompHsh
the result desired. And a joint or trust account will usu-
ally answer every purpose and fully protect the bank.

CHAPTER XVIII

ALTERATION OF PASS BOOKS AND TRANS-
FER OF ACCOUNTS

A savings bank pass book, once issued should never be
altered. It is liable to lead to complications and should
not be encouraged. Not that a loss or a law suit will fol-
low, as a matter of course, but law suits have arisen over
just such trivial matters, and it is best to be on the safe side
of the question. As to the addition of a name, this is not
attended with as much risk as an erasure, and is practised
to a greater or less degree in a great number of banks, and
many have forms for such purposes. Frequently savings
bank officials are asked to add names to existing accounts,
or to alter single name accounts to joint or trust accounts or
vice versa. It is always advisable when such alterations
are made, that the authority for so doing should be clearly
stated and filed for reference.

Frequently a bank is asked to alter a savings bank pass
book in order to defeat the operation of law. For instance:
A depositor having a balance of about $600 was sued for
damages sustained by a workman injured in his employ.
Flaving a son by the same name, he asked the bank to add
"Jr." to his name, making it appear that it M'as the boy's
money. This, of course, the bank refused to do, and for
good and sufficient reasons. But as a remedy suggested
that lie witlidraw his money.

The case of Kelly vs. Beeres (194 N. Y., 49), one of
the most recent (January, 1909,) and most exhaustive of
the "Joint Account Cases," in the New York courts, arose
in a large measure over such alterations. The depositor had
accounts in several savings banks, in single name accounts,
and had them altered to either joint or trust accounts for
her daughter. The deceased depositor left a will disposing
of her deposits in the various banks, by which the daughter
was to receive about $7,000, while the deposits totaled $9,-
878, and action was brought to test the legality of these
alterations and changes, which the daughter successfully
sustained on the ground that the mother had intended to

274

ALTERATION OF PASS BOOKS AND TRANSFERS 275

create joint ownership in these moneys and the intent being
clear, no particular formula was required for so doing.

Change or Name.

The only addition to a book, about which there can be
no question, is in the case of women who marry, and desire
to retain the old book from sentimental reasons; — reasons
connected w^th saving money for a specific purpose; the
growth of the account, the numerous and frequent with-
drawals ; reminiscences of the happy days when the wedding
trousseau was being prepared, and little knicknacs were

rUr^{.t.r,.U^.../.£. ^..''.

New Yorkrr

IforJlJalue lRecctvc&,..K: h&rehy assign to Cbe (Torn Eicbanee JBanft,

the sum o/.i>,^X^. >^<-7?^r<H<Vr?^ri€^^ due by the

as slwwn hy Pass Book J^o..^i/.<^/.././^^......ot said.(<X^.ri:r:'.<c^u^..<^^^^

defhered hereiPiHi, nith authority to demand and to receive laid sum and to receipt t/ierefor.

FORM 58. ASSIGNMENT OF PASS BOOK.

being gathered for the new home, and so on ad infi^iitum.
In such cases it is entirely proper to add the marriage
name, as for instance: "Lillian P. King now Fisher," indi-
cating that Lillian, once single and now married, had
enough left out of the wreck to keep her bank account alive.

But erasure or crossing out of names is quite a different
matter and should never he practiced. It is frequently re-
quested, and often for good and sufficient reasons, but the
account should be closed and a new account opened, thus
making a self-explanatory transaction.

Two cases in the New York courts illustrate this point.
In one, that of Beaver vs. Beaver (117 N. Y., 421),
the account was opened by the father "for" the son.

276 THE SAVINGS BANK AND ITS PRACTICAL WORK

The son's name was erased from the book, but by whom
and when, did not appear. Action was brought by the
representatives of the son, after the death of both father
and son, to recover the money so deposited, and while the
erasure did not materially affect the outcome, it was an
act that was open to question.

In the famous Totten case (Matter of Totten, New
York Savings Bank Cases No. 22), a trust account was
altered by erasure, and when carried forward to a new
nimiber in the ledger of the bank, the account was headed
without the erased portion. This also had but little effect

Zhc Corn JExcbancje Bank,

Please take notice that we hold Pass Book Xo... ^ .7?.: . /.Y.y.

of your institution in name d^^rrTTrTTPff^fr^r^r^^n'SfVrT^^ assignment and

check for $./P.?..t:. as collateral on loan made with us.

We will notify you when loan lias been paid

T/^S COIt^V BXCUA^GB 'jJA^'A:
Specimen siffiin/itrr. of deposilor. Y^ ^^ yV • ^^

>.-<^^^^C^<:::;^^^C'd--'^^--S-

ronji 59. — notice of assignjxe^'t of pass book.

on the final outcome, but the questions always arise in such
instances : \\'\\o made this erasure ? When was it done and
by whose authority? What was the intent in opening an
account in one form and by erasing a name, change the
character of the account, and what is the result upon the
X^arty whose name is thus cancelled? It is much safer in
law and much better in banking to take the depositor's re-
ceipt in full for the amount, issue a new book, and no ques-
tion can arise, — provided, of course, the one making the
withdrawal has the right to do so. It is about the same as
altering a will by crossing out paragraphs, and is bound
to open the question box, and question boxes are no part
of savings bank equipment. They are full of trouble and
should be left alone.

ALTERATION OF PASS BOOKS AND TRANSFERS 277

Transfer of Pass Books.

Transfers of pass books, being essentially deposits and
withdrawals, except in eases where names are added to the
book, are usually treated precisely as cash transactions and
put through the usual course, although some banks make
these a separate record, and do not put through the cash
anything that is not cash. Inasmuch as these transfers
generally carry interest, it is advisable to have some provision

J^ew York at
The,

of>Tf:/^Af^r:^(t-<;t-rr^ will please

pay to Ube Corn Etcbanoe Bank,

or^S^^^i the sum of

Dollars, named in the within assignm,ent,
find charge to Book J^oJ.y.^.-.-'^.'ty

^_^,,^^^^y^,X«2.-tt--<^

FORJI 60. ORDER ON SAVINGS BANK TAKEN WITH ASSIGNMENT IN FORM 58.

for "distributing" the amount transferred at the time, so
that reference to the old account will not be necessary when
the next dividend is computed. Forms 62 and 63 illus-
trate tliis point. Notation is made on the new account
and no other reference is necessary to properly compute
the interest. Transfers are not always attended with ac-
crued interest, as for instance in transferring to those
having no previous interest in the account. • Banks make
their own rules in such cases, but the usual custom is to
allow interest where the ownersliip of the book is not mate-
rially changed, or the funds are not disturbed. Some banks
even go so far as to allow interest if the funds withdra^vvn

278 THE SAVINGS BANK AND ITS PRACTICAL WORK

Kew Yorl^T^. r:i^'?HCWfT<rS,<<\. .../:.. yr. -Wu. ■ . .

Please take notice that loan made by us with Pass Book

Xor:.Y-.>^.:^.ff.'f.... of your institution in name <)/rrr2/>^f!^^'r:'rr^?^^T?T^

as collateral, has been paid and we desire to witluiraw notice ofi<^.<>^../:^:.(^f 9.

THE CO'JtJV JiXCBclJVGB ii^A'JS:

^ , Manager.

-^— ^-'-— .BRANCH.

FOBM 61. WITHDRAWAL OF ASSIGNMENT NOTICE IN FORM 59.

are re-deposited the same day. And this would seem to
be fair.

For the simple act of closing a book and opening a new
one in the same or in another name Forms 62 and 64 are
helpful. Form 62 of the Chelsea Savings Bank, Norwich,
Conn., with stub showing the distribution of interest is
especially good. The addition of a name, making the same
a joint account, with like privileges to each depositor, which
alters, materially, the original contract of deposit, should
have a clear-cut order, explicit in its intent, and Form 64
of the Albany Exchange Savings Bank will illustrate this
point. The fine print of this order is especially good. It
was by a similar order that Mrs. Beeres in the Kelly vs.
Beeres case referred to, changed her accounts and accom-
plished her very evident purpose that the daughter should
have these monevs.

CREDIT Dtpoiit A^o.^'^A-^ I

Three

Twt
Ont

—

Non, \

/ o

.f.o

Ko ^7. J i-'-

Norwich. Conn.

I The Chelsea Savings Bank,

I TravBfer to Deposit Account 0/ _

* and charge to my account. Deposit Book, ^tt- ■^7. j7 <>?-

•4f>b«..Br

FORM 62. TRANSFER OF ACCOUNT. STUB SHOWS INTEREST DISTRIBUTION.

ALTERATION OF PASS BOOKS AND TRANSFERS 279

Assignments.

Assignments of books are not to be encouraged. Some
banks will not recognize pass book assignments, and still
others require that the transaction be made at the bank.
Such assignments are frequently made in large cities in
real estate and other business transactions, and especially
during the closing months of the interest period when to
mthdraw the funds would sacrifice the accrued interest.

TRANSFER

NO.

(2/H^^^I^^

% <^^ .6 MOS

$- /..^.^.. .3 Mos

NOT ON Int.

^ ^o

From No '^p<^/^!^0/^.

FORM 63. TRANSFER OF ACCOUNT WITH INTEREST DISTRIBUTION.

Hence many commercial banks accept such security with-
out hesitation. One bank at one period held over $200,000
of such loans, with books scattered all over New York,
as security. The form used by the Corn Exchange
Bank of New York, is quite complete, and is worthy
of wide adoption. Where the transaction is between a de-
positor and a bank of discount the risk is nil, but when
made between private parties, there is room for gross
frauds.

280 THE SAVINGS BANK AND ITS PRACTICAL WORK

ALBANY^^,-<^!^r^r'^ r Y^.. IQO...^...

Alfaaug lExrljang^ i^^mugHlank,

OF Ai-HAxy, N. y.

Tri)ASfer to ne^ account, in Albany Exchange Savings , Bank, in my name

C^^<>:]^ ...*^^ '^-— — '^■— '"''"""r:"':'"^^ Dollars,

the balance of deposit account, as per accompanying Pass-book ^o. r^.(rj A ,«

to which said new account, please add the name of

as owner and creditor with myself of all moneys deposited this day, or of all moneys which may hereafter be deposited in said
Albany Exchange Savings Bank under said new account, together with all the interest which may hereafter be credited to the said
new account ; with fuU authority for each, or either of us, or the survivor of us, to draw out from the said I3ank, the whole or any

$^0—

((^'^.

FOBM 6i. TRANSFER OF ACCOUNT. NOTE FINE PRINT.

This matter of assignments presents one or two fine
points of law, upon which the cases in the courts are not
over-numerous. Whether or no a savings bank may make
a rule that no pass hook can he assigned, or will not rec-
ognize any assignment, does not seem to have been judi-
cially determined, at least in New York. But a pass book,
being evidence of ownership, while not negotiable, is doubt-
less assignable like any other evidence of debt. But since
a bank may make reasonable rules for its protection, it is
probably true that the courts would sustain a by-law to
the effect that notice of assignments must be given the
bank. And this for the same reason that stock in corpora-
tions, while transferable from hand to hand, is not binding

drf^ Jnstrfittion fat Submits.

LowcU, Mass., wZo/t /O m

Co tbe treasurer :

^P Sir : For \k>1uc received I hereby transfer, assign, and set over to

. ^^-^ '^^^r^:^->--<r--*r<rrr<r- — =^^-<^-*^-«^-'^^-<^<''^:^ all my rights, title, and interest in

Witness: ^^/c? ^:y'7U^^^^.^^f(^^i- *--^

FORM 65. SIMPLE FORM OF ASSIGNMENT.

ALTERATION OF PASS BOOKS AND TRANSFERS 281

upon the corporation unless duly endorsed upon the records
of the corporation.

Where, however, the assignment, through fraud, is for
more than the amount due, the assignee would take no
better title to the funds than had his principal, and could
only claim that which was due the depositor. He could,
however, if obstreperous, make trouble for the bank, and
the free transfer of pass books is not, and should not be

' ' ' ■ ■ /

jfOt JP^IU0 iK^CtlUCO, / hereby assign, transfer and sel ovei

unio.Q^..../^<Dl~~^ Deposil Book No. /£2£.Z

issued by the 0^KLESTOWN FIVE CENTS SAVINGS BANK

/Orv.^-c-K;«c^>5Z„£,<^^ together with

all honeys now due' thereof, subject to , the By-Laws of said Bank.
Signed and sealed..

lereon, sui

FORM QQ. ASSIGKMENT.

encouraged. But many banks provide for such transfers
by proper blanks. A simple form will be found in Forms
65 and 66.

Deceased Persons.

Accounts of deceased persons are attended with some-
what elaborate ceremony. The contract of the bank is to
pay "the legal representative," and who the duly authenti-
cated legal representative is, must be "duly" ascertained.
Where the amount involved is small, the custom, more or
less general, is to reimburse the family for burial expenses,
etc., and in such cases proof of death, proper releases, etc.,
are required. In New York, all savings bank accounts are
affected by the inheritance tax law, and the consent of the
State Comptroller must be obtained before making pay-
ment. But this is such a lengthy and important subject
that it is reserved for extensive treatment by itself. Suffice
for the present to give the rules of the Union Dime Savings
Bank, which appear on the back of the order used in such

282 THE SAVINGS BANK AND ITS PRACTICAL WORK

cases, giving the procedure required. This is typical of the
custom prevailing in the New York savings banks:

Requirements for Transferring the Account of a
Deceased Person.

1. The pass-book.

2. Certificate of appointment of executors or administrat-

ors. If not known at the bank, their signatures should
be endorsed on the certificate and verified by a bank
officer or notary public.

3. Waiver from the State Comptroller as to tax. In New

York City apply to his attorney, Edward H. Fal-
lows, 170 Broadway. We can obtain the waiver, but
it may take a few days longer.

4. This transfer blank signed by the administrator or

executor at the word "Signature."

5. Specimen signatures of executors or administrators on

Form A, for attaching to our books.

6. Please state how many names are required for drawing.

Requirements for Transferring a Trust Account to
THE Beneficiary.

1. The pass-book.

2. This transfer blank signed at the word "Signature."

(a) by the trustee, if living;

{h) if deceased, by the beneficiary.

3. In case of death of the trustee, a death certificate from

the public authorities, or other satisfactory evidence
of death.

4. Specimen signatures properly identified of the benefi-

ciary on Form A, for attaching to our books and
cards.

5. The trustee can transfer the account only to the bene-

ficiary originally named.

Lost Books.

Having a clear idea of how and to whom, and under
what conditions and restrictions savings banks pay money,
let us close this part with a brief review of the procedure
when, for various reasons, such as lost or stolen books, ad-

ALTERATION OF PASS BOOKS AND TRANSFERS 283

verse claimants, etc., the account is placed under notice not
to pay.

The loss of a savings bank pass book is an easy matter,
and of common occurrence. It is doubtful if any feature
of savings bank management, aside from deceased persons'
accounts, is attended with more annoyance than is the mat-
ter of lost books. For the owner, it means anxiety, delay,
notice to bank, advertising expense, affidavit or bond, as
the case may be, and a search of likely places in which the
loss may have occurred. For the bank, it means explana-
tion, search of the indices for account number, stop order,
preparation of the advertisement, and often the payment of
the bill, the drawing of the bond or affidavit and the closing
of the old account and the opening of the new. Many

No. OOfK)

PAYMENT STOPPED

NAME
^8oolc_Lp»t<_.:^-;:^f.Cf^„J-!.. ./.*?<» f .

.Attached ^__ ,

Collateral

i'-^^f-'U- 3 I90<7 "^ Settled ^j?^%^. ^190^

SAVINGS BANK,

FORM 67. STOP PAYMENT MEMO.

banks make no charge for all tliis, except the advertising,
attending to the details as a matter of courtesy. Most
banks have forms for the several steps, wliich will be re-
served for another chapter, tracing in detail the procedure
in cases of lost books and issue of new ones, or payment of
the money, which amounts to the same thing.

It is quite the universal practice to require that notice
of lost books be immediately filed with the bank, and in-
structions to this effect are to be found on practically all
pass books of such institutions. And the depositors are
quick to do so, as many are fearful that the loss of the
book means the loss of the money.

The situation is materially different when, through theft,
the book gets into the wrong hands, and fraud is perpe-
trated on both bank and depositor. Due notice cannot,
therefore, be prom]3tly given, and the bank is frequently at
the mercy of crooks.

28 1 THE SAVINGS BANK AND ITS PRACTICAL WORK

Mistaken Identity.

Even ill small banks, where many if not all the depos-
itors are personally known to the officers, frauds may be
perpetrated, through mistaken identity, as will be illustrat-
ed by the following instance: A German by the name of
Sclimidt had an account in a savings bank, and hke many
of this race was a frequent depositor. He had a brother
who resembled liini in many ways. In due time several
drafts were made on the account, each time being accom-
jDanied with explanations and apologies. The frequency of
the withdrawals becoming suspicious, the teller called at-
tention of the true depositor to the balance (which he never
verified), and immediately discovered that he had been pay-
ing the brother, thinking he was the owner of the book.
The i:)erpetrator of the fraud was given his choice between
a charge of fraud and forgery, or restitution, and wisely
chose the latter. It was simply a case of mistaken identity,
but had the signatures been compared, the scheme would
have been uncovered at the beginning. But this was an
unusual case, and in large institutions, where the personal
element does not enter, would not have gone through.

wStop Orders ox I^ost Books.

The first step in the case of a lost book is to "tie up" the
account by a "stop-payment" notice. In order to do this,
the first essential is, of course, to make notation, where at-
tention will be called to the fact that the book is under "sus-

UNiON SQ^UARE SAVJNGS BANK

Fonortlr INSTITUTION FOR THE SAVINGS Of MERCHANTS' CLERKS

No. 20 Union Square, New York
Pay, by opening New Aaounl with fame title as be/ore, the Balance due, and

charge the same to Pofsbook No. . /^-^ ■^..^.^... sent herewith.
Dated.. J^Jt^;^.../.^..^ iQ<*f.

(Signature). .^..

FORM 68. TRAXSIER OF ACCOTNT TO NEW HOOK.

ALTERATION OF PASS BOOKS AND TRANSFERS 285

picion," and to look into the matter before payment is made.
The usual method in commercial banks in the case of stop
payment on checks is to have a register of such items for the
teller's use, and such orders must be more or less a matter
of memory, with the register as a guide; but in savings
banks, notation can be made on the ledger account, where
the old style signature is used, and where the card is in
force (as it is in most banks and eventually will be in all),
a card with distinctive color, as in Form 69, which is bright
red, can be inserted with the signature card; or better, at-
tached to it with paper clip, and it thus stands as a rail-
way trainman wa\dng a red flag at the teller to go slow
at this point, there is danger ahead. He therefore looks up
the letter file, or information department, or whatever may

^//..^- ^^^^^-^

ACCT. No.

Do not pay

St* Informatisn Dtpartment

FORM 69. STOP CARD.

be referred to on the card and ascertains why payment
should not be made.

Other things than the loss of the book will tie up an ac-
count, as, for instance, disputed ownership, writ of attach-
ment, hypothecating the book as collateral security, etc.
And where such attachments or notices not to pay are filed,
it is always safe to follow them, even in the case of joint
or trust accounts, until the matter can be settled between
the disputants.

The case of Mulcahey vs. Emigrant Industrial Savings
Bank arose from a payment made contrary to a stop order.
The account was in joint names, and upon the death of
one of the parties, the other joint depositor notified the
bank "not to pay her money" to the wife of the deceased
depositor, "when she should come to the bank with the pass
book." Disregarding the notice, the bank paid the holder
of the book upon presentation of the same with letters of

286 THE SAVINGS BANK AND ITS PRACTICAL WORK

administration. The ruling of the court was, in substance,
that having paid to the legal representative of the deceased
depositor, the bank assumed the hazard of being compelled
to pay again to the living joint depositor, upon her estab-
lishing her actual right to the funds; and properly, the case
was one for an interpleader in which the respective rights
of the claimants could be judicially determined. The proper
procedure in such a case would be to pay the money into

REDEPOSIT

Date, ^1^VS^c/\^. V.«> /O^ ^

NO..^S 0.%-^ \o ,.

Name,

$.Ai!LO*_ 6 Mos

$ So 3 Mos.

$ ^^ Not on'Int

$ vn^ -

From no. ^XS-CilbS

FORM 70. BEDEPOSIT.

court and let the court decide upon the ownership. (Mul-
cahey vs. Emigrant Industrial Savings Bank, New York
Savings Bank Cases, p. 39.)

I^ikewise the case of Clark vs. Saugerties Savings Bank
came about through failure of the bank to heed the injunc-
tion "not to pay the money to anyone but herself." Dis-
regarding this notice also, the bank paid a draft of $500,
signed by the husband of the depositor, upon his statement
that the wife had sent him, by issuing a check to the de-
positor's order and then permitting the husband to endorse
the wife's name "as by her authority," by mark duly wit-

ALTERATION OF PASS BOOKS AND TRANSFERS 287

nessed. The bank lost in this case. (N. Y. Sav. Bank
Cases, p. 55.)

Frequently in family quarrels bank accounts become
involved, especially joint accounts, and the bank is notified
not to pay the other. The contract usually is to pay either,
and until notice it has a perfect right to do so. but in
such instances it is always wise to refuse to pay either
without the signature of the other, or to ask for a caveat
against the account, thus legally tying it up (Form 71) ;

WRIT OF ATTACHMENT.

/i'.-,t .„.,».-('• ^^7■^^

/"i^-^e^ ^^^iJZtZi. ^-«-<r. ^.

FORM 71. WRIT OF ATTACHMEKT KOTICE.

or to pay the money into court and let the disputants settle
the controversy among themselves. Frequently, if the mat-
ter is held up for a little time, the affair will adjust itself.
Some banks ask the legal notice of withdrawal and notify
the warring factions that if they do not get together before
that time it will pay to certain parties, and that usually
ends in a settlement. In one New York bank notice is
given the interested parties that unless suit is brought to
determine the ownership within thirty days, the bank will
take a certain course, and experience demonstrates that
time is the great healer of such disputes.

CHAPTER XIX

THE TELLER AND HIS CASH

By law, all banks of discount, and in some States, stock
sa\angs banks, are required to carry a minimum cash re-
serve and the character of that reserve is usually stipulat-
ed. But mutual or trustee savings banks are not, as a rule,
restricted as to the minimum ^ but quite generally a maxi-

6erman SavTnGS JSanh,

TELLER'S Report ,

CMCCHL

Trilrrt Citb ' - -
Cb^kt . . . .

/ 0"^

7^^

J- 0

7-r

/ o

/ oo

^ O O O

::.:::::.

7S.

}.. c

MaltlMled . . - -

1
/

/ss

^£-^

1. 0

lOOOa A 500» - - -

^00

°7

?7^

'"" ' '

S 00

10.

0 gc

•77 " -J

i Ar U ^ -^ > ' . •

^V^

^0 e

^-v

/ ^^

/ 0 <p

Paekagea . . . -

TotMJ

j-e*

^ £> ^:

i^n'

foi'

•^'i

■7^

•fS

..fjj

'■I

FORM 72. — teller's report showing classification of cash.

m,um reserv-e is named. The character of that reserve (or
to speak more correctly, available fund), is not defined,
and usually consists largely of bank credits. The amount
of such credits in other banks is also limited, but as to the
cash on hand, it is a matter of judgment, and is left to the
discretion of the bank officials. Thus, in New York City,

THE TELLER AND HIS CASH 289

a national bank is required to keep a reserve of twenty-five
per cent, of its deposits in actual cash in its vaults, and in
"lawful money," of wliich national bank notes may not
form a part. A State bank must keep a reserve of twenty-
five per cent., of which three-fifths must be in cash, and a
trust company fifteen per cent., all in cash, of which na-
tional bank notes may form a part; wliile the savings banks
are forbidden to keep more than ten per cent, of their de-
posits either in cash or on deposit. Not more than twenty-
five per cent, of the capital and surplus of a depository
bank may be placed in such institution. The cash on
hand may be as little or as much as necessity demands,*
the intent being that no great part of savings bank money
shall remain idle or uninvested according to law. Accord-
ing to the January 1, 1912, report of the New York State
saving banks, to meet deposits aggregating $l,619,llo,648,
the banks held cash on hand of but $10,953,182.40, or .0067,
—a trifle over one-half of one per cent., and on deposit in
addition to tliis sum, $90,944,209 subject to call, making a
cash reserve of about .063 per cent.

Any Kind of Money — But Good.

The teller of the commercial bank must concern him-
self not only with the amount of cash on hand, but the
variety^ and if he works in a national bank must keep the
different kinds of money separate. The teller of a savings
bank, however, need not worry about the varieties of money,
and can give due attention that it shall all be good money
and correct in amount. It matters notliing to liim what
kind he takes in and least of all what kind he paj^s out.
Money is money. And it need not be kept in packages
convenient for making up pay rolls, for he makes up no
pay rolls. He can strap his money as he pleases, but should
endeavor to conform to custom in his locality, so that it may
not cause undue annoyance to his depository bank and cus-
tomers. A uniform method of strapping bills and wrap-
ping coin is much to be desired and is coming to be given
attention in banking circles.

The notion that savings bank tellers are merely figure-

*One large savings bank in New York keeps a million dollars in cash in its

vaults for emergency purposes.

CASH RECORD, ^^^vwvocV^ "5

vw\x I U . ^.c^vo

Checksand Other Itkm<
Held as Cash.

CASH ITEMS.'

Currency in Safe,

•' Drawer.

received during the day,
Gold Coin in Safe,
" •' "• Tray,
" " received during the day.
Silver Coin in Safe,

' Tray,

" received during the day.
Other Minor Coin in Safe,
M „ ,1 Tray,

" " " received during the day,

Totml Currency and Coin on Hand
Checks and other items beld as Cash,

ToTiM. Cfl-iH r' UltVS,'

BALANCES ON DEPOSIT IN BANKS
OR TRUST COMPANIES.*

XCIIANGE BiKK,
TBU5T COMrAN

Albanv Trust Company,
First National Bank,

.iS

PROOF OF CASH ON HAND.

General Cash BalancBi*
Total Cash on hand,*

'^-A-A-'-W-V.fl

,CA_4rVA.

■s\2

Summary of Transactions with Depositors for the Period
Beginning (at Opening of Business), and Ending this Date.*

Amount due Depositors at the bc;;inning of the period.
■' received from Depositors during the period,

of Interest credited to Depositors during the period.

Amount paid to Depositors during tlie period.
'■ due Depositors this date,*

^ S

Number of Depositors' Accounts open at the beginning of the period

" " Di>cned or re-opened during the period.

Number of Depositors' Accounts /closed curing the period,
" " " open this date*

/ ^ >" Y/

/ ^j f

Number of Deposits received during llie period.

" ■■ Payments to Depositors during the period.

Remarks:
290

FOHM 73. — teller's cash sheet.

THE TELLER AND HIS CASH 291

heads and do little or notliing in the line of handling money
is erroneous. As a matter of fact, it is doubtless true that
the tellers of a large bank like the Bowery, or Bank for
Savings, or Emigrant Industrial, in New York, the Eutaw
of Baltimore or the Philadelphia Savings Fund Society,
handle as much real money as the tellers in large commer-
cial banks. The cash transactions of the Bowery in 1911*
were over $44,000,000- — or nearly a million a week, and the
greater part in coin of the realm.

The Overs and Shorts.

In small banks, one man, or it may be several, have ac-
cess to the cash and receive and pay over the counter. This
is so of necessity. This, of course, makes it difficult to
trace an error, or to place the blame, for in the language
of Nast's famous cartoon, one may point to the other and
say, '"Twasn't me; 'twas him."

In large banks, where the work is properly apportiqned,
and the receiving and paying entrusted to designated men,
an overage is usually (but not necessarily) "up to" the re-
ceiving teller, and a shortage quite likely to be an error on
the part of the paying teller. Some banks run an "over
and short" account, while others make the tellers respon-
sible for their own errors. Some banks run a "suspense
account" on the deposit ledger, to which overages are cred-
ited and to which shortages are charged.

Inasmuch as cash over is usually an error in making
tickets (as frequently happens in small banks where no
check is placed upon such work), or money taken in for
which no ticket is made (as also sometimes happens), and
such money belongs to soinehody, the proper course, if the
system permits such errors, is to open account to take care
of the items, and in due time the proper entry may be made
when the book turns up mth the omitted deposit. This is
not to say that such practices should he encouraged, or even
'permitted, hut as a matter of fact they are.

As evidence of how few and insignificant are such in
well-regulated banks may be cited the instance of the Bow-
ery, which reports deficits in 1911 of but $22.58 out of
forty-four millions handled; the Bank for Savings, handhng

*Transaetions with depositors only.

292 THE SAVINGS BANK AND ITS PRACTICAL WORK

over thirty-seven millions, reports $216 "loss at the counter,"
wliile a very small bank newly opened whose transactions in
cash amounted to about two millions in three years had but
one dollar overage. If these items were put through the
deposit ledger, they would not appear in the reports.

It has been held with no little degree of wisdom that
to make a man responsible for his shortages is to open the
temptation to reimburse himself from the overages. And
if such errors are reported and recorded against him, this
is all the penalty necessary to insure careful work.

In the handling of money, in addition to what has al-
ready been said, a few general and well established rules
may be opportune. First: Count your money; count all
your money; count all your money all the time. Take this
instance: Upon receiving a large amount in packages from
another bank, one package was inadvertently placed in the

TEUUER'S CASh
HOME SAVINGS BANK

Aovu J^AAaii._\5_A_;_

FOBM 74. — temkii'b cash sheet for small banks.

THE TELLER AND HIS CASH 293

vault without proving, where it laid for some weeks, when
ii was taken out and placed in the drawer, and found to be
ten dollars short. The bank that strapped the package re-
fused to make good after so long a time, and it cost the
teller just ten dollars.

Second : If uncertain about the count, especially in pay-
ing, count it twice, or thrice. It will be time well spent.

Third: Always prove package money after strapping.
Date the packages and initial them.

It cost another teller just one hundred of his salary to
learn tliis secret. In strapping money, he took from piles
of one hundred each, sioj hundred and made a package of
five hundred, and the other four hundred he labeled like-
wise five hundred. He, sure that only one thousand was on
the counter did not prove his strapping and shortly after-
ward handed somebody the package with the one hundred
too much. Subsequently, still unconscious of the error, he
handed the short package out for five hundred, when the
shortage was discovered. Six and four make ten, as well
as twice five, as this man learned to his sorrow. He now
counts all his money, all the time, and especially when he
straps packages.

Silver, when deposited in rolls, may be initialed, or num-
bered with the account to which the amount was credited.
The proper method for counting bills was discussed in a
previous chapter ; sufiice it here to say, use as few motions as
possible in handling paper money; count by the multiple
S5''stem, and strap but one denomination together.

In large banks, running receiving and paying depart-
ments, the cash is usually in charge of a superior officer, who
doles it out as needed in the business. The receiving teller,
after reserving barely enough to make change, or none at
all, turns his receipts daily over to this officer, or to the pay-
ing teller, who draws from the reserve supply as the de-
mands require. The paying teller receives money from
three sources: First from the receiving teller, who, of
course, has no use for money to make payments, and there-
fore turns over to the paying officer his receipts. These are
augmented by cash received from the treasurer from the
reserve in the vault, which in turn is replenished by with-
drawals from depository banks as occasion requires; third,
by checks drawn by the proper officers to depositors' orders,

294 THE SAVINGS BANK AND ITS PRACTICAL WORK
CONNECTICUT SAVINGS BANK

OF NEW HAVEN
Receiving Teller's Summary <CC?^^,^/ 190^

,J^,

/ ' 0 J/

5' ' -^ f 0
'o-s\

vO--

Cish al bi'ginniug r.f day.
Deposits,

less Transfers,

Less Cbecks deposited.

On hand at close of bufines*

Bank bills,

Packages,
100s and 50s,
20
10

1
Coin Rolls, '
Gold,

Silver Dollars,
Halves,
Qaartere,
Tens,

FORM 75. — teller's summary of cash.

or to his order and endorsed over to depositors, which be-
come like so much cash received and immediately paid out.

Proof of Cash.

The problem of the receiving and paying teller, or the
two offices combined, resolves itself into having a deposit
ticket for every transaction, and correct in amount, and a
receipt for every payment, corresponding to the amount
paid out.

In summarizing these receipts and payments, no better
scheme was ever devised than the teller's cash, which is in-
tended to be a quick, accurate and comprehensive account
of the day's business. In the smaller banks, it is quite com-

THE TELLER AND HIS CASH

295

mon to adhere to the journal-cash book, cumbersome and
slow, with full details of each transaction.

The usual details are, number of account, name, in full
or abbreviated, amount of deposit or draft, and the items

Receiving Teller's Proof oJu^^i^ /^, /^/^

DEPOSITS

2 a

8'J o

Deposited, 1st NafI, Paterson

A^7-^

o X

Certificates Issued

J^o

New York

•s

All other Receipts

/ i o

Transfers

Balance, Paid to Paying Teller

7f7

X 1

/ ^i

X 1

/ C 1

S t.

Certillcates Issued

Sondr;

Itcelpts

Casli Ctects

Forward
Rents

/ ^

fo o

/ o C

■s-o

fa /

/^o

/O £>

fo3

3So

/Jc

s-o

/ g

7-S-

'iu

/ i
Xa o

s-o

-y£ o

Miscellaneous '^

SDDdry Receipts '

Interest

^7^

/■So

(^7 2.

,2 J-^

—

/<3 o

■

1^7

sfo

Foreign Drafts sold

CISH

Checks

1>t

s-<.

/ e>

Bills

X38

Gold

s/s-

Silver

i / o

i-£

Nickels and Cents

/ £■

s-S

775

111

FORM 76. — teller's proof of cash.

296 THE SAVINGS BANK AND ITS PRACTICAL WORK

properly distributed among the groups of accounts. This
book has its place, and is quite generally used, but it is
too slow a method of proving, the cash. The point now is,
to get a quick proof of cash. And it is very plain, that, say

NEW ACCOUNT TELLER'S

PROOF

e5^/.

.190^

C(it to Plying TeBer,

Svecic,

£> C C

Mutilated^

, ^^

Is,

^ ^ G

28.

/ So

5s,

S^ X s

10s,

c> o <>

iOs,
50s,

9 ^^

100s,

500s,

1000s. '^

6*-

Packages,

K> O O

Checks,

£■ o

/ S s

^ o

9 S

v^O

Total,

^fn

6 s

C ^yit^cctje s-/i

^Lu^

'-- )

FORM 7()A. TKI.I.Ku's "TrUN'OVKIt" SUF.rT.

in a day of five hundred transactions, to write up the jour-
nal-cash, with all the details, add the amounts, and strike a
balance before the cash can be proven is neither necessary
nor desirable. And to properly enter the items, group
them correctly and obtain a quick ])roof is absolutely im-
possible, if the force is small and the man at the counter

THE TELLER AND HIS CASH 297

must do all this in addition to the window work, as is the
case in so many small banks.

How much better, therefore, to simply take the cash bal-
ance of the day before, add the credits and subtract the
debits, and arrive at the proper amount quickly. This can
be done by adding machine or by hand, and when cash has
proven, journalize the items at leisure, either in detail or in
totals. The point is, proof of cash is the important and
pressing thing and the less the book work in arriving at
this proof, the better.

Checks.

Checks received on deposit are carried as cash over night,
or turned over to the proper officer and by liim deposited in
the depository bank, after making due record. Some banks
do not hold checks over night, but deposit every day, even
in very small banks. In some banks all out of town items
are sent out the same day, while local checks which will be
paid the next morning are either carried as cash or de-
posited ^A'ith the clearing agent.

The reason for this is, first, to get the checks on their
way for collection and, second, to prevent fictitious items
being carried as cash, — a fruitful source of defalcation.

Any cash or checks which the teller has received and
turned over to other officers, are properly a credit to liim-
self and so appear in making up his cash.

CHAPTER XX
THE PASSING OF THE DEPOSIT LEDGER

On January 1st, 1912, the one hundred and forty sav-
ings banks of' New York State had 2,987,535 open ac-
counts on their books. They open over half a milUon new-
accounts each year, and the transactions with their depositors
aggregate over seven and one-half million items. One bank
alone had 340,346 deposits and drafts in one year.

To handle tliis vast volume of business necessitates a
host of employees; it consumes barrels of ink, and demands
infinite patience and attention to detail. When it is re-
membered that most of these good institutions keep their
books in perfect balance, it will not require long study to
become convinced that herein system and accuracy have been
highly developed. The greater part of the transactions re-
ferred to above occur at the interest periods, when the rush
is on and the vast multitudes are depositing and withdraw-
ing, having interest credited, etc., and whatever the system, it
must be expansive, capable of handling the rush, yet not too
costly and cumbersome to be serviceable in normal times. It
behooves the bank man, therefore, to find the easiest, the
quickest, the most accurate, and the most elastic system
available, if he would keep pace with the times and the
demands of his business.

The Old Idea and the New.

Accounting is a fine art, exceedingly simple in its funda-
mental principles, yet often intricate and complex in its
operations. It is simply a matter of debit and credit, asset
and liability; addition, subtraction and division. But what
is an asset, and what a liability? Twice two makes four —
but we sometimes get it five, or — three, and he who never
made an error w^as never born.

The old tinie notion of bookeeping was to make it com-
plex; to nmlti])ly the number of transcriptions and thus
lessen the lial)ility to err. Consequently, the journal, with
the post and cross-})ost idea, doing the same thing several

298

THE PASSING OF THE DEPOSIT LEDGER 299

times just to be sure to get it right — and multiplying the
chances of getting it wrong! But the new idea is simpHcity.
Do the tiling once, but do it right that once, and make this
entry serve as many purposes as possible. Transcribe as
httle as possible. Hence the carbon system, the billing
machines and direct posting, with the card and loose leaf
systems as auxiliaries, to simplify the process, eliminating
and promptly and properly burying the dead matter as fast
as its usefulness is ended.

Bookkeeping in the Past.

From the deposit ledger with thousands of accounts
(many dead) to the card tray or the loose leaf binder, is a
long step. In an able address delivered before the Savings
Bank Section of the American Bankers' Association, Col.
Chas. E. Sprague, President of the Union Dime Savings
Bank of New York, traced the evolution of the aforesaid
ledger from the time of the bound book with five thousand
accounts, to the advent of the latter day systems. He told
of the time when each debit had "To cash " and each credit
"By cash" — otherwise, how could you tell what it was? Tliis
was subsequently abbreviated to "T" and "B," representing,
as the janitor put it, "what they bought and what they took."
The time came, however, when simply the date and the
amount — in the proper place, of course, told the whole story.

The old time practice (still in vogue in many places)
was to make a deposit ticket, transcribe at the end of the
day to the journal — cash (the bigger the book the better),
and post from thence to the ledgers and check back. In
some places even yet the deposits are entered on the journal
as they come in, and the depositor signs the "withdrawal
book" in making drafts, a slow, unsatisfactory process. This,
as the Colonel humorously remarks, was "book"-keeping,
but to post direct from the slips and dispense with the
journal — that was unsafe and unsound. The ledger was
ruled for debit and credit, a column for each, and the balance
brought down at intervals or carried in lead pencil.

It is not so many years since these notions were current;
but these later days have seen many excellent substitutes.
Most banks now post direct from the credit and debit slips,
and check from distribution sheets. Others, using the coupon
system, post from the tickets and prove the work by entering

300 THE SAVINGS BANK AND ITS PRACTICAL WORK

the new and old balances on sheets ruled for the purpose, and
strike the difference, wliich must tally with tlie total deposits
or drafts. Others post from the perforated sheets, detach-
ing the perforations, leaving the name and number only,
the amounts being entered from the ledger and must tally
with the stub. jNIany and varied are the sj^stems de-
vised to meet the needs, but whatever the method of posting

TlATE

^^,::<-r>^

Numljer of
Account

/76^~^-i^ x^^V^

/ o

FORM 77. DEPOSIT JOURXAL. .MAXY BAXKS GROUP THEIR ACCOUXTS OX' THIS BOOK.

and checking and proving, one fact remains, the accounts
fill up. (For forms see chapter on posting and proving.)

The Bank Man^s Problem.

The savings bank account is peculiar. One can never
tell when Sarah Brown opens account with you, whether
her ladyship will be a weekly visitor, or never show up at
all. jNIany, perhaps most of the savings accounts are quasi-
dormant, increasing only with the periodical additions of
interest. The business account is ]:)resumed to be active from
the beginning. The Standard Oil man would certainly be a
daily visitor and due preparation made to handle his ac-
count, while the corner groceryman's would be more or less
inactive. In the savings institution, only time will tell who
will be the "steady's." In a certain metropolitan savings
bank, one account — that of a trolley car conductor — has had
over one hundred entries during a single year. Upon open-
ing the account, he stated, when asked his occupation, that
he was a "nickel knocker," meaning he "helped himself."
During the summer he de})osited daily. A perusal of this

THE PASSING OF THE DEPOSIT LEDGER 301

account would indicate the Mondays without the aid of a
calendar, for these were the largest deposits. After a "good"
Sunday, he would have from $15.00 to $25.00 as his share
of the earnings of his car, wliich speedily found its way into
the bank. He soon lost his place in consequence of such
practices and had to fall back upon his "savings." Obtain-
ing a new position A\ith another company, he repeated the
old tricks, and was again laid off. The liighest balance was
$203.50, and the lowest $30.00, — not a profitable account.

As a lesson in savings bank activity, and as a study
in the "traits and tendencies of trolley car conductors," it
is interesting. (Part of this account is herewith given.)
If tliis man is a type, and his brethren purloin hkewise, it is
no wonder the companies go bankrupt. But then, — this is
only supposition. It is no part of the bank man's duties to
ask "where he got it", — perhaps he had another source of
income.

This uncertainty has brought about the passing of the
bound ledger, and its more elastic substitute, in the form of
card or loose leaf, has come into being to meet this very need.
Under the regime of the bound ledger, one of the problems »
of the savings bank is, how to provide space enough for the
active and not too much for the passive. Many and cumber-
some have been the methods devised to obviate the difficulty,
a prevalent plan being as follows: when an account is
full, the balance is carried to the nearest open space. No
more undesirable method could have been found. It takes
the accounts out of all sequence, and its only redeeming
feature is the saving of white paper. To quote the Colonel
again: "After finding the place of an account, perhaps
tracing its course through several unfilled spaces to which
it had been carried, the eye and the finger had to recur to
the deposit book or draft book to make sure of the number
and name, then back to the account, carrying the amount
as a precious burden, sometimes spilling it on the way, and
usually making the voyage across the expanse of those two
big books two or three times till it finally reached the haven
where it should be. Many accounts overflowed the boun-
daries of the original spaces allotted to them and had thus to
be carried to the unused portion of the territory of some
short-lived depositor nearby, and so on, until the complica-
tion became inextricable and fruitful in posting to the wrong
account. Finally this became intolerable and the space so

^.^^.■50/8

rMMH ^.\\.Ii>.'^!^'vcKcVV^C)cV^x

0«TE

DEPOSITS

PB»FT3 1 B»L»SCE

DATE '„ ^ DEPOSITS

Ofl»FT3

BAL»NCe

'7
Jo

i
/I

.f^o

/ SS-o
Jo -

'7
2.,

''7-/

'7"

7 '
7 ■>

7J
7°
S /

a <

WLe^

1.
J-

' X
'J
'V

/
3

i
t

i
/

So
So

So
^o
£o
•Sc

■So
J-o
S'o

1/o.C-c

•/J

*/ */-ro

7/-/-0

?^'
7i.^o

} 1

J 0

"7
J?

3-4

i.^

S-o

/ O.C

' 7

»-»

/ 0?

'■>

i* 1

1 I J

' 0

■S-x
Jo

J
9

1 J
/ C
1 i
">

;
/

■sv

•To
■To

/ J J
/J<i
/J7^o
/ Jf ^0
■ V J
^ ^ »

1 j-o

1 ce
'<■?

,y„J-o
/ 7 iv-o

/ 7* ■fo

7
///

"f
i-i

■f

■J-JJV

3
1 /

1 */
i
/J

/ —

1.
■ J-

^7
2;

^7
" 7
f 0 /

//-^
// J

,/ J i
/J 0

<3Ec>

J-o

2-0 o

i-o i^

■h ?

J-
/ 0

/ 0 jr

/■»

/ ^

-To

/ SfJ'o

/ • ^

i-/

/ <

l-Tf-t-o

/ 0 J

J-J

/ .tf-^v"o

z!*^

' '7

/ <-o

1 0

; ^

i-i

/ rfwt

1 i

/ J »

, i

^-='

/ 0 0

f o<

/ 0 0

■ —

/
7
*<>

i3-J5
•^4 JJ

V-

--0 J»

«',^^8

^7J»
■^f St

■i

■CUJi.

i' ff

, J

;xgi

■«-^

w
Is

J 1

J-o

•To

7 •»

7
1 V

'7
'7

S
x„

io
J

/ 0 >-

/ 0 J
I J
7 J

s
7

1 o

i
J

2.
X

/ (.

' ''

/J-Tc.

._ '

■y ..^ . . > - . -

FOBM 78. ACTIVE SAVINGS BAXK ACCOUKT, SHOWING ALSO THE VALUE OF THE CABO

LEDGER.

303

THE PASSING OF THE DEPOSIT LEDGER 303

exhausted that all surviving accounts had to be carried to a
nice big new book. This was one of the most irksome of jobs
and nobody wanted it." (Other methods will be noted
presently. )

Contrast a thousand accounts, scattered thus, out of all
regular order, transferred and re-transferred again, with a
drawer of cards, every one alone, ahve and alert, or a loose
leaf ledger, likewise, each account carrying the same number
as long as the account shall live — verily it is worth while! A
year's experience under both systems, and no other argument
will be necessary.

Cards and Loose Leaves.

Many a bank man is wedded to his own, and parts with
it only under dire necessity ; but to convince him of the merits
of the new, oftimes needs a philosopher with gifted tongue.
The convenience of cards he will admit, but as to their
safety — that is another matter. From a somewhat extensive
canvass of tliis subject made by the author, the following
objections seem to be common in this regard, viz.; their
safety and their standing in court. While it was expected
that the legal side would be most prominent, this seems to
have been accepted as settled. The possibility of loss or
manipulation is pertinent, and between the cards and the
loose leaves, the chances are against the cards.

The fundamental differences between the two methods
are nil, merely that the one is in sheets, bound like a book,
under lock and key, if you will, while the other is in drawers,
locked also, if desired. To choose the better, is a. matter of
taste. One looks like a book — the other doesn't, that's all.
They both have their good points, and both have their weak-
nesses. Neither has reached perfection. However this may
be, it is a matter of wonder that so many banks have failed
to discover the great worth of the card system of indexing.
Many, if not all savings banks work under name and num-
ber. Without the number, the bank man is helpless. John
Williams comes in and reports his book lost. "What's your
number?" you ask. He doesn't know, and you must find it —
sometimes quickly. To turn to the old time vowel index and
hunt through a mass of dead matter, is neither necessary
nor desirable. His account should not be one of two hun-
dred, but one of twenty, one of ten. Herein comes the card

304 THE SAVINGS BANK AND ITS PRACTICAL WORK

index, dividing and sub-dividing the Williamses until it gets
to be a nicety, and you find it instanter. For due dates of in-
terest payments, expiration of insurance, etc., it is a godsend.
Every day has its allotment and for such records, it is with-
out a peer. But we are digressing, and back to the ledger.
As to security — and this must be considered, for as long
as men are human, some will steal and others try to, but

FOHM 79. XUMKKICAL CARD IXDEX, SHOWING ARRANGEMENT OF TABS.

(For alphabetical arrangement see p. 315.)

whether the card or the loose leaf will invite fraud is yet to
be seen.

Will a man who would go wrong stop at a piece of linen
thread, holding a leaf? Will he stop at a rod, or a lock?
Bound books have not prevented fraud; will the other sys-
tems invite it? Will he not find a way — or make one, as
history has proven time and again? After all, does not the
whole matter simmer down to human honesty? You may
lock the books or the drawers, so that two men and two keys

THE PASSING OF THE DEPOSIT LEDGER 305

are necessary to open, but will he not defeat tliis, if he is a
clever rogue?

As to the possibility of loss or misplacement, let this be
said for the loose leaf sheet; it can only go astray by desio-n;
the card maj^ and often does become misplaced in error.
The loose leaf is fast until its life is ended, when it comes out
to stay; but the card is loose all the time — else it would not
be a card. The one is a book — really a book, as the cuts will
show, with real binding and back and sides; the other is a bit
of bristol board sliding on a rod.

As to bulk, many banks raise the point of desk room,
and those whose quarters are cramped must consider this.
A thousand cards form a compact mass, and upwards of ten
thousand can be handled in the desk (Form 81), whereas at
the most four of the old bound ledgers could be handled
with ease.

The loose leaf ledger has not yet been devised that will
match the cards for compactness, but one has been invented
that will hold upwards of fifteen hundred accounts. The
genius who will devise a loose leaf savings ledger that will
equal the cards for compactness, has a wide field for his
wares, as a number of letters at hand would show. Match-
ing each other in this, it is "take your choice."

Will They Stand in Court?

In so far as the legality of these methods goes, let tliis be
said: It is a bigger subject than space permits to handle
with justice, hut they will stand in coiirt. It is a principle
of law that only books of original entry can be admitted as
evidence. It must be the original transaction, or the record
thereof, made by the party whose duty it was to make that
record in the regular course of business. The first record
made — crude memoranda even — may be called into play
to bolster up the otherwise original entry. If the one
who made them is living, bring him into court. If he
is dead, prove liis handwriting! In Hooper vs. Taylor,
39 Me., 224, the court said: "The material, form and con-
struction of a book offered in evidence as a book of original
entry are unimportant, provided such books are capable of
perpetuating a record of events, and the entries are made
in conformity with the general rule governing the admissi-
bility of such entries."

306 THE SAVINGS BANK AND ITS PRACTICAL WORK

Any bookkeeper knows full well that the ledger, no mat-
ter what the form, is not a book of original entries, except
perhaps in carbon systems. It is merely an assembly of orig-
inal entries, and the cards and loose leaves are in such uni-
versal use tliat no court could afford to question the validity
of the records therein contained.

For general ledger use, the loose leaf system is ideal. The
book is big or little as you please, self indexing, and always

FORM 80. CARD LEDGtlt DtSK^ SKOWIXG DETAIL OF CARD ARRAXGEMEXT.

(By courtesy of the Yawman & Erbe Manufacturing Co., Rochester, N. Y.)

as you will. For bond registers and mortgage records, it is
all that could be desired.

The Savings Bank in Account With Its Depositors.

It has therefore been decreed — the deposit ledger must
go! The handwriting has appeared on the wall, "Thou art
weighed in the balance and found wanting." Faithfully and
well has it served its day and generation, but its day is past
and its generation is passing, and in many banks it has taken
its place on the shelf of the "has-beens," bearing between its
covers the record of the struggles of the multitudes in their
climb up fortime's ladder.

It needs no monument, for jione regret its passing, and
those who have witnessed the advent of better things in their
institutions and must still earn their bread by the scratch of
their pen, rejoice that it has gone. Its virtues are so con-
cealed and its defects so apparent, that it would seem, ^vith-
out close analysis, to be entirely void of the former. The in-
creasing po])ularity of the savings banks and the increasing
prosperity of the people, have brought about such a growth,
both in the number of accounts and the frequency of the
transactions, that modern times have demanded better

THE PASSING OF THE DEPOSIT LEDGER 307

methods, and the bound book had nothing to offer but its
age. How universal is the trend toward the loose leaf and
card systems, ^vill be seen (as stated below) by the fact that
in an investigation by the auditing committee of the Ameri-
can Bankers' Association (Savings Bank Section), covering
600 banks, one-half were found using one or the other,
and but 123 out of the 600 still cling to the old idea. The
card ledger is not a new idea, as many suppose, for a sav-
ings bank man of national prominence is reported as saying
that he found a savings bank in Holland using card ledgers
txoenty years ago!

The Bound Book Passing Away.

To sa)^ that the bound book has kept good account with
the depositors, is to speak the literal truth; — it has "kept"
the account so firmly and so rigidly that its very firmness has
been its undoing, and the cards and loose leaves have come
in to keep the account just as well, but to let go when a
tenacious grip has no longer served a useful purpose.

As a book of account, to record the liabilities of the sav-
ings bank, its life has been long and useful, — too long ac-
cording to the notions of those who have had to hunt among
the "ruins" every time an account had to be found.

I>ike all things "ancient and honorable," it still has its
friends and defenders, but these, one by one, are bowing to
the inevitable and joining the ranks of the satisfied users of
the loose leaf ledger or the card system. Even the "doubt-
ing Thomases" are admitting that the disadvantages of the
bound book are so apparent, and the advantages of the other
sj^stems so manifest, that whatever merits the bound book
may claim are so outclassed by the newer ideas that the
weight of evidence is clearly on the side of the modern
sj^stems.

We accept the fact without discussion that it is of the
highest importance that the accounts of the bank with de-
positors shall be kept in such form as to be readily accessi-
ble for posting and ])roving, yet permanent and in such
arrangement as to make alterations, substitutions, and
manipulations difficult, if not impossible. The value of sav-
ings bank records was forcibly demonstrated in the case of
Kelly vs. Buffalo Savings Bank (New York Savings Bank
Cases, p. 67), where the action was brought nearly twenty-

308 THE SAVINGS BANK AND ITS PRACTICAL WORK

three years after the death of the depositor and several years
after the last transaction that was questioned. The ledger
account, being the assemhlij of the original entries, is, there-
fore, of vital importance, but not more so than the deposit
tickets and draft receipts, which should be duly preserved
as original vouchers which go to make up the ledger ac-
count. (For this reason some banks file the tickets and
drafts by account numbers, so that all the transactions with
one account are together, thus maldng it possible to recon-
struct any account from the files without regard to the led-
ger account. ) That the deposit ledger has accomplished all
this is admitted; but in so doing it has "accomplished" so
many other tilings that it has discounted its own worth. It
needs no long argument to prove that, wliile the records
should be permanent , they need not necessarily be sewed
together and bound between Russia leather covers.

The Bound Book No Safeguard.

History will demonstrate that the bound book has not
prevented defalcations. Whether the safeguards thrown
around the cards and loose leaves are sutTicient to protect the
banks from losses on this score remains for the future to de-
termine. Certain it is that more serious losses could not
occur under the regime of the loose leaf and cards than has
obtained under the bound book. Recent cases in JNIassa-
, chusetts and Maine, in wliich nearly half a million was
stolen from the banks and successfully covered up in the
ledger accounts for many years, and an old one in New
York, in wliich the bank lost over $350,000 in the course of
twenty years, amply demonstrate that the ledger is not
immune from attack by a clever man. In the ^lassachu-
setts case, the bank made, or was supposed to have made,
recentl}'', a thorough verification of its j^ass book liabilities
as required by law. According to the bank's accounts the
institution was solvent; but when the true condition, as
shown ])y the outstanding pass books, was known, a deficit
of over $2.50,000 was revealed. The legislative committee
that investigated this case severely condemned the trustees
for not recjuiring jiearly audits by outside accoinitants. In
the last analysis, therefore, it is not the bank's ledgers, cards,
or loose leaf ledgers, that tell the true story of the amount
due depositors, but the sum total of the pass books. It is,

^ '^

o PS

-^ O

O 3

< 2

5 H

w >^

S tt

100

ku^Jh Mir,^^.:^

^ ^ r l3n^..lL Tflu

r II

CATE

' DEPOSITED 1

r BALANCE 1 K 1 1

As-l^

6 -

sS -

1 0 -

/ o -

Xo -

^(1

i_2. -

3^ -

W(U>

' 0 -

llo -

1 o .

y 0 -

'111 J

) ^fi"^

3iL£o

i^ -

Hlo

J -

iASo

I 0 .

sJLi

}

/Afo

411^

1 0 -

fo -

1 0 .

ko -

S@^^

iU,

P^-^

CO. .OC-.T

"■ " '

F-F-

£ /

I'ORM 81a. BLOCK OF CARDS AS THEY APPEAR I:N THE DRAWER. NOTE THE EASE WITH

WHICH THE XUIMBER MAY BE LOCATED.

THE PASSING OF THE DEPOSIT LEDGER 309

therefore, more essential that adequate safeguards be
thrown around tliis part of the work, and that exhaustive
periodical verifications be made of the pass books, than that
the whole solvency of the bank shall rest upon the account-
ing system inside the institution. The average depositor
can be depended upon to verify the amount due him as
shown by the book in his possession, and manipulation of
the pass books is a dangerous and rare practice. But
manipulation of the ledger balances is one of the easiest
tilings imaginable in many institutions, and is given less
thought than any part of the auditing work. This verifica-
tion, of course, must be frequent and thorough. The laws
of Massachusetts afford an excellent example of what should
be done in this line, and the reports from the banking de-
partment of the State demonstrate the excellence of this
idea in practice. Some banks have verified as high as nine-
ty-five per cent, of the pass books in a period of six months.
This matter will be treated in full under the chapter on
"Auditing."

The Bouxd Book Unexpansi\^.

The charges against the bound book may be summed up
as follows: (1) It is full of dead wood. The time con-
sumed in finding the living among the dead equals or ex-
ceeds the work placed upon the living. It is impossible to
eliminate those accounts that are of no further use save as
records. Wliile dead, they are unburied, and like all things
dead, but unburied, become offensive. While they may be
invaluable as records, they are an intolerable nuisance.

(2) The accounts fill up and must be transferred. This,
perhaps, is one of its greatest weaknesses. It neither con-
tracts nor expands. The dead accounts cannot be taken
out; the live ones, or many of them, must he.

The latter is usually accomplished by one of three
methods: (a) Provide blank leaves at intervals; blank
spaces likewise; or additional accounts unnumbered at the
back, (b) Carry to the nearest open space (blank space
on some closed account nearby) . This is frequently the
practice, but as has already been noted, it takes the accounts
out of natural sequence and in the end promotes confusion
and delay in finding the account. As one bank that has
discarded this practice states, "Very often this open space

310 THE SAVINGS BANK AND ITS PRACTICAL WORK

would not be found except at quite a distance away from
the original page. It would, therefore, take the account
out of its rightful section, or block, which, according to our
system, occasioned a difference in such section, which re-
quired a long search to rectify. Tliis would be the case at

UMION DIME SAVINGS INSTITUTION

A.-e >yg P.rc

«4

7^-

lT"i'it;iti"i'Vi'

FORM 82. LEDGER CARD.

every half-yearly trial balance as long as the account re-
mained open." This idea has everything to condemn it and
nothing to commend it. (c) The closing of the old and the
opening of a new account every time the space is exhausted.

The Legal Side.

The bug-a-boo of legality, which has been raised against
the loose leaf and the cards, is no longer an element to con-

THE PASSING OF THE DEPOSIT LEDGER 311

sider. The courts have ruled so plainly, and the logic is so
clear, that it is the onginal entry that counts, and not the
assembly of those original entries, that it may be taken for
granted that the loose leaf will have as good a chance in
court as a bound book — provided it is properly authenti-
cated by the original entries (deposit tickets, draft tickets
and pass books) . The loose leaves of a bank ledger, con-
taining entries, are competent, though not conclusive, evi-
dence of the transaction to wliich they refer, when they are
properly proved by the testimony of the employees of the
bank. (Queen City Sav. Bank and Trust Co. vs. Reyburn,
U. S. Circuit Court, East Pa., July 31, '08.) In a careful
investigation of over one hundred savings bank cases in the
New York courts, covering practically the entire savings
bank litigation of that State, the author has not found a
single case in wliich the amount has been in dispute. It
has usually been the ownership of the fund or wrongful
payment thereon, but not the fund itself. It may be that
in cases where the pass book has disagreed with the ledger,
through the manipulation of the ledger account by the de-
faulter, the true balance could only be ascertained from the
pass book, but in such instances the evidence is clearly
against the bank and in favor of the depositor. But it was
for his protection that the pass book was given him.

Speaking of the Card Ledger.

The Auditing Committee of the American Bankers'
Association, Savings Bank Section, has steadily recom-
mended the card system. In the report for 1907 the com-
mittee states: "In the interest of conservatism, many bank
officers are opposed to the system, and we would advise a
thorough examination into the whole matter before deciding
to make a change from books to cards; we would advise
writing to some of the large banks now using cards, for their
experience and results ; our replies from such have been uni-
formly satisfactory and even enthusiastic.

"As regards the danger of losing cards, our inquiries
tend to show that this is but illusory. Experience has
proven that no loss of cards has really been made; it is pos-
sible, however, that cards may be misplaced or temporarily
missing, and as regards this, a very simple method will en-
able one to duplicate a missing card in a short time by

312 THE SAVINGS BANK AND ITS PRACTICAL WORK

observing the following directions: Draft and deposit
tickets, after being used for posting, should be filed away
seriatim, according to their numbers. Tliis requires but
little additional work; should a card be misplaced, a dupli-
cate card can be made for that account by starting with a
deposit according to the trial balance, and posting to it the
drafts and deposits made since that date, as will be readily
found when the draft and deposit tickets are filed seriatim."

The committee also recommended at this time that ledger
accounts be ruled so as to be practically a duplicate of the
pass book pages, and also that the balance column for both
ledger and book be used, "as it checks mistakes, prevents
overdrafts, sup])lies ready-made balances, which may be con-
sulted and compared at all times, and is of greatest value
when taking trial balances." In one large bank that adopted
the card system, after most careful investigation, the order
went forth that any clerk found guilty of misplacing a card
would summarily lose his job. It is needless to state that the
original force is still on the job, and the somewhat harsh
order yet to claim its first victim.

Again in 1908 the committee reported, "The day of the
old-fashioned bound ledger seems to be passing; one-half
of the larger banks (those having 5,000 accounts and up-
wards) use the card ledger; the loose leaf is used by more
than fifty per cent, of the smaller banks — while the bound
book is used by only 123 out of nearly 600 banks." As a
further precaution against manipulating the cards, the com-
mittee in its 1909 report suggested that "the depositor affix
his or her signature on the card at the same time he or she
affixes his or her signature on the signature card or book
when opening the account." Should such ledger card be
abstracted and another substituted, it would necessitate a
forgery of the depositor's signature on the signature card —
a serious matter. (Form 82.) Some banks not only take
the signature of the depositor on the ledger card, but also
the depositor's age, and father's and mother's name. In
small banks or small savings departments in discount banks,
the signature and full pedigree of the depositor may be taken
on tlie to}) of the ledger card, thus saving time and money
by dispensing with the other signature or pedigree cards.
(See Form 12.) This latter suggestion is very good and
works well, exce])t in cases where the depositor does not

THE PASSING OF THE DEPOSIT LEDGER 313

write a good hand, when the ledger heading is apt to be
"more artistic than beautiful."

One of the best features of the card ledger lies in the fact
that bj^ using a steel cabinet and having a fireproof building,
the cards may be left in the desk over night without danger
of burning. In fact, many if not most of the new banks
are using steel fiHng cabinets for their books and other
records, thus saving the cost of expensive vault room. The
practice of putting books beliind six inches of steel is grad-
ually passing away — half an inch in a modern building is
sufficient. Vaults are now used for securities and money
only.

In Witness Whereof.

Enough has been cited to warrant the conclusion that the
days of the bound book are numbered, and that it is only a
question of time when either cards or loose leaves (banks
must settle the relative merits for themselves) will be quite
universal. The following descriptions of the working of
the card system are taken from letters on the subject from
bank men who speak from experience: In the Springfield
Institution for Savings (Mass.) all ledger cards on which
any transaction is to be entered are first taken out and
arranged numerically. Those on which deposits are to be
posted are separated from those on which drafts are to be
entered. The deposit and draft tickets are likewise sorted
numerically. At the first posting the balance only is
changed. The cards are then turned over to another clerk
who enters on them the deposit or draft as shown by the
changed balance. These transactions are then run off on the
adding machine and the totals should agree A^ath the totals
as shown by the teller.

A skeleton ledger is used as a check (Form 96) in case
a card should be lost or mislaid or an attempt be made to
make false entries. On this ledger the amount of the de-
posit or draft only is entered. This is posted daily by clerks
who make no entries on the card ledger. The trial balance is
obtained from the skeleton ledger by comparison, account
with account, ledger and card. The totals of the accounts
on each page of the ledger are compared with the totals of
the same accounts obtained from the cards by adding
machine.

In the Cayuga County Savings Bank, Auburn, N. Y.,

314 THE SAVINGS BANK AND ITS PRACTICAL WORK

instead of one index figure at the top of the card, the three
terminal -figures of the account number are printed in addi-
tion to the full number in the usual place. (Form 83.) This
makes it much easier to find any given number, lessens the
number of finding cards by ten in each hundred in the ac-
counts of later date, and in the older sections needs but one
for each five hundred or thousand open accounts. In case
a card is misplaced the tliree figures enable it to be found
quickly, as it is only necessary to look for that three com-

309

40309

In Accl.

with CAHJO* CO. SAVINOS BANK A.biini. N. V. " t/V}/

vt.r.

.,|TH0B.»»

OEPOSfTCO

...«. 11

■"•Ji-L."i '_•

lOHji 83. — ij:dger card used ik conkectiox with system descbibed above, note

THREE FIGURE INDICATORS.

bination figure out of its rightful place, and there can be
but 07?^ of them to each thousand accounts, Avhile in the other
plan, there are one hundred to each thousand. Different
colored finding cards are used for each section as an addi-
tional safeguard against dropping a card in the wrong tray.
Closed cards are kept in a separate tray until the next trial
balance is taken, when they are filed in numerical order. This
allows checking back all postings for the six months, in case
it becomes necessary, although in five years' use of the card
system this bank has never had occasion to do this. When
cards are full on both sides, new ones are inserted in the
same place and imder the same number, and Avhen the
account is finallv closed, all transactions thereon are found

THE PASSING OF THE DEPOSIT LEDGER

315

together in one place. Accounts have been known to have
been transferred as high as thirty times on the old style

FORM 84. LOOSE LEAF LEDGER, SHOWING INSERTIOIT OF LEAF.

(By courtesy Dennison & Sons, New York.)

ledgers, and the difficulty of tracing back the account will
be easily manifest.*

FOK3I 84a. — ALPHABETICAL CARD INDEX.

•From a letter by S. M. Eddy, bookkeeper.

CHAPTER XXI
POSTING AND PROVING

xVs a proposition in accuracy, all bookkeeping resolves
itself into getting the right amount on the right account, and
he is the ideal bookkeeper who never gets the wrong amount
on the ^^•rong account, or the wrong amount on the right
account, or the right amount upon the wrong side of the
right account.

The transactions of a large savings bank are multi-

590

SOUTHOLD SAVINGS BANK.

NAMES (IF DEPOSITORS

Amou,nts brought forifunl,

i-S

/ o o

f-7

/-^

FORM 85. DEPOSIT AXD DRAFT JOURKAL.

tiidinous, and worst of all are spasmodic, coming like an
avalanche during the interest periods and in the interim run-
ning more or less uniformly.

On a quiet day the transactions in a large bank will,
number a thousand, and on a busy one, in one of the largest-
New York banks are reported to have been over ten
thousand.

Tlie system must therefore be adapted to the rush periods
as well as the slack times, and the force large enough to
handle tlie work at its maximum, which makes the work
much less trying during the quiet periods than is usually

POSTING AND PROVING 317

the case in commercial banks, where there is the daily grind
of grist, which must be completed before the force is at
liberty. This work is so nicely adjusted, that in a fifty-
million-dollar bank in Greater New York it is no unusual
thing to find the work finished witliin fifteen minutes after
the doors have closed. In a hundred-million-dollar bank,
the work is generally completed within half an hour after
the closing time. Rush periods and interest times, of course,
necessitate longer hours, but even these are not unduly
extended.

The proposition that therefore confronts every savings
bank is to devise a system of posting and proving that will
not 2)ermit an error to get past the posting check. If it does,
it will give trouble in the next trial balance, and trouble with
the trial balance is the most unwelcome visitor that can come
into a savings bank, large or small.

Accounting by Groups.

The foundation of all posting systems is the grouping
of the accounts. This is so generally the custom that it may
be taken as a settled savings bank policy. At a meeting of
the representatives of a majority of the savings banks of
New York and Brooklyn, held recently, this question was
put, and it was found that all but one made this a practice, —
that one being a bank carrying about seven thousand
accounts, and considering them all one group, which is a
serious mistake, as the dividing into smaller lots would be a
decided advantage. Just how small the groups should be is
a matter of opinion, but the smaller the bank the smaller can
be the grouping, and in the case cited, groups of either two
or three thousand would help materially in expediting the
work. If ledgers are used, each ledger would naturally in-
clude a group, but if cards or loose leaf systems are in vogue,
the accounts may be grouped numerically, as, for instance,
1 — 1,000; 1,001-^2,000, and so on.

It is, of course, of utmost importance that the items be
properly distributed to the various groups, or the system
falls down. But by the coupon system, herein described, com-
bined with postings direct from tickets, incorrect distribu-
tion is impossible. The classification is usually accomplished
in one of tw^o ways: First, through the use of the cash-
journal (Form 86) ; second, through the distribution sheets

318 THE SAVINGS BANK AND ITS PRACTICAL WORK

used in connection ^vith the coupon system of posting and
proving (Forms 87 and 88).

AVliere a simple method is desired and the coupon system
is not adaptable on account of the lack of clerical force, a
better scheme could hardly be devised than the one presented
below, which consists of a plan which retains all the good
features of the journal method and eliminates all the un-
desirable.

It is the custom in many banks before proving the cash

■2 GrovpS

Amounts Bnjughl Forward

~Si.yS<f

//i'H-^i ■^JjJ:

gj.

f t.,w fe VfeJ

/ /si, yf

•s'(, va ^ / oo

FORM 86. CASir-JOUHXAI.. GENERAL LEDGER ITEMS GO IX FIRST COLUMN ; DEPOSIT

ITEMS ARE DISTRIBUTED AMONG THE VARIOUS GROUPS IK THE NEXT
FOUR columns; MORTGAGE ITEMS IN LAST COLUMN.

transactions of the day to enter all drafts and deposits, to-
gether with the general ledger items, on the journal or cash
book. Some banks run a deposit journal, a draft journal
and a "general journal." By Form 8G, it will be seen that
before cash is proven by this method the permanent records
must be made in detail. This is not or should not be neces-
In advocating the use of the teller's cash sheet as a

sarv.

counter proof of cash, the author speaks from experience.
If time is an element to be considered, as it should be, and
accuracy as well, the use of this idea ^will accomplish both.
It is quite generally used in commercial banks, and ought

POSTING AND PROVING 319

to be in savings banks, as a quick and accurate proof. It
ought not to be necessary to list every deposit by name and
number and distribute to the proper group before the teller
can satisfy himself that liis cash is correct. At three o'clock
he is, or ought to be, concerned that his work has been cor-
rect during the day, — let the permanent and complete record
of liis doings be chronicled later.

On pages 290, 292, 294, 295, forms of teller's cash sheets
will be found. No particular form is necessary, as long as
it totals the debits and credits of the day. Form 74 has
an added feature in that it is a proof also of the journalizing
of the same work. The process is as follows : As the draftsi.
and deposits come in during the day, they are listed by
number and amount only, tvithout regard to the sequence of
accounts, in the debit and credit columns. After listing,
they can be posted to the ledgers or cards if desired, or this
may be done after journalizing. As soon as the doors are
closed, the columns are added. The credits are added to
the cash on hand as of the previous night, the debits de-
ducted, and the result is the amount called for. If by the
rules of the bank, postings are required to be made the same
day, this can be done direct from the tickets as soon as they
are listed on the cash sheet. The next morning these are
assembled in their respective groups, and written up on the
journal (Form 86). The totals of the journal are carried
until the end of the month, and the difference between the
debit and credit sides must give the same residts as obtained
on the teller's cash sheet. (See "Proof of cash book" —
Form 74.) If these figures prove, it indicates that the items
have been correctly entered. If not correctly entered, there
will be a difference which will readily be found by checking
from the teller's sheet. The ledger postings are checked
back fro7n the journal, and we have thus gone around a tri-
angle, not having done the same work twice, nor having
done a stroke of needless work. To post from call is liighly
dangerous, as many bank men will testify. The eye is more
accurate than the ear, and wherever oral posting and proving
is in vogue, the sooner it is abandoned the better for all con-
cerned. Amusing and annoying errors have been traceable
to this method, and it has nothing to recommend it. A
study of Form 74 is sure to be attended by good results and
will repay any bank running with but one teller.

320 THE SAVINGS BANK AND ITS PRACTICAL WORK

The Coupon System of Posting.

Tliis, of course, does not insure getting the amounts in
the proper groups, and to verify tliis process nothing can
be done but go over the journal columns and ascertain that
the grouping has been properly done. This is but the work
of a very few minutes. But the coupon system which we
shall consider at length has so many advantages over all

CREDIT DEI^OSITS.

Ledger /3

NUMBER.

Credit Deposits,

Ledger X3

This portion^of the oheat goes to the
bobklcaepar^irtio locates the entry on
tho l8dfi« by the number ir. the first
col-jiip^verifiea the name and enters
herj/flhatever he finds posted under
the current date. The total in some
ba.ik3 is carried to a "summary sheet
but if the work as a whole is out of
balance, comparison of the total of
this part with the detached portion
will indicate on which sheet the error
has occurred, and by placing the two
parts together, the iteii will be
quickly indicated.

•11

12
1.!

• 11

Iti

. ^"

1 IS

1!)

: 1!)

■JO
21

' 20

: 21

■J:!

■ 22
I 2:(

. -*'

■M\

k 20

o to o
/ o o

3/^

At the close
of the day's
business, the
footings of
this column
may be carried
to the oash
book in bulk;
but if the
items are
listed singly
and grouped
on the cash
book, the totals
must agree.
This part is
detached and
held by the
head book^
keeper or
other officer.

roHM 87.— iJisTniBUTiox shekt used in the coupox svstkm of posting.

EXPLANATION ON FORM.

POSTING AND PROVING 321

other schemes, and is in use in so many banks, that it would
seem but a matter of time when the fundamental idea em-
bodied in this system will be found in all savings bank post-
ing systems. It will accomplish four very desirable tilings,
viz.: (1) It insures getting the right amount on the right
account and on the right side of the account. (2) It pre-
vents wrongful grouping. (3) It will positively prevent
an error in extending the balance. (4) It will insure that
the same entry is made on the ledger as is made on the pass
book.

The foundation of the whole scheme is "blind" work, —
i. e., the clerk has nothing before him to make it easy to make
errors in liis postings. As Colonel Sprague suggests, "the
human mind is apt to assent to what is presented to it, and
it often assents to a thing that is wrong, and is not able to
tell afterward why it 'sHpped a cog.' " A study of Forms
87 and 88 is suggested in this connection, and what follows
is based upon these forms.

The sheet, whatever the minor details may be, is di\dded
roughly into tlu-ee portions: (1) List of deposits (we are
considering only the credit entries) ; (2) proof of posting;
(3) proof of ledger extensions. Some banks omit the last
named portion and use the first two only, verifying the bal-
ance by another process. Usually a sheet is used for each
ledger or group of accounts. In the present case we have
ledger "B" (Form 87) . As the deposit tickets are received
they are taken by the distribution clerk and entered upon
the proper sheet corresponding to the ledger or group to
which the entry belongs. In the present case credits are on
yellow sheets and debits on blue, and the deposit tickets and
draft receipts correspond with the distribution sheets in
color, and it is practically impossible to get a debit on a
credit sheet, or vice versa. This clerk fills in the number,
the name, sJxips a column and extends the amount on the
perforated portion which, after cash has been balanced, is
detached and goes to the head bookkeeper or secretary. In
some banks it is merely turned under. The items may be
carried to the journal in bulk or itemized, as in the process
above described. Postings are made direct from original
tickets to ledger. After postings are completed, another
clerk (or in smaller banks the same one) takes the sheet,
which now contains nothing but the number of the account,
or in some cases the number and name and in others only

322 THE SAVINGS BANK AND ITS PRACTICAL WORK

part of the name, and turning to the account he puts down
whatever he finds imsted and at the same time, the new
balance and the old one. In one large New York bank the
posting clerk merely extends the balance as it will he when
the item is posted. The check clerk ascertains what amount
will so a feet the balance and puts it down, both on ledger
and proof sheet. When his list is completed, the amount of
the deposits is added to (in case of debits it would be de-

PROOF OF BALANCES.

CREDIT DEPOSITS.

Credit Deposits.

^6-j 8

AS ticiets CCI06 from tbs teller to the bookkeeper duilr.g the day, thcv *r
•-itrred on thle sheet as above, and the anount (}i2S;er.-.erid in the cash-
Journal. After being entared part * le detached.

/ C5 O
/ O

PROOF OF BALANCES.

CREDIT DEPOSITS.

1 vf

^yg

z
f

' 1 O

/CO

/ o

ifter the itecs have oean poeted to the ledgat accounte frOBv tha tteketa,
taiB eboot, on which only the tiucbar of the account aEpeara, Is tajtan to
the ledfcer and whatever credit le found on that acco^Jlt ic entorsd in the
collar, marked -2" and foctod when the iiet le cocipietsd. The total le •-•
compared with the detached portiir. and If It agrees. It la proof ti.ct the
poatings are correct aa tc Eumber cf accou,-.t trd amount

PROOF OF uikms.

CREDIT DEPOSITS.

eortectiy ^^1 thr.!i;niL '"-'^^to agroa. t.-ie .ork haa be.n done

iodepSml'ntt; p*rSv," '""' ^'"'^^"te. and account nu^uo^ra have been

FORM 88.

COUPON SYSTEM OF POSTING AND PROOF OF BALANCES.
FORM.

EXPLANATION ON

POSTING AND PROVING 32.3

ducted from) the old balance and if the total of the old bal-
ances, plus the credits, equals the total of the new balances,
the work has been correctly done. The total credits must
also equal the total on the detached portion, and the "proof
of balance" columns equal each other, with the additions or
deductions mentioned above (Form 88). This absolutely
insures that the correct amount has gone on the proper ac-
count, on the proper side of the account and that the exten-
sions are correct. If improperly grouped, the checking
clerk tuill not find the item posted on that ledger.

To insure that the same item goes on the ledger that
appears on the pass book, some banks, instead of transcrib-
ing from the tickets to the distribution sheets make these
entries from the j^ass hook. The book goes from the teller
to the distribution clerk, who enters upon the proper sheet
whatever he finds on the hook.

This is a very good plan and works exceedingly well.
It necessitates, of course, enough help so that one or two
men can be made assistant tellers and give all their time to
tliis work. In large banks the protection against errors and
fraud would be well worth the cost.

The Coupon System ix Practice.

At the risk of appearing presumptuous, the author
wishes to go on record as an advocate of the teller's cash
sheet in w^hatever form the bank may elect, as long as it pro-
vides a quick and accurate test of the day's work. This
can only be accomphshed by eliminating all needless details,
and confining the work to the listing of account number and
amount of deposit or draft. Likewise no better foundation
for the proof of posting can be laid than the coupon system,
in whatever form it may be adopted, as long as it will p?'e-
vent wrongful posting and wrongful grouping, each of
which is of equal importance. As has already been said, the
underlying ideas in the coupon system are the grouping of
the accounts and "blind" proving. The grouping is well
nigh universally practiced, and the "bhnd checking" should
be. The use of the journal is mainly to assemble the totals,
and provide a summary of the work of the whole bank.
Where the force is large enough to pass the trans-
action through the distribution clerk, and at the same time
make a journal entry, while the depositor is waiting, as in

3^24 THE SAVINGS BANK AND ITS PRACTICAL WORK

the case of the Bowery, given below, so much the better;
but in many banks this would be impossible, and simpler
methods must be found.

Correct posting is important — vital, but correct grouping
is essential if the nerve-racking work of long and tedious
checking back at trial balance time is to be avoided. And
the eyes of the savings bank man are usually focused upon
the testing time, which, thanks to better methods, is being
robbed of its terrors.

The Bowery's jMethod.

A very clear idea of the procedure in a large savings
bank may be obtained from the following description of a
transaction in the Bowery Savings Bank, from the pen of
its comptroller, Mr. William E. Knox:

"The new depositor is directed to the receiving teller's
window, and hands in his monev. The teller asks him the

NEW ACCOUNTS

Ecok Nim.bc?r

! ^osoooo

108000g\ new

} ACCOUNTS

Amount found ; ?Tew account cleri

/ ^ // /^^

i/cr^^^ /i3a

.-b^

.^^

;i^

Tills por'.loc ot the eh«et goes to the bookkaepei, who locates
tie oniT7 In the lodger by number gTven In the first column,
Tarlfles the name and enters the amount In the amount column
of this portion of the sheet, aa he finds It posted In the
ledger ^.der current date. The total Is made and carried to
a sumary sheet. If the total does not correspond with the
detached part, ccmparlson will Iccato the error.

-W

At the close
of the days'
business, foot-
ing of this
colUBa mviS't •
agree with
the cash took.
This portion
ie than de-
tached.

FORM 89. — CLASSIUCATIOK SHEET USED 1 X THE BOWERY SAVINGS BANK.

POSTING AND PROVING 325

amount of his deposit, and finding it correct, enters it upon
a card, and on the same card notes the rephes to the follow-
ing questions: 'What is your business, j^our residence, your
father's name, mother's name, \^dfe's or husband's name,
nationality and in the case of a minor, 'Your age?' On
the card the depositor's signature is afterwards taken, and
it is used as an identification card so long as the account
remains open. The teller passes this card along to a clerk
who enters on the cash book (this takes the j3lace of the
teller's cash, which it really is) the number of the account,
the name of the depositor and the amount of the deposit.
The same clerk enters the number of the deposit on what is
known as a classification slip ( similar to Form 87 ) , and at
the end of the day's work, the footing of the cash book, the
aggregate footings of all the classification slij^s, and the
amount of cash received by the teller must agree.

"The classification slips referred to are so called because
the transactions of the day are arranged and classified on
them in groups corresponding to the ledgers to which they
are afterwards to be posted, each ledger having a slip cor-
responding to it in number.

"After the deposit tickets are entered on the cash book,
they are immediately arranged on the classification slips,
which are sheets about the size of foolscap divided into four
columns — the first column being for the number of the
account, the second for the name, the third being for the
present left blank, and the fourth for the amount of the
deposit. The last column is separated from the rest of the
sheet by perforations, and after the proof of the day's cash
receipts has been made, this column is torn off, leaving on
the main sheet only the number and name of the depositor
and a blank column. The bookkeeper takes the sheet to
the proper ledger, turns up the account recorded, and puts
down in the blank column the amount which he finds posted
— the 'postings having been previously made froin the ticket.

"Each bookkeeper checks out the postings on another
man's ledger and enters on a sheet, known as the 'Summary'
(Form 89A), the total of all the postings in the ledger.
When the postings have all been checked out, and the results
entered on the 'Summary,' the entries are compared with
the coupons, and any error in posting is at once detected.
If it be borne in mind that the bookkeeper when checking
out has only the number and name of the depositor to guide

326 THE SAVINGS BANK AND ITS PRACTICAL WORK

DEPOSITS

Number 1

^1
3 o

440.000

/ o

<c.

520.000

600.000

1.^

640.000

680.000

¥^

7 0 0.000

7 20.000

740.000

760.000
7 8 0.000
800.000
810.000

The totals of the vaiiou*
Ciassif icatlon elips ai9
caiiied to this summary
shsat, and the total must
agree with the total of the
cash booi: and with the caeh
In bands of the teller.

820.000

S30.000

8 4 0.000

8 5 0.0 00

1 1 1 1 1

860.000

870.000

880,000

890.000

900.000

910,000

920.000
930,000

940.000
950.000

E
t

955.000

960.000

1
1

965.000

970.000

975.000

980.000

lUll.-VI S9a. SL'MMAIIY SHEET.

him, and that his report is held by the head bookkeeper, it
will be seen what an effective, yet simple, check this is.
Finally, the footing of the 'Summary' must agree with the
footing of the cash book and with the teller's cash."

The same treatment is given the drafts. It will be no-
ticed in tliis instance that there is no proof of the correctness
of the ledger l)alance, as shown in the preceding example,
where the extensions were ])roven also. The check upon

POSTING AND PROVING

327

wrongful classification is the fact that postings are made
direct from the tickets and checked back from the lists, and
it is unlikely that the two men will make the same error and

CLASSIFICATION PROOF.
WOMEN.

/o
3

' After all itama have basn
I posted, and tba check cleik
has entered in the blank
column of the distribution
I or clasaiflcation sheets
whatever he found posted
1 under the current date, the
^ totals are entered on thii
"classification proof* and
I the totals must not only
agree with the cash book
' and the "summary" but the
I amounts on each ledger must
agree with the susmary. This
is proof that the iteae
I have been properly claselfled,

FOEM 90. CLASSIFICATION- PEOOF.

get an item jDosted to the wrong ledger, on the wrong ac-
count and on the wrong classification slip.

Akound a Triangle.

In the Greenwich Savings Bank of New York, one of
the largest of the New York banks, the operation is as
follows :

328 THE SAVINGS BANK AND ITS PRACTICAL WORK

Tliis is a good moment to take a glance at the desk sit-
uated directly between and M'itliin easy reach of the men's
and the women's teller forming the base of a triangle de-
scribed by the three tellers' windows. It will offer us the
opportunity to examine the complete system of recording
and proving cash transactions in use in one of our largest
savings banks.

The work of the desk of the journal clerk forms the base
of triangular record and proof. All transactions are
worked off and proved outwardly by way of receiving teller,
journal clerk, paying teller, and inversely, journal clerk,
bookkeeper, balance bookkeeper, making a collusion of at
least five persons necessary for the perpetration of fraud.
The journal clerk enters and initials wdiatever he finds writ-
ten on the pass-book on so-called balance sheets wliile deposit
— respectively draft tickets are sent around in another direc-
tion, by way of paying teller's spindle to the bookkeepers
for posting, when in the hands of the balance bookkeeper
the two ends again meet, forming a system of record, com-
plete, simple and safe beyond contravention.

And now let me explain in detail this system of the
journal clerk's balance sheets on w^hich are made the record
of the day's transactions and also the daily ledger proof.
These are double sheets about lOxS^/^ inches, numbered and
ruled off wdth columns for number of account, name,
amounts of deposits and drafts. There is a sheet for each
ledger.

The clerk takes pass-book placed on his desk by the teller
and copies on sheet from it the amount, name of account
and deposit or draft entry of that day in their respective
columns, then initials the pass-book entry.

At the close of the day the columns are added by the
clerk, and footings as well as number of transactions re-
corded on the sheets must agree with the records of the
tellers; then tellers and clerk put down their sums total on
a book of summary of daily cash transactions.*

Draft transactions are treated in exactly the same way
as tlie dejjosits. ^Vt the close of the depositors' hours, three
o'clock, the tickets are taken from the chief teller's spindle
by bookkeepers, each taking his own class of transaction,

•Chas. L. Siel)ert, in "The Bookkeeper."

POSTING AND PROVING

329

£>

CA1U0A COUNTt SAVIIOS BANK. :^

nmovurs <jf CREDITS ro olpasnofS ^

AUG 20 1908 Sec. ? J

4000 "^

»oooo

lOOO

AL'n20'9QS

Deposited in

CAYUGA COUNTY SAVINGS BANK

For Crcdil ol

/Oc

^S-o-

Deposit made by

No. /'J~ -2 O o

VeriBcilloii il CREDIT fusliais

D,pos,>.d.„ fiLG 20^908
CAYUGA COUNTY SAVINGS BANK

Foe Cred.l o(

<Oj~-

Deposil made by

N- // ^^/^y

J2^^

"^ A0G2O'90S

Deposited in

[UrUGA COUNTY SAVINGS BANK

For Credit of

VLaJI f&A-A-^

No /<? /CO

FORM 91. ASSEMBLIKG

3IACHINE

ITEMS IK OXE GROUP FOR POSTING TO JOURNAL.
USED IN 'b^'-PEN IX PROVIXG THE POSTING.

and when arranged in numerical order, they are posted in
the depositors' ledger. The following morning three or four
men, appointed by the balance bookkeeper, act as checkers.
They take the stub of the journal sheet, as before said, bear-
ing only the number of account and the name of the de-
positor, and, finding number and name on ledger to agree,
they should find a transaction. That transaction is copied
according to the posting upon the blaiik page opposite said
stub into its proper column — deposit or draft.

When all of that ledger's postings have been copied
thereon, the footings are compared respectively with the
footings of deposits and drafts as entered the day before
by the journal clerk, he having kept overnight in a sealed
envelope such portion of his sheets. This comparison is
made by the balance bookkeeper and the journal clerk. On
their being found to agree, we have again, without the pro-

330 THE SAVINGS BANK AND ITS PRACTICAL WORK

diiction of the bank book, verified the entry therein, and
which is of course the habihty of the bank to the depositor.
In case the comparison shows a difference between the foot-
ings of said cohimns, they are compared with each other,
item by item, until the one in error is discovered, and at once
the ticket is referred to for verification, and must necessarily
show the error as occurring in either the posting into the
ledger, or the copy of such posting, because on the prior
afternoon, the journal clerk's footings were found to agree
-vnth the chief teller's and receiving teller's slips. By this
method you will see that errors are at once corrected, and
do not remain unfound until a general proof of the ledger
is made.*

The "Balance-Posting^^ Method.

In the Union Dime Savings Bank of New York, noted
for what may be termed for want of better word, the "tech-
nique" of its system, the "balance-posting" is used. Tliis, of
course, is only aj^plicable when the balance column is used
and is not only reliable but practically infallible. As its
president states: "The human mind is inclined to assent to
what is presented to it, and if the figures of the test have not
been copied or compared-, but are the result of a mental pro-
cess, a vastly higher degree of dependence may be placed
upon them."

President Sprague thus describes his system: "The first
step in the posting is really not posting at all; it leaves the
debit and credit columns blank and inserts in the balance
column the increased or decreased balance which results from
the deposit or draft. The bookkeeper has in his hand both
deposit and draft tickets, assorted numerically, hut not sep-
arated, so that he must discriminate between a plus and a
minus in every case. Having properly checked each ticket,
as entered, he turns the bundle over to the chief accountant,
and commences to perform the second stage, not upon those
accounts, but on a section which his predecessor has been
putting through the first degree. These sections rotate
among tlie bookkeepers daily, so that Mr. A, who began
to-day on Section No. 1, starts to-morrow on Section No. 2,
doing the second operation on Section No. 3. No book-

*I.etter from James Quinlan, President.

POSTING AND PROVING 331

keeper has any permanent section under his dominion ; every
few days he passes over the entire field, and there can be
no complaint about unequal distribution of labor.

"To return to the 'second stage,' for which ruled sheets
are provided. A list of the numbers of the tickets which
have just been used in the work is written down the center
of the page, using the adding machine for this purpose. The
second stage bookkeeper, armed with this list, having no
access to the original tickets j, goes to each account and in-
spects the last two items in the balance column. They must
show either an increase or a decrease j and the bookkeeper
can only ascertain which by subtracting the amounts. If
there is a decrease of ten dollars, he inserts ten in the debit
column of the ledger and ten in the 'decrease' column of the
sheet. If there appears an increase of ten dollars, he in-
serts ten in the credit column of the ledger and ten in the
increase column of the sheet. He also writes the name which
he finds at the top of the account, having no clue to the name
on the ticket.

"Finally the tickets and the lists have reached the ac-
countant, who separates the deposits from the drafts and
carefully compares each ticket with the list. They should
agree in the following respects :

"1. The number.
"2. The name.
"3. The amount.

"Having eliminated any errors found, the totals are
made up by the smaller sections and recapitulated, finally
reaching an agreement between the increase and the decrease
of the depositors' balances and the increase and decrease of
the teller's cash. Barring the possibility of double and com-
pensating errors (which, though rare, is always with us) any
error would throw the final figures out, whether it be in
amount, in the wrong side, in the wrong account, or, most
important of all, in the derived balance."

Posted "While You Wait.^'

In the Strafford Sa^dngs Bank of Dover, N. H., posting
is done at the time of the original transaction. The teller
makes his entry at the window (e. g., in case of a withdraw-
al), takes the depositor's receipt and sends the pass-book.

332 -THE SAVINGS BANK AND ITS PRACTICAL WORK

with a charge sHp for the amount to be withdrawn, back to
one of the bookkeepers. She selects the deposit card, corre-
sponding in number to the bank-book, enters all back divi-
dends on the book and then enters the withdrawal on both
book and card. The card is then placed in a special drawer
and the book returned to the paying teller, who passes it,
with the cash, to the depositor. At the end of the day the
cards are checked back with the paying teller's sheets and
are then filed in place.

Daily Trial Balance.

In the Home Savings Bank of Boston they use the card
ledger, and the active cards are removed from the tray at the
time of posting, and at the end of the day's work a trial bal-
ance is taken of those cards. They use a fifteen-bank adding
machine (Burroughs) with the split and normal device
which allows two columns to be added simultaneously. In
the left-hand column they add the old balance on the card,
that is, the balance before the transactions are posted. In
the right-hand column is added the new balance. To the
sum of the old balances is added the deposits for the day,
and to the sum of the new balances is added the drafts for
the day. The results of the two columns should be alike.
The transactions are then listed numerically and sub-divided
to correspond with the contents of each tray, a sub-footing
being carried out.

In the front of each tray of ledger cards they have what
is called a proof card, wliich shows at all times the balance to
tlie credit of that tray, the deposits for each day being added
and the drafts deducted. It is a very simple matter at any
time to take off a complete trial balance on any tray, and
o\\ing to the fact that a daily trial balance is taken of the
active accounts, an error is very rare. The tickets, deposit
and draft, after a proof is made and they have been listed,
are sorted away numerically, so that the transactions of any
one depositor are all together.

A Maine Idea.

The Bangor Savings Bank, Bangor, Me., uses the fol-
lowing system:

The sheet system was adopted after installing the card

POSTING AND PROVING

S33

ledger, and has been found to facilitate the work very much
(Form 92). The sheets are used on strong, light boards,
held in place by a ten-inch Globe clamp. A deposit is en-
tered when taken, number, name and amount, the ledger
card is taken from its case, a red tag dropped into its place,
deposit book balance is compared with the ledger card and
the card stood in a box marked "deposits," handy to the de-
posit sheet at the receiving teller's window. All postings to
the ledger cards are made from the sheets (Form 92), and
if the cards are placed in the deposit box, one back of the
other in order of deposits taken, they will be in regular order

Bangor Savings Bank in account with Individual Deposits,

Dr.

NAME OF DEPOSITOR.

--^

3 it-s"*

! brought forward

/ a o

Dr.

BANGOR SAVINGS BANK,

^.c

hrougkt forward.

BEIT SIDE or CASH BOOI, TO WHICH I)EP03IT3 AHE CABmIBH IM PULK
rHOB THi; PEPOEIT JCHHllAL SHOTO ABOVR, TOGETHER KITH II1T?:RE3T
RKCEITET ASn 3UCH OTHSH ITKW3 A3 aOHTCACB PAYliE.vTS, Rr.CilPtS

raou Bo:;ri3 MAiimiiii or aoLD, etc.

We, the undersigned, acknowledge to have received of the BANGOR SAVINGS BANK, of
Bangor, Maine, the amounts set against our names respectively, in payment, in part or in full,
of sums deposited in said Bank in our names or subject to our control. (^

OATE. No- of

«^

JS^

/ o

a^.^.^

-^< ^. -i'a-^.o&i:

DEAH JOUHNAt miCH IS 8101110 BT THI DEPOSHOS. TOTALS AM CARHldT
rRQU HIRt to TBE CBSDIT aiOE Or CiSR BOOK.

FORM 9^. POSTING AND PROVING SYSTEM OF THE BANGOR SAVINGS BANK, BANGOR, ME.

334 THE SAVINGS BANK AND ITS PRACTICAL WORK

for posting and for the comparing of postings, thus saving
much handHng. After the day's entries are made and com-
pared, the cards are returned to the cases. The payment
sheets (Form 92C) and cards are used in a similar manner,
the paying teller entering the number of account, amount to
be drawn and taking signature of payee.

At the close of the day, the sheets are footed, footings
carried to cash book (Form 92B), then filed away till the
end of the year, when they are bound.

Each deposit is crosspiled in a compartment, and so are
kept distinct for checking back. Orders are filed away in
order taken. No other books are used in the receipt or pay-
ment of monej^

Connecticut Speaks on the Subject.

The jNIiddletown Savings Bank of INIiddletown, Conn.,
enters the items of deposits and drafts in bulk, as will be
seen from the follo^nng: JNIoney received, whether for de-
posit, interest, rents or payment on loans is entered on a
"Received" ticket, and the ticket placed with the money until
it is checked up. Receipts other than deposits are copied on
the jovrnal, all deposit tickets are added together and en-
tered as one amount on the journal. All "Received" tickets
are added up on an adding machine at the end of the day,
and must agree Avith the footing from the journal and the
cash received. All "Paid" tickets are treated as above
stated, and the difference betw^een the two shows the cash
balance.

All deposit tickets, "Received" and "Paid," are entered
on a slip each day, number of account and amount of entry;
each slip is in turn copied off into divisions, and the entries
in each division being added up at the end of the month, show
the increase or decrease of that division for the month, which
being added to or subtracted from the balance of the division
for the i:)receding month gives a new balance. Each six
montlis tliese balances are proved by comparing with the
previous six months' balance, and this proved balance is en-
tered in ink on the deposit account card (they use the card
system). As all of the proving work is done by machine,
tlicv carrv al)out two hundred accounts in each division.

POSTING AND PROVING 33.5

The Silk City Does It Differently.

In the Patersoii Savings Institution the tellers never
make an entry on depositors' pass-books. The bookkeepers
receive the pass-books, compare them with ledger accounts,
make the desired entry in the book, and fill out a deposit slip,
wliich is initialed by the particular clerk who makes the
entry. The clerk also writes the same initial in pass-book,
and it is as much a part of the entry therein as the date and
sum involved. The pass-book is then passed to one of the
tellers, who receives the money from the depositor, at the
same time returning to liim his book. The teller, for the
purposes of his mone}^ proof, enters in a book, conveniently
ruled, the number of the pass-book and the sum received,
as indicated by the pass-book entry.

The deposit slips are taken by a junior clerk at conven-
ient times during the day and copied in a book prepared
for that purpose, and this clerk places a check mark on the
ticket against the word "Entered." The total shown by this
book at the close of the day must prove with the teller's list
of the same transactions, and the system proves a very ef-
fectual check against omissions, either by the teller from his
list or by the bookkeeper in failing to make out a slip, as an
instance has never been known where both teller and book-
keeper have omitted the same item.

The bookkeepers now take the deposit slips and post
from them to the ledgers, entering not only the amount
shown by the ticket, but at the same time extending the new
balance of the account into the balance column. The book-
keeper places a check mark on the slip against the word
"Posted." Another bookkeeper, who does no posting, now
takes the book into wliich the deposit slips have been copied
in full, and from it compares the postings on the ledgers,
checking the same, also proving and checldng the newly ex-
tended balance. The deposit sKps are bound in suitable
packages and filed away. The occasion for again referring
to any of them is very rare indeed, but they are filed, never-
theless, so that should necessity arise thej^ can be produced
on short notice.

Note — Parts of the foregoing will be found in treating deposits and with-
drawals and repeated here in order to lead up to the posting proof. The proof
of cash and proof of posting so interlock that i-epetition is quite unavoidable.

CHAPTER XXII

TESTING TIME IN THE SAVINGS BANK

When the head bookkeeper steps into the president's
room and says with a smile, "Mr. President, the trial bal-
ance is off, and our books are in balance," he has a right to
smile. Not because the work is done, but rather because it
has been done right. To do it, in tliis latter day, is a
mechanical process, and a three-dollar office boy may do it
and even get it correct; but the work that leads up to it, —
the work which it is intended to prove, the postings, ledger
balance extensions, etc., require the man, and call for
constant care and careful work, lest a mistake creep in,
somewhere, some time, that will make the trial balance a
burden and a thing to be dreaded. To do it, is easy; to do
it right — that is a different matter, and eternal vigilance is
the price of accuracy as well as of liberty, and is as apropos
to banking as to the affairs of State.

The Bank Man^s Burden.

When it is remembered that banks having over a
hundred thousand accounts and whose transactions with
the depositors number over foin* hundred thousand a year,
exclusive of interest postings, keep their books in perfect
balance, the magnitude of the bookkeeping in a large sav-
ings bank will at once become apparent. The mechanical
process of proving the accuracy of these half million
entries and extensions is trying at best, but if the figures do
not jibe, it ma}' mean a long, tiresome hunt to unearth the
error. The bank that thus keeps its books in balance must
have due regard to system, checks and counter checks, lest
in the vast sea of entries, an error, simjjle in itself, and yet
the easiest thing imaginable, creep in to discount all that
may haxe been done correctly. jMany men, of many minds,
have wrestled with the problem, and each has solved it in his
own way — the best of course; but it is not the item that is
correctly liaiidlcd that causes the work and the worry; it is
the unlooked-for, the unexpected, the unnoticed, that rises

TESTING TIME IN THE SAVINGS BANK 337

up to mock us, for one entry wrong will discount ten thou-
sand right. Until that man is born whose brain never slips
a cog; who never gets five out of two plus two; who is more
machine than man, and cannot err, the trial balance will
cause the knight of the pen more or less apprehension.

The expert, who was really expert at his trade, but
nevertheless in adding a column of figures set down the five
and carried the two, when he should have done the reverse,
and whose brain persisted in doing this several times, may
have felt like going into the back j^ard and "using lan-
guage," as David Warfield would put it, but a dictionary
full of "language" would not explain why he did it.

The object of all accounting is accuracy, and all sorts
of schemes and checks galore have been devised to prevent
errors, but once getting through the first proof, or a counter
eiTor occurring to balance, only at the testing of the work as
a whole will the slip be discovered. Then, somewhere in a
thousand or two thousand accounts; or somewhere in three
or six months' work, a miss has been made and nothing re-
mains but to hunt it up.

The experienced bookkeeper learns of the most likely
methods to detect mistakes, but these failing him he is
"up against a proposition." For instance, a shortage of
$81.00 would naturally, applying the rules of 9''s, be $90.00
posted $9.00; a shortage of $10.00 might be an omission, a
$5.00 credit posted as a debit, a double posting, a mistake
in footing, extending, etc. — a dozen places readily suggest
themselves, but when the usual tests fail, and it may be in
one of many places, it is a proposition.

A Bank Man^s Waterloo.

There was a bank man who thus prided himself on his
abihty to locate errors; whose trial balance always balanced,
not without work and some worry, to be sure, but before
he got through it was correct. But he met his Waterloo,
and it was nothing less than a three-cent shortage. For a
whole week he hunted in vain. He checked the extensions,
the postings, even the footings of the adding-machine, but
in vain ; everytliing was provokingly correct.

Now, the novice would say, "Why didn't he put three
cents in?" And any bank man would quickly answer,
"Three cents had nothing to do vAih it, and pulling three

338 THE SAVINGS BANK AND ITS PRACTICAL WORK

cents ill would not have helped his case." It was an error
in accounting, and wliile figures do not lie, they often give
us a long chase to prove it.

One test remained for this expert in accounting, and if
done with care, nothing could get through this proof. It
was a long, unwelcome task. Taking the previous correct
balance of each account in the group, and adding the in-
terest credited and the deposits, and subtracting the debits
would give the correct balance, and even the closed accounts
must yield to this. (Form 96.) And there it was. Ac-

DEPOSITORS' BALANCES

B.i!jnce Dec I, i^?;.

December.

J.inuary, 1908. 1 Dividend, June 1, iqoS.

Number.

Amount.

Dr.

Cr.

Dr.

cr.

6 Months. 1 J Months.

No Int.

Dividend. 1

0. /J2f

"XiZ

1 dr

/oo

VJ/

I 1

1 C

1 1

/ 0

1°

1 2 ^

0 1

^1^

'^^1

!f(.

/27

I3i

-2

i>Z

1 a

0-)

lf4o

'7
^1

f 1

1 1

il^l^

(

A^C

<?->

i nc

o 1 o

0 1 n

lU-j

■>,

1 s-J>

i^u

1 06

9-iC,

i 0 0

H 1 U

2^9

Z7I

13^

/i-9

/ J J

^o.

lOn.M 93. TttlAL BALAXCE SHEET COMBINED WITH A SKELETON LEDGER, SHOWING TWO

MONTHS ONLY, ON ACCOUNT OF THE GREAT LENGTH OF THE SHEET. THE
SOCIETY FOR SAVINGS, OF HARTFORD, CONN., KEEPS 64,000 ACCOUNTS IN PERFECT
BALANCE BY THIS SYSTEM. FEBRUARY, MARCH, APRIL AND MAY OMITTED. CARD
SYSTEM USED FOR INDIVIDUAL ACCOUNTS.

count No,

had, or should have had, a balance of $8.45.

In Avriting up the book and extending the balance, the
bookkeeper had mistaken a figure and made it $8.42. The
teller paid this amount, and being a small bank, where one
man is everything, from legal adviser to the poor to assist^
ant to the janitor, the teller posted the item him-
self, footed and ruled the account, presuming if it was
closed, it must balance. It didn't — for he made one of those
fooli.sli crroi-s that clever men are prone to make, and the

TESTING TIME IN THE SAVINGS BANK 339

savings bank owed Amanda Jones the great and magnifi-
cent sum of three cents and didn't know it — neither did the
dear old lad}^, but the "expert" can now swear that such
liabihty existed and it toolv him a week to find it out. Here,
the footings were right (but did not balance), the posting
likewise, the ledger extension correct, cash right — everytliing
right but that little slip in not detecting the failure of the
columns to balance, and a miss of an inch is as bad as a miss
of a mile, when the trial balance is at stake.

Doubtless, in a larger bank with a more complicated
system, this could not occur, but others seemingly as foolish,
might easily pass unnoticed.

The Adding Machine to the Rescue.

It takes no prophet to foretell that within a few years
the adding-machine will be in universal use, both in banks
and business houses. The man "as deaf as an adder" will
be a museum freak. The "fifteen bank" machine, allowing
the full number of the account, together with the ledger
balance, to be listed, makes itself especially valuable. As to
systems, they are legion. In many instances, the trial bal-
ance forms the basis of the interest computation; but where
this is not the case, and in many instances where it is, the
forms are merely a roll, or loose sheets of paper, as suits the
fancy. Where the two are combined, it simplifies matters,
the one aiding the other, and a few representative forms for
such are shown.

Helps to Accuracy.

The trial balance is a test, a proof, and not a chromo.
Its sole object is to prove, and that system is best which
will accomplish this result in the quickest and easiest man-
ner. The result should be primary; the looks secondary.
Looks are good, but results are better. To facilitate this
work, one thing is primarily essential, i. e., that the ledger
balances be correct. This has already been treated. With-
out a good system to keep these correct, the trial balance
becomes a nuisance; with these accurate, it is a mechanical
process, as above noted. But aside from this, three things
seem to be advisable in this connection and quite commonly
in practice; namely, first, the grouping of accounts, so that

340 THE SAVINGS BANK AND ITS PRACTICAL WORK

■ ia

■ 'v''

NUMBtR.

MONTHS

yi)NTii.<

WONTlia.

I^Th.KH^:

i>i\n>i:Nii

""m''"...".""

MONTHS.

• ''I

ais

^eiEoo

5624

£16682

3OO00

\^M»<

600

5060 1

2ia45

.. ^*^

lU'o

436

8228

•j

40474
1,027.39

'V- ^

'«V '

,\:.'

■

ac8

2054

4128 !
1,0479 1

91476

1 ia28

9310 ;

e0£16

1604

8162 )

•i

1BC6«

611.19

3ai7

61629

iooaoo
5oaoo

50C0O

■■\L

■h-

5.9 0
IGSa
60
1232
.-;Q0 0
IGOO
10.00

23De )
6 2 1 4 j >
30.7 '
6 2Rf. I
1,0300 J
6 too )
61C0 )

i.07ae7

22445

£144
4.4 S

1,0943 L
22 P 9 »

17.75

IRO >

7 e 9. a 5

IB 78

6 0 5.0

2.57

3a57

311

8170

166

Bf.3b

■J J,

273

!■

'/■(■

ie.4B

•

6ia35

1£.36

6 3 0. 7 ^

1, 1 R 0 5 7

2 3. 6 0

1. ? 0 4 1

58430

1168

595.9^ 1

-1

1,091.79

2102

11116

,i;

1,09Q04

21.80

1,1118

e4a£2

4.9 6

2514^ 1

561.19

i iir.2

5 7L4

26113

\ 1.1

.r.

5.6 5

3aa7

21116

426

2174

saoo

^(^

''.-

108

76.0

2667

3t.5

223

3339

11062

^-^
'M

%■

'•'

4
66

220

227
5405

iiae

77750-

1 '; £

' ■>

.'« ..1

17 7 0

9 2 5. 2

466

1,61383

3226

1.6460

145^90

1 :

■■

116

1640

1" li

£^157.36

39.5 5

56106

(T £,^

4480

11.36

2,7 0 2,0

•154
5743

6
1

407.11

: c

£49

46Q60

267.46

5.69

3 0 e 1 5

56934

1118

67033

•

10295
20090

2.04
400

10499
2049 0

103

iC 4

■■»■'
^1

&4,95a53*

1 " .

1 ■-.

'• 't

!^ifi(

-('

50461*

a^3»7.aji*

rOR.M JH. l.NTEIIKST SHKKT SHOWING USE OF THE ADDING MACHINE. ALSO CONTAINS

THE UAI.ANCE AITEU INTEREST HAS llEEN ADDED TO OLD BALANCE.

cacli .section o]- group may be proven separately. An error
developing, it is far easier to locate it in a thousand accounts
than to 1)0 o])liirc(l to hunt through five thousand; to have
three or six month periods under test, than to wait until

TESTING TIME IN THE SAVINGS BANK 341

the end of the year. Some banks take tests monthly, others
quarterly, but most commonly, every six months. In some
banks, the balances that are disturbed are proven at the
time of posting, but only the final testing will prove the
work as a whole.

The journal-cash book, in common use in most of the
smaller banks, ruled in columns representing these groups
of accounts, makes it an easy matter to keep account with
each section and prove separately. The same result is ac-
complished in the larger institutions by using sheets, with
proper rulings for distributing the transactions. Representa-
tive forms have been shown in discussing the posting meth-
ods. The perforated sheet, quite commonly used, forms the
basis of an admirable system, both for grouping and proving.

Secondly, to allow for items posted after the date
of taking the balance. The credits must not be included;
the debits and closed accounts must be in the balance.
It therefore becomes necessary to do it quickly, with
as little chance for this as possible. If the bank could shut
up shop and do no business until tliis work was over, all
would be well, but business must go on, and the daily
routine followed, else a huge mass of work will accumulate.
Some banks postpone the ledger extensions until this work
is complete, and one omits posting altogether, but M'here the
daily test of the balances disturbed is made, tliis is quite
impossible, and great care must be taken not to list that
which does not properly belong in the balance. Here the
rapidity of machine work becomes exceedingly valuable.

Thirdly, to keep the trial balance and interest work
separated, so that the two do not fall on the same date.
Interest methods will not be discussed here, but suffice it
to say that every man has his own way of doing things, and
some seem to have selected the hardest and most cumber-
some methods imaginable. However this may be, they both
lequire time, and where the trial balance forms the basis of
the interest work, the periods should be near, otherwise it is
of no use. In the majority of instances, only the drafts
affect the interest after certain dates and the interest work
can be anticipated to a large extent.* If interest is paid in

*Savings banks rarely pay interest on daily balances; a few pay from the date
oi' deposit. The usual rule is to pay from quarter days or the first of each
month. In the former no deposits after April 3 and October 3, and in the
latter, Jime 3 and December 3 would affect the interest. (Dividends January
and July.)

312 THE SAMXGS BANK AM) ITS PRACTICAL WORK

July and January, as is generally the custom, the trial-
balance can be taken to advantage -in May and November,
leaving the months of ^lay and November for trial-balance
work and June and December for ihterest computation, and
tliis would seem to be highly desirable.*

I.^'uder the regime of the bound ledger, the time con-
sumed in finding the living accounts among the dead made
the process a slow and tedious one; but with the coming of
the card and looseleaf ledgers, where every card or sheet
represents an open account, it becomes mechanical to a liigh
degree and any (careful) boy of sixteen can do it. But
the finding of errors, if such there be, is the work of a man,
and rccjuires ex])erience, often bitter, and training, long, to
teach the most likely places in which such a difference could
occiu*.

The jSIachixe in Action.

No matter what the system, either of posting, proving,
or interest work, one thing remains true, the adding-ma-
cliine has now become the means. For this it is eminently
fitted, and is coming to be a necessity. Were 5''ou to play
the role of philanthropist — "one wdio makes life easy for
others" — and journey among the banks, especially those a
bit antiquated in their ideas, with an adding-machine under
your arm, you would meet the usual excuse, "Yes, we know
you have a good thing — a mighty good thing, but we're a
little bank, you know, and would have no earthly use for
your philanthropy, save on the trial balance, and we can
hardly afford so expensive a luxury just for that; and
besides, we have always done it by hand — M^hy change now?"
But listen — they will buy it, some time, just for that! And
it is worth all it costs — just for that!

For the good of the man who adds this to his outfit, a
friendly word of warning — learned in the bitter school of
experience— may not be out of place. If you have the idea
that "it adds what it prints and prints what it adds" — for-
get it, for it don't — not always, and it took another bank
man another week to learn this little trick. The affable
agent knew all al)out it, but forgot to tell him, and he had
to discover it for himself. This is how it happened. A

*Snme banks tako ;i proof immediately after posting the interest-dividend to
prove extensions.

TESTING TIME IN THE SAVINGS BANK 343

shortage of something hke $1,235.67 occurring at trial bal-
ance time in one group of accounts, all the usual methods
were exhausted without result. Taking it for granted that
this expensive outfit could do no wrong, like the King, he
did not concern himself about the footings, and turned to
these only when no other source remained.

FORM 94a. THE BURROUGHS "fiFTEKN BAXk" ADDING IWACHIXE. PER3IITS LISTING

THE FULL NUMBER OF THE ACCOUNT AND THE BALANCE.

(By courtesy Burroughs Adding Machine Co., Detroit, Mich.)

One of the keys, especially on the later machines, is
labeled "e." Now "e" may stand for any one of a dozen
things; this man took it to mean "error," for it made a
mark (# ) opposite the line when it was pressed. In run-
ning along at a lively clip, an account may be omitted, or a
figure mistaken, and to call attention to the correction of
the error, the "e" was pressed, showing that the account was
out of its regular order, etc. This was his undoing, for the

344 THE SAVINGS BANK AND ITS PRACTICAL WORK

No.

Balanas due Depositors April 30th, 190 7" and Interest due July Ist,

190 7

/'^

101

303

£S

zze

226

32S

633

167

239

573

1 S

67C

13 2

1 5

3 C

312

126

141

563

0 2

4j2 6

'93

17 8

L07

78
86
30
13)4 0
34
30
60
60
66
2 +

rs 2

90
516
4 82
518

'^Z-,? ^ '

3620
6 140
4 621

2583 5

359

84 1

S»c(lsn&l Ealuica sneat. (Afirtl 30th,1807)

ma section includes the Aocounts troa
88,603 to e8,649. Tbe Inteiest due on
the following Jul; (tll6.30) la alao
shown.

To the total of these aooounte is added
the deposits fox eaob sonth as shown helow,
together with the Interest credited thereon,
KaJilng a tot&l of $10,628.97, fron which
la deducted the drafts ((3,24B,10) leaving
a balance due aa of October 30th, the ti^s
of the noit trial balanoe, of $7,279.87,
which proved to he the tot&l of the balances
on these accounts.

llf±77

MAY
JDNE
lourvftt

;ui.v

AUGUST

SEFTEUBER

OCTOBER

-J
///

/•.

^yfy

^/'y

MAY

JUNE

Inleresl

JULY

AUGUST

SEFTEMBKR

OCTOBER

7 '-77^7

FORM 9o. ntlAI. nAI.AXCE AXD IXTEaEST COMPUTATION SHEET. FOR EXPLANATION

SEE PRINT ON FORM.

TESTING TIME IN THE SAVINGS BANK 345

"e" meant, not "error," but "eliminate," and the total of
such items "thrown out" was just the missing balance.
When this is down it prints what it prints, hut does not add
what it prints — eliminates it from the total, throws it
out, if you please, and 'tis Avell to know the tricks of the
"durned thing," as the Yankee would say, before one begins
to pull the handle. Ask the salesman — he knows, but may
sometimes forget.

The Tkansitiox of the Trial Balance.

On the toj^ shelf in the vault of the Blank Savings
Bank stands a row of books, placed there "for future
reference." But the future not requiring any references of
such nature, a goodly accumulation of dust and cobwebs
has gathered thereon, giving them that ancient look that
characterizes historical works of art. They are the trial
balances of the past forty years, and are indeed works of
art, produced by the sweat of many brows, and the history
recorded therein is one of much struggle and anxiety.

The changing character of this collection of antiques
well typifies the transition of the trial balance from a work
of art, laboriously produced, to a product not only a thing
of beauty, but a joy forever. For a number of years the
record would be found to consist of the full name of each
depositor, the number of the account, also in full, and the
amount, together with the distribution for interest calcula-
tion, all carefully done in ink with much pains — the word
pains meaning also "pangs of labor" (Standard Diction-
ary) . As a matter of fact, for manj^ years the work was
first done in lead pencil to get it right, and then carefully
copied in ink (often to get it wrong), and the latter duly
placed in the graveyard to rot, while the pencil copy, being
the original entry, formed the basis of future calculations.

As time wore on, the christian name was abbreviated
and only initials used; then the first name and initials were
dropped entirely, and only the surname used, and the full
number written only at intervals as a guide. In due course
of time, the providence that watches over bank men and
endeavors to lift their many burdens sent the man with
the adding machine, who, after much persuasion, obtained
consent to ship a machine on trial, with full assurance that
he was "wasting good express money." But he knew bet-

3i6 THE SAVINGS BANK AND ITS PRACTICAL WORK

N<7MU1

BiUbm

H«. 1, 19":

i^jruwbU

D*I«xIU

(nifmt

M«r I, !«"»

i>.,»»nu

l)r|K»ill<

[Dl<>n<»l

Nuv 1. IIKIS

.U7000

—

r')

;

i.'!

• (.-

■

.•/

.97001

(

j;'

/ ,'

-■'

;'•'

y7(M);i

^.^

/''

„./

■iJ

^-C

197<M).'5

. 1

(,:.<;

197(>(M

,5/.

yz-y

rlt

L');(H)5

-Li

/ ..

ys'

,.y^

>'7

■'^.

f.n

1<)70<MJ

':/

•-■^

.w^

,.-.1

»)V007

«.) roos

;'•'

/.'

';/

.'■• :>

'JTOO'.J

—1

;■ /;

■f^'

.\'

..'

!■:>

*r/(m)

/.-,■

»(^

/. ■

■ •A

.iiiOlJ

-.-■'J

.^.-'

'//

.>l'

-■■--

'■■■

'.')

-■- t

ie.t

■}

\r,iH.i

-'■

-'■',

; ^

'-/

>^^

•■'■

9/(;i:5

t i

L^' '

•' .'.'

-/J

/.-'

_., /

'Jt

, ,,

.-/

■'':

■

',v

fij\

''.-

.V'?'

*.-'

'.iiif.l-i

'■

' -

,!t;o:>:5

'l'^

-
X

fii

/V-^
//>/(

.->

.y;»»:2i

1/!^

',•*

/./

-<.i

■■<,

ij\

.'.

-7,

■ ''.

■

,■"

■^h

■i

;■'/

^'-f

■ . >

I ('KM 90". KOKM COMniNING TRIAL BAIAXCE, IXTKUEST COMPUTATION', SKELETON

LEnCEIi AND I'HOQF OK LEDGER EXTENSIONS. QUITE AX ELABORATE FORM NECESSI-
TATING MUCH I.AIIOR, BUT A SURE TEST OF THE BALANCES. USED BY THE SPRING-
FIELD INSTITUTION FOR SAVI.VGS, SPRINGFIELD, MASS.

t(.r. add the niacliine "stayed put," and from that time on,
the reeoi-d shows merely a eoliimn of account numbers and
led^rer l)alances. Detail has f>iven way to despatch, and

TESTING TIME IN THE SAVINGS BANK 347

accuracy has gone hand in hand with speed, and the man
with the writer's cramp need only press the keys (the right
ones of course) and pull the handle. A grateful savings
bank fraternity should build a monument to the man who
invented mechanical addition, for if any one thing lightens
the burden of overworked bank clerks, it is the adding
macliine. To sing the praises of tliis bit of clever mechan-
ism, is not the primary purpose of this chapter; but if that
row of books could speak, they would testify in no uncer-
tain tone of the value and adaptability of this invention to
this particular part of savings bank work, and as for hand-
work,— say "never again!"

There^s a Reason.

If a reason were sought why savings banks, everywhere,
take extreme care that the ledger balances shall be correct
at all times, the answer would not be that the bank ran any
great risk of monetary loss through such errors, for pay-
ment is made only on presentation of the book, and the
book is, or should be, compared before paying any great
amount, and the book is supposed to show the correct bal-
ance due. But the real reason would be found to be, first,
that an error is an error, and as such should not be toler-
ated; and second, if not found at the time of posting proof,
is bound to turn up at trial balance time and cause endless
anxiety and annoyance.

But however this maj?^ be, grave danger lies in neglecting
the trial balance. Occasionally a savings bank failure re-
veals the fact that the trial balance has been neglected,
sometimes for years. Failures in Massachusetts and Con-
necticut have recently uncovered such a state of affairs,

Here is an old trick that was "turned" as early as 1823,
by a clever Englishman. In taldng in deposits, say of ten,
twenty and thirty pounds, respectively, he would enter the
correct amount on the book, drop the cipher on his tickets,
and pocket the balance. His cash balanced, naturally.
After his superior officer had checked back the work, he
would enter the ciphers in their proper places, maldng the
ledger account agree with the book. ISTot having a modern
system of bookkeeping, he was not detected for a long time;
but it will quickly be seen that had a monthly statement
been taken of the general ledger (supposing they had this

318 THE SAVINGS BANK AND ITS PRACTICAL WORK

useful article) and a i)eriodical trial balance, he would have
met liis Waterloo much sooner.

The processes heretofore described to insure accuracy in
posting may seem to savor of red tape, and be more or less
needless; but the clerk who has been confronted with an
error, great or small, that existed somewhere in from two
to five thousand accounts, and anywhere within six months'
M'ork, needs no pliilosopher to convince him that an ounce
of prevention is better than a ton of cure, and the best way
to find an error is not to make it.

The new-comer in savings bank work thus "up against"
a shortage, say of ten dollars, and who is advised by older
heads to check back his postings from the ledger to the
journal (if postings are so made) is apt to heave a big
sigh and start in with a grumble, wondering tohy, — since
he has checked everything from the journal to the ledger;
but when lie stumbles over a ten-dollar draft that was
posted to the wrong account and not discovered and also
posted to the right account, thus making a double posting,
he will quickly understand that the check that didn't check
an unchecked item was no check at all. But whatever
method is adopted to prevent omissions and commissions
and ''double missions," — one thing remains true: barring
counter-balancing errors, only a trial balance of the work
as a whole will demonstrate the accuracy of the work in
detail. And, no matter how meritorious the proof of daily
]iosting may be, only such a comprehensive test can verify
the work for the period under proof.

Proof by Groups.

As heretofore suggested, practically all banks group
their accounts. In taking trial balances these groups are
first tested and then the work as a whole is balanced with
the general ledger. In fact, it seems hardly believable that
any bank man M^ould be so short sighted as to try to keep
any great number of accounts without such a system. In
making this group test, as will shortly be seen, as low as
thirty-two accounts are balanced separately; but the num-
ber is optional, — it is the idea that should be emphasized.

We must, of course, have a correct starting point, and
the ])roblem generally resolves itself into adding the receipts
to the last trial balance and subtracting the drafts. It is,

TESTING TIME IN THE SAVINGS BANK 319

therefore, absolutely essential that the account with the
group be accurately kept, for to test by an erroneous bal-
ance is about as difficult a proposition as one could under-
take. But with the help of a good system to insure cor-
rect grouping, and another to insure correct balances, aided
by the adding machine to take off the "grind," trial bal-
ance work becomes a pleasure, and there is a certain satis-
faction that comes over a man when, upon striking his
proof he finds it to be correct; and whatever of care and
pains he has exercised in his daily work finds its reward at
this time. It is no unusual thing in large and well-managed
banks to have sixty per cent, of their groups, or ledgers,
balance upon first test. Such events are not accidents, how-
ever, and accuracy has cost its price in care.

But how often shall such a test be made? That would
dej^end upon the excellence of the daily proof of posting.
If the postings are merely checked hack (and cases are on
record where such have been checked as having been posted,
and again checked as posted correctly, when they were not
posted at all), and no proof of the extension of the ledger
balances is made, a monthly proof would be desirable, but
not generally possible, and the better part of wisdom would
seem to be to pay more attention to the daily postings and
take the trial balances at six months' intervals. In fact, a
canvass of this matter among the New York banks shows
that semi-annual tests quite generally prevail. If a bank
whose transactions average two thousand a day can keep
its books in perfect balance by a six months' trial balance^
so can its more modest brethren.

Trial Balance Methods.

In a New York savings bank, whose open accounts
number 32,000, the follo^ving system of posting and trial
balance is in force: At the close of the day the tickets are
sorted numerically and placed in clamps, one for each
ledger. The next day these items are posted without re-
moving from the clamps. In order to prove the work, two
day books are used for each ledger, debit and credit, and
the numbers of the accounts as per the tickets are written
down. The proving clerk turns to the ledger and sets down
opposite the number whatever he finds posted on the ac-

350 THE SAVINGS BANK AND ITS PRACTICAL WORK

count. The items are checked back from the book to ledger
and totaled.

With all the advantages of the adding macliine, there
are still many banks that adhere to the hand method of
trial balance work, for the good and sufficient reason that
the accounts are so numerous that a large number of ma-
cliines would be necessary, and where the bound ledgers
are still used, a macliine for every two or three ledgers
would be required if the work were to be done ^\dtli des-
patch. Tliis bank, at trial balance time, calls in extra
help, and takes down all balances in ink, no erasing being
allowed. The balances are checked back, and any errors are
reported to the secretary. Postings are held back until
balances are all taken down (but hot footed), which usually
requires about two days. The footings are made by two
men, but are not taken down until the last clerk has been
over the work, having been kept on a separate sheet. If
the totals agree, the footings are wi'itten down in ink. The
group accounts are carefully ke})t and each group is bal-
anced by itself, only the secretary knowing what the group
calls for, and the footings are verified by him when proof
is ready. This is really a "blind" system, as no one knows
his proof figures and there is no chance of forcing a bal-
ance. The total of the groups must, of course, tally with
the general ledger; any errors being traced to the proper
groups and located.

In the Jefferson County Savings Bank of Waterto^\Ti,
X. Y., whose open accounts number 27,000, the following
system is in force:

Trial balance sheets for individual ledgers are ruled with
a column for folio, previous balance, total drafts on each
account, total deposits and interest added, present balance,
and ruled for thirtj^-six accounts. The previous balance is
the last trial balance. All drafts made on each account since
last trial balance are added together, and the total entered
in debit or draft column. All deposits made and the inter-
est credited since last trial balance are added together and
entered in credit or deposit column. The present balance
of account is entered in the present balance column. Each
line represents an account, and the transactions thereon for
six months.

To prove the work the previous balance and credit
columns arc added together and should equal the sum of the

TESTING TIME IN THE SAVINGS BANK 351

debit and present balance columns. If they do not agree,
there is an error in those tliirty-six accounts, which is easily
located. Each ledger is verified in the same way, proving
the tliirty-six accounts at a time. The total footings of
these sheets for tliis ledger mil agree with the columns of
tliis ledger on the general ledger.

Care is exercised not to leave any amount off or to go
back of last trial balance date. Either will cause trouble
and show error. It proves the posting is correct; that the
interest was footed and entered correctly; and that the
ledger is in balance. There is only one thing it won't prove,
one error balancing another, on these thirty-six accounts.

The Portsmouth Savings Bank of Portsmouth, N. H.,
runs an account with each even thousand numbers. The
deposit slips and withdrawal blanks are listed by adding
macliine monthly, and the amount added to or deducted
from the balance due thereon. In taking trial balances, each
division is subdivided into blocks of fifty, and each block of
fifty is taken off and totaled. In this manner, on January
1, 1909, twenty- two out of twenty-nine blocks were correct
the first time and the errors in the remaining seven blocks
were found in a few hours.

In the Fitchburg (Mass.) Savings Bank, they use the
loose deposit and withdrawal tickets. The cash is balanced
from the tickets, and then the tickets are posted on the
ledgers, and entered in the deposit and withdrawal books,
this to make sure that no tickets have been lost during the
posting process. These tickets are kept in temporary boxes,
and arranged numerically daih% until the time for taking
the trial balance arrives.

The dividend days are January 1 and July 1, and they
take trial balance on the last business days of January and
Julj^ thus giving ample time to extend the dividends, as
any system of trial balance that does not prove the exten-
sions, as well as the postings, is of no value whatever.

Their system of trial balance is briefly this : The ledgers
and tickets are subdivided into small sections, the sections
in the inactive, or old, ledgers being larger than in the new
ones, where the subdivisions consist of one hundred num-
bers. Dividends are made in separate books, one for each
ledger, along the same subdivision lines. About a week
before the time for taking the trial balance, they begin list-
ing off the deposit and withdrawal tickets, building on to

35 2 THE SAVINGS BANK AND ITS PRACTICAL WORK

them from day to day, mitil the actual taking of the trial
balance.

The proof blanks are made up of the following items:
Previous balances of the subdivisions; dividends credited;
deposits credited; less the Mitlidrawals.

The ledgers are listed with the adding machine, with
the same subdivisions, and if the two agree, of course that
ends it. If there is a difference, the subdivisions being so
suiall, ordinarily the difference is foiuid in a minute or two.
Then tlie proofs are put together, making a general proof
of the ledger, and when all the ledgers are done, a general
proof is made of all the ledgers combined.

The deposits, withdrawals and dividends must agree
with the se]3arate books for those three items, and the total
amount due the depositors must agree with the daily state-
ment and controlling ledger.

They really get everytliing, except practically the last
ledger, proved up previous to the day on which they take
the trial balance. During that day, they list the last
ledger, and ordinarily, within one hour of the conclusion of
business, they have that ledger proved, and in a couple of
hours or more, the proofs are all practically put together,
and the trial balance is finished. They also absolutely prove
the number of open accounts, which many banks neglect
to do.

Under the old system of taking trial balance, where the
entire ledger was drawn off and footed up into one item,
it used to take, with a great many less accounts than they
now have, nearly a month. With the loose deposit and
withdrawal tickets and the system now in use, tliis drudgery
has been reduced to the most pleasant w^ork in the bank,
consuming the time of the bank's force for parts of four or
five days, and a pretty active afternoon for recapitulating.

In every way, the system is not only absolutely accurate,
but an interesting and fascinating process.

The Springfield Institution for Savings of Springfield,
]M[iss., uses a skeleton ledger as a check in case a card
should be lost from the card ledger. On this, as will be
seen, are listed merely the items, debit and credit, which post-
ings are made by a clerk who did not make the posting on
the card account. The trial balance is taken from this
ledger and compared with the cards, account by account.

TESTING TIME IN THE SAVINGS BANK 353

The totals of the accounts on each page must agree with the
totals of the cards as obtained on the adding machine.

The Hoboken (X. J.) Bank for Savings takes its trial
balances semi-annually. Ledgers are divided into sections
of fifty accounts each and the balances are taken off on
adding machine, the sheets being ruled to fit the spacing on
the machine (Form 95), and at the end of each sec-
tion the footing is struck. The footings must agree with
the amount obtained by taking the total of the group at
the last test and adding the deposits and subtracting the
drafts.

The most famous savings bank trial balance (and verifi-
cation of pass-books as well) in tliis country, is that which is
taken off at three-year periods by the Schenectady Savings
Bank of Schenectady, N. Y., published in the daily
papers and pamphlets sent to all depositors. The idea is
original with them, but has since been used by other banks,
and must have proven profitable and popular, inasmuch as
it has had its second trial during the past year. The idea
is that depositors may verify their own balances, and is both
a very clever advertising scheme and a practical audit of the
bank's liabilities. In a printed circular issued shortly after
their first experiment in 1907, the bank states:

By publishing the pass book accounts by number, a complete check
is made upon the balance in each pass book, as well as upon the aggre-
gate amount of all the depositors' accounts in the bank; the same prin-
ciple applying to the assets, as they are all numbered, and when interest
is received from mortgages, the numbers are given on the receipts for
interest.

As no bank would publish less assets than it had, nor more liabilities
than it had, the check is complete from the outside as well as from the
inside of the bank.

The accounts were drawn off from the ledger cards with an adding
machine. Each column of the newspaper carries 380 accounts, a footing
being made for every column — such footings carried forward to the end
of the list. The numbers of the accounts were put on with a hand stamp
opposite the accounts. Adding machines were used to foot the numbers
as well as the accounts, in order to verify. Adding machines that are
listing machines will foot both numbers and accounts as they are drawn
off from the ledgers. We expect to use such machines when we make
our next detailed statement. The work will then be much easier.

The proofs received from the press, both numbers and amounts,
were refooted by the machines to verify.

Announcement was made in the newspapers published in this vicinity
several days in advance of the detailed statement. We stated that num-
bers and amounts only of depositors' accounts Avould be published. The

351 THE SAVINGS BANK AND ITS PRACTICAL WORK

Schenectady Gazette has about 17,000 circulation, our statement being
a part of the regular issue.

The expense to the bank for the statement complete including
10,000 copies in pamplilet form, postage and advertising for the special
report was in the ncighborliood of $1,000. The sales of tlie paper on
the day of issue, Feb. 20, were very large, and we find that very many
of our depositors compared their accounts on that day.

No objection has been made on the part of our depositors or anyone
connected with the bank in any way, to the publication of the detailed
statement. On the other hand, much gratification was expressed and
many compliments paid to the bank by those interested, and by the
public, at home and abroad.

The pamphlet containing the detailed statement will be distributed
from the bank and tlirough the mails, to banks and others.

It is not intended by the bank to make a detailed statement regu-
larly, but only at such periods as may be chosen by the management.

It is perliaps well to note that a check upon the business of a bank
is not to be obtained completely by calling in the pass books, as even if
such a system could be made complete, the public cannot verify the
aggregate of the deposits. Such verification is made by publishing the
list of accounts — this applying to assets as well as to liabilities. Although
this detailed statement was made during one of the busiest parts of the
year for a savings bank, and a special abstract being made of depositors*
accounts (our regular abstracts are taken May and November), the
regular business of the bank was not interfered with to any extent, and
no serious inconvenience attended the getting out of tlie statrnu-nt. We
employed but two extra helpers.

CHAPTER XXIII

THE DIVIDEND, ITS DECLARATION AND
COMPUTATION

Undoubtedly the most important feature in the manage-
ment of a savings bank is the dividend; for the strength, if
not the solvency of the bank depends upon the amount of
interest which is paid to depositors. It is the pivotal point
around which all other operations revolve. The amount of
deposits is materially affected by the interest rate, and the
ratio of surplus to deposits depends quite as much upon the
dividend as upon the earning power of the bank. In the
placing of mortgage loans and in the buying of bonds, the
ultimate effect upon the dividend is a factor to be consid-
ered; for the question of income closely follows that of
security. Not that the savings bank man says or should
say to himself, "I must j)ay my depositors high interest and
must therefore earn high interest"; but, rather, "I want my
depositors to get the liighest rate compatable with safety,
and must therefore in justice to them make their money do
its full duty to this end."

Interest or Dividends?

Whether or no the amount that is periodically credited
to depositors in red ink should properh'^ be called dividend
or interest is not a vital matter, but of enough consequence
to merit consideration. Interest has a special, legal and
technical significance. It is the "price paid for the use of
money" — an amount usually if not always fixed and deter-
mined in advance, either hy law or by agreement; or, as one
authority puts it, "The increase in a debt due to the lapse
of time." A dividend is something divided, and is usually
indeterminate until profits are estimated and the dividend
and its rate declared.

Savings banks do not, as a rule, promise interest in
advance; in New York they are forbidden to do so. The
rate is not therefore subject to agreement and cannot be
known beforehand. But the interest credited is the dis-

356

356 THE SAVINGS BANK AND ITS PRACTICAL WORK

trihiitive share of the hank's earnings, pro-rated among
the depositors who are, by the rules, entitled thereto. Being
"distributed earnings" they are therefore properly called
dividends in speaking of the aggregate of the interest
credits.

The dividend is now quite generally spoken of as in-
terest. And since the rate is not generally promised in
advance, dividend would seem the more apt term; but con-
sidering also that it depends upon time, it is in that respect,
strictly speaking, interest. The term interest-dividend .
would seem to be the most exact.*

In a discussion in the New York Legislature on this
subject, one Senator proposed to make a distinction be-
tween the profits distributed, calling the semi-annual dis-
tribution "interest" and the extra allowances at irregular
intervals "dividends" — a distinction without a difference.
AVhere interest rates are promised in advance, it is an agree-
ment that probabty could not be enforced against a mutual
corporation, such as a trustee bank, if it should turn out
that the agreed rate could not be paid without intrenching
upon the deposits. The trustees have no authority to pay
a dividend they have not earned and would be liable for it.

Depositors to Shahe Earnings in Full.

The original theory of the New York Legislature con-
cerning dividends to be paid to depositors was, that the
entire jirofits of the institution should be divided ratably
among them, and a provision to this effect was inserted in
the first charter, and has been inserted in nearly the same
terms in every charter since that time down to this (1875).*

In fact the charters of most of the early savings banks
in all States contemplated the full sharing of the earnings
jimong the depositors. Thus the charter of the Savings
Bank of Baltimore provided that after pajdng depositors
llic agreed rate of interest (here the term "interest" is
j)rol>ably correct) the entire profits should be distributed
every three years.

Provision is quite generally found in the laws of most
States for extra di\'idends as the profits maj^ warrant.

* Holies IV.irticiil Bankinp, pajrf 97.5.

•K»-yts' llislon- of Savings Banks, page 41.5.

THE DIVIDEND 357

The Xew York provision for full distribution, ratably,
was modified in 1831, authorizing a differential rate of one
per cent, in favor of deposits under $500. In 1853 it was
conceded to other banks and made imperative on banks in
Xew York and Kings County. There was some question as
to its application, and it was practically inoperative. In
fact, the whole subject of the regulation of dividends, ex-
cept the general one assuring to them the profits after pay-
ment of expenses, has been controlled, in the main, by the
views and wishes of the trustees of each institution, f Tliis
is the situation in Xew York and X"ew Jersey to-day. The
law names no minimum surplus, and the dividend rate is
controlled, not "in the main," but absolutely by the views of
the trustees of each institution.

Interest Promised ix Advance.

The practice of stipulating the rate of interest in ad-
vance, wliile illegal in X^ew York, is permitted in some
States; but in many cases in Xew York the rate has been
uniform for so long a time that it is more or less a fixed
quantity. There may also be found cases where it is actu-
ally promised as far ahead as six months; but be this as it
may, the practice is wrong, even if permissible under the
law, being contrary to the fundamental principal of savings
banking. "There is nothing," saj^s Keyes, "in the theory
of savings banks to justify it; on the contrary, everytliing
in their theory and constitution is opposed to it."

A Differential Rate.

]Many banks are in the habit of classifying their de-
])ositors into tM'o classes, paying one a lesser rate than the
other. The difference is usually one-half of one per cent.
Some make three classifications, and pay three, three and
one-lialf and four per cent. The theory is that the small
depositor will be encouraged thereby, for the higher rate
usually applies to deposits under $1,000, although in some
instances runs as liigh as $2,000. The rule usually is, the
higher rate up to a certain sum and the lesser rate on sums
above.

■jKeyes page 416.

EXCELSIOR
SAVtNGSBANK

jj*

^0 PER AWNUM

OfTN C GB

2V-"ST?iF. e-i^AVE

IRVING

SAVINGS
INSTITUTION

tls rkaak«ra FH.. .N. 1.

aMrttk Atl. E:I«t4U<1 UkUgo.
Tk« Tt«si»9* bare decUr«d » ^vldeBd for ih*
MX monUa ecdtng Dtc. 3Ut, 1810, it *h» raUof

FOUR PER CENT.

p^riDDum. or. ^1 8u:as (rr>m *1 I'j $3.00«
eo'lUcd ihf rcto uciler the t^".U»s. payatit
osiQdafter Monday. Jan ur>' lath, lOU.

I>cpoiit5 made on or before Jan. lotjj
wili araw interest Irom Jan. 1st, 1911.

H. E TtNF.B. Pr«.lJ«llI
OIO&aE B. Ut'!<.''l>a. :->orel*i7

lAlMKlAiE

THE KINGS COUiNTY

Savmgs Institution

EbTABLISHED 18«Q.

Broadway and Bedford Avenue.

Brooklyn, K. T-. December l^IiH, '1910.
A Mml-aDnoAl dividend ftt Ih« r«U of

4 Percent. 4%^^^ Annum

hi* tfftx declared and will be credited to
depoiltors. who on Janu&ry let, 181t. may b«
entuKd tbcreto. payable on and after Jan-
uary IGth. 1011.

or befcr« JaauafT
ntercft trom Jaa-

All mone/ deposited o
10th. 1011. will draw
uary l»i

JACOB HEN'TZ. Caahlei

GERMANIA SAVINGS BANK
KINGS COUNTY

3W FTI/rOX SKKEOT'.

rhe Irusiflca oi tnTs Bajnc hava de«tar«4

per annum on all aums entitled thereto Ml
Decern btr 31. 1010. payable on and ftA«r
January 17. 1911.

DrpoHlts mad« on or before JAXtTABT* U

vlll draiT Interest from JANUABT 1.

ADOLPH GOEPEL, President.

Oscar Ttioma«s. Treas. F. Kocb, 8M.

BUSHWIGK

/^ SAVINGS BANK

will be credited

Mo-.jer dfix«it«d oo« mi up "^ Jsnuarjr lOtb
DeprwiU iem»M from 0 A. il. U' S:30 P. M.;

from 0 A
II ir.!I <

12:™ .-tMi

VUAL rjlVllHIMJ.

Grand St. A Graham AT.

Intereit for Thr?e and Six Mootba ending V*-
" - entitled tbereto. ftom

, 3f FOUR FEB OEyr.

. jjpyable after January 16. 1011.
t Money deposited on or before Taa-
' iiary loth wilt draw intereat from
''Jkaaary isL

; JEEE E. BEOWN. Prealdent.

' GEORGE J. MERKEO. Caahler.

; LOCIS G. BUBGEB. Secj.

leeiDber 81. 1810.
U to »3.t:-)0.

NEWYOBESAflNGSfflK

v. W. Cor. 14tb Ki. ond »th ATQsaft.

Jan. 1. iDll. divldeal at ihft rate ot.

FOURPERCENT.

per annum on all sum^ from S3 10 13.000 oatiliod

thereto under ihe by-la'cs.
DEPOSITS HADE ON OR BEFORE JAN. 10b

JAURS L. WANDLING. Treaauror.
ARCHIBALD U, PLXTZ. Sccrolaxj'

CITIZENS' SAVINGS BANK

» AND && BOWERV. CQR CANAL ST.
lOlSTSCMI-AVN'tALDITIDEND.

The trustees have ordered Interest at the rate ol
THREE A«DOh"E-HALF OVj) PER CENT.
per annum to bo paid to depositors on and af^r
January LOtb on all sum:i of SK and up to
S3,000 which have remained oa deposit for th*
three or six inohths ending: December Sil%U
1©10.Cb accordance- with the by-laws and ruJespi'

EMIL A. H(JBEK.Asalslant Secretary.

fHE~BANK FOR SAVII«GS

IS THK CITY OP NEW YORK. '
:» Fourth Aveoue. Dec. Ift'.h, 1910.
J88D .SEMl-ANM'AJ. DIVIDEND.

Ttie Board of Trustees has declared an Interest
dK-ldend for the SU Months jendUigDecSIst.

s principal January
or before Jaou&rr

from January isi

WALTKR TRIMBLH, Frfi&lOaat.

CHARLES A. SHERMAN..pecretHJty. '
JAMES K\'0\\T-K,S. Comptroller^

The 125th semlai
dexlared i

. divtdeod has beeo

NO. SO LAIO.% SQL'.Uil^

A DinDt:.\0 Laa tteco declared for 5ix nurntbi
«Bdlac DectfcbcT 31, 1010, on aU dopoaiu eaUUed
tbuMo at the nJ« <tf
TBREB AND ONE-HAI^ PER CENT.

per as&um cu mitu frufs >5 to 93,000. partt>J»
— M Hirt Junutrj 10. 1011

inuri

KHANK

l-rfurt Jaauary 10 will dran

■jL uV'rLBIT, I»re«I<lcnt;

I H. K<7CKW(K(L>. atcretan;

ASSETS.

I!!! Williamsburgli

SAVINGS BANK

Broadway and Drlsc* Are., BrookljK

Doc-ember S. 191&

Notice la hereby clven that on and a«el

1911. »-Besi^

FOUR^IS

CENT.

CUAETtKtD 1S02.

115th DIVIDEND

.__ —N" I'""'- Dee. IS. I810L

INTEBEST FOR THr. U.U.K-VE\K V:.VDl.-ia
DE-:. 31. ItllO, at tc* rata of

Four Per Cent. Per Annum

111 1M cTwlltad la d.E>oflt£n ntniM t^icreta
andar t^ b7-lawi ot taa bank ca auau troa
ii to U.OOO

iNTEarar paTable jancart is. i»il

liO.VEr DEPOSITEII ...

Bend tor booklei

On H0NUAT8 train 10 A. M.

brfnr. Janoart I*

- January 1.

JOXATH.IN B. CrRREI. Prcsldsrt.

frotD January L
... CTRR — "

rowARr»^HKr.ER. p^ret.ry.

CITIZENS' SAVINGS BANK

M AND 68 BOWERT. COE. CANAL ST.
191ST 8EMI.ANXUAL. DIVIDEND.

?T* Lru«t«ca ba*» orderrd latemt

TbrM

and O

■e.Hnlf <3V^> Per

cent.

P«f •^-L-

(«jj tJ ilci^jt.iUjn oQ I

riaooo

tr rwajiin>l 0& ^tiiomil

n,ej»

1010. In

tbr luk

Mcr»7

depr-:"^ oa <^t brlor* January

lotk m

UL.NRY IlJLaUta. I'naiacoL

:*ATI.r-l(. t-ineunj.

KMIL A.

HVUK

3, Aauttant R«rretJVT.

west sme^savingsjank
four'per'cient.

r« &£s.^ a .'-"1 -Q t .v.r.'j .r t> t9 }:;.ooo.

Eatabllstaed

Comer Plerrepent
and CltntoD Streets

Brooklyn Saviis BanK

DEPOgnit t» MII.IJONS
Snrphia Jannarr 1, 1911, 0>ar S MODnw
Intereat at the rate of

4 PER CENT
PER ANNUM

titled thereto (po.Ti

Depualt. mmlr r»D or b«taf«
January lotti nlli draw lotcrvat fraia
Januarr l»l.

BRYAN H. eMITH. TmMtmt.

EDWIN P. MAT>ABD, ComptnOn.

LAfRlS E. 81TTON. Caahler.

«o«rr d.pu.lf.d on c
mry l.tfh miii draw laic

8;fi '.;!;, '""•» s.- o.«'

£••

• laalllutloa

■>.-W VIJRIi.

par-

Tnwr

Tt.
<lar>t

I*r a.
• bla

ca ar

hour

n ual atiB.
l»»oe. ita.

"fiAVaiT

11 13%.

Her Cent.

mtfUilM mc'A'J*^ lh«T«u

Jaa. 2r-tK T>«t- «lla
lUUt will draw Intrrnt

Pr«. r A wniTifKT

THE CITY SAVINGS BANK

, OF BROOKLYN

Camer of Flitbusb and Fourtb Avt.
bii dfcltrcil a •uiil-sDiiunl Internt
(llvidcdU OD all deposits from $0 to
fiSMO antntetl thereto nt tbc rale ol

4 Far Cent.

per aDDuia. paraltle on or after Jann-
nry 15, tl^ll. Moue; deiioilteil ou or
before Jaouur^ 10 drana iDiereat troia
January ]. )

' ItKMSE.V RCSHMORE. ProaldonC.
tl. \'. i;n;.oioii<1. Jr.. Sec"y. '

Four Per Cent.

innutn on all accounts entitled therett
ble on and after Jan. 20ih. Deposit
! on or before Jan. 10th will draw l£
t from Jan .

UnionSquareSavinEsBaRk

NO. to tJ>nON SQUARE.
A DIVIDSND haa boon declared for >tx
xnoDths erdln( December 81. UnO. on all de-
poBlta entitled thereto at the rate of

THB£]C AND ONE-HALF PER CENT.
per annum on Buros from J6 to Jfl.ooo, pay-
able on and after January 16, 191L

Depoalta made on or before January 1* wtll
draw

JOHN T. WEEKS. Ca

THE FRANKLIN
SAVINGS BANK

Corper 8th Avenue & 42d Bteeet

lOOfH conseculivf sem-.-annual divi-
dend has been d'?olaTfid at tha rate
of Three and One-half Per Cent, per

a:inum on all a " •-

from $6 to |3.Cv,„ ^,.y,
after January 16fft, l(t!
Depoetta niade on or before the Tentb
of January will draw Intereat from-
the lat.

Aaaeta - - - «20,047.I«.44

BttrpltWr par ralnee - 1.178,670,87
WM. O. CONKLl.V, Pre*.
J. HALLOCK WARINQ. Sec.

Metropolitan Savings Bank

1 and 5 THIKO AVE. < opp. Cont,t.r laatltuta).

llSth DIVIDEND

New York. Dec. ISlh. 1»19.
INTERE.ST FOR THE HALF TEAR END-
ING DEC. 81GT. 1910, at the rate ot

Four Per Cent. Per Annum

will be credited to depoaltora entitled thereto
undc-r the Lvy-laws of the bank on aums from
IB to 18.000.
INTEREST PAYABLE JANUARY 18th. lilt

MONEY DEPOSITED on or before January
ISlh win draw mtereat from January It'..

JONATHAN B. CURREY. Prealdoot

EDWARD 8HBRER, Secretary.

GREENWICH 5AVIN6S BANK

»■ r^- tor. oih Av .t laih SI, x,„ York.

Two-ihif; i>Ti;rtJr''" "■"•■•-----
SIT ]llo^TIls i;.Mir>(

•lom i't;n « E.\j-.

OeiHftalia made on or
will drmw tiit^|.«at fron „

JAIIKS QL'1.\LAX, rr«.Meilt

J IIAMPDHX ROBll. |„

LP.AXCIS iL EACO.N. JR. ]«<:"'«":'«».

858

-OIVIDKNI) NOTICKS OF' A IT.W NEW YORK SAVINGS BAXKS.

THE DIVIDEND 359

The usual result is either withdrawals of the overplus,
or a general scheming, by opening joint, trust, or fictitious
name accounts, to get the higher rate, which obviously de-
feats the purpose in view. As Keyes reminds us, if the
institution can afford to pay a uniform rate it is much
better; for to label a $500 depositor "poor" and a $501
depositor a man of "affluence," makes a class distinction —
again without a material difference, and often injures those
who need and are justly entitled to as liigh an income as is
possible, as, for instance, a widow whose only income is her
savings bank deposit.

Prophetical Warnings.

With a foresight quite remarkable, Keyes, in writing
liis history in 1875 seemed to look ahead thirty years and
view the present situation, especially in New York. He
says, page 423: "The insecurity attending deposits of con-
siderable amounts, I would provide against by proper safe-
guards; and having done that, the more free for all classes
the access is made to savings banks, the greater will be their
prosperity, and the greater ^vill be the benefits they confer
upon those in whose special interest they were primarily
instituted. But it by no means follows that the trustees
should be left to the exercise of an unlimited discretion in
the matter of dividends. Whatever policy or practice in
regard to dividends, as in regard to anything else, is calcu-
lated to impair the perfect security of depositors, or to
operate injuriously to the system, or to work an injustice
to any individual or class of depositors, shoidd he pro-
hibited/"

The difficulty arises largely from new banks attempting
to meet older banks in interest rates. In fact, it would
seem to be a question, not how much can you afford to ipay,
but how much does your neighbor pay?

In the past many banks started in to pay high rates and
paid over so much of their earnings that no adequate sur-
plus could be established, and therefore quickly succumbed
when disaster overtook them. The established bank with
a surplus fund earning for the joint benefit of all deposit-
ors, together vnth an assured earning power, can more ac-
curately gauge its income ; but new banks must work for a
time in the dark ; and the more so if the management is not

360 THE SAVINGS BANK AND ITS PRACTICAL WORK

experienced in such matters. The writer has seen the earn-
ing sheet of a bank which showed estimated earnings that
were ahsoluiclij impossible, — and upon tliis erroneous com-
piLition a dividend was declared!

High Rates in the Past.

High rates of interest prevailed quite generally in sav-
ings banks up to about 1880, often running as liigh as six
per cent., ^\ith frequent extra dividends; but tliis was pos-
sible under the liigh earning power of money at that time.
In fact, the charters of early banks often named the
ininimum rate to be paid, instead of stipulating, as is now
commonly the rule, the mcucimum rate. In 1854 a bank
was incorporated in jNIaine with the unique provision that
all profits above six per cent, were to go to some charity.
It lasted seven years!

As early as 1869 the Maine Legislature recognized the
importance of restricting dividends, for while realizing that
in theory all profits should go to depositors, in practice it
is far from wise. They therefore made provision that be-
fore declaring dividends, one-fourth of one per cent, of the
net earnings should be set aside, as a reserve or surplus,
until the same amounted to five per cent, of deposits, to be
kept intact to secure depositors against loss. The amount
^\'as changed to ten per cent, in 1871. In JNIassachusetts
the act of 1834 provided that the entire income be divided
among dej^ositors, making no provision for surplus.

Provisions in the State Laws Regarding Dividends.

Before proceeding to prepare for a declaration of divi-
dend, let us review briefly the provisions in the State laws
regarding this feature, to note particularly the fact that
additions to surplus are quite commonly required outside
of New York, In Maine, one-quarter of one per cent, of
tlie average amount of deposits for the previous six months
must })e set aside as surplus until the same reaches ten per
c-eiit. of the average deposits. Dividends are not to exceed
five per cent, yearly. Extra dividends are required every
tln-ee years to de])ositors of one, two and three full years'
standing. Dividends are to be voted on "yea" and "hay,"
and may not aggregate a greater sum than has actually

THE DIVIDEND 361

been collected as earnings. This would exclude accrued
interest, which is generally regarded as income due but
uncollected.

In Vermont not over one and three-fourths per cent,
may be paid semi-annually, so that depositors may receive
as nearly as may be all the profits of the bank, less ex-
penses, and reserving such amount as the trustees may deem
expedient as surplus, which, to the amount of ten per cent,
may be accumulated and held. After a ten per cent, surplus
is established the rate is optional with the trustees. As in
JNIaine, earnings must be actual and collected, not accrued.
After the ten per cent, limit is reached, extra dividends are
provided for when the amount of the excess shall equal one
per cent, of the deposits for one year next preceding.

In Connecticut, dividends are restricted to six per cent.
The net income in excess of one-eighth of one per cent, of
the deposits, actually earned during the past six months
may be distributed. Discrimination may be made between
deposits of $1,000 and less, and those over that sum, not to
exceed one per cent.

New Jersey makes the maximum five per cent. The
surplus is optional with the trustees, not to exceed fifteen
per cent., and discrimination may be made in favor of
deposits of $1,000 or less.

In Indiana, accrued interest may be considered an earn-
ing, and not less than one-half of one per cent, of the
deposits must be carried to surplus, not to exceed, however,
three per cent. Special dividends are provided for, once in
three years, provided the trustees shall not be compelled
to reduce the reserve below ten per cent, of deposits.

The law of 1910 in Maryland requires savings banks to
reserve one-eighth of one per cent, of the deposits as sur-
plus until the same shall equal three per cent., and the
guaranty fund may never be impaired by the payment of
dividends. The deductions made for premium account shall
be made proportionate to the life of the bond (amortization
in other words) , and in ascertaining the amount of guaranty
fund, assets shall not be appraised above market values.

In New York the rate shall not exceed five per cent.,
and the depositors are to receive all profits, less expenses,
and providing for the amortization or gradual extinction of
premiums or discounts on securities so as to bring them to

362 THE SAVINGS BANK AND ITS PRACTICAL WORK

par at matui'ity, and reserving such amounts as the trustees
may deem expedient as surplus fund, not to exceed fifteen
per cent, of deposits, after which extra dividends must be
declared. Accounts closed between dividend periods may
receive the same rate of interest as paid at the last interest
day. Notice posted in the bank is notice to all of a change
in rate of interest.

In Massachusetts, not less than one-eighth, nor more
than one-quarter of one per cent, of the amount of deposits
must be set aside as guaranty fund until the same reaches
five per cent, of deposits. After deducting expenses, taxes
and guaranty fund, ordinary dividends shall be declared
every six months, from income earned and collected during
the six months preceding, "except that there may be ap-
propriated from the earnings remaining undivided after
declaration of the preceding dividend an amount sufficient
to declare an ordinarj^^ dividend at a rate not in excess
thereof"; but the total dividends during any twelve months
shall not exceed the net income of the corporation actually
collected during the period, except with permission of the
Commissioner of Banking. Deposits must remain three
months. When the guaranty fund amounts to ten and a
quarter per cent, of deposits after an ordinary dividend is
declared, an extra dividend of one-quarter of one per cent,
shall be declared on all amounts wliich have been on de-
posit six months, and one-eighth of one per cent, on deposits
of three months' standing. The guaranty fund must be
kept up to ten per cent.

The Dividend the Big E^t^^nt of the Year.

Coming as it does, with the regularity of Fourth of July
and Christmas, the dividend work is one of two of the
bookkeeping events of the savings bank year, the trial bal-
ance being the other. It probably entails more labor than
the trial balance, which also comes with the same regularity
although usually a month or two earlier. The latter is now
a mechanical process largely, and resolves itself into press-
i!ig the right keys and pulling a handle. The drudgery
that attended this work when adding had to be done men-
tally has been eliminated, and better posting and proving
methods have made long hunts through six months' work to
find erroi's no longer necessary. But the macliine has yet to

THE DIVIDEND 363

be invented that will figure interest. Tables there are to be
sure, in great variety, good, bad and "so-so," and these have
their place; but the savings bank man should first learn how
to figure interest quickly and accurately "in his head," and
use the tables only after becoming proficient in this line.
It is very much better to be able to sit down with a customer
and figure the interest on a pad and get it as it appears on
the book than to point to an interest table and say, "The
book says so, and it must be correct." The new clerk should
never be allowed an interest table until he can do it with
ease and despatch without, leaving it to the table to help
him save time, when time is valuable. For instance, we
have to find interest on $796 for six months at three and
one-half per cent. We have learned by experience that the
interest on this amount is about $13.93; it will probably be
quicker for many to find it in a table, such as Adams' of
the Suffolk Savings Bank, Boston, than to figure it out by
even so short a process as subtracting the interest on four
dollars — seven cents — from fourteen dollars (interest on
$800) which leaves $13.93 — the correct amount.

Tliis interest work must necessarily be crowded into a
few days at best, since all drafts affect the interest (provid-
ed they do not come out of a non-interest-bearing deposit),
and banks having five hundred drafts a day would find it
no small task to keep changes up to date and correctly
made. And it must be done accurately, for many depositors
are able to make the computations for themselves, and ac-
curacy is desirable just for its own sake. Some banks even
go so far as to prove to an eighth of a cent, as will be seen
in the form and explanation of the Union Dime Savings
Bank, New York, on pages 382, 383.

Estimating the Bank^s Earnings.

But before proceeding to figure a dividend, or to dis-
tribute the amounts that draw interest, let us take a peek
into the board room and secretary's office and review the
preliminary work.

In theory, as has been said, the savings bank is supposed
to pay over all its earnings to depositors; in practice, it
never does, and what is more, should not. Good banking
demands that there shall be a surplus fund established to
take care of the shrinkage in bond values and other losses

36i THE SAVINGS BANK AND ITS PRACTICAL WORK

that accrue to any financial concern. The present agitation
in Xew York for a lower rate of interest is, in the last
analysis, due to the fact that the banks have paid over too
much of their earnings and have not set aside an adequate
amount for surplus.

The ex2)enses must, of course, first be taken out, and
before any dividend can be declared, we must first ascertain
how much the bank has earned, and how much (approxi-
mately) the dividend will be.

Note the term earned. Dividends should not be paid
out of surjDlus (past earnings) but current earnings; and
receipts do not necessarily mean earnings; nor do all earn-
ings appear in the receipts, however much the legislatures
may stipulate that only actual receipts shall be used. And
in these earnings we have accrued interest. No less author-
ity than the Court of Appeals of jVew York has ruled
(Bank for Savings vs. jNIiller, Xew York Savings Bank
Cases, page 3) that interest accrued is an asset, and accrued
interest an earning. The problem, then, is to determine as
accurateh" as can be done a month before the period closes
just how much the bank has earned for its depositors, leav-
ing it to the proper officers to see that it is collected. The
income on mortgages, bonds, real estate, etc., can be figured
with considerable degree of accuracy; the only item that
need be estimated in the earnings is the interest on daily
balances for the last month; wliile taxes and other liabilities
of the same nature (franchise tax, etc.) may be apportioned
over the year by monthly distributions.

The Cost or ^Ioney.

Experience teaches that a dividend at four per cent, will
not figure at four per cent., and the "cost of money" to
the bank is considerably less. By taking the last four or
five years as a guide and dividing the principal into the in-
terest, the rate, can be ascertained with enough accuracy to
answer the purpose.* Thus in some Xew York banks the
rate is as high as 3.88 on a four per cent, dividend, while in
otliers it runs as low as 3.60, depending upon the nature of
tlie business. A large line of inactive accounts will figure
much liiglier tlian a line of active, since there is little loss of
intcicst ill the former, and much in the latter. In esti-

*The average amount on deposit during the period should be divided into the
interest paid and credited durinir tiic ]» riod in order to get the rate with accuracy.

THE DIVIDEND 365

mating his dividend on total deposits of $25,000,000, re-
cently, a savings bank man in New York came within
four hundred dollars of the correct amount.

In making up our earning sheet, it will not do to turn
to income account, and finding a credit balance of, say,
$10,000, assume that this amount, together with the unpaid
interest past due, and interest accrued represents the total
interest for the j^eriod. In this account there will be found
amounts that represent earnings for the previous period,
as, for instance, interest on bonds due July 1 — all earned
prior to that date, but paid on Juh^ 2, and therefore do not
belong in the computations at all. These receipts will, of
course, appear in the assets as cash on hand or in bank or
otherwise invested, but should not be confused with the true
earnings of the period under review. More than one bank
man has been deceiving liimself as to his earning power by
getting the same item in twice, once as collected and again
as accrued. Interest cannot be paid, due and accrued at the
same time. Interest due should be collected, that wliich is
accrued cannot be collected until due.

The Schedule of Earxixgs.

For the purpose of ascertaining the earning power of
the bank at any given time, all banks should keep a list or
book of investments, classified as to the rate of interest
thereon; thus in Item No. 1, in the illustration on page 366,
the mortgages are divided into groups at six, five and four
per cent. Care must be taken not to include for the full
time those loans that are made during the period, and which
do not earn for the full period. The same is true of bonds.
( Item No. 2. ) These are also grouped, and interest figured
at gross income, leaving the amortization process to adjust
the amount to be reserved for premium account. Another
way of arriving at the same figures, and useful where the
mortgage interest is due, say, as of June 1 and December
1, is to ascertain the amount received during the period
from income account, deducting that which was earned in
a previous period, and adding that which is still unpaid and
accrued. The overlapping of one month into a previous
period makes this a more complicated process, and the
better way is to determine the amount each investment or
group of investments at a uniform rate has earned during
the period, irrespective of payments made.

366 THE SAVINGS BANK AND ITS PRACTICAL WORK

The Blank Savings Bank.

Schedule of Earnings and Expenses for Six Months Ending Dec. 31, 1911-
(As made for Board meeting December 5.)

Earnings. J^tem No. 1.

$300,000 Mortgages at 6% 6 months $9,000.00

200,000 Mortgages at 5% 6 months 5,000.00

200,000 Mortgages at 4% 6 months 4,000.00

20,000 Mortgages at 6% 5 months 500.00

30,000 Mortgages at 6% 4 months 600.00

50,000 Mortgages at 6% 2 months 15 days 625.00

Item No. 2.

$400,000 Bonds at 5 % 6 months $10,000.00

600,000 Bonds at 4 % 6 months 12,000.00

200,000 Bonds at 31/2% 6 months 3,500.00

30,000 Bonds at 4 % 3 months 15 days 350.00

50,000 Bonds at 4 % 2 months 333.3S

$2,080,000

Item No. 3 — Income from daily balances (as per income acct.) .... $3,899.23
Item No. 4— December daily balances (estimated) $120,000 at 3%. . 300.00

Item No. 5 — Add other items of income (interest on mortgages paid
off during the period and on bonds sold, as per
income account, but not including any interest

listed above as accrued) 756.00

Item No. 6 — Otlier earnings, such as rents, received and accrued from

rent account 1,200.00

Total earnings from all sources $52,063.56

Charges against income —
Expenses:

Salaries for six months $5,200.00

Other expenses (5 months) 3,800.00

Reserve for taxes, etc 1,000.00

December expenses, unpaid bills 300.00

$10,300.00

Amortization for six months (explained in text) 356.89

$10,656.89

Applicable for dividend 41,406.67

Dividend on $2,100,000 at 3.60 (see text) 37,800.00

Excess of income $3,606.67

FOn.M 98. — SCIIKDII.E OF EAIIKIXCS AXI) EXTHNSES.

THE DIVIDEND 367

Items 3 and 4 (interest on balances in other banks) can
he obtained from income account, and the estimated interest
for the current month added. Item 5 (interest on mort-
gages paid at odd times, bonds sold, etc.) must also be
obtained from income account. This includes interest re-
ceived on mortgages satisfied and bonds sold or matured;
but as above pointed out, that which belongs to another
period should be eliminated. Item 6 (rents received and
due) explains itself.

Against the total earnings, we have as a charge, first,
the expenses, paid and to be paid; second, the half-year's
proportion of taxes, State and local. These must be par-
tiall}^ estimated. Third, the amortization of the bond pre-
miums, which is in substance the amount chargeable against
current earnings, so that the premium on the bonds will be
replaced during the life of the issue. The process of deter-
mining how much tliis shall be for each group of bonds is
treated elsewhere; but this is an important matter, and
should have careful attention. If all earnings are consid^
ered net earnings, we shall deceive ourselves as to the true
income of the bank, and declare dividends out of principal,
which should be carefully guarded against in any con-
cern. Banks are now giving more attention than in the past
to the proper determination of the true amount to set aside
for amortization purposes.

Schedule "J," of the New York Banking Department
report, is intended to show the true earning power of the
bank for the year under review, and embodies essentially
the same ideas as above set forth; the only difference being
that the dividend is known to a certainty when this is made
up. Accrued interest, however, plays a most important
part in this sheet. But when the ISTew York report is com-
plete (and it takes no cognizance of the bank's bookkeeping
sj^stem, since it calls for certain facts that must be stated
irrespective of how those facts are obtained) it is like a fine
piece of machinery which locks and interlocks, one schedule
into the other, and all into the main sheet, where the pres-
ent status of the bank is revealed. Having ascertained
what the bank has earned, what it has cost to operate
it, and what the bank will be called upon to add to
its deposit liabilities if it declares a certain rate, the
matter is presented to the board of trustees, the ques-
tion discussed pro and con, an agreement reached and

368 THE SAVINGS BANK AND ITS PRACTICAL WORK

a vote taken (in New York and many other States it
must be by call of the roll) after which it becomes a Uabihty
of the bank. The next thing in order is to figure interest
for each individual account, total it, post to the ledgers, pay
it at the proper time, or enter on the books as presented,
according to the direction of the depositor.

Extra Help Often Necessary.

Having taken a vote upon the question of dividend and
decided that the bank will pay a stipulated rate of interest
"upon all sums entitled thereto according to the rules and
regulations of the institution, the trustees hand over
to the accounting force the problem of determining how

TRIAL BALANCE AND INTEREST ABSTRACT

Si/

TR(AL BALANCE INT. B

i 5

/ o

adz

i t

U.-M 99. TRIAL BALANCE AND INTEREST SHEET COMBINED

much of the dividend each depositor is entitled to according
to this mandate. In a brief period, not usually exceeding
three weeks, each account must be analyzed and separated
into its component parts; the interest computed upon each
part; the separate items aggregated, proven, posted, entered
upon depositors' books as presented (usually after a stated
time su])sequent to the closing of the period, as, for instance,
the tliird ^Monday in January and July), and the balances
extended. In many banks a trial balance is also taken.

In many if not most of tlie banks, the exact amount of
the (hvidend is known on the last day of the semi-annual
period. Mhen the books are closed. The postings may be
made later, but it is quite necessary that the amount be
known in order to make the proper reports and keep the

THE DIVIDEND 369

controlling accounts in perfect balance. It is plainly to be
seen that if tliis work is done by the regular force, it means
considerable work overtime, and some banks employ extra
men for a few weeks during this process.

Any good bookkeeper can figure interest, especially at
four per cent., and it does not require expert help; but the
distribution is more complicated and requires experience,
both with the theory and with the books themselves. Where
extra help is emploj^ed, the distributing is generally done by
the bookkeepers, leaving it to the extra men to make
computations and help in posting. In fact, some banks
have sort of an auxiliary force upon wliich they depend,
these men dropping whatever positions they may have at the
time and taking the savings bank work on account of the
remuneration that is offered therefor, usually about five
dollars per day of eight hours. One bank in New York
will not allow^ night work, and arranges accordingly in the
emploj^ment of extra clerks at interest time. On the other
hand, the author knows of a young man in a savings bank
who is able to "distribute" five thousand accounts, compute
the interest at three and one-half per cent., post, and prove
the postings, without help of any kind in a period of three
weeks, and not work later than five o'clock, and still keep
up with liis routine work.

Knowing the rate, we proceed to distribute the dividend
to depositors according as they have become entitled to it;
not a difficult, but a lengthy process. (The distribution of
items as to time may be done in advance of the work of
computation, changes being made as withdrawals are
made. )

Interest Rules.

There are two general rules in force as to interest
periods: First, the quarterly method, by which deposits
begin to draw interest from the first of each quarter, after
allowing the days of grace. Thus deposits made between
July 11 and October 3 will draw from October 1; those
made between October 3 and January 10, from January 1.
Second, the first-of-each-month method, whereby deposits
begin to draw interest from the first of each month, although
credited and paid as in the quarterly plan.* Thus, in the

*The term "quarterly method"' is sometimes used to indicate that interest is
paid four times a year, although credited but twice.

370 THE SAVINGS BANK AND ITS PRACTICAL WORK
TRIAL balance: AND INTEREST ABSTRACT

J /( /i e>^ ce^<

Intoxett I

OIL the

flfit cf

eeot tenth

.,:.......«

„.s....c.

6 ^

■A

/ ^

■/-

'-""-

i^o^-r

5 0 <^

£3 CD 0

/o<o

/^o

/o 0

/.o

/oo

i-/

■V •

First Method — Common denominator metliod

Interest at 3 per cent, a year is equal to ',4 of one per cent, a month. Havingr
the amount of interest at 3 per cent., at 3 'A per cent, it will be 1-6 more.
Rule: Point off two places; multiply each amount by
the numerator as indicated by the number of
months for which the amount draws interest;
add these amounts and divide by the denom-
inator, and the result will be the interest at

3 per cent. Add 1-6 and the result is the In-
terest at SVo per cent.

Applying the above rule in the example above, we get:

6 X 10.00 60.00

5 X 1.00 5.00

4 X 1.00 4.00

3 X 1.00 3.00

2 X 1.00 2.00

1 X 1.00 1.00

4|75.00|18.75
add 1-6, 3.12

$21.87 Interest

Second Metliod — Each month figured separately

Rule: Point off two places; multiply the amount by
the fraction at the top of column, which gives
the Interest at 3 per cent.; add 1-0, and the
result is the interest for the given time on that
amount. Assemble the various months and
carry to the interest column.
Applying the above rule in the example given, we get:

6-4 X 10.00 15.00

Add 1-6 2.50 $17.50

5-4 X 1.00 1.25

Add 1-6 21 1.46

4-4 X 1.00 1.00

Add 1-6 16 1.16

3-4 X 1.00 75

Add 1-6 13 88

2-4 X 1.00 50

Add 1-6 08 58

1-4 X 1.00 2.J

Add 1-6 04 29

$21.87 Interest

FORM 100. SHORT METHODS OF COMPUTING IXTEREST.

monthly process, deposits made between July 11 and Au-
gust 3 draw from August 1.

In a report of the Committee on Auditing of the Sav-
ings Bank Section, American Bankers' Association, for
1908 (proceedings, p. 24) the committee says: "The prac-
tice of allowing interest semi-annually is followed by more
than eighty per cent, of the banks; a small number pay
interest quarterly; while a few of the larger banks still
fldhere to the annual ])eriod. Over half the banks pay in-
terest upon monthly balances, but most of the large Eastern
banks pay upon a quarterly basis — in some the semi-annual
balance is used as the basis of reckoning. Nearly three-
fourtlis of all the banks allow interest from the first of each

THE DIVIDEND 371

month upon deposits made during the first few days of the
month; a few still adhere rigidly to the old rule that in-
terest commences on the first of the month following the
deposit."

Monthly vs. Quarterly.

The advantages of paying interest from the first of each
month are very well expressed in the following, taken from
the experiences of banks making tliis a practice: Inasmuch
as money begins to draw interest shortly after its deposit, it
encourages frequent, regular deposits. A $5,000,000 bank
states that "if we were to abandon the monthly method, we
would notice a marked falling off in deposits." Another
bank of the same size reports that it is "an important factor
in keeping up deposits during the time between 'quarter
days.' "

Under the quarterly rule, deposits are held back, and
other opportunities being afforded to spend or invest the
funds, the chances are against the savings bank getting the
money. It is not only good business to offer tliis as an
inducement to save, but it is equitable to the depositor to
give him the benefit of an early investment, and a delay
of from one to ten weeks before money goes on interest
is all on the side of the bank. It tends to make the business
uniformly active rather than crowd it into brief quarterly
periods. The average savings bank depositor is looking for
interest, and the bank that offers liberal yet safe interest
inducements A\all find in it a strong advertising medium. A
three and one-half per cent, rate from monthly periods is a
stronger inducement to save than four per cent, quarterly —
its appeal is to the regular, systematic saver.

The disadvantages of the monthly plan are, first, the
cost. It is readily to be seen that the less time money is
idlef the greater the cost to the bank; and it is obvious that
with the maximum time of idleness but twenty-seven daj^s
in the monthly, as against two months and twenty* days in
the quarterly, the odds are clearly on the side of the quar-
terly method, as viewed from inside the counter, and clearly
in favor of the monthly, when viewed from the outside. A
bank with over a million on deposit reports that in changing

*Deposits made in early April and October would be idle still longer,
tidle in the sense that it is not drawing interest for the depositor. In other
words, the sooner interest begins, the less the profit to the bank.

372 THE SAVINGS BANK AND ITS PRACTICAL WORK

from the quarterly to the monthly plan they found the cost
to increase from 3.35 to 3.36, on a three and one-half per
cent, basis, while in another it increased from .0333 to .0339.
Some banks hold that the increased labor of bookkeeping
is not offset by the gain in deposits, considering the extra
cost of the money as well. Others that it emanates from
a spirit of competition, and the bank needs all the surplus
the small margin of })rofit any method affords. And again:
A depositor will hesitate to draAv his money if he knows he
will lose three months' interest, no matter how he may
scheme to avoid the loss.

INTERKST

AMOUNT

AMOO'T

Interest

INTERKST

BALANCE

6 Ml.S

3 Mos.

To Spare

(J Mos.

J Mos,'

Total Int.,

Total

/•S'o o o o

n.Tf

S-n

o5 J.

= •

°7-'

'^V

Si a

,r. /i

)

$-lU

1 o

' 9

/ c>

rt.-;

(•■'■

,' li

-r.<;

7-s

Tr,

sT'

1(.

.c,-.

■O,?

/,<

,''/.?

/ r,

? ('

) /

frxU

o /

-r

<f o

( <?

>Tr

1 c

f '

/ o

/ t

> r

y t

,to

/ o

/.Co

/o o

'?-'■

i.^

•).

1 A>

— (■

Ti^

*/»^

ii<

V«

f <

n '

FORM 101. INTEREST SHEET SELF-PROVIXG.

The above form Is as complete as an Interest sheet can well be. It proves everything.
Including the distribution for interest (but not necessarily, however, that an item shall be
listed at "3 mos." when it should be "to spare"). As will be seen, the total of the "6 mos."
and "3 mos." columns equals "total Interest," and the "balance" plus "total Interest" must
equal the "Total," thus proving the extensions. The sheet contains seventv-elght lines, and
the bank which uses this form calls in extra help during interest time. The amounts are
distributed by the bookkeepers, and the extra men are required to ngure and prove the
Interest and extensions. Four sheets an hour is expected of each man, not a difficult
task when the work becomes familiar.

The monthly plan attracts large sums of temporary
deposits that come in for a few months and are withdrawn
as soon as the period closes. Such deposits are usually un-
profita])le— it is the lapse of interest that makes for gain to
the bank. A large bank that operated the monthly method
for many years and then abandoned it, found that it not
only increased the dividend, but required an extra man four
and one-half days of eight hours to compute the interest on
each million of deposits.

A large savings bank in New York says: "We follow
the quarterly method because we started that way. It

THE DIVIDEND S73

would cost about one-tenth more to pay from monthly
periods. I note that the old depositors, who are really
the best friends of the bank, are not the ones to suffer
by the quarterly computation, and only the 'small fry'
would benefit, and these cost more than they are worth as
they are. It astonished us to discover that each transaction
over the counter cost the bank three cents in stationery and
time on all accounts of less than fifty dollars and are a
dead loss to the bank. The cost need not be reckoned, but
the extra labor takes about four times as long."

Another: "We do not think it advisable for savings
banks to be so anxious to obtain business as to give the de-
positors all the profit there is in taking care of their money.
We think it quite liberal to make interest payable quarterly
and give twenty days' grace. We cannot see anything to
be gained through the monthly idea and think it unwise."

A bank in Albany, N. Y., says: "The custom of allow-
ing interest from monthly periods arose in this city from a
spirit of competition."

Days of Grace.

Savings banks quite generally allow days of grace at the
beginning of the interest periods. These must be carefully
kept in mind in making calculations, whatever the method
used. In order to guard against errors in dates, and to
make the distribution easier, one large bank changes the
color of the ink on its ledger cards every three months ; thus
all entries between July 11 and October 3 will be in purple;
October 4 to January 10, green, so that a purple entry
7iieans three months' interest. There are two good reasons
for this leniency; first, to allow depositors time to arrange
their affairs and take advantage of the beginning of a
period; and, second, to avoid the crowds that would be im-
possible to handle if the work was crowded into one or two
days.

In New York, where ten days (legally the first ten
business days beginning a semi-annual period, and three
business days beginning any other month) are allowed, the
crowds on the last days often look and act like a real bank
run. In one instance the line was over two blocks long
when the doors were closed at three o'clock.

The provision for daj^s of grace is not found in all the
State laws, but is quite common, nevertheless. The New

Trial Bolaace.

19.

INTEREST hi. 19

Lex)GER No.
DIVIDEND AND BALANCE SHEET

fST.

oJA«»ot ABl g Mo. AmL 3 Mo. I So In-.c.r.l Toul ot 1:

TRIAL BALANCE AND INTEREST ABSTRACT

HOME SAVINGS BANK

EAST BROOKLYN SAVINGS BANK.

DIVIDEND

HTMB

McTith. Thro- Mon'l

^ith Dividend

Drafu i of

2rsi

NvDlMf o( A.fVllD

PROOF OF INTEREST

IVot Ityoarii

FOHM 102. FORMS FOE TRIAL BALANCE AND INTEREST SHEETS.

S74

THE DIVIDEND 375

York law not only allows days of grace at the beginning
of a period, bnt also at the end of a quarterly or semi-annual
period, the banks being permitted to pay interest for the
full time if the deposit remains up to within three days of
the closing of the period. INIinnesota allows the same,
except the time is extended to five days at the beginning
of any month. Vermont allows ten days at semi-annual
periods and five days in other months, but says nothing
about days of grace at the end of a period. New Jersey
allows three days at the beginning of every month and ten
days semi-annually. Indiana ten days, January, April,
July and October. Massachusetts, but three daJ^s quarterly
or semi-annually.

In distributing for interest, care must, of course, be
taken to allow these days of grace, and where interest is paid
from the first of each month, the deposit dates must be care-
fully watched. I^ikewise if computations are made direct
from the cards or ledger accounts. It is obvious that to
figure correctly either way, the distribution must be made,
the difference being largely in the fact that in one case it is
set down as a permanent record, while in the other it is not.
Where the items are listed on sheets, the trial balance
quite generally forms the basis for this work, and is taken
on the same sheet.

But before discussing the technical side of interest calcu-
lations, let us go over the groundwork that precedes the
actual comj^utation of interest, i. e., the distribution of the
deposit balances for the time which they draw interest. As
a general statement, there are two ways in which the interest
is computed in savings banks; first, directly on the
ledgers or cards, being posted at the time, generally in
pencil, somewhere on the account, but not necessarily in its
permanent place. After the work has been checked by an-
other clerk, it is posted in ink, quite universally red. After
the work is all computed, it is listed on the adding machine
and again checked back. The second method is to "dis-
tribute" the account in another book, forms of which are
herewith given, and the interest is figured on these dis-
tribution sheets, and pj'oven to he correct, so that going over
the second time is unnecessarj'-. The only work that needs
verification is the distribution, to see that an item is prop-
erly listed for the time which, according to the rules, it
draws interest. Where interest is paid from the first of

376 THE SAVINGS BANK AND ITS PRACTICAL WORK

each month, as elsewhere noted, it is a more compHcated
process, and to properly distribute the work requires more
time and labor than to figure it.

Distributing an Account for Interest.

The savings bank employee who would become pro-
ficient in figuring interest must first learn to distribute the
items rapidly and correctly. Tliis is a matter of practice,
and once the "trick" is acquired it becomes almost a matter
of intuition. A few suggestions will, however, be timely.
In the first place the balance ledger fulfills its mission most
admirably in connection mth this work. As desirable as it
is to have the balance always extended for the sake of com-
parison and in taking trial balances, its value in distribution
for interest calculations would make it worthy of a place
in every bank. In fact, after having used the old style
ledger with debit and credit sides and balances jotted down
somewhere in pencil, and then adopting the balance ledger,
one wonders how he ever managed to get along without this
most efficient system.

The usual rule and equitable is that the last draft shall
come out of the last deposit. In Massachusetts this is com-
pulsory. {Sec. 64.) To take the last draft out of the first
deposit, or the first for the period, as a few banks do, is
hardly just to the depositor and entails a vast amount of
extra work in distributing. A general rule, applicable
whether the bank pays interest from the first of each month
or from the first of each quarter is as follows:

Find the lowest balance. If it is less than the balance
at the beginning of the period, it draws for six months.
From this point work up to the close of the peiiod (last day
for which interest is paid).

It is obvious that if a depositor has less in the bank
to-day than he had six months ago, he must have withdrawn
all the deposits made in the interim, and part of the balance
at the beginning of the period, and present balance re-
mained undisturbed for the full time.

On an active account that draws from the first of each
montl), tlie distnl)ution takes a little longer; for having
found tlie l)alance that remained undisturbed for the full
time, the net amount that is entitled to five, four, three, two,
and one month's interest respectively, must also be found.

THE DIVIDEND

377

.DATE

DEPOSITS

DRAFTS

BALANCE

DATE

DEPOSITS 1 DRAfTS

BALANCE

'7'

^7-

7-f

^ r

X8^

/ A

i-S^S

7-«

' T

l-ga

/ £

i-^ o

7-^

i-i

J-c

1 t. o

/>i

isS-jr

7-^

j-«

/ o

AS !

J.6 t

..A-e^

■s

t o

■S-o

i-s

' (S

i Si

1 1

.»^A

>-<».S

"i*^

Jo
Jo

/
J'

/ o
/ o

7 l':y

per cent, interest

1 -'^

frcu auartsrlv

' *

•2y i

rerlcda, January. April. July," Oolotsi.

•

/ C

ij i

/ c

i J- i

Abstract from an active eavings bank

/ 6

i J ?

account for sli montliB, shewing tha

/ /

2 ^o

application of tha fcllcwing riilo in

/<S

2 J ^

thd distiibutlon for Intarast:

/ t>

i i J

/<r

2 io

'-S

"Fina the lowaat balance. If it is less

■

i / £

than th9 balancs at the baglnrilng cf

i-/ o

tha period, that IB the amount for slj

i- / 6

/v^

ccnths . Frcii this work up to tha last

/ «3

J i <^

f s

Jai for interoat, which amount draws

Oc^

i-e

i.v4

r-i

for three monthsr

^*.»

2
J

/ i

i-r/

The balance on tnlg, account July ist
Was J270.7£,. Lowest balance Septamber

7-5

•^7 -^

J~S

13th -JSIO.IS, which afliount dra«s for
elx coTithB. October 3rd last day for

7-^

-c

LgL

interest, therefore deposits cf Ju and
$1'J S(»ptrt::,ber 26 and 27, draw for three
iicnths. Multiply the first a::,cunt by
2 and the sscond by 1 and thd result la

n3 correct i

ntirest —\

4.3C

FORM 103. LEDGER ACCOUNT SHOWING THE EASE WITH WHICH AN APPARENTLY COM-
PLICATED ACCOUNT MAY BE DISTRIBUTED AS OF JANUARY 1, 1911.

Referring to page 378, which is reproduced in type for
the sake of ready reference in tliis connection, it will be
found that by running over the balances no amount less
than $100 is found, indicating that the first $100 remained
undisturbed for the full time. To distribute this for month-
ly periods, allowing up to the third of each month, we have
the following figures: January deposits, $40 less $15 — $25
for five months; February deposits (including ]March 3),
$60, less JNIarch 15 draft, $25 — $35 for four months; March
18, $10, and April 3, $25, draw for three months— $35;

INT.
BALANCE

[NTEREST

230

100

3.03

FORM 10-k

-INTEREST SHEE* SHOWING DISTRIBUTION OF AMOUNTS PREPARATORY TO
FIGURING INTEREST.

378 THE SAVINGS BANK AND ITS PRACTICAL WORK

INIay 18 draft of $10 comes out of April 15, April 29, May
1 deposits — $45 less $10, making $35 for two months. The
$45 draft on June 18 takes the $20 of May 29 and $25 of
June 10, therefore nothing for one month. We have there-
fore the distrihution for this account as shown on page 377.
The sum of the several amounts equals $230, the interest
balance, proving that we have accounted for all the money
in the account.

Rules for Distributing Accounts.

(Accounts standing six months or longer.)

Rule 1. If no transactions have been made on the
account, the whole amount draws interest for six months.

Date

Deposits

Drafts

Balance

1911

Jan. 1

100

Jan. 6

110

Jan. it

130

Jan. 25

140

Jan. 31

Feb. 15

150

PVb. 26

165

Mcb. 3

185

Mcb. 15

160

Mcb. 18

170

Apr. 3

195

Apr. 15

205

Apr. 29

225

May 1

240

May 18

230

May 29

250

June 10

275

June 18

230

FOR

M 10 J

. SAVINGS ACC(

DUNT T

O II,I,U

STRA

TE TH

E DISTR

IBUl

nON o

F AMOl

I NTS

iXTEUEST C05IPUTATIOX. (Scc page 377.)

Rule 2. If the present balance is smaller than the bal-
ance at the beginning of the interest period (July 10 and
January 10, where ten days' grace is allowed) the lesser
balance draws interest for six months.

Rule 3. (Quarterly) Find the balance at the close of
the days of grace (July 10). If no drafts have been made
on the account this amount will draw for six months, and
the difference between this amount and the balance at the

THE DIVIDEND 379

close of the period (October 3) will draw for three months.

Rule 4. (Active account) Find the lowest balance.
This usually draws for six months. If subsequent deposits
have been made the difference between tliis amount and the
balance at the close of the period draws for three months.
(The days of grace must always be kept in mind when dis-
tributing, and the change in color of ink referred to in text
is a most helpful idea in tliis respect.)

For monthly interest apply Rule 3, as of August
3 and July 10. Thus, if the balance on August 3 is $510,
and the July 10 balance is $475, it indicates that thirty-five
dollars has been the net deposit during July, subject, how-
ever, to subsequent withdrawals that might eliminate it.

Figuring the Interest.

To become adept at figuring savings bank interest
merely requires an alert mind, concentration and practice.
In fact, it becomes possible by choosing a method that wiU
work to that end (as, for instance, JNIethod No. 2 in the
illustration page 370) to become so familiar with a great
number of amounts that draw interest that it becomes
merely a matter of memory. Even \\dth an odd rate
such as three and one-half per cent, on deposits drawing
interest from the first of the month following the deposit,
it is possible after years of training to set down instantly
the interest on any amount from one dollar to three thou-
sand, either for six months or three months, and also to
know from memory a large number of interest amounts for
the odd months, five, four, two and one.

By making combinations, it is possible to figure the in-
terest on such an amount as $787 for six months by two
mental calculations, thus: Interest on $800 for six months
at three and one-half per cent, (from memory) is fourteen
dollars; interest on thirteen dollars for the same time is
(also from memory) twenty- two cents. The result is there-
fore $13.78, ^^athin a half cent. And so all sorts of com-
binations will readily suggest themselves, after doing tliis
work long enough to become somewhat of an expert. We
might take an odd amount, like $1,761, which does not
readily divide itself into two known quantities, and make
three calculations, thus:

380 THE SAVINGS BANK AND ITS PRACTICAL WORK

$1,600 (which we know) $28.00

160 (likewise known) 2.80

1 02

Result $30.82

By such processes it becomes possible to figure the
interest as distributed in Form 101 as fast as one can write
the amounts down; the work in Form 104 takes longer on
account of the odd months.

In figuring interest at three and one-half per cent, for
quarterly periods, the quickest method is to apply the four
per cent, rule; /. c four i)er cent, yearly equals two per
cent, for six months and one per cent, for three months.
Therefore for interest at three and one-half per cent, for six
months. ])oint off two places, multiply by two and deduct
one-eighth; for interest at three and one-half per cent, for
three months, point off two places, multiply by one and
deduct one-eighth. Thus, required the interest on $o4G for
six months:

5AG
X 2

10.92
less Vs 1.37

Result %9-55 as in the next example.

Another method is as follows: Interest at three and
one-half ])er cent, a year is equal to one and three-quarters
per cent, for six months; or one, plus one-half, plus one-
half of a half. For three months, either take the amount
and figure for six months and divide by two, or divide by
two and figure for six months.

Required: Interest on $.546 for six months at three and
one-half per cent.

Interest on $546 at 1 per cent, is $5.46 ( 1%)

One-half the above will be one-half per cent 2.73 (V2%)

One-half of one-half, or one-quarter per cent is 1.365 (1/4%)

Correct interest $9-555(1%%)

Required: Interest on $546 for three months at three
and one-half per cent.

THE DIVIDEND 381

Divide $546 by two thus obtaining $273, and proceed as
for six months :

$2.73
1.365
.683

$4,778

Use of the above rule will quickly train a man to make
most of the calculations mentally; Thus, interest on $40
is merely 40+20+10= 70.

Interest JNIethods in Use.

In the Hudson City Savings Bank of Hudson, N. Y.,
the interest is figured on the "interest book" which has the
amounts distributed for the several months (this bank pays
from the first of each month) and is not posted to the
ledgers until after the first days of January and July, refer-
ence being had to the interest book in entering the interest
on pass books.

Interest is posted direct from tliis book to the ledgers as
soon after the first of January and July as possible, after
which extensions are made in the proper column of the total
of principal and interest, each page of which is proved by
comparing the footing with the sum of the principal column
and interest column.

During the current six months entries are made in the
next two columns of the transactions on each of these ac-
counts, and at the end of the six months' period the last
column "Balance of Account" will be the amount of the
first column in the new interest book. The first column is
copied from the last column of the previous book, and is
then compared with the ledgers by calling back, so that if
there should be a wrong amount entered in the first column
a double error would have to be made not to find it. Each
ledger is balanced separately. (Cards are now used in the
same manner.)

The Utica (N. Y.) Savings Bank figures its interest
upon ledgers and enters the amount in lead pencil, after
which it is drawn off and totaled and proven, after which
it is entered in ink. Likewise in the Holyoke Savings
Bank, Massachusetts; Mariners Sa^iDgs Bank of New

382 THE SAVINGS BANK AND ITS PRACTICAL WORK

Seml-Annual Balance and Dividends, January 1(^11

150

DEPOSITS, hi

3 94,5 40
3 9 4,5 4 4

3 9 4,5 4 6

5 50
5 5.5

lY,

lui-

68
3.9 6

•^0

iJL

562
58 4
596

599
604

/to

1,2 6 0

2;043

3 4

161

54
43

11
IV
•H3 3

S-i

632
635
637
6 39
647

98 8

aODQ

89
83.

LQ_

i^i)

1±

651

661
680
698
702

3 0
2 5

4>78

1.03

— &^

174

703
705
713
730
73 3

■4-5 8

3^2 e 0

9 6 5

1.1 IC

l-v

•^5.

734
738
743
755

766

166 .

683:

£.3 5

9
■■ no

^^7

773

774

791

3 9 4,797

3? 47 9 9

s-f

10
110
133
150

43
13
45
11

oyr

-j-^r?

,i,>-.-v'

'^'

?-)

■m

■l-^s'

viJfy

TsT

-- >

'kJ-f

ce /

T>^ 0

LEi863 139.38«

IL^OOI^

FOHM lOG. INTEREST SHEET WITH PROOF OF COMPUTATION CARRIED TO EIGHTHS OF A

CENT. (See page 383 for explanation.)

London, Conn.; Saugerties Savings Bank, New York, and
many otliers.

The use of the interest book in a form similar to that
of the ITndson City Savings Institution is practiced every-
where, and in some of the largest banks. As between the
two systems, figuring direct on the ledgers or cards and

The trial balance she^it on the oppoaite page iB a sununary' ItTi
horizontal form of all the transactions for the half year on about
5o accounts bringing out the balances on the next day' following the
last day of grace. It proves line by line, taking into account tho
balance of each account six nonths earlier, in the previous book.

For example account No. 394,703 :

Balance July 1, 1910, (previous book) 440.74
Deposits for six months (90 + 70) 160.00

Interest 7.52

608.26
Minua drafts (10 +90+70) 170.00

Final balance (438 + 26 ) 438.26

The deposit and draft tickets which are filed nurierically arei
condenst into single sums on tlie trial balance.

The aggregate proof at the foot on the left hand side proceed^'
on the same principle after adjusting the fractions of interest. The
rate was 3 l/2/i and this resiAlts in fractions, which are exprest in
eighths, either plus or minus, the latter being encircled. The
interest on the first balance ($6) is 10 1/2 or 10 4/8 cents. The
actual credit is 10 cents, the 4/8 .is placed in the margin ac gain
to the bank. In the next open account, 394,550, the true interest
is 15 6/8 cents, or rather 16 cents minus 2/8, since the nearest
cent is 16. It is written 16 minus 2/8. At the bottom of the
c olumn we have :

Total plus items 38

" minus " 16

Difference 22 or 2 cents 6/fe, gain

The aggregate interest is

$ 644 at 7/8.^ 5.&3 4/fe

14475 " 1 3/4,< 253. $1 2/8

258.94 6/8
less above gain 2 6/^

Actual credit 258.92. which agrees with the sua

of the colimn.

We then have the following proof:

Old balances (16,095 + 89.48 ) 16,184.48

+ deposits J 934 + 1020 ) 1,954.00

18,138.48
- drafts (1620 + 290 + 486.02 ) 2.396.02

Principal, excl. dividend

(623.46 + 644 + 14475) 15,742.46 _

Plus Interest - dividend 258.92

Total which should appear 16,001.38

Sum of actual balances 16,001.38

The colxnnns for deposits and drafts are subdivided into
three, according to the effect upon the next dividend of interest,
6 months, three months and "no interest", the sane subdivisions
being observed. in the daily work. On January 11th, there is no
three months money, and the subdivisions are 6,0. The "0" amoxmts
are: 1st, all cents; 2nd, anounts less than |5. ,' 3d, excesses
over $3,000, the legal maximvcn.

384 THE SAVINGS BANK AND ITS PRACTICAL WORK

checking by another clerk, or computing on ruled sheets
and posting to ledger and checking back, is a matter of
choice. There is doubtless merit in both systems. The add-
ing machine comes into play admirably in the former, while
in the latter, to list by machine simply for the sake of
saving the ])rainwork of footing the columns is a waste of
time, since it can be footed quicker without the machine,
for this requires listing as well. And yet some men, to
avoid the mental strain of adding, would waste their time
running the items off on the machine, more's the pity!

In one of the large banks in New York State the inter-
est is figured by one man and posted in lead pencil in a
column provided for this purpose. The computations are
proven by another man, — all the work being done before the
close of the interest period. Immediately after the close
of business on the last day, the whole force begins to enter
the amounts, indicated in pencil, in ink in the proper places,
extending the balances at the same time. As soon as liis
ledger is finished the clerk runs off the interest amounts on
adding-machine and checks back. A trial balance of the
ledger is then taken, which, of course, must prove with the
group account of this ledger. Record is kept of the prog-
ress of each ledger, viz.: "Interest entered," "postings ex-
tended," "called back," "balanced." \o extensions are
made in the daily postings until the ledgers are in balance,
tchen the extensions are made to date.

With nineteen ledgers and over fifty thousand accounts,
with a force of about fifteen, this work is accomplished in
about three strenuous weeks.

CHAPTER XXIV

MORTGAGE LOANS AND REALTY VALUES

A mortgage has been termed "a conditional deed," and
to "mortgage" real property is to "grant or make over" the
same as security for the performance of some condition,
usually the payment of money, with the stipulation that the
conveyance is to become void upon the performance of the
condition. In law, a mortgage is an estate in land created
by conveyance coupled with a condition in the mortgage by
the performance of which the principal deed is rendered
void and the estate therein granted is defeated; or, in other
words, a lien upon land or other property as security for
the performance of some obligation, to become void on such
performance.

It is upon such pledge of security that the greater part
of the funds of savings banks is loaned, especially in the
case of mutual savings banks. The laws of all States per-
mit such loans, and even encourage them; for while they
are a slow asset, they are at the same time, if made with
care and conservatism, of the highest order of excellence.
According to the 1911 report of the Comptroller of the Cur-
rency, the mortgage loans of the mutual savings banks of
tliis country amounted to $1,526,977,451. In the State of
New York alone such loans aggregated over $900,800,000
on January 1, 1912, while in Massachusetts the total is over
$370,251,000.

Realty Values the Basis of Mortgage Loans.

In order to make a mortgage loan with safety and con-
servatism, the only requirements are that the property shall
be conservatively valued and carefully watched; for hav-
ing determined the value, the quality of the loan quickly
manifests itself. But this is saying a great deal in a few
words. What is the property icortli? And to determine
tliis is to be a good real estate man, and good real estate
men are made and not born. There are so many elements
to consider in properly valuing real estate that it soon be-

386 THE SAVINGS BANK AND ITS PRACTICAL WORK

comes a comi^lex subject and worthy of life study. The
idea that anyone who fails in other caUings can take up
this field and make a success is untrue; for while it is ad-
mitted that a great many men have acted as if this were
true, they have found to their sorrow that real estate de-
mands as keen a mind as any other profession, and like all
other professions, has something to teach even the oldest.
In small places where the economic conditions are not

J^ noiicc 10 examine Properly

" Di»« Sik;

Applidtion hM b««i made to the Baok bf

lor > l»in ot % - '^-O « =»-_, ^t - •51,_ ^ upon property .C

•?J>-7 ySL-l^iC———%<M\

Tiplioi> ol loLi-ffKXeO.—., _<<fet^sideof

' g"-" -y-g - ■ ■ l~i Ifoin

Ownw's VttluKlioo-Und. Z^ o o o ^Building?. 8_<^-C;J>_^-.

—

.lu«lion— Und. %J (s O, O Buildiojs. tJ^^ClPJ^ .,

tmiiruK., I .&0 0. a , Bental, 8-.P O <* . .

Pl<*se report by luinding or mailing the annexed slip tfO the Secretary

not Uter than i^*-'^-.'-^ 19//

O' ' RopecKalli

Mortgage Ko. ^/ ^^^-

AMERICAN SAVINGS BANKOF BUFFALO

Buf!alo. S. Y ,>i«-<!^ /0_ *9'/.

I have eaamined the property No ■^V^y f S ''^C^ Sueet

menlioncd lo the application <A /^ t^'l^-^tz^y^'^-*'^'*^ -^ |

lor a loan ol \ "P- ^-*- * ^-^ and report that in my judgment the property'

la^orthaa (oUowa : Land. %^So O ,buildiiig»8jif.^.<?.P ,

Total. I ^6 <=«>__

* 1 am willing lo join with the other memhcra of the Loan Committee ia
recommending a loan of 8-^^.^US-; ■* ^^ ^

FORM 107. XOTICE TO APPRAISER TO EXAMIN"E PROPERTY. COXTAINS ALSO APPRAISER'S

VALUATION.

subject to sudden changes, and where property values are
relatively stable, it is not a difficult matter to determine the
value of realty. In such places sales are infrequent; neigh-
borhoods do not change their character suddenly; trans-
portation facilities are not in a state of constant develop-
ment, and none of the conditions that surround property in
large cities are present to influence values. In valuing
farm pro])erty it becomes a matter of soil, crops, buildings,
location, nearness to markets, etc. But even here, outside
influences are at work to enhance or diminish the value of
the property, and farm values are a studv in themselves.

MORTGAGE LOANS AND REALTY VALUES 387

The coming of a railroad or other large industry will in-
crease values; the closing of a large industry will depress
them. Even so small a matter as the advent of a five and
ten cent store has been known to change the shopping cen-
ter of a town of 25,000 inhabitants. In such places it is not
difficult to watch the realty market and guide one's self
accordingly; but in large cities like New York, realty in-
vestments become a fine science, and must be viewed as
such.

The Appraiser.

One of the fundamental principles of the savings bank
is that it shall be a neighborhood affair; that is, each bank
shall have its field to cultivate, and it is not only supposed
to cultivate the field thoroughly in the way of reaching out
for deposits, but at the same time it is supposed to favor
local people in the matter of mortgage loans. To this end
the trustees are presumed to know values in their neighbor-
hood, and in maldng loans the bank often falls back upon
this knowledge; but in large cities, savings banks lose their
neighborly aspect and cover such a wide field that to keep
track of values merely by casual observation is impossible.
It therefore becomes necessary to employ a man who is a
real estate expert, and many banks have such an officer,
either an official of the bank or one employed as occasion
arises, whose business it is to value property. The law in
a great many States requires that mortgage loans shall only
be made after the premises have been examined by a com-
mittee of trustees, usually three, upon whose valuation and
report the loan is made. But in cases where an appraiser
is employed, the committee accept his valuation and act
accordingly. And when loans aggregating millions are
made upon the judgment of one man, his importance at
once becomes manifest. This man must not only know
how to value property, but must keep track in a scientific
way of the changes in ownership, prices paid, leases, rentals,
sales in the neighborhood, assessed valuation, etc.

Real Estate Has No "Market."'

Strictly speaking, there is no "market" for real estate,
in the sense in which the term market is used in connection
with stocks and bonds; for only in very large cities is it

388 THE SAVINGS BANK AND ITS PRACTICAL WORK

J\ro. of Loan ^T^y ■

THE BOWERY SAVINGS BANK.

.Yew York,-y^i:^..'C^ /*^ . iv//....^.

MJf. CffJRLES S. BJROir.Y, O^ ^

Please appraise the folJotring described property, viz:

Location / f f'2_^^-1^i<^(-^ &^^X^^d^^^^^^ V^"^^^-^ _„

Dimensions:. Land , jTo^^ f GO Building ^ p >-^<fo _

Description of Building._^.^''''i^^^-^^---^i^^&Cyc<.^^^^ , ,._

Ani't of Mortgage,, -^ So o o o Held by

Title insured by .. ^- '~V. 9^.: '^ ,

Bond given by (^^ c:^ /^ -^^^^-^^-^'^L^..

.Address of Bondsman / ^^ : C. r.^

^••

Appraised Value.

Lan d, •>'. ^ o , <=> 9 .9 :..

Building, $ ^ o . o <, © _^

Total, $ / ^O . o <:> o

Date ,—:y>t.c^-^^

FORM 108. NOTICE TO APPRAISER TO EXAMINE PnOPERTV. CONTAINS APPRAISER'S

VALUATIONS.

possible to sell a property quickly. Each property stands
by itself as a unit; while the bond or stock is one of series
of like issues and the value of one affects the value of
others, and it is readily to be seen that except in rows of
"flats" or two-family houses, no two are alike, and even
these are generally altered for the sake of pleasing the
varied tastes of prospective buj^ers. Therefore the value
of real estate must rest upon two factors: opinion and cap-

MORTGAGE LOANS AND REALTY VALUES 389

italized rentals. The term opinion includes the judgment
oi the appraiser as to its condition, desirability, adaj)tabihty,
cost to reproduce, possibiUties of increase or decrease in
value, etc. The term capitahzed rent means what the prop-
erty will show as an investment. Some men are of opinion
that the latter should govern to a large extent, while others
hold that rental income is but an indicator of value and not
a sure guide.

In order to express an opinion as to the value of prop-
erty, the appraiser must have accurate knowledge of past
sales, rental values in the neighborhood, cost of construction,
etc. Frequently the consideration is nominal, for obvious
reasons, and the appraiser must fall back upon other re-
sources than public records for his basis of value. There
are many properties in New York where the land value is
greater than the value of the building with the land as it
stands — meaning to say, the value of the building has
passed into the land and it will become profitable to tear
down the building in order to have the plot vacant again
for building purposes. The modern and well-preserved
twelve-story building at Nassau and Wall Streets, New
York, "w^as recently torn dow^n to make way for one twice
as high and twice as costly. Knowledge of the conditions
wliich bring such changes about is essential in passing upon
the value of property subject to such influences.

Sales.

The value of anything which can be reproduced indefi-
nitely can never long exceed the cost of reproduction. The
value of land, however, is a monopoly or scarcity value; it
depends upon the supply and demand; the supply cannot
be increased and the demand is a changing factor.

In considering the value of a manufactured article, we
know for a certainty that it can be reproduced at some
price, except in the case of old paintings and antiques,
which, of course, are limited in their supply; but in valuing
land one is confined to an inquiry as to what other people
think it is worth and what they are mlling to pay for it.
Each particular sale is merely an evidence of what the
buyer thinks the land is worth. He may have some good
reason for paying a particular price, and this, of course,
must be known in order to correctly judge whether his

390 THE SAVINGS BANK AND ITS PRACTICAL WORK

es 0

^ Ed

a. ^

? ^

CO 2

o< a

< S5

O ^

opiuioii is true or not. A man who is pressed for money
and sells under necessity has, no doubt, measured the price
of his proi^erty by his necessity; on the other hand, if he
needs a particular site for a particular purpose, as, for

MORTGAGE LOANS AND REALTY VALUES 391

instance, to enlarge his business, he may not only be wilHng
to pay a larger price than would ordinarily be obtained,
but his very need is taken advantage of by the owner to
compel him to pay such a price.

Therefore, to determine the value of land correctly, it
is quite necessary to secure an opinion of a large number of
people who would in a sense form a market for such a
parcel; and this can only be done by a public sale, and
such sales are the only true indicators in the large cities.

The selling price of property ordinarily reflects the
rental value, but this may be altered by the prospect of
higher rent as the community builds up and the demand
increases. Values do not always depend upon rentals, or
rentals upon values; for some high-priced property brings
an inadequate return, and some cheap property excessive
returns, depending upon the amount of business that can
be done in that particular location, irrespective of the con-
dition of the building. A high class building does not rent
to the same advantage as a cheap tenement; for while a
tenement may bring in ten to fifteen per cent, gross, or
from six to ten per cent, net, good authority has it that
some of the best modern office buildings rarely return over
three per cent. Vacant land usually has no rental value
and is not accepted as mortgage security by any mortgage
company in Europe or by conservative companies in this
country.

In many cases, however, the rent is a fair indication
of values, for allowing four to five per cent, for running
expenses, a building such as a two or three family house
must earn enough to give the owner a fair return for his
investment, say five per cent., and by such a rule we may
capitalize rents in this manner: taking, first, the fair rental
income for the property, which can be judged with consid-
erable accuracy by the prevailing rents, we find that one
floor will rent for fifteen dollars, another for fourteen dol-
liirs, and the third for twelve dollars, or forty-one dollars,
making $492 as the total income from rents per year; on a
basis of ten per cent, this would make the property worth
approximately $5,000, wliich in a large number of instances
would not be an excessive price.

This is not to say, however, that all property does or
can earn such a proportion; for in country districts and
small cities it is no unusual thing to find property renting

392 THE SAVINGS BANK AND ITS PRACTICAL WORK

for a mere pittance alongside of city values. The land is
clieap and carrying charges low and the greater part of the
rent is net, and we might well capitahze rents upon a
six per cent, basis. A misplaced building will, of course,
be a bad renter. The structure must be adapted to the
land and to the surrounding conditions; thus if an expensive
building is put upon a cheap lot, it will prove disastrous,
as also might a cheap building upon an expensive lot; the
two must be well balanced, otherwise the investment be-
comes destroyed. Property that is well built carries less
repairing charges than that which is flimsily constructed,
and the owner of a fireproof and modern building might
capitalize it on a five per cent, basis, kno^^dng that tliis
five per cent, would be four-fifths net, while a flimsily con-
structed tenement, needing constant repair, must necessarily
be capitalized higher, if it is to show any returns at all.

The ^Iargix of Safety.

The margin of safety in mortgage loans depends largely
upon the needs of the borrower, "aided and abetted" by the
willingness of the lender. Many mortgage loans carry "the
limit," and in many cases the limit is stretched by over-
valuation. In speculative ventures the limit is generally
asked for, and some lenders, including savings banks, have
seemed to work upon the theory that because the legal limit
is, say, sixty per cent., tliis should be granted in as many
cases as possible. On the contrary, in making small loans
on homes the opposite is true, since the owner instead of
trying to devise ways and means by which he may increase
the loan, generally endeavors to keep it at its minimum to
save the interest charge. The tendency to mortgage every-
thing is forcibly seen in the city, where opportunities are
many for using money to such good purpose that it becomes
]irofitable to mortgage one property in order to buy an-
otlier. Second mortgages usually carry a bonus and high
interest rates, and while in some instances are risky, they
have been the basis of small fortunes.

Cost.

In arriving at the cost of a building, there is no abso-
lutely accurate method. Some appraisers employ the foot-
front rule, while others use the cubic-foot rule. The cost

MORTGAGE LOANS AND REALTY VALUES 393

of various classes of buildings has been ascertained with
enough accuracy to make the following rules a fair guide
in the appraisal of the value of a new building:*

Brick tenements, old buildings, 8 to 12 cents per cubic
foot; new law tenements, non-fireproof, 15 to 25 cents per
cubic foot; high class apartments, fireproof, 25 to 45 cents
per cubic foot; store and loft buildings, non-fireproof, 12
cents per cubic foot; new law mercantile buildings, fire-
proof, 25 to 35 cents per cubic foot; office buildings, fire-
proof, 35 to 60 cents per cubic foot.

There will be variations, of course, depending upon the
character of the work, the decorations, plumbing, trim, etc.,
but these figiu'es give an approximate value of the build-
ing. The cost of maintenance depends upon the char-
acter of the building. A two-family dwelling costs but
little outside of taxes and insurance, while an office build-
ing or elevator apartment has the added expense of elevator
service, attendants, heat, light, etc. A poorly built build-
ing costs much more to maintain than a well constructed
one, since it is constantly running down and in need of
repairs. The plumbing goes wrong, ceilings fall, tenement
house violations are filed against it, and all these add to
the cost of the up-keep.

Income.

The income from any property depends upon its desira-
bility and adaptability to the purposes for which it has
been constructed. If a loft, there must be taken into con-
sideration light and air, location in respect to the particular
trade for which it is intended, nearness to shipping facilities,
etc. If an apartment or flat, the class of tenants to be
attracted, the neighborhood, nuisances and transportation
facilities. A well built and well arranged apartment will
command a better class of tenants and stand higher rents
than one that is merely speculative. If light, air and ar-
rangement are satisfactory, and the quality is maintained,
tlie original rent may be steadily adhered to, and where the
market is not over crowded, the question of vacancies Avill
not be serious; but as a general proposition, capitalized

*Figures supplied by Mr. John J. PuUeyn, Comptroller, Emigrant Industrial
Savings Bank, New York, a recognized authority on Mortgage Loans.

394- THE SAVINGS BANK AND ITS PRACTICAL WORK

rents is a fair basis of value, and when proper deductions
are made for vacancies this method affords a good test of
values, — unless the rents are inflated and fictitious, — as is
often the case in speculative buildings.

Safeguards.

It remains to suggest how the various elements of risk
ma}^ be guarded against. First of all there should be an
ample margin to allow for contingencies, and to this end
it is essential that the appraisal be made with good judg-
ment. There is no doubt but that many loans made by-
savings banks carry "all the traffic will bear" and some-
times more. And especially is this true in cases where the
savings bank is commercialized. Errors of judgment there
will be as long as men are human and cannot look far into
the future; but no changes in realty are so sudden that they
may not be guarded against. The New York Times of
INlarch 25 contained a news item from Massachusetts, stat-
ins that the Bank Commissioner of that State had filed a
complaint against five members of the Finance Committee
of the Greenfield Savings Bank for alleged violation of the
savings bank law of the State, in maldng excessive loans.
In a short time the sum of $288,000 had been charged off
for losses from this cause. One loan of $153,000 was made
on a hotel property that brought only $35,000 on sale.
The bill charges that the committee not only made loans in
excess of the legal ratio (sixty per cent.), but in some cases
loaned more than the total value of the property.

Another danger arises from depreciation in value, due
to causes that may be termed economic. Of this character
are those resulting from the changes in neighborhoods,
mentioned above. Against tliis there can be but one check,
and that is frequent re-valuation and careful watch of the
realty movements. These movements are not usually of
sudden occurrence and can be guarded against. Changes
in assessed valuation often indicate which way the wind is
blowing, and while not a true index of values, often afford
a startinfr point for such work.

In Xew York it is the policy of the tax bureau to tax
full value, and while it may, in certain cases, prove other-
wise, yet tlie aim is to assess each parcel at its fair market
value.

MORTGAGE LOANS AND REALTY VALUES 395

Realty Movements.

One point to be watched and carefully guarded against
in making mortgage loans is the loss in values through
changes in the internal structure of a city. This is due to
many causes, such as the building of bridges, abandonment
of ferries, changes in transportation lines, the crowding out
of residences by business and manufacturing establishments,
etc. The first cause is noticeably true in New York and
Brooklyn. The building of the Williamsburg Bridge, which
ultimately caused the ferries to be temporarily abandoned,
turned the tide of travel over the bridge and left the lower
end of Broadway* more or less deserted. The building of
the Queensborough Bridge has altered the whole aspect of
Long Island City and also the region immediately sur-
rounding the bridge terminal in New York. Such changes
either improve or damage the j^roperty in the neighborhood,
and must be carefully watched. The building of subways
also has a marked effect upon property, usually for the
better.

There is always going on in large cities a movement of
the best stores in the direction of the residential districts.
This is due to the fact that storekeepers find it advisable
to be as near as possible to their customers; thus the old
shopping center of New York at Sixth avenue and Twenty-
third street has moved up to Fifth avenue and Thirty-
fourth street. Such movements leave sort of a vacuum
behind, which is filled up by cheaper stores, wholesale
houses, etc. And unless the growth of the city is rapid
enough to make wholesale property worth as much as the
retail property formerly was, there is quite likely to be a
drop in values.

Property used for wholesale purposes is quite apt to
locate between the shopping districts and the terminals and
wharves, so as to be able to handle goods cheaply and yet
be in a location convenient for its customers. Where the
transportation is largely by water such business is apt to
center around the waterfront, and when the railroad comes
in \^^th competition and takes the prestige away from the
water route, changes are likely to follow in values of dock
properties.

•Brooklyn.

396 THE SAVINGS BANK AND ITS PRACTICAL WORK

In the case of residence property, social reasons enter
in largely to determine values, wliich are usually high. As
the transportation systems are improved, such property
moves away from husiness centers to more quiet neighbor-
hoods. Such property is seriously affected by nuisances
of anv kind, and such should be carefully watched. Of
such a character would be stables, hospitals, armories (mak-
ing a "dead" block) , properties rented to negroes, Itahans,
etc.

Warnings.

One of the first signs of danger in real estate loans is
tardy payment of interest and taxes. This indicates that
the borrower is sailing close to the wind and his mortgage
instead of being a help to him has proved a dragweight.
There is but one safeguard against this: To insist upon
prompt payment of the interest and taxes. This can be
done. But if tlie borrower is given to understand that "any
old time will do," he is apt to take any old time to do it.
In a certain savings bank where promptness was 7iot the
rule, this habit became chronic. Notices were never sent
out in advance. When the interest was thirty days' over-
due, notice was mailed requesting prompt payment. Tliis
brought some into the fold. A month or two later another
notice went out. Little or no response. Again a notice a
month later. No response. Then a personal visit by one
of the clerks. Result : Promises, ardent, and . excuses,
plausible, but no adequate results. By this time the in-
terest was six months overdue and the time to report to the
Department of Banking was at hand. The upshot of the
whole matter was that one of the officers usually advanced
the interest himself and took his chances. Even a letter from
the bank's attorney in many cases elicited but little re-
sponse, for the borrower had been educated to the point
of knowing the bank did not "mean business," and treated
the whole affair somewhat as a joke. It would have been
a kindness to many of the mortgagors to have been rigid
in requiring promptness, — not being harsh or unkind, but
sim))ly as a l)usiness ])ro])osition, insisting upon due dili-
gence in the payment of that which was justh^ its due.

Another safeguard which is coming to be given serious
attention in the making of real estate mortgages is the
part paymcjit or amortization plan. By this method a

MORTGAGE LOANS AND REALTY VALUES 397

monthly payment is made which includes both interest and
principal, and in the course of time the loan is discharged.
The advantage of this method is that the payments are
small and can be watched closely and kept up to date; and
inasmuch as the principal is constantly being reduced, the
margin at the beginning may be increased, making home
owning much easier for the poor man.

The Application.

The first step in the making of a mortgage loan is to
secure an application from the borrower giving full details
concerning the property proposed to be mortgaged to the
bank. These details may be voluminous or barely enough
to designate the property. All banks have forms for such
purposes and generally require the application to be on their
own form for the purpose of uniformity.

The points generally covered in the application are: The
amount required, the street and number, often the distance
from the nearest corner, size of lot, size of buildings, char-
acter of the latter, and the rental value, for purpose of
capitalizing the rents in order to appraise the property upon
this basis. Sometimes the number of rooms, improvements,
assessed valuation and other details are called for, but
always the owner's valuation of the property, usually sep-
arating the buildings from the ground.

In the matter of farm loans more minute details are re-
quired, as will be seen from the following questions found in
the application for a farm loan in use by a savings bank in
Central New York: How many acres does the farm con-
tain? How many acres are improved? How many acres
are unimproved or timber land, and what kind of timber is
on? How many acres of waste land? Describe the build-
ings generally (giving sizes and number of rooms, if pos-
sible). Describe the fences and state in what condition of
repair. Do you occupy the premises? If you are not the
occupant of the property, who is, and by what right does
he occupy it and what is the rent? Have all the taxes been
paid, and if not, how long have they remained unpaid?
Has your title ever been questioned? If so, what was the
nature of the defect ? What was the last assessed valuation ?
How much insurance do you carry and in what company?
Are you married and if so give the name of j^our wife. Are

APPI^ICATION FOR LOAN.

Post Offici

htrehy apply loym to procure for a loan of $ ■^ v c e> for a term of .

■xmnual «iterest to be secured by FIRST MORTGAGE on/ / O cures of land in

County, Minnesota, described as follows, to-wit:

semi

Township,

/^//^^^ioco/4l

and /Hereby appoint

at my agent to negoliale said-Joan. to whom the papers and money maybe sent at my risk.

For what purpose is money -wanted? '^ " -*-*<'<-;^yV*-'V'-"^— c-t--t^

km* many acres are under cuUivatimf . <fP - - f^ow many acres arHficial grove* . ■? Q. _

Of Hit land not cultivated, how many acres can be* /«5.

How many acres pasture land* V M .„_ How many acres waste landf.„.

What is the general character of the land and, soil* -.~^'?r»-^ —

How may acres are fencedK'<fr<^^~''^'y>^ -

IVhai buildings on land* (Give size, material, description.'}..

If not fenced, -why net*. ." .'■>,._

3 o ..x...._«. o /^3A>V**rrr^,":?X.^i

WlMoUier improvements, suck as orchards, groves, etc.f\

yfor

j2i-itfC^^^

^ „ CaHUf .-^ .0 Hogsf...

Are the buildings imuredt.-..^^ Tvr wh^ amount and what company f -J %S^O o

^ . , _ _ Wilt you assign policy for benefit of tender?

Whtti is Ike value of ike land without buildings f ..^. « ..* ,. o ...._

Wttat is the va/ue of the buildings? $ 3 S O C^ Total. $

Are there any mechanic' s or lumbermarC s liens filed on the buildings, or have any person or persons done work tm, ot fur-
nished material within ninety days past, whereby they tvould be entitled to file a lien? Sr—^'^-€K „...^-. .•.._.„

Who is in possession of property? 0~'C<j-t,^LX~y%,-^ _

'How ntar^ horses, eattte and hogs has the applicant, and has he a full set of farming implements?. '^. — '^^"K^..

!"^^ fforsesf

What encumbrances on this property?y~rfPtO'%^

By whom are they held? , ',,7!, .7

t^ame of and distance to nearest railrocut steUion? ...
Do you own any other land?y-rf^ „„,.

What encumbrances are on j/f._.."T

Give wife's name, if applicant is married .^

What is applicant's age? -^^ ^. In whose name does title stand? .. ^^^^^-C-^^-r-^^rf^ , . y.,^, ,^__ .: .,_

I will furnish a complete abstract of title to this properly, from the government to the present time; and I am in pcAceful possession
"f "id premise*, ihr title 10 said land has never 10 my knowlcdRe been questioned or disputed. I agree to pay for reconling the Mori-
plciin^ the abstract of title showing the loan mortgage to be hrst lien. There are neither
' premises, nor are there any unpaid taxes, unsatisfied judfrments in the State or Federal
Courts except as shown on the abstract furnished with this application. Nor am I cither
id laod. and have any necessary corrcciior>s in title made before the
mcnts for the purpose of procuring said loan, and for

cage to secure the loan arnj pay cost of >

unrerr.rdtd deeds or mortRages for or upon

Cooris of Minnf-M>ia. nor suits pending in any Courts except

prinrii»al or surety upon any bond. I w "

loan I!, completed 1 have answered lh<

purpoM" whatever, and swear that the>' j

by agree to pay said agent % f..^t>

: qu<

.-.. for hi

/■)<// name

ry particulate If I should rcfu

pt loan when placed. 1 here-

STATE OF M/NNF.SOTA.

Subscribed and sworn to befc

^ f^jLOfficc - •

FOBM 110. APPLICATION FOE LOAN ON FARM PROPERTY.

MORTGAGE LOANS AND REALTY VALUES 399

there any incumbrances on the property and if so how much
and of what character? What improvements have you
made and what do you intend to make? What do you con-
sider a fair value of the property per acre? What do you
consider the value of the buildings? What figure would
you sell at?

In many cases the application blank has provision for a
diagram of the location of the property, wliich often makes
the finding of the premises easier. In all cases the banks
require the application to be signed by the borrower and
in cases where the borrower is not the bondsman, the signa-
ture of the latter is required, and in some cases a written
guarantee that he is the person in question. It is important
that the one who presumes to be the owner is the owner,
for frauds have been worked upon savings banks and title
companies by persons assuming to be the owners of prop-
erty offered as security, when in reality they were impostors.

Care should at all times be taken to identify the bor-
rower as the person having title to the premises. In large
cities much borrowing is done through brokers, and the
principal does not appear on the scene until the money is
to be handed over. In such cases it is well to know who the
broker is and that he is authorized to negotiate a loan on the'
property.

Frequently applications are made to savings banks for
loans simply to get the bank's valuation of the premises;
and while as a rule no charge is made for the appraisal, a
number of banks are now requiring a modest appraisal fee
when the application is made. In some instances no fee is
charged unless the loan is made, while in others, no ap-
praisal will be made unless the fee is paid.

It would seem but just that if a committee of trustees
make a personal inspection of the property, as is generally
required by law, they should be paid for their time. Some
banks have a salaried appraiser and make no charges, pre-
ferring to have an expert's opinion and pay for it than to
depend upon the judgment of a committee of trustees.
This is particularly true in the large city banks.

Some applications may be found having provision for
the certification of the value of the property by two or more
disinterested persons. This is often embarrassing to the
borrower and is rarely worth considering, for it is fre-
quently done as a faA^or and is not a safe guide as to values

ApplicatioT) Fo. ^ y ^ <?

Ko cbarte U> AppUcilw for lout »• tominlMloo or olbtr<rlw.
la ludr or prnsitlKl, dirtily or IndirrtUj, by >Dy Officer. Tr»»l»».
«r p«r»OD iD Ibe omploymrDi of Ihe G«nsul SatIdc* B*nk. for pro-
<iirli>|i lo«ii» or for ••rTl«» io c«iio«tlol> lbor»irltb oicopl tb«l tbe
tltlM »J» oitmlnwl, ftod tbi- r(s]ublte pM^r* prepared by Coiina«l
•ppoinKid by th» lotlHutloD wbo.e cbirgc. lo Iho .pj>lk»pl for tb»
iMkO »r« iT<ialre«Lto b«1lDiilwl lutd rt**oD»l>le.

Signature and satisfactory references of the pro-
posed bondstaan M-ill be required in every application.

The undersigned desires to procure a
Loan of $^.f?..!..$S-^ at...-~ /-^ -per cent interest per annum, from

Che ^crman ^aiinfls l^anK in \\\t 4j^\^ 4 %^^ ^^r^-

On mortgage, secured by the bond af^rrrr::^..EZZ..C-^..!.^^<J...-<:^..:

on the property described as follows - — —

Location, I.2^^.-i^....J..t....^ -

Distance from, the comer of the nearest cross street,. .fr..<^..'^

Dimensions of Ground, .-^..y^.-K../..-.^...^. --

Dimensions of Building, . .^ -S~ '< 5" O „

Building Materials, ''«^yt-<<-c-^t_- _ -

Purposes of use, .^^^^-s^e- «*r:rtr?rrt^.....i=!r:^^

Vdlue of Ground, $\.../>f-. o o,. O ,....._

Value of Building, $ .3 -S: o o o

Jnnual Rent, .$... yS. o g <^

Insured for $ .. \^ o, .<:> <r> c> ,.-_ _

/S-77L ^//'~ee/'

y.B. — The applicant will please specify the rihox-c parti culo rs n s far as practicable

nftd in all cases sig}i the appUcofion.

Signature of Bondsmar

Address of Bondsman, <y^ ^l// ^....ji^^r....... „ _

j///._ /^<'»-<:-*^-

Mot

t^oaoK art nol made on Factories, Iron Works, BrewerlvK, or dtf Suburban Property, Appllcatlona for Loant
DwelllnH-Houaea, Stores, OKceH, on central property well situated and productive will be considered.
Applicants ishoold sign, and present their proposals, In person, when practicable, to secure attention.

FORM 111. APPLICATION FOR LOAN, CITY PROPERTY.

400

MORTGAGE LOANS AND REALTY VALUES 401

and should be eliminated. The loan is to be made by the
bank, and the only persons interested are the bank and the
borrower, and no unnecessary outside parties should be
brought into the matter. In all cases the borrower pays all
the expenses, but in some applications, as in the one of the
Albany Exchange Savings Bank, shown herewith, this is
agreed upon when the application is signed.

The Appraisal.

The next thing in order, after having application pro j)-
erly filled out, is to have the property appraised. Many
banks have appraisal forms (page 409), and these are
turned over to the proper persons, in some banks the fund-
ing committee, and in others the appraiser. Where the
matter is in the hands of a committee, these men meet at
intervals to look over the applications, and after discarding
those which they do not care to consider, turn their attention
to the likely offerings.

Some banks have a preference for certain kinds of prop-
erty and rigid rules against loaning on others, as in the
application of the German Savings Bank, herewith shown,
no loans are made on factories, iron works, breweries, or
suburban property. Those that seem to be desirable are
personally inspected and the value placed thereon, usually
in writing, as in the forms sho^vn.

The rate of interest, time the loan is to run and other
details are agreed upon between the bank and the bor-
rower (or liis agent) at the time application is made, or
when the loan is accepted, and nothing further remains to
be done, insofar as the bank is concerned, but to pay over
the money. The mortgage loans are quite universally re-
ported to the board of trustees and ratified, thus becoming
part of the records of the bank. Some banks record the
date of this approval on the application — a very good idea.
(Form 113.)

The Search.

But inasmuch as it is essential that the borrower shall
be in position to mortgage this property, and unless he is
the true owner and has good title he cannot give a good
mortgage, it is necessary to determine that the title is in
the borrower and that the title is free from defects; for
upon the rule that a man cannot convey by deed that wliich

402 THE SAVINGS BANK AND ITS PRACTICAL WORK

%o the Upuztcez of ihz Iffionpoe (Sounf g Zdiomg^z ^Bank.

rzjl wiJ^ /c »//at'ft a Stun t/ y»ut <»««M^ nt ^ ■Utttt »^

_ Two thousand — ~ — ~~ — ^.— -— ^,<^«,

,« «.^ y4<«,, .« i5!". Village ./ Rochsster Falls r-'=0.u»/y^

Monroe ati</ -<//a/c /•/cA'av (^oi4, -w^ix^ -umU eM^ttuei/ A ttte /y J'ett/ c/a^

.J.anu.ary....5th., 1.9Q.3. _ ^«y,««<^y ««..*.-»Onr.o.e :------- ^«.«^

(€4iA* ^g^^, .« of,, SiA* .346 ^^»c^, «//U^c 2.3... . . .€4«/^*«. co^<^/, ./

104- aetM, cn t<K>tcAit</ ^y myself - ••

m*ti/ u *i/i*it/c en iXi i«<C4( (b«n briellir atue locatloo) : frODl ROCbeSteT City tO

,...Rooheater Falls, one mile from tne latter. Land is of good --
-.quality, corps varied and abundant, well watered and all under.

--.cultivation except wood lot of ten acres. BuiWings consist

_of_houj.e_of:.J;.e.n....room8,...8tpn.e

^repairt. outbuildings for all larm purposes and all In good con-
dition; Loan ie desired for the purpose of building new barn __

„ and buying 50 acres adjoining, and not to be covered by tM8 —
__mortgage. _ _ „ ,. _ ,...

c//^^/.

affile, tf)C Subscribers, /«/;^«, .«,^«/ <« Rochester FallB .....
'^*««^ ,/ Monroe—---—— . jjo tcrtCfs ^^/ «" "" ^^-^/Z ic^cacn/,,^ ■u.a^ //t^

ft^rrt 4/ucU^et/ /ttc/iet/'-u, one/ Hia/, <7t ottt iu<^a>nert/'' //ie ittme u tt-^tiit c>t ea<>A a/ /itu/

Seven thousand five hundred----— '—-^""«—"^^-^----^««^«, txc/,<i<>„e »/

. Three thousand — • -----rr---— - — Qc^u.

^*^/«/..£och.eat ex Falls Oiu Tenth ^ay»/^ August, -.jugy.

RUL.BS RND DIRBCTIONS.

) of tbe lurm, llio miinber cf sere, how much UDd«r laiprov«^iotDt or ouluvklton, and how much woodlAOd;

klao. whkl bolldlogi arv on Ih© property, thi^lr condition nnd viiluo, and wli.-tber thpy an- ln«ur«d, and to what amount tiet «
two wall-known nr^holdeni to raUtoat© ib« property and b» make an appmlaal of l!« value ilj*nd and balldlnint aepamte),

.*'.' "^J" ,"."''' .''/ i"' M""""' CouMir BiTl»o« l!a!<K will ba made for one yoir; and If liia I^n iliall b« contlnned for >

CTOIer lenjtb of time, the lotereat mum be paid rHOHl-ri.lr on the fliat daya of Jnooarr and July In oach y«»r >" --i .

All iDrmmbmocea iDQat be removed from property, on which Loana are to be mode, before the moDey vlliba paid

''''i'fi'!!r"I.'^'".^"."J' l"""""" which JodnmeDlH are eilitloi upon record, Itjtlnst any pet^n of tbe autle Dame aa the appll.
unlcaa It !• ahown that he U not the eaioe n-rvOD by proof Katlilltctory to the Bank Attorney. • ■• -ff"

oao caODot ezceiKl lo atnoDDj ooe-half the vfilnoof the land mortxaaed InolQdlDK the bQLMib«» mereon.

all caafa where loann are mafle, the bulldlngi nioal be Inaured, and the Volley of Innunuice baaa«%t>ea Ul Ibh Bank aa oollatem

NOTICE TO KPF>I.1CKNTS.

•ea ^iSjV?i'™ i!!'?!? .7S.°L'*.t" ."'• "P<>°«tJ o' aearcbea eiamloatlon. and oerUd-^tet'of MMi, at>if of dr«w1n., perfectlo.
SI^^STSiSi ^m!^' Is fh t ,?^ the bormwer. When a loan (■ (lanled. the npplleant ehonid fornHh; without delay fil« Ve«d and
.^mj».Ua, lb.°'lJSai'"Ti^UrSJL'pt'i'5e^r„;:5epS!! orifoSCo"^^^

<lyav<</ C^oy/, -eff^i/my

FOHM 112. APPLICATIOV FOR FARM LOAX, WITH VAI.UATIOX.

MORTGAGE LOANS AND REALTY VALUES 403

he does not own, and a mortgage being a conditional deed,
the latter will be void if the title is defective.

Some banks require this to be stated in the application
and others go so far as to ask for an affidavit to this effect;
but inasmuch as no man would buy a defective title if he
knew it, and most of the defects are unknown to the owner,
his statement is usually in the negative, and counts for little.

And yet, there are cases where defects exist and are con-
sidered of little or no consequence by the owner, as is illus-
trated in the following example: In taking title to a piece
of property in the suburbs of New York, a defect was
found wliich was apparently cleared up by affidavits. The
title was pronounced good by a title company and a policy
of title insurance issued, and also passed upon by a reliable
firm of attorneys. An expensive house was built on the
property and mortgaged to a savings bank, wliich accepted
the title as certified to by the company. In replacing the
loan with another savings bank subsequently, the same
defect was found, and the latter bank's attorney would not
pass the title upon the affidavits accepted by the title com-
pany and the other attorneys, and the loan was refused on
account of bad title.

After considerable delay and expense the title was
cleared of the defect and the loan closed; but had the owner
been asked to state if there were any defects to his. knowl-
edge, it might have revealed the true state of affairs in the
beginning. But in tliis case it turned out advantageously,
for it secured the owner a clear title, whereas he did not
have a "marketable" title before.

All such matters are, of course, "up to" the attorney, to
whom the application is referred after favorable action by
the committee. It is his duty to examine the records and
satisfy himself that the title is clear and is vested in the
borrower. This he presents to the bank in the form of a
"search," together with certificate of title. This work is
often done in large cities by title companies, who not only
certify to the title but guarantee the bank against any loss
that may come through a defective one. In some banks
the attorney simply turns the work over to the company,
which allows him a commission, and he therefore assumes
no risk, but at the same time, sacrifices the full fee for a
commission. The amount of the fee depends upon the
bank, the attorney and the borrower.

404 THE SAVINGS BANK AND ITS PRACTICAL WORK

AUtrnry't Till K>- 1^089.

APPLICATION
FOR LOAN OK BOND AND lORTtAtE.

$5^aQD„

_30, East 19 til Street. -

Presented to the Bond of Trustees, od

.September 5th Referred

lo» Committee, consisting of Messrs — : —

-Smith, jonee acd Brovn

Your comnitiee re$p«eifoll)r report ihii
thtj have ctrefully examined the property
mentioned in the within application, and cer-
tify that, according to their best judgmenl, its

valueis J 3,Q00

[Ground »i^iX)^Bu.ldings » 5,000 ]

and tbey recommend a loan of
} 5,000 at_S_P« cent.

»w*n- A'.._34,56r »_5*D00 -

Union Dim Sailngs Bank

to John Coodman .

Dated, . September- 38th' H
Mortgage No. 1,089. -

f .

g ^

£ On motion, the application VaB

S granted for |5,0C0 -at 5 P*' «nt.

Dated, s^tembex 5th ' 11 j

Referred to the Attorney of the Bank
for examination of title.

-Mori. L.

fixaninedby Auiilirtg Commillee :

..October 1st,.. 1911..

Please read the Regnlations,
to ■which your loan, if made,
•will be subject.

NEW YORK.

Al! Mortgages mature either May 1st or
November isL

Interest on all mortgages must be paid
punctually on the isl of flay and tTie' isl of
November.

Receipted tax-bills fjr each year on mort-
gaged property must be exhibited on or be-
fiirc tl.e first day ol May following.

Insurance policies to tover our mortgage
mustbe taken out IN COMPANIES DESIG-
NATED BY THE UNION DIME SAV-
INGS BANK and »Titten through its author-
ized agents and must expire either May ist
or November 1st. Premiums must be
promptly paid. Renewals will be attended
to by the representatives of the Bank.

All letters should be addressed to the
Bank, as above, not to its officers.

Checks should be payable to ihc •' Union
Dime Saving? Bank."

In paying money to the Bank always
make and sign a written statement of the
amount and purpose. Give notice of any-
change of address.

Business Hours, lo to 3 daily.

F0B5I 113. APPLICATION FOR I.O.\X, CITY PROPERTY. CONTAINS SEVERAL UNIQUB

FEATURES.

In some cases the charge is "all the traffic will bear,"
while in others it is extremely modest. The writer knows
of one bank where for twenty j'^ears the highest fee was
less than twenty dollars, and the usual fee was eleven
dollars and fifty cents — ten dollars for the search and'
drawing papers and the one dollar and fifty cents for
recording. Where a mortgage tax is in operation as in
Xew York (one-half of one per cent, when the mortgage
is recorded), this is in addition to any fees to the attorney.

Closing the Loan.

When the mortgage loan is closed the papers that should
be in possession of the bank are: (1) Mortgage. This
must go to the proper office for record — in large cities the

MORTGAGE LOANS AND REALTY VALUES 405

Hall of Records; in smaller places, the county clerk's office,
and is usually the last paper to come in. (2) The bond,
which is the obligation or promise to pay and upon which
suit is brought in case of default. (3) The appUcation
duly signed both by the borrower and the appraiser or the
committee charged with this duty. (4) Search, or title
policy, with certificate of title from the attorney. (5) In-
surance jDolicies in amount sufficient to cover the loan, duly
made payable to the bank. Some banks require all the
insurance so that it may be uniform. The papers are then
complete. (Some banks also require a "tax search" to
show that all taxes are paid.)

At tliis point a word as to insurance may be acceptable.
Some banks have restrictions in the matter of insurance
policies. (Form 113.) Some stipulate that policies in
designated companies only will be accepted, and this would
seem a very good idea, if the Ust is reasonably large and is
a "fair" one. The bank can then rest assured that it is
fully protected by good companies. Others stipulate that
policies must be written through designated brokers, and
this for obvious reasons. The bank, in law, has a perfect
right to stipulate the conditions of its insurance, but what-
ever regulations are to be made in this respect should be

RrtlDSON CITY SAVINGS INSTITUTION, Hudson, N. Y.

No- 567 Mortgagor Hpnry TTurtflnn ^»<° ^

_Addres» 1456 Main St . Date of Mortgage Fcb ♦ 1 ' O&nnoi/nt $ 3 j 400

Assumed by —

Assumed by

Pescription of Property Tvyp stoTy Frame Dwel],ing ^

•Mortgage Recorded 3/l/'09^ '' 3 P M. in Book 34 Page 33 See 5 Biock No. 17

Principal Payable Feb . 1, 1913 Interest Payable June and DgG .

Valuation: Land $1^800 Buildings $.r; ^ QnO Total$ AjAnO

Insurance Required $ 3 ^ 4Q0 Insurance Held $ 3^5Q0

Mortgage bigned by HenXV HudSOn

Mortgage Paid Satisfaction

Ll«n/>>IV BUREAU. c«oit a

FORM ] 14. CARD RECORD OF MORTGAGE LOANS.

406 THE SAVINGS BANK AND ITS PRACTICAL WORK

Xew York, September Ist, X911

To the UNION DIME SAVINGS BANK:

..at .3 per cent, per annum, for

The undersigned desires a loan of ^5,000

[Miy or NoTciuber]

3 years from the 1st of next November _ ^ „ -

on the Bond o/ John Goodman. --^—-and subject to your regulations printed

on this application, secured by first mortgage of property described as follows, and provided
the title is approved by the attorney of the Bank.

» boundiDg thr block:

No. 20 East 19th. S.txee.'t..

East 19th Street

On tlienortheslyside. 80 feet from

the U. E corner of Second AV6.

Dimensions of Ground :

35 feet by 100 feet.

Dimensions of Buildings :

.35 feetfcy 8.Q....feet.

East leth Street

Material of building. Brown StonO and Brick Number of stories, 3

Used for.., D.welling Annual Rent,.- i^J..,.000 Insured for $6,000

■ Valuation of ground, - - $ .4,Q0Q
Valuation of buildings, - $ 6,000'

Remarks : .Recently ..overhauled and put in..

f i.?J..t....clM.8.....c..ond.i.t.ipn . thrpugho^^

pluin.tii..ng..and ..newly ..decorated

Total , as valued by applicant ,$ 10 , 000

> [Name and address of applicant]
-£_^ <?_>y^ ..■%-^-<^- -Broker.

[Sm Re|i!ap<fDS on me back]

FORM llo. APPI.ICATIOX FOE LOAX, CITY PROPEaTY. EEVERSE OF FORM 113.

made before the loan is closed, for after the matter is closed,
the right of the bank to make such conditions will be waived.

The case of Heal vs. Richmond Co. Savings Bank
(Xew York Savings Bank Cases, p. 18) is in point. In
this case, the bank made a loan and after closing the matter,
wrote the mortgagor that inasmuch as the bank required all
])olicies to he "written by an agent having an office in the
l^oi'ough of llichmond, he would have to secure new policies.
To this the owner did not assent and the bank secured the
additional insurance and charged the same to the mortgagor.

When paj^ment of the principal was tendered, it was

APPLICATION FOR LOAN ON BOND AND MORTGAGE..

ihC UndCrSlPr^Cj desires w procure fromilie Albany Exchanck
Savings Bank a loan of $_ 3j QOO ,.. ,_, payable in U. S. gold coin in £1 VG. years, with interest payable semi-
annually on the first day of March and the first day of September, at the said Bank, at the rate of. five _ per cent per

annum, on the BOND of Johnathsm J. EdwardS secured by

Mortgage on the Following Described Property:

Location (Number and Street) 56 (Juail.. Street ^..

Between what cross streets, and distance from nearest one, State Street 100 feet east

Dimensions of ground, 50 JC. -100.

Dimensions of building, and number of stories high,_ 50^ X' SO^three StOry and basement ..

Building Materials, BlloJC

Purposes of use, Fr.i.y ate dwell ing.

Value of ground, $ 2,D0U

Value of buUding, $ 3,000 _

Value of both as assessed for taxation, $. .4,500

Annual Kent, $ 43C! _

Insurance for $ 2,800

1 r

Remarks: Loan. of . .^3,000 DO held by John E. Bridgeman, due Sep tea be r..

1st, 1911

In case this application is considered by the Albany Exchange 'Savings Bank,' the undersigned hereby agrees, in
compliance with section 120 of the Banking Law of the Stale of New York, to pay to it, or its attorney, "all the expenses of
Searches, Examinations and Ceilificaies of Title or Appraisal of 'V^Jo?, and of Drawing, Perfating MdRecording
the Papers."

Signatike^/"*^^ £? . .

££ting ana Kecoromg

.FOEM 116. AFPUCATIOK FOR LOAK, CITY PROPERTY. NOTE ARROW.

407

408 THE SAVINGS BANK AND ITS PRACTICAL WORK

NAME Sar.uol Simpeon
ASSUMED BY Rebecca Sanpeon

93 Java St.
KA7I0N 698 Uanhatta

Taxes
10/10/1 I

r.al« _5^

Wkcn n... January let. 1914

R.void.j September let. 1911

B-..I v^ Ml:- V^ TilU Poll

J L

•^ ■ — I

L'i

Ap9t^c:ition a^

BonJ "' "^"rfiiKl Rlmpa

For_*Z,flC2_

su. oi I/.I an n loOBi.iMin, so x 80

Rcnli Iw )S30

Rcmatki Valija-.lon 87,000

ava St.

Aaaeasel tS.BOO

(A'^^i)

n r

<Cc

-0«/

Mortgage Ledger wl^h provision for recording
all Daoeaaary details regarding a mortgage loan.
T.ie space allowed far pay^n-.snts of Interest is
over twiofl the alloliment 'for payments on account
of principal. Notfl the 'provleion for cheeking '
papeea.

rOEM 117. 3I0RTGAGE LEDGER. NOTE ARROW.

refused on the ground that the owner had refused to reim-
burse the bank for tliis insurance. He thereupon deposited
tlie money in a trust company, subject to the order of the
bank when it should dehver satisfaction of the mortgage.
The bank brought suit and lost, upon the ground that hav-
ing accepted the policy at first, and being in a good solvent
company, it had waived its right to stipulate conditions
regarding the insurance. Therefore, if any restrictions are
to be made in such matters, they should be made before
the loan is closed and not afterward.

In closing tlie loan, the usual custom is to draw a check
for the amount, sometimes to the order of the attorney, and
in other instances to the borrower; but not generally* is the
payment made in casli, since the check makes valuable
evidence of tlic transaction. 'When the check is drawn the

♦Besides the bond and check, some banks also take a receipt for the money,

in wliifh case cash is paid over if desired.

MORTGAGE LOANS AND REALTY VALUES

409

loan is charged up to the borrower and ledger account
opened with him. This account may be simple or it may-
be complex, the better idea being to have it complete as to
detail, yet not weighted down by surplusage.

To the Tnulees of the Oneida County Savings Banle

We, the underRgiwd • waunillK ctiarg«d byyour Boatd wilh tKe ijiily ol iaveitigatuM) rhe facta

i. the m.lte ol .l» .p(&.», a,^ / yT<^.-^.^^ft

(or a loui ol i <P -^O O horn iKe Onod. County Samogi Buk on a bodd and mortgag*

l^on the [oflovnng 'docnbed pMouaei. t

yCk.tyt-'a-^ ...^^ cf^X

do Kefeby repon thai we have made lucK invetbgabon and recommend taid loaa; and we cenly die
•aloe ol laid piemuei to be $ — /t <^ ° ^ :^-, accoidmg lo o«f best judgment. •

0.i«iRoi«.N Y. :r^^>^ tf . \'"'

^--^^- >^^

/•fc^

^■^O^j^jy

^■"^T

<-,'-«r^?'-^

FORM 118. APPBAISEr's REPORT.

The ledger should show all the details covered by the
papers, and the usual data taken on the ledger is: Name
of mortgagor, with provision for recording subsequent

-3,4SG

_245 TTeet Fnri Avp.

U^rrY. Pr,, i;)n

-^13_

Tonry W. HPn^i T'"'"''

Ralph .T. F;n.-n!»r;ir;t

333

345

5 Story Brownotone

Grant and Lincoln

Brown, f!hnr1pH Tn .

$5.000 I S9.0Q0

FORM 119. CARD RECORD OF MORTGAGE LOAXS.

o^vners; address; location of the property, often with
diagram, as in Form 117; rate of interest; jolace to
which interest notices should be sent; amount of bond;
amount of insurance; when due; when recorded; valuation;

410 THE SAVINGS BANK AND ITS PRACTICAL WORK

rents; provision for i-ecording payment of taxes (Form
117), with cokmins for recording the payments of both
principal and interest.*

Inasmucli as banks frequently are called upon to ad-
vance insurance and taxes, it is a very good idea to have
provision made for such payments, and in Form 117 this idea
Avill be found. Other details may be covered in the ledger
form, as the bank may elect, but one feature is worthy of
commendation, and that is also found in Form 117. It is

RECEIPT

for PARTIAL PAYMENT
on Mortgage

V. 345

PRLSCIPALt 100-
IVTEREST from

:.:cii.i . idi *5.

». 145

Leaving balance of Principal
unpaid

$ 1,400

SouTHOLD. Surr Co. N. Y., September 1 , 790II

"^eseived from Andrew J. Jackeon -

_One hundred— :-r:.-.-.--r.-r:.----r-—.—r-..DoUa,r8, ea a'j>artial J'aymtnt

on his ■-•-.•f-irr.rr.^.-T-.n-.rrrriamm'rim'ir.^- 1 : £ond held bij the

Soutbold SaviuES Bank, secured by cMortsage orj property located at

No. 46 Center Ave.. - ^■»-. ........ ...a"!/ / ^ti^ ^^^for interest on this

payment.

(Duplicate indorsed on bond)

STreasbrer

FORM 120. RKCKIPT FOR PART PAYMENT OF PRINCIPAL.

very desirable to know that the papers are complete for
each loan without the necessity of going through the files;
and in this form will be found spaces for checking off the
papers as they are turned in, and by running through the
ledger and noting the vmchecked items, the missing papers
can readily be ascertained.

If pa])ers are removed from the files for any cause, a
recei])t should be taken and inserted in place of the paper
taken, or notation made on the cover as to where they may
be found. The mortgage has now become part of the assets
of the bank and all that remains to be done is to see that
interest is collected when due, insurance constantly in force
and taxes paid.

•A very helpful idea is to indicate somewhere on the ledger account the
amount of interest the loan draws for one month, so that in figuring accrued
interest at any time this will form the basis. (Fom 117 last line of the details.)

CHAPTER XXV

BOND AMORTIZATION IN THEORY AND
PRACTICE

Two men of finance once made an attempt to define a
bond in the fewest possible words and settled upon the
definition, "A promise to pay under seal." Cleveland, in
"Funds and Their Uses," distinguishes between a bond
and an ordinary promissory note in this way: "The only
way that a bond is distinguished from an ordinary promis-
sory note is by the fact that it is issued as a part of a se-
ries of Hke tenor and amount, and in most cases under a
common security. By rule of common law, the bond is more
formal in its execution. The note is a simple promise (in
any form so long as a definite promise for the payment of
mone}^ appears upon its face) signed by the party bound,
without any formahty as to witnesses or seal. The bond,
on the other hand, in its old common-law form, required a
seal, and had to be witnessed in the same manner as a deed
or other formal conveyance of property, and though as-
signable, was not negotiable. This is still the rule within
many jurisdictions."

Montgomery Rollins, in "Money and Investments," de-
fines a bond as "An instrument by wliich a government,
municipahty, or corporation contracts and agrees to pay a
specified sum of money on a given date (sometimes reserv-
ijig the right for earlier payment) ; the bond itself being a
coupon-bearing (or registered) note under seal; the cou^
pons representing the quarterly, semi-annual, or annual in-
terest, as the case may be, at a fixed rate."*

In the case of corporation bonds, such as issued by
steam and street railroads, telephone, telegraph, terminal,
gas, water, power companies, and such enterprises, a mort-
gage is usually placed upon the property which secures the
payment of the bonds issued against it. In tliis respect it
is like a mortgage on real estate; the bond is the debt, —
the promise to pay, while the mortgage is the pledge of

*Money and Investments, p. 44.

27 411

412 THE SAVINGS BANK AND ITS PRACTICAL WORK

security. In the case of government, state, city, county,
town and school bonds, no mortgage is necessary, inas-
much as the bonds have back of them the faith, credit and
taxing poM'er of the nmnicipahty to insure payment. In
some cases the government pledges certain revenues, such
as customs receipts, taxes from tobacco, etc., as a guaranty
of payment; but this is not common in municipal bonds, the
right to tax the inhabitants for such purposes being suffi-
cient to warra?it the ])ayment of the bonds as tliey mature.
It is essential, in fact vital, that the issue be legal; that
is to say, that the debt shall be a binding obligation upon
the issuing munici])ality. The law usually is explicit in
these matters, stipulating what procedure is necessary in
order to make a bond issue a valid claim against the munici-
jjality, and it is quite important that these conditions be
fulfilled. Hence, every bond issue (other than those which
are issued by a sovereign power, such as Congress, State
Legislatures, etc., and by that token become legal without
other formality) is usually closely looked into bj^ attor-
neys who make a specialty of these matters, and who cer-
tify that the bonds have been lawfully issued; but this cer-
tification does not warrant their payment, being simply a
lawyer's opinion as to having conformed to the law.

A Speculation or an Investment.

It is not the purpose of this chapter to go into the bond
question in its various aspects, such as the varieties of bonds,
the security, principles of investment, etc., which would
make a book in itself, but rather to assume that as a sav-
ings bank, a block of bonds has been purchased and the
present object is to properly keep account with them.
Whether purchased by a private individual, a corporation,
such as a college, hos])ital, or other endowed institution, or
financial corjjoration, a bond investment takes on one of
two aspects; it is either a speculation or an investment. The
nature will depend u])on the ])urpose for which the pur-
chase was made. A bond in the hands of a bond house,
whose business it is to buy and sell such securities, or in
the hands of an individual or corporation that has bought
with the expectation of selling again at a profit, is hke
merchandise of any kind, a commodity to be traded in.

BOND AMORTIZATION 413

But in the hands of savings banks, estates, or private
investors, who buy for income and not for i^rofit, the bond
becomes a fixed investment, whose value, while influenced
by the security, the market, current conditions, etc., is a
scientific proposition in buying a certain article at a certain
price, which will produce certain desired results. An in-
vestor, for instance, making up his mind that he would like
an income of four and one-half per cent., need not hesitate
long in a selection, for he knows that at this rate he can
•buy any quantity of good securities, safe as to principal
and sure as to income, and need not stop to analyze the
securit}^ for following the well-known axiom of finance,
"The greater the rate, the greater the risk," the low income
is evidence of quality. Making up his mind to obtain six
per cent., he would need to look closer into the security
back of his bond, and the chances for final payment.

If he merely wishes to speculate, he can probably find a
more inviting field in some other line, where his profits will
be larger; but in seeking profit, he must, in a measure at
least, sacrifice security. Market conditions in all that the
term means, have much to do with profit and loss in such
a venture, but buying for investment and not for specula-
tion, the market may rise and fall as it will and he can go
serenely on his way.

As a commodity, a bond, like any other commodity,
must be subject to outside influences; but as an investment,
it has a fixed "income" value, which may be correctly as-
certained at any time during the term of its life. It is
like a piece of real estate under long lease to a responsible
party; the value may rise or fall, but the income is certain,
and the bond has the added advantage that the principal is
certain to be paid at the maturity of the instrument.

Three values attend every bond investment: past value,
or the amount paid; future value — par, the amount that
will he paid; the present value, or the holding value as de-
termined by the process of amortization. To this may be
added a value in the potential mood, which is the price that
might, could, or would be obtained if the securities were
sold.

Savings banks, trust companies, and other institutions
and agencies that invest money for income and not for
trading purposes, must consider their bonds in the light

414 THE SAVINGS BANK AND ITS PRACTICAL WORK

of investments, to be held until maturity and sold during
the interim, if at all only under necessity; or perchance, it
may be, at a profit. Of course, the bond holdings are in a
sense a secondary reserve, and are bought for this purpose.
Some banks hold large quantities of high-grade bonds as
quick assets to meet emergencies. One large New York
bank held at one time a miUion dollars in Government bonds
solely for such a purpose. But selling is not a common oc-
currence, and with a fair margin of reserve, and a few
secin-ities of such character as are quickly salable in
time of need, the bank may consider that it holds its se-
curities for investment purposes only. I am not now dis-
cussing the question whether in determining surplus or
guaranty fund, the par, the market or the investment value
should obtain — this is another matter; for present purposes
we are concerned only about proper accounting methods in
relation to bond holdings.

Amortization and What It Is.

Amortization is a technical term meaning hterally, to
kill. In finance, it means to liquidate a debt by the crea-
tion of a sinking fund. In investment accounting, it means
to replace a premium by setting aside, out of the income,
periodically, such amounts as will equal the premium paid,
at the maturity of the bond. This should not be done, as some
banks do, by a single stroke of the pen, but by a scientific
process of accounting, — keeping books, as it were, with the
premium or discount and the apparent (for it is apparent)
loss or gain; and when properly understood, amortization
is just keeping books.

Amortization a Legal Requirement.

Bond accounting in such institutions should be based
upon the broad and equitable rule of finance and of law
that the principal should be hept intact at all times. The
lelationship between a bank and its depositors in this re-
gard is similar to that between the executor or trustee of
an estate and the beneficiaries. Unless stipulated in
the will, the estate is to be kept intact, and only the net
income paid over to the beneficiary; otherwise the remain-

BOND AMORTIZATION 416

derman will come into his inheritance only to find the prin-
cipal depleted by overpayment of income. ''The capital of
the trust should he kept intact, and that to that end an ade-
quate pj'oportion of the annual income should he set apart
to make good the amount paid in premiums in order to se-
cure a proper investment, it is the duty of the trustee, who
has invested the trust funds in honds purchased at a pre-
mium, to set apart out of the income payahle to the life
heneficiary a sufficient sum each year with which to form a
sinking fund of such extent that the principal of the trust
will he kept intact and unimpaired" N. Y. Life Ins. and
Tr, Co. V. Baker, 165 N. Y. 484.

Section 123 of the banking laws of New York, as
amended in 1908, requires that savings banks shall pay all
profits to their depositors "after deducting necessary ex-
penses, and providing, in a manner approved hy the super-
intendent of hanks for the amortization or gradual extinc-
tion of premiums or discounts on all securities owned hy
such corporation so as to hring them to par at maturity,
and reserving such amounts, etc.'" for surplus.

Section 159 of the same law, respecting trust compan-
ies, requires that "stocks and bonds constituting a part of
the lawful investment of the capital of any such corpora-
tion (trust company) shall not be valued upon the books
or entered in its reports to the superintendent of banks at
a higher price or value than their investment value as deter-
7nined hy amortization, etc."

As already suggested, three elements enter into every
bond transaction that has for its purpose a permanent in-
vestment. These are, cost, maturity, and interest rate; or,
we might put it, maturity, face rate, and expected income
rate, for having these the cost can be ascertained by the use
of Bond Tables, the best known of which are those of Mont-
gomery Rollins and Charles E. Sprague. The latter car-
ries the computations to six decimals, and are more accu-
rate in large transactions than the former. Knowing the
cost and the maturity, we can readily ascertain iha income
basis (knowing, of course, the face rate) ; or, knowing the
expected income, the maturity and the face rate, we can
easily determine the cost.

The income, or interest, is represented bj^ the coupons
(little promises to pay) attached to the main promise; or

416 THE SAVINGS BANK AND ITS PRACTICAL WORK

ill the event of registry, the periodical receipt of check cov-
ering the interest promised.

A Rising or a Falling in Value.

15 ut whatever the cost, or the form of the instrument,
we have two periods of fixed value, the time of purchase — •
cost, and the time of maturity — par. During the interim,
we have a gradually fl6'cending or 6?escending value, depend-
ing upon whether the hond is a premium security or one
at a discount. The premium hond loses in value steadily
until it reaches par; while the discount bond increases in
value until it also reaches par, or 100. It is, therefore, vital
to the investor to know just Jiow much this increase or de-
crease is; for otherwise he ^^A\\ be led to believe that he is
receiving more than he bargained for on the one hand, and
sooner or later must take his loss; wliile, on the other hand,
if he holds a discount bond, he wall receive less than the ex-
pected income and sooner or later (certainly at maturity)
wull find a profit attending his investment which while
apj)arently a sudden occurrence, has been steadily going on
ever since purchase. (This, of course, presumes the invest-
ment is made for investment and not for speculative pur-
poses, otherwise the amortization theory will simply tell how
much must be realized at a given time to obtain the expected
income and principal in full.) It matters not how much
the cost may have been, even if in excess of the true value,
for having bought for income, and not for trading, the in-
vestor can tell to a certainty what his money will earn, and
buying for investment only, he may pay his own price and
yet receive all that he bargains for.

Institutions as well as investors have been inclined to
ignore this gradual increase or decrease in the value of their
holdings and consider the gain or loss as immediate, which
is not and cannot be true, except in case of sale. If par is
l)aid for a security the process of amortization will not
apply; but this is infrequent. jNIany banks pride them-
selves on holding their bonds at par in their statements,
and, if they are all premium bonds, it is a conservative
basis, to say the least; but if discount issues are much in
evidence, it is like unto a merchant taking inventory at
sellinr/ ])rices. And, again, other banks make it a custom
to cliarge all premiums to profit and loss and "get rid of

BOND AMORTIZATION 417

the durned thing" at one fell swoop, or inversely to take
the profit likewise; but the practice of marking up is not
so common as marking them down. However, both pro-
cesses are incorrect. Another method, which is quite fre-
quent, is to carry a premium account and charge off each
year as much "as they can spare." This practice reminds
us of the old lady who kept her money in a teapot. When
she had more than she needed she put it in; when she "went
shy she took it out.

This is utterly unfair to all concerned — the bank, the
depositor, the surplus and the investment. An institution
like a savings bank has no more right to pay its depositors
more than it has earned than a trustee has to pay a bene-
ficiary the whole income from a premium bond. If it does
it impairs the principal of its trust. Likewise it has no
right to consider the surplus depleted at every bond pur-
chase, or suddenly inflated at every maturity. The bank
man may know that he paid 101 for a bond and gets 100,
or pays but 90 and gets 100, and somewhere, some time, he
has suffered a loss or made a gain, but when and how he
does not know. It therefore behooves him to find out just
how much his money earns for him, and when and how he
makes a profit or takes a loss. Amortization will tell him
both when and how. As aforesaid, this loss or gain is ap-
parent only.

Tw^o jMethods of Amortization.

There are two methods of amortizing a bond, either of
which will give good results. The first is the true, or sci-
entific method, and the other is the average, or pro rata,
sometimes called the "common sense method." The scien-
tific, as its name implies, is mathematicallj'' correct. It is
based on the principle that only the net income is received,
and the difference between the interest actually received and
that which is actually earned is the amount to be set aside
for the replacement of the premium; or, to put it in an-
other form:

Interest received — interest earned^amortization.

To illustrate: A five per cent, bond, five years to run,
bought to net 4 per cent., costs 104.49, or $1,044.90. Evi-
dently the latter sum is the amount invested and not the
par value of the bond, $1,000. You have paid $1,044.90 for

418 THE SAVINGS BANK AND ITS PRACTICAL WORK

tliis piece of paper and you must get it all back, if the
principal is to he kept intact. You expect to get, not 5 per
cent., but 4 per cent., on your money, as it was purchased
with tliis in mind. Now, the interest on $1,044.90 at 4 per
cent, is $41.80 a year. But you get 5 per cent, on $1,000
($50.00) which is more than you bargained for. There-
fore the difference between what you should have had
($41.80) and the amount received ($50.00) is the part pay-
ment of your premium handed hack to you out of the
interest.

If the book of bond tables is used, the value of a security
at any given time and rate may easily be found by turning
to the proper page and column; but inasmuch as "split
rates," such as a 4.80 bond on a 4.18 basis, are not provided
for in the tables, such problems necessitate "splitting" the
figures given in the tables. A simpler way is to inultiply
the invested amount hy the income rate and suhtract
as ahove shown. On a discount bond the operation is re-
versed. Here the interest received will not be the true
amount and will need to have the amortization added in
order to reflect the correct income on that security. Ex-
ample: A 4 per cent, bond, five years to run, on a 5 per
cent, basis, costs 95.62, or $956.20. The income expected is
5 per cent, and not the face rate — 4 per cent. Now the
interest on $956.20 at 5 per cent, is $47.81. But the bonds
pay but 4 per cent, on $1,000, or $40.00. Therefore the
difference between the amount received and that which was
due according to the calculation at purchase should be
added to the income and charged to the bond, maldng the
true income $47.81 for the first year, and the value at the
end of the first year 96.40,* as the tables ^vill show. This
amount is the increase in the hond value as it approaches
maturity.

Having a clear idea of what amortization is, as applied
to a bond investment, and what it is intended to accom-
pHsh, let us proceed to do it. The tables given in connec-
tion herewith are all based on the one problem of a
5 per cent, bond, purchased to net 4 per cent., due in five

•The tables based on semi-annual interest give 96.41 as the value at the four-
year period, but this is near enough to illustrate the point. This figure is ob-
tained by adding .$7.81 to $956.20, making $964.01. "First year" means first
year lield; the bonds would run four years longer, and the value of a "4 year
bond" on tliis basis is 96.40.

BOND AMORTIZATION 419

years, either straight or serially. Interest due semi-an-
nually. It will therefore be easy to make comparisons of
the different methods.

A "Straight" Issue — Scientific Method.

We shall take, first, an issue of $5,000 of such bonds
purchased January 1, 1912, which run until January 1,
1917, and are due (Table No. 1). By turning to the book
of bond tables we shall find that such a bond is worth
$104.49. Tliis is the value given in Rollins' Book of Bond
Values. By using Sprague's EfXtended Bond Tables, which
give the values to the nearest cent on a million dollars, the
price would be slightly different. But inasmuch as the
Rollins' Tables are in more general use than the Sprague,
we shall use these as the basis of our calculations. By turn-
ing to the pages headed 5, 4 1-2, 4, 3 1-2, 3, 2 1-2, 2, 1 1-2, 1
and 1-2 years, opposite the 4% in the left-hand margin,
we will find* the figures given in the last column of Table
No. 1. These are the values at the different periods. By
subtracting the value at one period from the value at the
next preceding period we get the amortization for the pe-

TABLE NO. 1.

Table 1. — Five per cent, bond on four per cent, income basis. Purcriascd

January 1, 1912; due January 1, 1917; five years "straight." Amortized by use
of Rollins' Bond Tables, which give the values at the different periods as in the
last column.

Par Amorti- True Investm't Interest Amount

Date. "Value. zation. Interest Value.* Due. Due. Rate.

Jan. 1, 1912 $5,000 $5,224.50 104.49

July 1, 1912 $20.50 $104.50 5,204.00 July 1, 1912 $125.00 104.08

Jan. 1, 1913 21.00 104.00 5,183.00 Jan. 1, 1913 125.00 103.66

July 1,1913 21.00 104.00 5,162.00 July 1,1913 125.00 103.24

Jan. 1, 1914 22.00 103.00 5,140.00 Jan. 1, 1914 125.00 102.80

July 1,1914 22.00 103.00 5,118.00 July 1, 1914 125.00 102.36

Jan. 1,1915 23.00 102.00 5,095.00 Jan. 1,1915 125.00 101.90

July 1,1915 23.00 102.00 5,072.00 July 1, 1915 125.00 101.44

Jan. 1,1916 23,50 101.50 5,048.50 Jan. 1,1916 125.00 100.97

July 1,1916 24.00 101.00 5,024.50 July 1,1916 125.00 100.49

Jan. 1,1917 24.50 100.50 5,000.00 Jan. 1, 1917 125.00 100.00

$224.50 $1,025.50 $1,250.00

"The Sprague tables would be slightly different from these figures.

riod. This amount taken from the interest received gives
the true interest which has been earned on this investment.
This is the scientific method, by use of the bond tables. It

*In the "5% column."

420 THE SAVINGS BANK AND ITS PRACTICAL WORK

will be observed that the amortization plus the true inter-
est equals the interest received, both in the various amounts
and in total, thus proving the result of the whole computa-
tion. Table No. 1 will bear out these observations.

TABLE NO. 2.

Table 3,— Bond purchased at an intermediate period. Five per cent, bond

on four per cent, basis; four years and nine months to run; bought April 1.

Amortized as of January and jiily to keep the dates uniform. For rule see text.
Values at different periods from Rollins' Tables of Bond Values.

Par Amorti- True Investment Interest Amount

Date. Value. zation. Interest. Value.* Due. Due.

April 1, 1910 $5,000 $5,214.25

Julv 1,1910 $10.25 $52.25 5,204.00 July 1, 1910 *^$62.50

Jan. 1,1911 21.00 104.00 5,183.00 Jan. 1, 1911 125.00

Julv 1,1911 21.00 104.00 5,162.00 July 1, 1911 125.00

Jan 1, 1912 22.00 103.00 .5,140.00 Jan. 1, 1912 125.00

July 1,1912 22.00 103.00 5,118.00 July 1, 1912 125.00

Jan. l', 1913 23.00 102.00 5,095.00 Jan, 1, 1913 125.00

Julv 1. 1913 23.00 102.00 5,072.00 July 1, 1913 125.00

Jan. 1, 1914 23.50 101.50 5,048.50 Jan. 1, 1914 125.00

Julv 1,1914 24.00 101.00 5,024.50 July 1, 1914 125.00

Jaii. 1, 1915 24.50 100.50 5,000.00 Jan. 1, 1915 125.00

$214.25 $973.25 $1,187.50

* The Sprague tables would vary somewhat from these figures, owing to more
accurate computations.

** There would be six months' interest due at this time, but the bank would
only be entitled to three months' interest. To make problem balance only net
interest has been included,

BoxDs Purchased at Odd Dates.

Table No. 2 shows the same bond purchased on April
1, 1910, and amortized as of January and July. It is
better to keep all amortizations at uniform dates for con-
venience in making reports and adjusting the general led-
ger to conform with the bond book. In New York State
amortization being compulsory for savings banks and trust
companies, and the reports of the former being required
January and July, uniform dates greatly facilitate the
work. Where the period is even, as, in this case, four years
and nine months, it is not a difficult matter to ascertain
the value of the bond, or the amortization for the period,
as it is a simple "spht" in the table; thus: Value, 4 years
and 6 months, $104,08, Value 5 years, $104.49; add to-
gether, e(iuals $208.57. Divide by 2, equals $104,285 x 5
equals $5,214.25, cost of the lot. Valued at 4 1-2 years
(July 1, 1910,) $104,08, x 5 equals $5,204.00, which taken
from previous value, $5,214.25, leaves the amortization

BOND AMORTIZATION 421

July 1, $10.25. But when a bond is purchased at an odd
date, as, for instance, April 22, to find the value at that
date and the amortization for the two months and
eight days is a more difficult matter. To ascertain the
correct cost necessitates "splitting" the tables, and for this
process the reader is referred to a treatise on this subject
published by the author of the extended bond tables re-
ferred to above, ]Mr. C. E. Sprague, late President Union
Dime Savings Bank, New York.* But to ascertain the
correct amortization for the period from April 22 to July
1, find the true interest for the period (60 days' interest on
$5,211.55 at 4 2^^^ cent.) and deduct this from the interest
due (69 daj^s' interest on $5,000 at 5 per cent.) and the
difference is the amortization for the 69 days. After this
the work can proceed as in Table 1.

Serial Bonds — How to Figure the Cost.

Thus far no serious difficulty is likely to arise, as the
rules are simple, depending largely upon finding proper
columns and pages. But, in the case of a serial bond, more
difficult}^ attends. In the first place the amortization, being
based upon computations mathematically correct, the cost
price must he based on like comjmtations, or the result
will not work out correctly.

In serial bonds it is the general custom among bond
houses to quote prices by averages. For instance, Mr.
Bondman offers a lot of bonds, five per cents., due serially
from 1912 to 1917, on a four per cent, basis. You ask him,
"How much will they cost?" He quickly adds one and
five (the time the first and last bonds have to run), di-
vides the amount (6) by two and gets three as the average.
He turns to three-year bonds in the aforesaid tables, finds
the rate to be 102.80, and you take them at that price,
$5,140. After handing Mm his check you endeavor to
amortize them according to the above rules (scientifically),
get an average of $1.80 at the end of the calculation, and
wonder what can be the matter. The trouble is, you paid
him too much. Prove it!

*Amortization— a guide to the ready computation of the investment value of
bonds, etc.

422 THE SAVINGS BANK AND ITS PRACTICAL WORK

Bond No. 1 runs one year and is worth (find it in your book) . . $1,009.70

Bond No. 2 runs two years and is worth 1,019.00

Bond No. 3 runs three years and is worth 1,028.00

Bond No. 4 runs four years and is worth 1,036.60

Bond No. 5 runs five years and is worth 1,044.90

Cost of lot $5,138.20

Cost of the lot by average method of determining cost price

($1,028.00x5) $5,140.00

DiflFerence $1.80

It is therefore essential that the price be correct if the
scientific method is used. For this reason the average or
pro rata method is desirable as the accuracy of the
amortization does not depend upon the cost. The premium
is pro-rated over the period, and a slight variation in the
cost, either one way or the other, does not affect the ulti-
mate result.

Amortization or Serial Bonds — Scientific Method.

Table No. 3 shows a serial bond of same character as
those given above. One bond matures each year for 5
years. The result in tliis instance has been computed with-
out the use of the table.

TABLE no. 3.

Table 3. — Serial bond. Scientific amortization. A five per cent, bond, due
1910-1915, on four per cent, basis.

Amortization determined by multiplying the investment value by income rate
(four per cent.) and subtracting this from the interest received.

Par Amorti- True Investment Interest Amount

Date. Value. zation. Interest. Value. Due. Due.

Jan. 1,1910 $5,000 $5,138.20

Julv 1,1910 $22.24 $102.76 5,115.96 July 1, 1910 $125.00

Jan. 1,1911 4,000 22.68 102.32 4,093.28 Jan. 1, 1911 125.00

Julv 1,1911 18.14 81.86 4,075.14 July 1, 1911 100.00

Jan. 1,1912 3,000 18.50 81.50 3,056.64 Jan. 1, 1912 100.00

Julv 1,1912 13.88 61.12 3,042.76 July 1, 1912 75.00

Jan. 1,1913 2,000 14.16 60.84 2,028.60 Jan. 1, 1913 75.00

Julv 1,1913 9.44 40.56 2,019.16 July 1, 1913 50.00

Jaii. 1,1914 1,000 9.62 40.38 1,009.54 Jan. 1, 1914 50.00

Julv 1,1914 4.82 20.18 1,004.72 Julv 1, 1914 25.00

Jan. 1,1915 4.72* 20.28 1,000.00 Jan. 1, 1915 25.00

$138.20 $611.80 • $750.00

• Where there is a discrepancy in the last amortization, usually a few cents
due to dropping the half cents, it can be adjusted in the last amortization.

Average (or Pro Rata) Method.

AVe shall now take up the average (or pro rata) method,
wliich is simpler and in small transactions, gives satisfactory

BOND AMORTIZATION 423

results. The idea is simply this: The amount of the pre-
mium must be Mquidated during the course of a number
of years. The principal is gradually reduced by the re-
placement of the premium; but for present purposes we
shall take a straight issue, five years to run, and therefore
divide the premium into as many parts as there are interest
periods, and the result will be the proper charge against
each year. This is not mathematically correct, but far bet-
ter than the "hit or miss" method suggested above.

By comparing Table 1 with Table 4, it will be seen
that the charge against the first year is $20.50 by the sci-
entific method (Table 1), and $22.45 by the average meth-
od (Table 4). In the last period the charge is the same
in the average method, but increased to $24.50 by the sci-
entific. If the sum involved was larger, the comparison
would be more forcible, but the ratio would be the same.

TABLE NO. 4.

Table 4. — Average or pro rata method of amortization. Five per cent, bond,
live years to run; purchased January 1, 1910; due January 1, 1915. Premiimi,
.50, divided into ten equal parts.

Par Amorti- True Investment Interest Amount

Date. Value. zation. Interest. Value. Due. Due.

Jan. 1, 1910 $5,000 $5,224.50

July 1, 1910 $33.45 $103.55 5,202.05 July 1, 1910 $125.00

Jan. 1,1911 22.45 102.55 5,179.60 Jan. 1, 1911 125.00

July 1, 1911 22.45 102.55 5,157.15 July 1, 1911 125.00

Jan. 1, 1912 22.45 102.55 5,134.70 Jan. 1, 1912 125.00

July 1, 1912 22.45 102.55 5,112.25 July 1, 1912 125.00

Jan. 1, 1913 22.45 102.55 5,089.80 Jan. 1, 1913 125.00

July 1, 1913 22.45 102.55 5,067.35 July 1, 1913 125.00

Jan. 1, 1914 22.45 102.55 5,044.90 Jan. 1, 1914 125.00

July 1, 1914 22.45 102.55 5,022.45 July 1, 1914 125.00

Jan. 1, 1915 22.45 102.55 5,000.00 Jan. 1, 1915 125.00

%22\>.50 $1,025.50 $1,250.00

Serial Bonds — Pro Rata Method.

Serial bonds are the most troublesome, and more de-
tailed explanation will be necessary, especially if amortized
by the average method. Here we shall have a lessening
principal each year. The amortization will be reduced
likewise. Therefore the following rule will be useful :

1. Divide the premium by the average number of years
the bonds run; this will give the average amortization.

2. Divide the average amortization by the number of
bonds; this will give the annual reduction.

424 THE SAVINGS BANK AND ITS PRACTICAL WORK

In tliis instance our bonds cost us $5,140, as was found
on page 422, and we have the premium, $140, divided by 3
(average time to run) which gives $46.66 as the average
amortization. $46.66 divided by 5 (the number of bonds)
gives $9.33 as annual reduction. ^Ve can prove that our
work is right before making any subtractions by striking
a total, and at same time prove the correctness of our
theory, thus:

Amortization for first year (five bonds are in force) and we take

five-fifths of the average amortization, or $46.66

Amortization second year (four bonds are in force) and we take
four-fifths of $46.66, or $46.66, less the reduction, $9.33,
which is 37.33

Amortization third year (three bonds are in force) and we take
three-fifths of $16.66, or the last amount, $37.33 less $9.33,
obtaining for the third year 28.00

Amortization fourth year (two bonds are in force) and we take
two-fifths of $i6\66, or $28.00 less $9.33, and get for the
fourth jear 18.67

Amortization fifth year (one bond is in force) and we take one-
fifth of ^6.66, or $18.67 less $9.33, and get .' 9.34

Which added together gives us the total desired $140.00

Tliis shows the computations to have been correct, and
all figures made in the accounting of this issue will like-
wise be correct. We have jwoven the whole transaction.

The amortization for the half-yearly periods will be
one-half of the amount for the year. The table will stand
like this:

TABLE NO. 5.

Table 5. — Serial bond. Average or pro-rata method. Rule: Divide the pre-
mium by the average time to run, which gives average amortization. Divide
average amortization by the number of bonds, which gives annual reduction.

Par Amorti- True Market Interest Amount

Date. Value. zation. Interest. Value. Due. Due.

Jan. 1,1910 $5,000 $5,140.00*

Julv 1,1910 $23.33 $101.67 5,116.67 July 1, 1910 $125.00

Jan. 1,1911 4,000 23.33 101.67 4,093.34 Jan. 1, 1911 125.00

Julv 1,1911 18.67 81.33 4,074.67 Julv 1, 1911 100.00

Jan. 1,1912 3,000 18.66 81.34 3,056.01 Jan. 1, 1912 100.00

Julv 1,1912 14.00 61.00 3,042.01 July 1, 1912 75.00

Jan. 1,1913 2,000 14.00 61.00 2,028.01 Jan. 1, 1913 75.00

Julv 1,1913 9.34 40.66 2,018.67 July 1, 1913 50.00

Jan. 1,1914 1,000 9.33 40.67 1,009.34 Jari. 1, 1914 50.00

Julv 1,1914 4.67 20.33 1,001.67 July 1, 1914 25.00

Jan. 1,1915 4.67 20.33 1,000.00 Jan. 1, 1915 25.00

$140.00 $610.00 $750.00

•Price is $1.80 too much to illustrate the point made in the text that price
doe» not effect the average method of amortization.

BOND AMORTIZATION

4>25

Serial Bonds Running More Than One Year Before

First Maturity.

But bonds frequently have from two years upwards to
run before the first bond falls due. Our rule as above
will not work in such cases, as the bonds will be due long
before the premium is replaced. We therefore evolve this
rule: In cases where serial bonds do not begin to mature
one year after purchase, the amortization for the first year
is the aino7'tization for each year until the first bond falls
due. After this apply the rule as above given and it will
work out properly. Table 6 shows this principal. Here the
bonds run three years before the first maturity, and we take
the amortization for 1910 as the amortization for 1911 and
1912 also, giving three years alike, until January 1, 1913,
when the reduction begins to take effect. This must be
clearly understood or confusion and inaccuracy will result
in the effort to apply the pro rata method to serial bonds of
this sort. The last amortization must fall on the due date
of the last bond, or the work has been incorrect.

TABLE NO. 6.

Table 6.-

—Serial bond running three

years before

first maturity.

Average

method. Purchased January 1, 1910; due

January 1, 1913-'17. For rule

see text.

Par

Amorti-

True

Investment

Interest

Amount

Date.

Value.

zation.

Interest

Value.

Due.

Jan. 1,1910

$5,000

$22.29

$102.71

$5,222.90
5,200.61

July 1, 1910

July 1,

1910

$125.00

Jan. 1,1911

22.29

102.71

5,178.32

Jan. 1,

1911

125.00

July 1,1911

22.29

102.71

5,156.03

July 1,

1911

125.00

Jan. 1,1912

22.29

102.71

5,133.74

Jan. 1,

1912

125.00

July 1, 1912

22.29

102.71

5,111.45

July 1,

1912

125.00

Jan. 1,1913

4,000

22.29

102.71

4,089.16

Jan. 1,

1913

125.00

July 1, 1913

17.84

82,16

4,071.32

July 1,

1913

100.00

Jan. 1,1914

3,000

17.83

82.17

3,053.49

Jan. 1,

1914

100.00

July 1, 1914

13.38

61.62

3,040.11

July 1,

1914

75.00

Jan. 1,1915

2,000

13.38

61.62

2,026.73

Jan. 1,

1915

75.00

July 1,1915

8.93

41.07

2,017.80

July 1,

1915

50.00

Jan. 1,1916

1,000

8.92

41.08

1,008.88

Jan. 1,

1916

50.00

July 1,1916

4.44

20.56

1,004.44

July 1,

1916

25.00

Jan. 1,1917

4.44

20.56

1,000.00

Jan. 1,

1917

25.00

$222.90

$1,027.10

$1,250.00

Discount Bonds.

^11 that has been said will apply to discount bonds, in-
versely. In this class of securities the amortization is added
to the interest received to get the true interest earned. It

^
i

i
1

<•

f<?

<
<

<
5

•<
a.

t/i

«c

-ft

•«

A
V

-*-

;<:

(iS

0£

z
a

/;i

— ' \

1 :

■ 1 1

>«

>/l

.J.-

^-l

— ;

</i

. —

. ^

. -

.^^

>=-^^

^i«=J^^

f <

K7 r^ r-> r--;

K" r^

t < Q <i <i c

C (

|„

J) « 0]

< c

J ,

t/ t

t 'i "

(V C

o«

"^ '

s^i

C o<

-^ <

- p

- i

r' «

'^ 1

< c

Tl C

•^

-0

y ir

S 0

c— ^

c- "c

0 c

< ^

-« «i

(Vl

• r

' 5

■o

-0

(/)

-r

— c

''1

VV)

■ "

-■'

■ "

-••

.-'

-3

^ i

■J

- ^

(-0

.K>

-1

1 ~

■/I

—

■

•

BOND AMORTIZATION 427

is obvious that a 4 per cent, bond purchased to net 5 per
cent, earns more than the face rate. The annual accretion
must therefore be charged against the bond and credited
to income account^ thus giving the bank the benefit of this
annual increase in value; and, as the bond approaches ma-
turity, its holding value increases until, at the time of pay-
ment, it stands at exactly par — the sum that will be re-
ceived for it.

TABLE NO. 7.

Table 7. — Discount bond. Four per cent, bonds on five per cent, basis;
five years to run. Amortization by accretion. True Interest i= Interest received
4- Amortization. Values at different periods from Rollins' Bond Tables. Prac-
tically the same result would be obtained by multiplying the investment value by
income rate. In this instance, $4,781.00 X 21/2 (six months interest at five per
cent.) would give $119.52, instead of $119.50, as per the table.

Par Amorti- True Investment Interest Amount

Date. Value. zation. Interest. Value. Due. Due.

Jan. 1, 1910 $5,000 $4,781.00

July 1,1910 $19.50 $119.50 4,800.50 July 1, 1910 $100.00

Jan. 1,1911 20.00 120.00 4.820.50 Jan. 1, 1911 100.00

July 1,1911 21.00 121.00 4,841.50 July 1, 1911 100.00

Jan. 1, 1912 21.00 121.00 4,862.50 Jan. 1, 1912 100.00

July 1, 1912 21.50 121.50 4,884.00 July 1, 1912 100.00

Jaii. 1, 1913 22.00 122.00 4,906.00 Jan. 1, 1913 100.00

July 1,1913 22.50 122.50 4,928.50 July 1, 1913' 100.00

Jan. 1,1914 23.50 123.50 4,952.00 Jan. 1, 1914 100.00

July 1, 1914 23.50 123.50 4,975.50 July 1, 1914 100.00

Jan. 1,1915 24.50 124.50 5,000.00 Jan. 1, 1915 100.00

.$219.00 $1,219.00 $1,000.00

Bond amortization is not a perplexing art, although
the methods of estimating bond values involve technical
knowledge of mathematics and accounting. Once the the-
ory is clearly in mind it is not burdensome; and, by using
the 23ro rata method, the problem can be proven at the
start, thus avoiding errors in subtracting across columns.
If the amortization foots up correctly the investment value
must reduce to notliing in like amounts. But where large
amounts are invested the scientific method is recommend-
ed. While it probably entails more labor, it is accurate,
and accuracy always costs its price.

CHAPTER XXVI

SAVINGS BANK AUDITS

The first question that arises concerning a savings
bank audit naturally is, why should such an institution be
examined^ And the answer quickly comes, first, that the
work of the clerical force may be tested and the honesty
and fidelity of the employees proved; and, second, to de-
termine that the institution is solvent, that the manage-
ment is honest, the assets intact, the liabilities what they
purport to be, that it is not violating the law, that the pol-
icies are safe and sound, and that the work is reported
properly to the board of managers. Small and sometimes
large losses occur through carelessness or dishonestv of the
clerical force, and it is important that every safeguard shall
be afforded the men who receive and pay money, as well
as those who handle the securities and records. Every
bank owes its employees a reasonable measure of protection
against temptation, and thorough examinations are usually
recognized as one of the best if not the chief means to this
end.*

Bank Men are Honest.

It is no doubt true that most bank men are honest, as
well as efficient; and while the working force should be sub-
ject to examination, the officers themselves should be sub-
ject to the same process; and right here it may be well
to digress for a moment to say that every bank owes it to
itself and to its employees to make the temptation to be-
tray a trust as light as jjossible; to this end, every bank
should aim to pay its employees an adequate salary, so
that the man who handles money or valuables will not be
tempted ])y an inadequate compensation to do those things
which he would never think of doing if he were well paid
i'or his labor. For this reason one large New York sav-
ings bank pays its tellers $4,000 a year.

♦J. E. Sterrett, C. P. A., before PIiiladel]iliin Chapter, A. I. B.
428

SAVINGS BANK AUDITS 429

It is easily to be seen that the teller working on a sal-
ary of $1,500 and handling milHons in the course of the
year, and obliged by virtue of Ms office to maintain the
dignity of his calHng, to dress reasonably well, and live
in a good neighborhood, is under a severe test of honesty.
The chances are that he would not be tempted if he were
paid so well that he could hve decently without feeling the
pinch of poverty; but if he must carefully economize, cut
corners, deny himself most of the luxuries and a few of
the necessities of life, the odds are all against him; and
on the other hand, the bank would be the gainer, for no
better safeguard can be placed upon the men who are in
such positions of trust than to pay them so well that they
can have some of the good things of life through honest
means. A contented man is better than an insured one.
Of course, a small salary does not excuse theft, but it often
helps wonderfully to explain it; and while the audit should
be exhaustive in its test of the working force, banking liis-
tory shows that few banks are ever wrecked by the men
in subordinate positions; those that have succumbed have
been brought to ruin b}^ the recklessness or dishonesty of
the men higher up.

Let us see what constitutes a complete and exhaustive
verification of the affairs of a savings bank. This divides
itself into four parts; the examination by the State; the
examination by the trustees; the examination by an inde-
pendent auditor, and lastly, the internal audit.

Examinations by the State are made by periodical
visitations by the State examiners, running from six
months to two years in intervals, supplemented by reports
rendered either quarterly upon call, or semi-annually or
annually at stated times. These reports of course are in
no sense an audit, being merely a digest of the bank's
books. The examination by the State is supposed to be
an audit, but it overlooks in many instances the most im-
portant part of the whole matter, the verification of the
pass books and the aggregating of the liabilities as ex-
pressed bj^ the outstanding accounts.

The internal audit, being made by parties from the
inside, is practically no audit at all, for in spite of the
examination, so-called, of trustees, and the checking of the
work by the head bookkeeper, and other supervising officers,

430 THE SAVINGS BANK AND ITS PRACTICAL WORK

huge and inexcusable defalcations have been visited on the
savings as well as other banks.

The only true audit is one made under the direction of
an outside party who has no interest in the bank whatever,
and whose sole end and aim is to get at the root of things
and uncover the condition of the bank at a particular time,
without regard to the feelings of those whose work is under
surveillance. Such an audit by an independent party has
been recommended year by year by the Auditing Committee
of the American Bankers' Association, and many large
banks now employ such a person, both to check up the work
at monthly or semi-annual periods, as a safeguard upon the
accounting system, and also at intervals to review every
pass book which is presented for any purpose vidiatever.

The first thing to determine in such a process is: do the
assets as called for by the books of the bank reallif exist?
Xot, are there vouchers for these assets or memoranda of
the same, but are they in their original form in the posses-
sion of the bank and unhypothecated? and second, are the
liabilities as per the pass books the same as shown by the
general ledger, and, if so, is the bank sound in all that the
term "soundness" implies.

The Psychology of an Audit.

There is psychology in bank audits as well as in other
things. The manner in wliich it is conducted and the
object in mind have much to do with its success. To be-
gin with the assumption that the bank man is honest and
the audit will prove him so, is much better than to as-
sume that every man is a rogue and must be caught. The
auditor or examiner who enters the bank at nine o'clock
in the morning with the air of a detective, "seeking whom
he may devour," will find his work much harder and more
unsatisfactory than if he assumes the role of a helper and
advisor, whose duty it is to prove the men honest and to
suggest changes for the betterment of the work.

One of the first requisites of a true audit is that the
auditor shall go about his business as if he knew what he
was doing; if lie goes into a bank not knowing just where
to begin, or what to do, he is certain to make a bad im-
pression, as well as a poor audit.

SAVINGS BANK AUDITS 431

It is important that a savings bank man audit a savings
bank, for unless the auditor has had experience in this par-
ticular line he cannot know the inside methods by which
things are done, and a commercial bank man examining
a savings bank or a savings bank man examining a com-
mercial bank is at a serious disadvantage.

One of the principal objects of an audit is that the
work may be kept at a high state of efficiency; a suggestion
here and there, hardly called a criticism, will often help in
the betterment of the bookkeeping system, and as for loose
methods on the part of the managing officials, they should
not be tolerated for a single moment. It is no excuse for a
body of trustees that they trusted one of their number and
gave him unlimited power, as well as unlimited confidence;
they have violated the first rule of trusteeship in "trus-
teeing the trust" which they should have in all honor ad-
ministered in person; it is not only the trustee's duty, but
it is his right to know just what is going on in his insti-
tution, and he cannot, either in law or morals, excuse him-
self for blindness when both law and good management
demand that he should see.

Some bank men claim that our banks are examined too
much; others, not enough; but however this may be, the
savings banks of the mutual type are not as a rule exam-
ined more than once a year, which is certainly none too
often. The frequency of the examination is not as impor-
tant as the character of it, and a loose examination once a
week is not as desirable as a complete and comprehensive
examination once a year.

The Comptroller of the Currency has of late given a
rude shock to all the national bank directors by insisting
that they shall really be directors who direct, and not
directors who are directed, and it has been the fault of the
past that managing officials of banks have expected the
government or the state to do for them that which they
could and should do for themselves.

An internal check is often found advisable through
some such means as, in a large bank, an examination by a
committee of employees, or by a shifting of the force so
that one man will not do the same work continually. Only
collusion will then fail to unearth crooked practices; but
such internal audit, if made by men who are themselves dis-
honest, of course avails nothing.

432 THE SAVINGS BANK AND ITS PRACTICAL WORK
The Scope of the Audit.

A true audit must necessarily consist of: First, count-
ing the cash on hand and verifying with the statement of
cash; all items other than cash, but held as cash, should be
fully explained, and if a petty cash account is carried,
ascertain that it is not abused. Second, all collateral loans
should be examined to see that the collateral is what it pur-
ports to be; that it is properly pledged; that the accom-
panying notes are signed, and that the margin is safe. All
bonds and securities should be listed; the coupons examined
to see that they are all intact; the market value calculated;
and if the bonds are carried at investment values, the total

RECEIPT FOR INTEREST. Mortgage No.^X&^

^ New York, (X\v--^ ^\^0

g Received from >)'MJ- c5 ^^Ji-^^^'^AyN^,^v/' _ Check for

^^r\\jiLLmv>A?Ci) fvX^..'--:''^^ Dollars,

for interest to May ist, 1910, on Bond and Mortgage to the
Union Dime Savings Bank. ^WS. ^jMjcAx

I^Your Mortgage is eubject to tbe Regulations on the other side. /"^^ 0 aKJ

FOBM \22. RECEIPT FOE INTEREST OK MORTGAGE. ENABLES BORROWER TO VERIFY

A3IOUNT OF PRINCIPAL UNPAID.

of the investment values should agree with the stock account
with proper deductions for amortization charges; if carried
at par value, the total of the bonds in the vault will, of
course, agree with the par value as shown by the ledger
account. ^Mortgages should be examined to see that
taxes are paid; that the title insurance is properly issued;
that the appraisal certificate of the loan committee or ap-
praiser is on file; that the insurance is on hand, properly
assigned and in force, and that the mortgage is not in excess
of the legal ratio; in other words, that the papers are com-
plete, and the complete papers of every mortgage loan con-
sist of (a) the mortgage— (b) the bond*— (c) the applica-
tion for the loan— (d) the fire insurance— (e) the search

*With endorsements of partial pajnuents on principal.

SAVINGS BANK AUDITS * 433

or title policy — (f) the certificate of examination or ap-
praisal, which is usually embodied in the application. Also
that the mortgage is properly recorded.

Of course, the value of a mortgage loan can only be
ascertained by a physical inspection of the property itself
by one quaUfied to judge of its condition and to pass
opinion thereon ; this naturally falls to the lot of the trustees
or appraiser and should be done at intervals of about three
years, the results of wliich should be reported to the board
with recommendations as to the desirability of reducing the
loan, or calling it in entirely, with the alternative of replac-
ing the property in its former condition. The borrower
can be depended upon to verify the amount of his mort-
gage, and in their interest notices some banks have tliis pro-
vision— a very good one.

The furniture and fixture account should be carefully
examined, as well as the real estate holdings of the bank
for banking purposes, to see that the values are conserva-
tive. Other real estate owned by the bank should be ex-
amined to see that the deeds are properly recorded; taxes
paid, and the property insured in the name of the bank.

If the bank is a stock bank, stock issues should be
proven with the stock register and over issues carefully
checked. Balances due from other banks should be verified
at first hand. The proof of income should be examined to
see that the bank really gets what it has earned. If cer-
tificates of deposit are issued, these should be examined
to see that the old certificates are canceled when new ones
are issued, and that partial payments on the same are prop-
erly recorded on the stub. The minute book should be
examined to see that the minutes are properly kept and
that all matters that should be reported to the board are
brought to their attention.

In a large bank, the cash vaults are usually sealed when
examination is begun, so that all the monej^ and securities
are under the control of the auditor until verified, thus pre-
venting substitution of securities or cash.

The general administration of the bank may be tested
by answers to the following questions: Are loans made to
the officers and employees, and if so, under what restrictions
and to what extent? Does the bank loan on its own shares
of stock, if a capital bank? Are the officers deceiving

434 THE SAVINGS BANK AND ITS PRACTICAL WORK

themselves by carrying securities at more than their market
values, thus showing inflated resources? Are the officers
and employees under sufficient bonds? Are the trustees'
meetings well attended? Are the proceedings kept in a
creditable manner? Are the disbursements properly vouch-
ered? Does the expense account actually reflect the salaries
and other expenses? It is an axiom of accounting that for
every disbursement there shall be a proper voucher, and
for all expenditures on expense account for repairs, taxes,
and like expenses, there must be a receipt on file in the
same amount as appears upon the expense book. Has pro-
vision been made in the minutes for sudden help in the
case of need, without the necessity for a special meeting?
Is the bookkeeping system complete, comprehensive, and

NOTICE. — Interest will be due and payable May i, 1910, on Mortgage No. .2.'?45- -
at the Union Dime Savings Bank, Fortieth St. and Sixth Ave., New York.

PBOsrrr PA^^I^:^■T ts Kxit.ctkd. Receipted Tax-biU for last year to be exhibited uolcss already done.

Principal, $.49 ,000... Rate. 5 %. Time, 6 months. $.i,o30,.

Please SIGN BELOW and Return with payment.

j^'ew York, _ /po

To the Treasurer oj the UNION DIME SAVINGS BANK.

Sir: Herewith I deliver to you in payment of above Interest,

°"« Thousand-- - - - ----- - --:--:: ---:i::- ".::.::.":::.::" -..._z?^//ii„,

in Check oi^cy^ -c^aU^::^ — ■y^O^^'.^fit.fi.y^i^. Plea^ acknmtledge receipt.

Signature. ...y}€>: ^SSI^ r J^'^.^^^^J*^

R L M D. .4rfrfm....i2L£.'L^.._..<^.:/-.J-__

FOEM 123. NOTICE OF IKTEREST COMING DUE.

modern? Are the clerks changed about frequently? Is
there a daily statement taken? Are the officers careful
about small things, such as the filing of letters, pass books,
vouchers, endorsement on bonds, the insurance in force, in-
dexing, etc.? Are chemical or knife erasures on the book
frequent? Are loose leaf sheets and cards properly guarded
against manipulation? Lastly, is the whole bank under the
control of one man, or is the responsibility properly divided
and the work really conducted by the board of managers
to whom the management of the Ijank properly belongs?

In counting cash in the teller's cage, it is well to keep
this official present, so that in case any deficit occurs, it
cannot be charged that the examiner has been implicated
in any manner.

SAVINGS BANK AUDITS 435

Misappropriation of bonds and other securities can
easily be prevented by having such securities registered, or
by having them under two combinations, the former being
preferable. To transfer such a security usually requires a
resolution of the board of trustees and a certified copy of
the same, together with a copy of the by-laAvs pertaining to
such a transaction.

It is as essential to determine whether the teller has
accounted for all the money he has receipted for as it is to
verify the actual cash on hand. In most of the transactions
with depositors, the owner of the book may be depended
upon to verify the correctness of the entry in his pass book,
but he cannot verify the fact that the teller has turned over
to the bank the amount wliich he has credited upon the pass
book.

Theft of money is usually hidden, first, by substituting
fictitious cash items; tliis can only be prevented by pro-
liibiting the holding of anything as cash but cash itself.
Secondly, by charging accounts mth amounts wliich have
been abstracted under the names of depositors and charged
to their account, and, in appearance, receipted for by the
depositor; this of course is rather risky, but an old trick;
as far back as 1820 in England, gross frauds crept into
the savings bank management by this process. The famous
Cuff Street fraud and the wreck of the Rochdale Savings
Bank was accomplished by the embezzler taking what
money he wanted and charging it up to depositors, being
careful of course to select an inactive account, which would
not be likely to be called for. As a preventative of this pro-
cess, it is the custom in some places to investigate at stated
inten^als the large withdrawals, especially closed accounts,
to ascertain if they have been properly receipted for and
the pass book has been surrendered. Of course, the verifica-
tion of the pass books themselves in any great quantity
would uncover any such practice. The third method is, as
above suggested, withholding receipts both of deposits on
pass book accounts, payments of interest, payments of prin-
cipal on mortgage loans and bonds, and lastly, might be
stated, the manipulation of bank balances. Tliis is exceed-
ingly risky and cannot be carried on with success very
long if the balances are properly verified.

Turning to the liabihties, the audit should show just

436 THE SAVINGS BANK AND ITS PRACTICAL WORK

how much the bank owes, not on its own books, but by the
pass books wliich are outstanding. Tliis may be done by
calhng in the pass books by advertisement, personal letters,
and notice upon the cover of the j^ass book to present at
stated intervals for the entry of interest and comparison of
balances. Where the auditor is in attendance for a few
weeks at each interest period, in the course of a few years
enough books can be verified to prove the general correct-
ness of the entries therein; but to call in the books without
an apparent reason is to invite suspicion on the part of the
depositors that all is not well, and is apt to lead to misun-
derstanding if not more serious results. This is accom-
plished in jNIassachusetts and other New England States
in an admirable manner by a provision of the , law which
requires periodical verifications. This work is done every
three years, at stated times, and extends over a period of
from three to nine months. The call is extensively adver-
tised in the press, and in the case of the Boston banks in
1910, the banks united in one large advertisement calling
upon all depositors to present their pass books, thus lessen-
ing the cost and making the notice more effective. Banks
have been known to verify as high as 95 per cent, of their
pass books, and in the last verification, which was made in
1910, 922,753 books were verified out of 2,074,317, or 44.48
per cent. These books represented $396,739,108.27 out of
$759,330,023, or 52.25 per cent, of the deposit habilities of
the banks. Out of 900,000 and more books verified, only
2,801 showed errors, or 13 per cent.; 36 banks found no
errors, and the cost per book verified was $.043. On the
face of such an admirable showing, it is obvious that a more
or less complete verification of pass books can be made in
the course of a few years. Some duplications, of course,
enter into the process, but the test is comprehensive enough
to be of great value.

These verifications of course should be made by an out-
side party if possible, and certainly by a clerk who has no
connection with the handling of the funds; otherwise, the
end is defeated.

Proof of Income.

The withholding on the part of the collecting officers of
receipts from interest on bonds and mortgages and upon in-

SAVINGS BANK AUDITS 437

vestments can easily be detected by a proof of income, which
aims to check the earnings of the bank.

It is eminently desirable that the bank officials should
know that the bank has received what it has earned; and
to determine tliis it must first know accurately what its
earnings have been, or, rather, will be, for it is an anticipa-
tory process. Many large banks are now giving careful
attention to the matter of proof of income, with very great
satisfaction.

For auditing purposes the income of a bank should be
calculated ahead, that is to say, for the period to elapse
until the next dividend is declared. This calculation can-
not be made accurately by banks doing a commercial bus-
iness, but where the business is of a purely savings bank
character and therefore permanent, this feature can be
handled with considerable degree of accuracy. The in-
come may be calculated on each investment, or class of
investments and the receipt thereof ascertained through
the cash book. The Committee on Savings Bank Methods
and Systems of the Savings Bank Section, American
Bankers' Association, gives this as an example: Suppose
a bank declares dividends every six months, as of January
and July 1. On the first of January an account is opened,
debiting it with the income from all investments, bonds,
mortgages, etc., due for the current six months. When
this income is received, the account is credited with each
payment so received. Thus on June 30, if the income has
all been received, the account will be closed out; any odd
amount of income received during the six months may be
easily adjusted. The calculations should be made by the
head bookkeeper or auditor and checked by an officer.

Trustees^ Audits.

The periodical examination by the trustees is quite uni-
versal, and the general requirements may be well summed
up briefly by reference to the laws of a few of the lead-
ing States. Thus, in Indiana, not less than three trustees
on or about January first must examine into the securities,
loans, cash on hand, and other details of the bank's opera-
tions and report to the board, and the report to the de-
partment is based upon this examination. Connecticut
requires that two auditors, who are not inemhers of the

438 THE SAVINGS BANK AND ITS PRACTICAL WORK

board, shall be appointed yearly to make the examination
on October first; these auditors report to the Bank Com-
missioner. New Jersey requires that three examiners, on
or before December 31, shall examine into the condition of
the bank, while New York requires that semi-annually, on
or before June 30 and December 31, trustees shall examine
the cash, securities, mortgages, and balances due from other
banks, and the report to the bank department is based upon
their examination. JNIaine requires a yearly examination
by two trustees. Xew Hampshire, an independent examin-
ation every six months. In Minnesota, on or before Feb-
ruary first, a thorough examination by experienced account-
ant must be made; he must submit a written report attested
by two of the principal ofhcers, and the statement of assets
verified by two trustees and the person making the exam-
ination, ^lassachusetts has recently amended her law in
this regard and now requires what is perhaps the most ex-
haustive of all savings bank examinations. It was found
that the old law which divided the responsibihty between
the auditing committee and the bank resulted in a lack of
thoroughness, therefore ^ change in the law was made, so
that the responsibility for the audit has been placed upon
the bank department itself, although the audit is made by
a certified public accountant, who may be selected by the
auditing committee, but who must first be approved by
the Commissioner; the accountant is required to personally
supervise the making of this examination, except that with
the consent of the commissioner he may verify trial bal-
ances if made within six months. In accordance with these
ideas, the bank department has prepared what it concedes
to be the minimum requirements for an audit, which must
be complied with by the public accountant, and copy of
his report must be filed with the bank department and with
the bank. This department is now verifying every mort-
gage loan in ^Massachusetts made to a savings bank, by di-
rect communication with the borrower.

A Mechanical Auditor.

It is always more difficult to prevent embezzlement on
the part of a receiving agent than of a disbursing agent, be-
cause the latter is compelled to produce a voucher for each
expenditure; but unless guarded in some other way the re-

SAVINGS BANK AUDITS 439

ceiver may withhold or destroy the evidence of his having
received. There are two classes of methods employed in
preventing this in moneyed institutions; one is that which
makes another employee cognizant of his doings; and
another, that which makes that known to the public. It is
manifest that there is no absolute security in the former
method. If you multiply the number of hands through
which the transaction passes, you somewhat diminish the
probability of fraud, but there is always the possibility
of collusion; but collusion with the chance public, whose
interests are directly opposite, is impossible. Therefore the
writer considers that the only security against embezzle-
ment lies in making the acts of a receiving agent to some
extent public, as the bell punch does on the horse-car.*

In order to have a complete check on the receipts of
the institution, the Union Dime Savings Bank of New
York had made for its own use four mechanical tellers,
somewhat similar to an adding machine, the operation of
which is as follows:

The object is to insure that the amounts entered in the
pass books shall be identical with those entered in the
books of the banks in amount and in total. Embezzlement
in savings banks is almost invariably accomplished by
entering in the pass book a correct amount, but accounting
to the bank for only a part or none.

The mechanism in question prints the amount of the
transaction, with date, in the pass book; and simultane-
ously prints on a tape within the machine the same amount
without a possibility of variation, and also the number of
the account. As an additional safeguard it displays, through
glass, a total register increasing at each transaction. The
total indicated by this register, minus the total at the begin-'
ning of the day, represents the day's transactions. For
this amount the teller is responsible and he is charged
therewith in triplicate: 1. the debit entry in the pass book
which the depositor may be trusted to verify: 2. the en-
tries on the tape, which when cut out and pasted in a book,
forms a journal of the amounts to be credited each depos-
itor's account; 3. by the total over which the teller has no
control and which must be corroborated by the bookkeep-
er's work.

*Bolles' Practical Banking, p. 280.

440 THE SAVINGS BANK AND ITS PRACTICAL WORK

Thus, without the loss of a second's time, a mechanical
check is imposed upon the teller's accuracy and honesty,
and that by an inanimate machine incapable of corrup-
tion or conspiracy. All methods wherein a second clerk is
brought in to check the work by comparison, re-recording
or otherwise are subject to two defects, loss of time and
the possibility of collusion.

The time occupied is less than where the entry is made
in extenso with the pen, and this time may be diminished
by one-half, when in very busy times, teams of two work
together, one handling the money and the other manipu-
lating the macliine.

Although the machines, being the first in use, were ex-
pensive, they have probably paid ten per cent, per annum
on the cost. But tliis is not the most important advan-
tage; the security from fraud and error and the ability to
know the exact total of liabilities is worth far more.

The Schenectady Idea.

What is doubtless the most unique, if not the most com-
plete and comprehensive audit of a savings bank ever de-
vised, has been used by the Schenectady Savings Bank,
followed by a few banks in other parts of the country.
The idea is to make the audit automatic, and every de-
positor and every borrower an auditor. The medium is the
newspaper. For months in advance notice is given that
on a certain day, the pass book number and correct balance
of every account in the bank will be published, and depos-
itors are asked to check their balance as it appears on their
books with this published list. The difference, if any, is
the accrued interest. Likewise, every mortgage loan, by
number only and interest rate is given, and borrowers in-
vited to verify the amount due thereon. These two impor-
tant features are supplemented by a complete list of the
securities in detail, and such other matter as may be perti-
nent to the occasion.

When the depositors number upward of 20,000, this is
no small task, inasmuch as no account must be omitted, or
listed in error, either as to number or amount, and great
care must be taken that it be accurate. The results have
been eminently satisfactory, the papers being in wide de-
mand on the day when this feature appears. The same mat-

SAVINGS BANK AUDITS 441

ter is issued in pamphlet form and sent out by mail, so
that every depositor is sure to receive a copy. The Avork
is quite voluminous, occupying at least ten pages of news-
paper space, and is rather costly; but the end has justified
the means, and the scheme has had its second trial during
the year 1910. It is not only good auditing, but good ad-
vertising, as well; for the bank that has nothing to conceal,
must by that token be a good bank.

CHAPTER XXVII

BANKING THROUGH THE MAILS

Banking by mail and banking through the mails are
somewhat different. The one may be a feature of the
business; the other only an incident. The banks featur-
ing banking by mail are located in the ^liddle West, and
the magazine advertising pages would seem to indicate that
it is a profitable line of business, and would merit treatment

USE THIS FORM IN REyUKSTING THE BANK TO SEND MONEY BY MAIL OK EXPRESS.

This Draft cannot be paid if presented without the Pass-Boofc

(Sec information on the Dated OaaJLv\ U> 190 <? . Book No. l O. <^ .^ . O . .

back hereof.) ■•*.' -•-'^ A^" I' ' •

THE UNION SAVINGS BANK, Patchogue, N. Y.

Please send at my expense and nsk, ^.sD.-O.'^^-^

<3^s.^X^t^^'^-^--<'----'-"--^^ .. Dollars

(On the line aboVe wrj<e plainly IN WORDS, the amount you want ; or if you wish to close the account, write
on the above line. "The amount in full, principal and intere8t," State how you prefer having the amount
sent, by striking out part of the two lines below, leaving the instructions you wish the bank to follow.)

Send Cash.— Send Check payable to..yyv^^€JUy'.•.,.... ......^

By Express. — By Registered Letter. — ^.Ordinary Mail.'— By Bearer.
And charge to account of (2 ft r* ' D \

CPcUA'v.ati k.P.vv<VV^.\^vv^ _

gned by the /

siBuature.

Address... 2D-J^CVwv\tJL\^....W.-.vi-r

A check by ordinary mail is the quickest, and a safe way to have funds sent.

FORM 12i: WITHDRAWAL BLAXK FOR USE IN MAIL BANKING.

by itself. For the present, however, mail banking as an
accommodation to customers only will receive attention.

As a matter of fact, anyone wishing to save time and
trouble, as well as expense, especially in dealing with large
banks, Mliere standing in line and waiting one's turn is in
order, would do well to look into the advantages of this
"back door banking," as it were, — going in with the mail
man and receiving prompt attention. A wealthy woman
di.scovercd tlic* merits of mail banking, when after mak-

fSignature must be written

by the Depositor) *g" -^»- ,-^

If the account is ip trust, the order must be signed by the /

trustee, with the words "in trust" after the sijfuature.

BANKING THROUGH THE MAILS 443

Ndir insrruiticn,

The Passbook rr

ust be mailed

with this 0

rder.

tm Ikt t.ick.

is order will only t

e paid by mai

; not to a

mcsse

ngcr.

If a t

rustee account, add

the word"trus

tee" after

he si

enature.

OLLAR S

AVINGS

BANK.

Send me by

Mail

AND CHARGE PASSBOOK NO.

- Dollars

Shall the Bank '

/^ —
'-^ "- —

-— >^_-—

—

SEND A Check or
Bills?

^.o......-'-^^^'^A^

^— ^,

Present Addres

'/^

. ^^v^r^

spaces
in the

ashed,
st the
Iter,
nk for
: mail.

e blank

itamp, :

c ■
S —

check c
d reque
tered le
the Ba
thru th(

5 -E .

0 —

- a .V. >, „
" a at j3 n

dink

this.

1 a 2
ow.

•- 1

^
Ji

0 5 „ a =

* "5 -1 -^

•g 2-

It t
pes
Isii

ISSU

f bi

per
sid(

er, '
See

3! -S

ifi ^ •- b

-s.

X. a 0 .

C 0

\l -1%

1 be
se 1

to s
Sibil

del

•a

0 ^ *- X:

„ 0

— .2 ^ a u
3 ~ = 0 ^

" C =■ «

f D

0 c « p. S

U. 0 C, =1.

t/3 Ci.

? « PS 3

0
I-

-c

0
Z

'I i

FORM 125. WITHDRAWAL ORDER BY MAIL.

ing a trip around among her depository banks twice yearly,
that cost not less than twenty-five dollars and occupied two
or three days' time, she was advised to simply sit down and
write a letter, requesting the bank to forward her interest,
order for which was enclosed, with book. Such a course
probably cost two dollars in postage, and occupied two or
three hours, but it was a vast saving, both of time and
money, over the old method.

All banks have provision, more or less elaborate, for the
handling of deposits and drafts through the mails. A de-
posit coming in the form of check, money order, or regis-
tered letter, may be turned over to the teller and put

441 THE SAVINGS BAXK AND ITS PRACTICAL WORK

MAIL DEPARTMENT

RKUUISITION FOR OHBOK

In favor of

Book Number ^77" -^7*^

FOBM 126a.

^ To THE HUDSON CITY SAVINGS INSTITUTION.

JjI Enclosed find .'f^ 5!^^.. for $.-4^^ which please credit to account

yj No./^/.^^f3jn name ot../>i:./^./!/.f^^^^^ Pass Book

(J sent herewith. Please return the book to the following address, and oblige

Z Very truly yours,

t \ (Nan,e).._:Z^^f?^^^^^^t-:....

^ "^ (Address) <C?:^^-r<:<^7I^/?'f:*":r'^^^

[U RETt'RN POSTAGE fi^,--^ ^V^

Q; should always be enclosed .-- 'T-.:/.. —

FORM 126b.

^ ..C^.^.7^^.'?h<^/-^^:/.f.'^'^ '%.^/>.^.-

OF HUDSON, N.

TO THE HUDSON CITY SAVINGS INSTITUTION.

^ D

-I I ^

H Pay to g<^^^H^,.^^-.^f'!'ry--f^^rrr?f^^4:^.--- ..' or bearer.

^ I !$ Q and charge my Pass Book No. ^_o • y 7 'f, sent herewith.

Addi

POST
SHOULD ALWAYS BE ENCLOSED

> RETURN POSTAGE

FORM 126c.
FOn.MS li?6 A^ B, C. USED IK BANKING BY UfAIU

BANKING THROUGH THE MAILS 44,5

For deposit by /viail

Passbook No.^/^- y f '^

lOCNT D

SPOSITUD. $ ^ ^ <^ ^^^ . _..

Depositor's Name-

^ ^j^^^-^-'^^

^>*i:^-2=t:-,i^ -7VA

Present Address.

...<^

..-t&Srs^:^^

^C.,.>^^,.rJ> ^ ^^"S^^

Note imiriictions on the bark.

es on the other
ticket.

th a 2c stamp
ssbook.

0.
>

1-"

: payable on its
; Hank.

AJbich case the
istered, at the

ibility for safe
hru the mail.

« B -'e 0.

i5 S

■s "i 1 - 2 = ti

■9 1

a 2 c =

.^ 0.

c -c ' 1; ^ '" .s

rt Q. 2 •'•

° 'B

0 ___ _^ 0 S . 0 g

01 ^ H 'lA

0 S
.0 s

i,'3'oc'S'i» «,&■

•0 G -S S

in '^

oocg.Q^ S^

^ <f~ B g-

0. li

ifi-S<u„^° E-

>ut all
of thi

this
thed

"^ 0

■0

0 ja -• M u „: >

«>

Fillc
side

Put
and

1 l

•a

° ^ -^ « „

♦^ "i

•d

.■S I. 0 J3

^ ,s

WO Z H

FOEM 127. DEPOSIT BY MAIL.

through as a regular transaction, and duly acknowledged
by the correspondence clerk. If the business warrants, a
separate account can be kept of such transactions and
turned over to the teller in bulk. After the first transac-
tion, forms similar to Nos. 125 and 127 are useful, and de-
positors are glad to comply witlh such instructions as are
found thereon.

In the matter of withdrawals, payment may be made in
cash, by registered mail, or by check to depositor's order.
The usual order received is a letter asking for funds and if
this is couched in terms that constitute an order on the bank.

446 THE SAVINGS BANK AND ITS PRACTICAL WORK

it is usually honored, the letter being filed as an order, or as
in Form 129 of the Bowery Savings Bank, filed among the
letters and "memorandum draft" properly filled out by an
officer and initialed, filed among the vouchers. This would
go through the books as a cash payment, if cash were sent,
or as payment to depositor by check over the counter if

BANKING BY MAIL

It it is not convenient for you tocall'at the bank,
you can have the benefit of the security and profit
which would be afforded by doing your banking
by mail, by opening an account in the Monroe
County Savings Bank, 35 Slate St., Rochester, N. Y.

Thousands of people are now doing their bank-
ing by mail with perfect safety. The U. S. Mail,
with its free city and rural delivery, brings the
strong, liberal savings bank to the very door of
every person no matter where they are.

The records of this bank prove that the mails
are safe and that you run practically no risk in
doing your banking this way.

HOW TO DEPOSIT

Sign your name in full on the red line of the
enclosed Identification Card, answer all questions
thereon, and send it with your first deposit.

You can send money by registered letter, post-
orfice or express money order, or draft on New
York.

As soon as your first deposit reaches us, your
name and amount of your deposit will be entered
on our books, and we will send you a pass book
with similar entries. In making other deposits
always send the pass book enclosing a letter giving
name and address in full.

DRAWING MONEY

You can withdraw money by mail just as easily
as though you visited the bank.

Your signature to a blank, which we will send
you to fill out is all the identification necessary.
We will send you a draft on New York for the
amount you wish 10 draw, upon receipt of pass-book
and cheque properly signed >ign your full name
on letter enclosing book and cheque, giving P. O.
address, lor return of the remittance If you draw
through another Bank, mail your pass book to
this bank to meet your check.

When forwarding pass book to the
Bank always enclose a letter stating
nature of your business, and give name
and address In full.

FOBM: 128. INSTRUCTIONS FOE BANKING BY MAIL.

draft were issued. (See Form 126A.) And as in the matter
of deposits, where this becomes a common occurrence, proper
withdrawal blanks could be furnished the depositor with in-
formation and instructions, so that delaj'- and annoyance
would be eliminated. In treating of withdrawals many good
forms were shown, with full instructions. Those of the
Dollar Savings Bank, of New York, shown herewith, are
both in good arrangement.

Inasmuch as all such transactions cost money for post-
age, it is quite a common procedure to ask the depositor

BANKING THROUGH THE MAILS

447

to defray the expense, either by request for stamps, instruc-
tions to inclose postage, or by deducting the same from the
remittance. In the matter of a draft by mail, in currency,
where the letter is registered, the registry fee would be
added to the amount of the draft, the remittance taken out

memorandi;m draft.

THE BOWERY SAVINGS BANK,

Chick. t / O-

Cash, ^ Cost .>/ Moi:ey Oi^,

\ Rr-,ltpos,U Con of Rceij/fiiioi,. ■ ^ O

I <^ 4/

Bahiirr, ^, ^ To/al. Jt /O^ O g

Sf,- Ittttr i/alt/f' _ iA-fc-^^

FORM 129, MEMORANDUM DRAFT FOR USE IX MAIL BANKIXG.

of the teller's cash and the ten cents placed in the stamp
drawer; but if a draft were sent, tliis would mean a charge
to the depositor, say, $100.10, and a credit to depository
bank of but $100, and ten cents would have to come out of
the cash. Likewise, in closing accounts, say one for $100,
and remitted for, less the charges, the same procedure

FORM 130. MEMORANDUM OF ADDITIONAL CHARGE ON ACCOUNT OF POSTAGE.

would be required. All tliis may seem a trivial matter, but
when it is remembered that some banks deduct postage for
all remittances, even as low as two cents, it is not a waste
of time to consider this phase of the subject, and in some
banks such care of trivial matters would pay the janitor's
salary.

CHAPTER XXVIII
THE ACCOUNTS OF DECEASED PERSONS

In the conduct of a savings bank, we are bound to take
cognizance of two facts: First, the depositors lose their
jiass books; second, they die. And both are the cause of
no Httle annoyance and concern to the bank officials. The
matter of lost books is treated at length in another chapter,
and we confine ourselves to the accounts of those who have
lived and saved and gone to their reward, leaving a deposit
in a savings bank behind them. How important are the
rules that the banks make in regard to this feature of their
business may be seen from the fact that upwards of 25,000
savings bank depositors die in New York State every year,
and whatever rules these banks may adopt affect approxi-
mately one per cent, of the total number of depositors
annually.

The usual contract between the savings bank and its
depositors is that the money will be repaid to the owner
in person, with the pass book, or on his order, or to his
duh^ appointed attorney, and at death to his legal repre-
sentative. Where the depositor leaves other property, and
administration is necessary, or where a will is made, it is
not a difficult matter, as the only course open is to require
letters of administration or executorship, duly authenti-
cated, and proper identification, together with the posses-
sion and surrender of the pass book. In New York,
however, the consent and release of the Comptroller is also
necessary. But where the depositor is in moderate circum-
stances, as is often the case, and the savings bank account
and a few personal belongings constitute the entire estate,
to require administration would work manifest hardship
upon the relatives and add expense to an already overbur-
dened household. The expense attending the issue of letters
of administration depends upon the locality and the attor-
ney fees. In some parts of New York State, for instance,
letters may be obtained without the aid of a regular attor-
ney at a nominal cost on small estates, while some attorneys
will do such work for a fee of five dollars.

THE ACCOUNTS OF DECEASED PERSONS 449

It is, of course, no fault of the bank that the money
cannot be handed over without delay, for the bank stands
ready to pay upon presentation of the proper authority to
receive, but the inability to determine who is the proper
party to give receipt causes all the annoyance attending
tliese transactions. To avoid, therefore, the appearance
of plajang the role of oppressor, and to make the ceremony
as simple and as efficient as possible, a custom has grown
up among savings banks that is worthy of notice in this
regard. It is now the common rule to pay the accounts of
deceased persons, where the amount involved is small
(usually under $250) to the nearest relative, upon estab-
lishing satisfactory proofs, and usually with the provision
that it shall be applied on the funeral expenses. Frequently
the undertaker's receipt is required also.

The Law.

Before seeking to justify tliis practise, or even to ex-
plain it, let us inquire for a moment into the legal status
of the burial expenses of a deceased person. Let it be
clearly understood at the beginning that in no case where
other estate has been left, or where a will has been made, or
regular administrator appointed, should moneys be paid
without requiring letters of authority. But where the
parties and the circumstances are known to the bank, or
well authenticated, the risk is practically nil.

It is an accejDted principle of law that the expenses of
suitable interment of a decedent's remains have priority
over every other claim against the estate; indeed, the stat-
ute provides that the representative shall not be allowed
for the payment of any other claims or debts upon his
accounting until the funeral charges are paid. * * By
whomsoever the duty is performed, the estate of the de-
ceased is ultimately liable to defraj?" the necessary reason-
able expenses of the burial. * * It seems to be settled
that the reasonable and necessary expenses of interring the
body of a decedent are a charge against his estate, though
not strictly a debt due from him. * * Formerly one
having a claim for funeral expenses was not considered a
creditor of the estate and could not enforce payment in the
Surrogate's Court. But the former distinction no longer
obtains, and he now is given a remedy for the collection of

450 THE SAVINGS BANK AND ITS PRACTICAL WORK

his claim against the representative directly. The statute
provides that every executor or administrator shall pay
ont of the first moneys received the reasonable funeral ex-
jjenses of the decedent, and the same shall be preferred to
all debts and claims against the deceased. If the same is
not paid within sixty days of the grant of letters testament-
ary or administration, the person having claim for such

$ 18

Treasurer of the Albany County Savings Bank^

Pay to the order of Undertaker,

on account of the Funeral Expenses of

who died at

on the day of 18...., the sum of

dollars, on the account

of the said deceased, as per accompanying Pass-book. No

which is hereby surrendered.

In presence of

of the said

deceased.

Note. — This form of draft is to be used only in cases where the
amount at the credit of a deceased person does not exceed $100, and is to
be signed by the nearest surviving relative.

FOn.M 131. ORDER FOR PAY3IEXT TO UNDERTAKER ON DECEASED PERSON'S ACCOUNT.

funeral expenses may present the same to the Surrogate's
Court with a duly certified petition praying that the admin-
istrator or the executor may be cited to show cause why he
should not be required to make such payment, etc. (New
York Code Civil Procedure, § 2729 Sec. 3.) In respect to
the reasonableness of the expenses they must be in keeping
with the standing and station in life of the deceased. The
amount of the funeral expenses that will be deemed rea-
sonable or necessarv for suitable burial of a decedent must

THE ACCOUNTS OF DECEASED PERSONS 451

be considered generally with respect to his degree or quality.

But as against creditors, the amount of his estate is also
to be considered. As respects those who are entitled to the
estate, as legatees or next of kin, the executor or adminis-
trator, while he is not justified in an extravagant outlay, is
not restricted to the bare necessities of the case as he is
where the rights of creditors intervene. And as to the
expenses incident to the death of the party, "The expense
of a special messenger to the family of the decedent, to in-
form them of his decease, may be allowed, where he dies
abroad, and such prompt communication is necessary for the
security of the estate, for the burial, and to avoid expenses
of delaj^ So, the expense of accompanying the body, and
of a copy of the verdict of the coroner's jury, if such copy
be necessary to the burial. In some of the States, though
not in tliis (New York), the expenses of the decedent's
last sickness are given a preference, with the funeral
charges. JMourning for the family of the testator is not a
funeral charge, strictly speaking, although charges therefor
have been allowed in some of the States and in two cases
allowed here." Selected from "The Law and Practice of
Surrogate's Courts in New York," Redfield, pp. 435-440.

In Patterson vs. Patterson 59 N. Y. 574, the court
said: "The duty of giving decent burial to a deceased testa-
tor who leaves some estate devolves upon executor. The
necessary and reasonable expenses thereof are a charge upon
the estate and have a preference over all other debts against
it, as part of the expenses of the trust. And the law implies
a promise on the part of the executor to pay one who in
absence or neglect of the executor from the necessities of
the case, incurs and pays such expenses."

The only case to legally determine this point that has
yet come to the author's notice is that of Schofield against
the East Brooklyn Savings Bank, tried April 6th, 1911,
in the ^lunicipal Court of New York. The facts, briefly
stated, were as follows: The bank having an account of
$115.60 belonging to a deceased depositor, paid over the
same to the undertaker, taking his receipt and assignment,
which amount was barely sufficient to pay the cost of bin-ial.
Subsequently a will turned up and the executor sued the
bank for the money. . The bank won its case under the rules
above given, the attorneys for the bank citing Redfield as
above quoted, together with Section 2729 of the Code.

452 THE SAVINGS BANK AND ITS PRACTICAL WORK

INDIVIDUAL ACCOUNT. WITHDRAWAL.

DEPOSIT $250 OR LESS

^tatc of N?ui fork.
(Coutiti; of

being duly

sworn^ says, that resides at .

and is by occupation a and was

acquainted with the depositor named

in Bank Book No of The GREENWICH SAVINGS BANK,

and was a of the said depositor.

That the said depositor died on at

leaving no Will, and leaving an estate not exceeding in value the

sum of $ ; that the said depositor at death

resided in the County of in the State of

that no letters of Administration have been granted in any State,
or by any Court or Tribunal, upon the personal estate of the said

deceased depositor, and that estate is so small that no

application for such Letters is intended or needed; that the said de-
positor left no debts of any considerable amount, and that the money
in said Bank Book mentioned, deponent desires to withdraw

funeral expenses of said depositor, which exceed

the balance due said account wliicli. . . .verily believes to be

That no person other than deponent has or makes claim to
said money.

Sworn to before me this

flay of 19

' Payment approved,

Pres't

Treas.

FORM 1:5^. AirU)AVIT I OH WITHDRAM'AI. OF SMALL BALANCE WITHOUT ADMINISTRATION.

THE ACCOUNTS OF DECEASED PERSONS 453

In the spring of 1911 the savings banks of New York
were asked to answer a set of ten questions relative to lost
books and deceased persons' accounts, and the replies indi-
cated a wide diversity of ideas on these matters, and yet a
fair degree of uniformity. And representing the greatest
aggregation of savings in this country, the methods of these
banks may well be taken as a criterion in this respect.

Accounts of Deceased Persons Where the Balance

Is Small.

As a general rule savings banks in New York seem
willing to waive their legal rights in cases where the
amount on deposit represents practically the entire estate,
and endeavor to make the withdrawal of the fund as easy
and expeditious as possible, although twenty per cent, of
the banks report that they do not pay such funds without
administration.

The general custom followed in the majority of cases
is to first become satisfied that no other estate is left,
and to pay upon signature of the next of kin or all the
heirs, usually drawing the check to the undertaker, the
bank taking an assignment of his claim. If the amount is
insignificant, say under $25, payment is often made upon
receipt of the next of kin or heirs. Accounts of children
are often paid to the parent.

The amount which will be paid upon such conditions
varies greatly. Some banks, not many, will waive adminis-
tration in instances where the estate is as large as $300, two
banks at least having provision in the by-laws permitting
payments as high as $500, although one bank in practice
limits the amount to about $100, which is the rule in the
majority of cases. Many banks have no arbitrary limit,
but will not pay more than the amount of the undertaker's
bill in any instance, and this would seem to be the com-
mon custom, the idea being that there must be no residue
after paying the undertaker to open the question as to
whom it belongs. The amount thereof must not be ex-
cessive, but may be in keeping with the status of the
deceased in life. Banks generally consider each case on its
merits and guide themselves accordingly. Affidavit is often
taken that no other estate is left and no other debts remain
unpaid. Bond of heirs or undertaker is sometimes taken as

454 THE SAVINGS BANK AND ITS PRACTICAL WORK

DOLLAR SAVINGS BANK OF THE CITY OF NEW yORK

THIRD AVENUE and 148th STREET.
NEW YORK.

For the withdrawal of funds standing in the name of a de-
ceased depositor, if the estate of the deceased is small, payment
may be made by the Bank as follows:

1. The burial of the deceased must be completed and
tlie undertaker's bill made out in full, but not paid.

2. The nearest heir-at-law, or relative, should call at the
Bank bringing the pass book and the undertaker's bill, make
affidavit of death and request payment of the decedent's ac-
count to the undertaker, also sign an order on the Bank in
favor of the undertaker. Blank forms are furnished by the
bank.

3. If there are other near heirs or relatives, their signa-
tures are required to the affidavit and request, and should be
obtained by the depositor.

4. After all the signatures to the affidavit and request
are obtained, the deponent and undertaker should call together

at the Bank, or the undertaker may come alone, bringing the
pass book, affidavit, undertaker's bill and order, when the ac-
count will be closed and tlie money paid to the undertaker to

be receipted on his bill.

FORM 133. IKSTRUCTIOXS FOR WITHDRAWAL ON DECEASED PERSON'S ACCOUNT WITHOUT

ADMIS'ISTRATION.

THE ACCOUNTS OF DECEASED PERSONS 455

an extra precaution. Some banks refer the matter to the
board, others to the attorney.

The procedure in one bank is indicative of the general
custom: (1) Assurance that there is no other estate; (2)
Affidavits of claimants and waiver of relatives; (3) Check
signed by relatives to order of undertaker (sometimes in-
cluding the doctor) who file duplicate bills, receipted, run-
ning to the bank; (4) Assignment of claims of the latter;
(5) Death certificate. Justification for the above is found
in Section 2729 of the Code of Civil Procedure, already
quoted.

In the application to draw, without administration, the money ot deceased
persons deposited in The Greekwich Savings Bank, New Yorli, the following
questions must be answered:

Did you know the said

and how long have you known him?

Were you related to, or connected by marriage with him, and how?

State how you know the facts herein stated by you.

State how you know or believe the said person to be the same person who is
named in said Bank Book as the depositor?

Has the said died ? When and

where did he die?

Where did he reside at his death

Did he leave any Will? What effort has been made to ascertain if he left a
Will?

Have Letters of Administration upon his estate been granted by any authority
in any State or County?

Did he leave any real estate; if so, what, and where and what was its value?

What amount of personal property did he leave, and if so, of what does it
consist?

Was he indebted, and in what amount?

Has such indebtedness been paid?

Have his funeral expenses been paid? If so, to whom, when and to what
amount?

456 THE SAVINGS BANK AND ITS PRACTICAL WORK

Did he leave any widow or husband? State the name and residence of him
or her?

Did he leave any children, and any descendants of deceased children? If so,
state their names, "the ages of those under twenty-one years of age, and their
residences.

(If the decedent left no descendants). Did he leave any father? If so,
state his name and residence.

(If the decedent left no descendant or father). Did he leave any mother,
brother, sister, or children of a deceased brother or sister? If so, state their
names and residences, and who of them are under twenty-one years of age.

(If the decedent left no widow, descendant, parent, brother, sister, nephew or
niece). Did he leave any great-nephews or great-nieces? If so, state their names,
ages and residences.

(If the decedent left no widow, or any of the relatives above named). State
the names and residences of all the relatives of the decedent who are of an equal
degree of relationship to him.

Has a guardian been appointed by any authority, or in any state or county
for any of the persons above mentioned who are under twenty-one years of age?

Death or Depositor in Single Name Account.

The custom in practically all banks in New York State
in cases of death of depositor in single-name account, is to
pay the legal representative upon due proof of death, which
may either consist of death certificate or other acceptable
proofs, together with authority to receive payment (letters
of administration or executorsliip) mth waiver from state
comptroller.

In small places where death is a matter of common
knowledge, the death certificate is not often required, the
surrogate's certificate being generally held to be sufficient
proof, as is f recjuently the case in banks in large cities.

As elsewhere stated, in cases involving amounts too
small to warrant administration, the common custom is to
pay the undertaker or nearest relative, upon proof that no
ether estate is left, and under safeguards to be found above.

Death of One Party to Joint Account.

A majority of the banks pay the survivor in joint ac-
count, upon proof of death of the co-depositor, with waiver

THE ACCOUNTS OF DECEASED PERSONS 457

of the comptroller. One bank pays survivor upon giving
bond; four banks will not take joint accounts; five require
proof of death and waiver if the account is payable to both
parties upon both signatures; one bank requires administra-
tion ; two banks pay according to the agreement entered into
when the account was opened; one pays the survivor where
the account is in the names of husband and wife. If notified
of the death, one bank requires comj^troller's waiver, but
does not ask if co-depositor is living. In making payment
upon joint accounts, some banks require the one drawing to
state if the other is living or not, and some forms have this
provision.

Death of Both Parties to Joint Account.

Fifty-seven banks pay to the estate of the survivor in
cases of death of both parties in joint account. Proof of
death of both is required to determine priority of death,
together with the usual letters testamentary or of adminis-
tration, with waiver of the state comptroller. Two banks
require administration on both; one bank pays to the legal
representatives of both, to share the estate; four banks do
not take joint accounts; five have had no experience; four
refer such matters to the attorney, while one bank opens
joint accounts only with husband and wife or blood rela-
tives, while a few take bond of indemnity in certain cases as
an extra precaution. The rule in New York would there-
fore seem to be, to pay to estate of last deceased upon
determination as to priority of death and certificate of
authority to receive payment and release from the comp-
troller.

Death of Trustee in Trust Account.

Savings banks in New York quite generally seem to
recognize the fact that trust accounts in these institutions
are usually self -constituted trusts, and at the death of the
trustee the fund should go to the beneficiary. Many banks
have special forms for opening trust accounts, and stamp
an agreement to this effect upon the pass book. This is in
keeping with the rule in the Totten Case (177 N. Y., 112)
and section 144 of the Banking Law.

A majority of banks report that they paj^ to the

458 THE SAVINGS BANK AND ITS PRACTICAL WORK

DOLLim SAVIK6S BANK OF THE CITY OF NEW YORK

THIRD AVENUE and 148th STREET.
NEW YORK.

For the withdrawal of funds standing in the name of a de-
ceased depositor, if Letters Testamentary or of Administration are
granted in this state, the following doLumtnts will be required:

1. The pass book.

2. Certificate of recent date from the Clerk of the Surrogate

Court, showing the appointment of the Executor or Ad-
ministrator.

3. Waiver to claim for Transfer Tax from the State Controller

in Albany or his receipt for the tax. The Waiver may be,
and usually is, obtained from the Attorney for the State
Controller, Mr. John S. Jenkins, 16.5 Broadway, New York.

4. Receipt for balance of the decedent's account signed at the

Bank by the Executor or Administrator; or the amount
may be collected thru a Bank by a draft, signed by the
Executor or Administrator as such, if the signature is
guaranteed by the Collecting Bank.

Letters Testamentary or of Administration granted in another
State or in a Foreign Country are of no force in New York. In
such cases Ancillary Letters of Administration should be obtained,
and a certificate of such presented to the Bank instead of the
second item above.

Or, should it be impracticable to obtain Ancillary Letters as
above, the Bank may a*ccept the following:

1. The pass book.

2. Certificate, as above.

3. Waiver, as above.

4. Assignment of Claim for balance of decedent's account by the

Executor or Administrator (signed as such) to a resident
of the State of New York, acknowledged before a Notary,
with the County Clerk's certificate of the Notary's signa-
ture, or acknowledged before a United States Consul.

5. Receipt at the Bank from Assignee, or the amount may be col-

lected thru a Bank by a draft (signed as Assignee), if the
signature is guaranteed by the Collecting Bank.

Note. In case of Letters of Administration, all the adminis-
trators named are required to sign.

Executors, Administrators or Assignees should be identified
at the Bank, or payment will only be made by check.

FORM 134. INSTRUCTIOXS FOR WITHDRAWAL OF DECEASED PERSOX's ACCOUNT.

THE ACCOUNTS OF DECEASED PERSONS 459

beneficiary upon proof of death of the trustee, which proof
usually consists of the death certificate, or other acceptable
evidence, identification of the beneficiary, and comptroller's
waiver. Eight banks merely state that they pay the bene-
ficiary, and the presumption arises that they assure them-
selves of the death of the trustee and identity of the bene-
ficiary, and if they do not, they should obtain the waiver.
Four banks do not pay the beneficiary if a minor, and either
hold the fund until majority of the beneficiary or pay
to a guardian. Some require proof of relationship, or proof
that the funds belong to the beneficiary; two banks Mill only
take legal trusts ; four require a new trustee to be appointed
(how is not stated) and a few will not open trust accounts
at all.

Death of Beneficiary Before Trustee.

Twenty-two banks report that they make payment to
the trustee in cases where the beneficiary dies before the
trustee, presumably without further inquiry, under the rule
that the trust is a tentative one and the trustee has sole
control during life, and the death of the beneficiary does
not alter the status of the account or the right of the trustee
to withdraw at will.

Twenty-one banks report having no fixed rule in this
regard; six pay the trustee upon waiver; three upon proof
of death; three require administration; three require the
trustee to close the account; one will transfer to another
beneficiary upon proof of death of former beneficiary; two
banks will not transfer such accounts; one pays to the estate
of the beneficiary; one requires the rights of the parties to
be established; and one bank does not take trust accounts.

Death of Both Parties to Trust Account.

Over thirty per cent, of the banks pay to the legal rep-
resentative of the last deceased where both parties to a trust
account are dead, depending upon the proofs of death to
determine priority of death, accompanied by letters testa-
mentary or of administration, and waiver.

One bank requires proof of death of both with waiver,
and pays to the legal representative of either, but endeavors
tc secure the consent of all parties. Fourteen banks pay

460 THE SAVINGS BANK AND ITS PRACTICAL WORK

to the executor or administrator of the beneficiary upon
waiver and death certificate of the trustee. (This practice
no doubt is based upon the theory that the trust was a legal
trust and the rights of the beneficiary became vested in his
representative.) Two banks require proof of death of both
parties and ordinarily pay to the estate of the beneficiary,
but circumstances might warrant payment to the estate of
tlie trustee. Two pay to the estate of the trustee, presum-
ably upon the ground that whatever interest the beneficiary
had in the account could be collected from the estate of the
trustee. One bank requires administration upon both
parties. In one case, if the beneficiary dies first, the bank
will be governed by conditions; ordinarily payment is made
to the legal representative of the trustee and the bene-
ficiary's interest must be collected from him. One bank
states: "If the trustee dies first, we would pay to the estate
of the beneficiary upon proof of death of trustee; if bene-
ficiary dies first, we would pay to the estate of the trustee;
if both should die at the same time, as in accident, the mat-
ter would be referred to the court."

Accounts of Deceased Persons in Other States.

Banks in New York do not, as a rule, pay upon letters
issued in other jurisdictions, the common custom being to
require ancillary letters where the amount involved is of any
considerable size. Some banks, however, accept foreign let-
ters upon certificate to the effect that no letters have been
issued or applied for in New York. A few banks honor
letters issued in near-by states, while others accept foreign
letters if accompanied by comptroller's waiver. Bond of
indemnity is frequently required to guard against the risk
attending the pa^^ment under foreign letters.

The procedure in cases not coming under the above
general rules may be stated as follows:

One of our largest banks only requires ancillary letters
in cases where they are issued in a foreign country. An-
other, if the amount is small and no domestic debts are left,
honors the foreign letters; in large amounts ancillary letters
are required.

A frequent custom is to honor assignment to a citizen
of New York, accompanied })y waiver, sometumes requiring

THE ACCOUNTS OF DECEASED PERSONS 461

in addition the death certificate, certificate showing that no
letters have been granted or apphed for in New York, and
the draft signed by both the legal representatives and the
assignee. Quite commonly, in cases where the amount is
small, the foreign letters are honored.*

*Paniphlet issued by the Savings Bank Section, American Bankers' Asso-
ciation, and prepared by the author. '"ui.c™ asso-

CHAPTER XXIX
LOST PASS BOOKS

A^o single feature of savings bank management is at-
tended Math more petty annoyance than the matter of lost
pass books, unless it be the payment of balances due de-
ceased depositors, where the amount is small and no other
estate is left. And dealing, as it does, largely with the
working classes, and those having inadequate facilities for
keeping such things safely, lost, stolen and destroyed books
are to be expected. Not wishing to put the depositor to
undue annoyance and delay, and at the same time to safe-
guard the bank against double payment, the problem re-
solves itself into finding an easy, yet safe, method for
making such payments.

As a matter of fact and experience, the majority of
the books reported lost are merely mislaid, and few are
stolen or hopelessly lost. The depositor, anxious to avoid
the delay and annoyance caused by the loss, is usually em-
jjhatic that it is a hopeless case, and cannot see that the
bank runs any risk in paying him at once; but there are
cases where the book is inadvertently burned, or destroyed
by cliildren, when nothing is gained by delay except com-
pliance with a custom. And where such is the case, the risk
is nil. But where it is a case of theft or carelessness, risk
no doubt attends such payment, and due care should be
used. A peculiar case of a lost book occurred some years
ago, when a bank book in the safe of a brick maker was
carried out into the Hudson River by a landslide and buried
under tons of clay. Recovery was, of course, impossible,
and payment promptly made on bond, but after fifteen
years, the safe was uncovered by the action of the tides and
the book was found to be intact and still legible.

There are several cases in the New York courts that
have arisen tlirough lost and stolen books, one of the most
peculiar of which was that of People vs. Third Avenue
Savings Bank (New York Savings Bank Cases, p. 105).
It seems that in selling a stack of hay on a farm of a convict
in Sing Sing prison, a bank book was found at the bottom

LOST PASS BOOKS 4>63

in a piece of stovej)ipe. After the death of the convict the
book was turned over to the administrator, and demand
made upon the receiver of the bank for the dividend due.
A book, an exact dupKcate of the one found in the hay
stack, was produced by the receiver, showing that the
original had evidently been reported lost or stolen and a
new book issued. Had not the receiver been able to show
due care in payment, doubtless the case would have gone
against him. The case of Schoenwald vs. Metropolitan
Savings Bank (New York Savings Bank Cases, p. 49)
arose from a stolen book, as did also that of Kenney vs.
Harlem Savings Bank (New York Savings Bank Cases,
p. 118) and Wall vs. Emigrant Industrial Savings Bank
(New York Savings Bank Cases, p. 113).

The IjEgal Aspects of Lost Books.

It is practically the universal rule to require immediate
notice of loss or theft of a savings bank book, and most
banks have this plainly stated on the cover of the book.
And the depositor is very quick to do so; but, in cases of
theft, such notice cannot, of course, be given with the same
despatch as the loss in other ways. As a matter of law,
such notice is required. Sullivan vs. Lewiston Savings
Bank, 56 Me. 507; Donlan vs. Provident Savings Institu-
tion, 127 Mass. 183; Burrill vs. Dollar Savings Bank, 92
Pa. 134; Kelly vs. Emigrant Industrial Savings Bank, 2
Daly (N. Y.) 227. The reason for this rule is, that dis-
regarding the rule, the depositor cannot recover anything
if the bank should pay in good faith and with proper care;
such care to be based upon the surrounding circumstances.
Smith vs. Brooklyn Savings Bank, 101 N. Y. 58; Levy
vs. Franklin Savings Bank, 117 Mass. 448; Goldrick vs.
Bristol Co. Savings Bank, 123 Mass. 320. After giving
the notice of loss, he can demand liis deposit; though the
bank is justified in requiring him to give, for its protection
before paving, a bond of indemnity. Wall vs. Provident
Savings Inst., 3 Allen (Mass.) 96 and 6 Allen 320;
Mitchell vs. Home Savings Bank (New York Savings
Bank Cases, p. 102) . Such a requirement must be enforced
reasonably, and it cannot be used as a means to confiscate
one's property. A deposit, therefore, cannot be ^dthheld

464. THE SAVINGS BANK AND ITS PRACTICAL WORK

L05T.

Bank Book ^Bo. ,..,

East Brooklyn Savings Bank,

643 MYRTLE AVE., BROOKLYN, N. Y.

Payment Stopped. Please Return to Bank.

FOBM 135. ADVERTISEMENT OF LOST PASS BOOK. (tHIS IS GIVEK TO DEPOSITOR TO

TAKE TO NEWSPAPER.)

from a depositor who can prove the loss of his book, yet is
unable to give the bond. Wahrus vs. Bowery Savings
Bank (New York Savings Bank Cases, p. 101) ; Wagner
vs. Howard Sav. Inst. 52 N. J. Law 225. To withhold
payment from such a depositor would be "confiscation."

LOST or STOLEM-Pass-Book No.Z'^7_7iof the CITIZENS'

SAVINGS BANK. All persons are cautioned against purchasing or
negotiating the same, and any person having a claim to said Pass- Book
is hereby called upon to present the same to the Bank on or before the

_y <^/C!r day of_^?^^«=r<:^^-rv ^ ig/-^, or submit to having the

Pass-Book declared cancelled and extinguished, and a New Book issued
in lieu thereof.

FORM 136. ADVERTISEMENT OF LOST BOOK, TO BE TAKEN BY DEPOSITOR TO NEWSPAPEB.

And like\vise, when the bank has kno^vn for many years
of the loss of a depositor's book, it is justified in paying
the deposit to his executor without requiring him to give
bond of indemnity. Mills vs. Albany Ex. Sav. Bank (New
York Savings Bank Cases, p. 104). Moreover, a depositor
who is physically unable to give notice of loss on the day

LOST PASS BOOKS

4C.^

of its occurrence may still hold the bank liable should it
immediately pay the deposit to a thief. Wegner vs. Second
Ward Savings Bank, 76 Wis. 242.

Again, if a bank has no by-law requiring a depositor to
give notice of the loss of his book, and it is stolen and pre-
sented with a forged order, and his deposit is paid to an-
other, nevertheless the bank is still liable to him. The
liability of the bank rests entirely upon contract. No ques-
tion of negligence, either of plaintiff or of the bank officials,
is involved. The contract was the ordinary one of debtor

ACC'T OPENED

/7Z>^ / o o ^

'then lived

' Sc

married or single

LOST BOOK

present balance

* Coo.

father and mother

^i-ti-jUyl^

'now lives

occupation

COuaJ^ (^T-i«-^.^

DATE OF NOTICE

^t^ f

a. f 1.

FORM 137. ^DETAILS OF ACCOUNT IN MATTER OF LOST BOOK.

and creditor. Ladd vs. Androscoggin Co. Savings Bank,
96 Me. 520. (BoUes Modern Law of Banking, p. 648 and
authorities cited.)

The Procedure.

Upon receipt of notice of lost books, the first step is, of
course, to place a "stop payment" order against the account.
Some banks file a card to this effect in the card signature
cabinet; others make notation on the ledger, or both. The
depositor must then be placed in position to obtain another
book or the money upon proceedings satisfactory to the
bank. In some States, as will be seen presently, this is a

466 THE SAVINGS BANK AND ITS PRACTICAL WORK

Esrm 84.]

Office B, 26 S. Fifteenth St Office C, York and Front Sts.

THE WESTERN SAVING FUND SOCIETY

OF PHILADELPHIA
1000 WALNUT STREET

C. STUART PATTERSON. PrcsiDInt WILUAM K RAMBOROER. TrcaAUMK amO ScomTAMT

ROBERT J. 6RUNKCR ASSibtawt Tr£asurcr FREDERICK F. HALLOWECL, Oomptmoixiii

Lost Book Indemnifying Receipt

Received, of tb^ Wtsftm

Saving Tund Sccfetp of Philadelphia, ■.

balance of my deposit in bank book No which'

has been lost or destroyed, and cannot be delivered to the said
Society, as the rules thereof require, and I hereby agree to
indemnify the said The Western Saving Fund Society of
Philadelphia from all lost by reason of such payment to me
without the said book .

FORM 138. LOST BOOK IKDEMNIFYINO RECEIPT.

matter of law, but in others, as in New York, this matter
is left to the individual banks.

The methods in vogue are three: advertising, bond of
indemnity, affidavit of loss. Some banks use but one of the

LOST PASS BOOKS . 467

three, others a combination, and still others all three. Where
the amount is small, equity and justice demands a speedy,
inexpensive procedure. The following section of the by-
laws from a savings bank on Long Island covers this point
Avithout hardship or risk. "If a pass book is lost, the de-
positor should immediately notify the bank, and if after a
reasonable time the book is not found, and the balance
thereon is not more than $10, a receipt shall be taken for
the balance, stating that the book is lost. If the balance
is more than $10 and not over $50, the depositor shall make
affidavit as to the loss of the book and give a receipt for the
balance. If the balance is more than $50, the depositor shall
execute to the bank a bond of indemnity for twice the
amount of the balance with sureties to be approved by the
officers.* In all cases of lost books the accounts shall be
closed and the balance if not withdrawn shall be transferred
to a new account under another number." Another: "If
a savings bank book be accidentall}^ lost or destroyed and
the owner makes affidavit of that fact and of its circum-
stances, and gives a receipt for the money drawn on such
account, such money will be paid unless the case be such
as to afford reasonable ground of suspicion of fraud."

In most of the New England States the procedure is
covered by law. Thus in New Hampshire:

"Whenever the deposit book of a depositor in a savings
bank, or savings institution, is alleged to be lost or de-
stroyed, and the depositor shall request such bank or institu-
tion to issue to him a duplicate thereof, he shall, if such
bank or institution so requires, advertise such loss or de-
struction by publisliing a notice thereof containing a descrip-
tion of such book by its date and number, together with
the name of the bank or institution which issued the same
three weeks successively in two newspapers, one published
in the vicinity of the residence of the depositor, and the
other in the vicinity of the place of business of such bank
or institution and by posting a like notice at the office of
such bank or institution.

"If no other person shall make claim to such book or
to the deposit thereunder within three months after such
publication and notice, such savings bank or savings institu-

*The custom of requiring bond of indemnity is rapidly dying out, and
proper advertisement and affidavit are being substituted.

468 THE SAVINGS BANK AND ITS PRACTICAL WORK

State of .^^^:^'i>i>^ ) ^--^z / s ,.

y ^:^ 55. „^;^^'»— ^ -Z-2- 190/ y-

County oSr'^nkx^-^'^^^^^z^ ) ^^ '^

/ . / • ^2^ C^ ^?r?<-r<-^ being duly sworn, doth depose

and say, 1 reside at ^ -^ ^^<^.

and 1 am a depositor in THE NORWICH SAVINGS SOCIETY, Norwich,
Connecticut, having received from the said Society a ,bool< containing the
amount of my deposit, and numbered . ^^^ cf ^^. That on or about
the -_-^^ik^ /"-^ . - day of ij^*^
book was ,^'C^<?-tfi^ ^^r .«— -*^'

_i9(// the said

that I have made diligent search for said book and have been unable to find it,
and that 1 am ignorant of the whereabouts of said book ; that the same is out
of my possession, beyond my control, and tljat the loss of said book was
accidental. .

I have not given, transferred nor assigned said book to any person or
persons, nor have 1 given any person or persons a draft or other authority to
draw on my said account, nor is said book pledged as security or otherwise.

CTc::^

Subscribecl and sworn to before me |
this / ^-..day of^^^--'--^ . igy V4

'Ndhiry Public.
FORM 139. AFFIDAVIT OF LOST BOOK.

tion shall issue to the depositor a duplicate of such book,
which shall contain a complete statement of the depositor's
account, and shall state that it is issued in lieu of the one

LOST PASS BOOKS 469

alleged to have been lost or destroyed; and such savings
bank or savings institution shall not be hable thereafter on
account of such original book.

"If any adverse claim shall be made to such original
book or deposit before a duplicate book has been issued, or
if such savings bank or savings institution shall refuse to
issue a dupHcate thereof, such claimant or depositor may
petition the superior court for rehef and such court may
after due notice and hearings make such orders and decrees
in the premises as justice shall require."

In Connecticut: "When any pass book issued by a
savings bank or other institution for savings has been lost
or destroyed, the person in whose name such book was
issued, or his legal representatives, may make written appH-
cation to the bank which issued such pass book for pay-
ment of the amount of the deposit represented by said book
or for the issuance of a duplicate book therefor, and shall
give pubHc notice of such application by advertising the
same at least once a week for three weeks successively in a
newspaper published in the town in which such bank is
located, or if no newspaper be published in said town, in
a newspaper having a circulation in said town. If said
book shall not be presented to said bank within six months
after the date of the first avertisement, as aforesaid, said
bank shall, upon proof that notice has been given as here-
inbefore provided, pay the amount due on said book or
issue a dupHcate therefor, and upon such payment or deliv-
ery of a new book all Uability of the bank on account of
the original book shall terminate." Public Acts of 1907,
Chapter 130. Massachusetts and Maine statutes are similai;
except that the period is three months.

In many instances both advertising and indemnity bonds
are required, as, for instance, in Pennsylvania: "If a de-
positor shall lose his or her pass book, immediate notice of
the loss must be given, and a new book will be issued to the
depositor upon satisfactory proof of identity, and after the
depositor shall have advertised the loss of the book in one
daily newspaper and after the depositor shall have given
to the society satisfactory indemnity against any loss to
the society in respect to the book so lost."

The notice usually states that book No. — is lost or
stolen, that payment has been stopped, and calls upon all
parties having claims against said book to present tfhe same

470 THE SAVINGS BANK AND ITS PRACTICAL WORK

AiFLDAVIT.

<Jo S6l/KMin.v SwBAR that i am

the deposi-
tor and only lawful owner of Bank-book No.
A ^ < 7 <S..^ ..issued by the Union Dime Savings
Bank on or about ^sfLt-^lL—f o f .f O J

that 1 have not in any way disposed of
said bank book, nor of my interest in the de~
posits therein: thai said bank-book has been

and I am unable to produce the same.

ANt), if the Union Dime Savings Bank shall

transfer to another book, or shall pay to me

•S'o
or to my order % / ,2 7 . , the amount of

said deposits; then I, the depositor, and 1,

as surety, da jointly and severally agree
to hold the Institution harmless from any
claim thereon, and to ra«i<y to it any moneys
which it may pay by reason of any such claim >
and I, the surety, do solemnly sweartbat
I am worth $ /o o • . in property not
exemj>t. tr^iTT M^CUtlon.

Deposit)

Surety

Swom^ subscribed, and acknowledged before

me, this. / P dav of J^ti^Srf^^fr^* ,

>9'2-. by the depositor and by the surety.

Notary Public
fy and'CautuyafNcw Voik.

FORM 140a.

roBM 140b.

TRANSFER,

ON AFFIDAVIT OF LOSS OF BOOK.

_^X_7-

Cents

BookM. '^-P^9 ^7 ^

Present Address: ■ ^^ ^ (f~^ 1^

— : - Daie,

<-^ 6 3 O

Transf. from

V o^ 7 6y

Interest from

FORM 140c.

FORMS 140a, 140b, 140c. — forms used by union dime savings bank in connection

WITH LOST BOOKS.

LOST PASS BOOKS 471

within a stipulated time, after which the old book will be
declared extinguished and new book issued, or payment
made. Other banks simply state that the book is lost and
payment has been stopped, finder to return to the bank. It
is usual to wait a certain length of time before making
payment, or issuing new book (which amounts to the same
thing), but the period of three and six months, as required
in New HaAij)sliire and Connecticut, respectively, would
seem unnecessary and burdensome upon the depositor. Affi-
davit of loss is usually taken, in all instances as a matter of
precaution, which is wise, as the average man would not
perjure hmself in such a small matter. An instance of the
latter came to the writer's notice a short time ago. A de-
positor, wishing to draw money, was unable to obtain his
book from his aged mother, who was safeguarding the prop-
erty of a spendthrift. He claimed the old lady had inad-
vertently burned the book while putting coal on the fire.
He was willing to pay the advertising fee (fifty cents), and
the advertisement was duly inserted. At the proper time
he was given the affidavit to have signed by his mother,
which she naturally refused to do, as the book had not been
burned, in consequence of which the money was not paid.
In small amounts advertising and affidavit are ample pro-
tection, but, in large matters, satisfactory bond should be
insisted upon.

In an investigation covering this question, made by the
Committee on Methods and Systems of the Savings Bank
Section of the American Bankers' Association, in March,
1910, and covering 1,700 banks, from which over 600
replies were received, it was found that four methods for
protecting the banks in case of lost or stolen books are
in common use, viz. : Affidavit of loss ; bond of indemnity ;
advertisement of loss; notice of loss. Some banks combine
two or more of these, while others use but one. INIany com-
mercial banks issue duplicate book on statement of loss.
Some savings banks do so upon being satisfied that a
thorough search has been made for the missing book, but
these are not common. The practices most in use may be
classified as follows: 313 banks do not cover this matter
in their by-laws; 205 banks require bond; 185 banks do
not ask for bond; 84 if occasion warrants; 193 banks re-
quire advertisement of loss; 345 do not; 44 under certain

472 THE SAVINGS BANK AND ITS PRACTICAL WORK

circumstances; 474 issue duplicate books; 142 do not; 14 at
times.

Only six banks report charging a fee for lost book,
other than the cost of advertising or drawing the bond,
-which usually costs a nominal sum, but in some cases runs
from $1.00 to $3.00.

CHAPTER XXX

ADVERTISING THE SAVINGS BANK

There are three essentials in savings bank advertising:
First, it must attract attention; every advertisement must
attract attention or it utterly fails; it might just as well not
have been printed. Attention, as St. Elmo Lewis says, is
purely a mental condition, and if the attention is caught, it
means that the advertisement has been so displayed that it

=D®

Your Child's Future

A SAVINGS ACCOUNT opened when your
children are young wiD provide for their edu-
cation and give them a proper ftart in life.
You can open an account with this large safe bank with

nuc nni i ad and upwards.
Unt UULLAn and it will earn

INTEREST

QAd etceScnt m<
arrive at majority
d One DoUar for

t/l BIRTHDAY FUND

lu of providing a too or daughter with an inheritanoe when the?
, on each birthday to place to thdr credit v,ith ihii bank the lum
&ch of the yean they have lived. Theae sumi, with intereA. %vdl
amount in twenty -one yeara to over $300.00, not an inaignificant sum in itietf; and
moA children, knowins that a bank account wai crov,in8 for them, will make con*
timicms cSorta to add to the amounts of their lavinfli, thus swelling the aggregate,
which wcuid enable any young man or woman to A&rt out m a buiiaeM career, well
equipped for succea.

The Citizens Savings ca. Trust Co.

Euclid Ave. near Erie St., CLEVELAND, OHIO

' THIRTY- NINe'mTlLION DOLLARS

T)®

FORM 141. AN ATTRACTIVE AD. APPEALING FOR THE CHILDREN.

has caught the eye and been telegraphed to the brain; that
here is sometliing worth looking into.

Second, it must awaken interest; it must incite inquiry;
it must create a desire to know. Interest is merely sus-
tained attention, concentrated thought; and if your interest
is awakened, the advertisement has accomplished the second
step, and has made an impi'ession upon you.

The third is to arouse to action. Having appealed to
you and interested you, it must lead you to do something;

474 THE SAVINGS BANK AND ITS PRACTICAL WORK

it must persuade you that you want to do or ought to do
wliat the advertisement tells you you should do. It is futile
to mereh^ admire the setting of the advertisement, the catch-
iness of its verbiage, or the brilliancy of its wit; if it does

Brifig Success

Be determined that if your former
practices led to NO savings, you;
new practices shall lead to SOME
saving. That if you former y saved
only a little, you shall now save
more.

Tlie Tnistees of the Enipire
City Sarings Bank have iJe-
clarert ifiterest for the six
mniiths endlcg Dec. SI. lUlO.
at the rate of

Four Per Cent.

;-.cr annum cm nil sxinu fronv
"."i.OO fu $'i.COO.CO. f^yable
laa. 1(1. mil. Money de-
roslted on nr before Jan.-
13 will draw Interest
from Jan. 1. 1011.

Empire City
Savings Bank

231 West 125lh Street

A. T. T1MP30N.

.Sec'y.

Business Men

are invited to open savings ac-
ccomta at this bank. We par-
ticularly invite the accounts of
those who in the future expect
to need the services of a bank
willing to extend credit to
responsible borrowers.

CHARLES S. CASTLE, President

W.M. F. VAN BIJSKIRK, Vlce-Pras.
JAMES M. MILES. Caahlor.

TANDARD TRUST
QISl SAVINGS BANK

^ CapitBl ond Surplus Jl, 250,000

159 LA SALLE ST.

SAVrSOS BAKKS.

Camer I'ierreiiont
aJLd Clinton Streets

Brookljfn Savings Bank

BEPOSITS 46 MILLIONS
Snrplas .January I, 1»11, Uvrr S SlUUons
Interest at the rate of

PER CENT
PER ANNUM

Tvlll be cj'edlted to depositors with this
bank January 1st next, on all sums en-
titled tliereto (payable on and after .Jan-
uary aoitb.l Deposits made on or before
January 10th will draw interest from
January 1st.

BEYAN H. SMITH, President.

EDWIN P. HAY-VARD. (Vunptroller.

LAtTHlS E. SU'fTON, Cashier.

SIXTY-FIVE MILLIONS

FURPI.T'S JAN'y 1, 1911,

OVER EIQHjJIILLIOHS

I!!2 Williamsfjorgh

Broadway and Driggs Ave., Brooklyn

Dcoember 5. 1910.
Kotlce Is hereby given that on and after
the Twentieth day of January. 1911, a Seml-

Annual Interest at the

FOUR

ratp of

PER
CENT.

per annum will ho paid to all depositors ^a
this bank who on tho First day of January,
l^U. may In- entttlc-d thereto.

M-OPoy. dc.iosltcd xin or before Jan'y 1-0, Ui-H. <
viU draw i^tnreSt from Jan'y 1.

'Accounts can be opened by maiL

Send for booklet and -full instructions.

K. B. TIITTLK, President.
WILLIAM K. BLRNS, ( nNhler.
S. M. MKKKKK, Secretary.
Bonk Open Daily, 10 A. M. to 3 "P. M.
On MONUAVS frpm 10 A. M. to 7 P. M.

K>HM I 1 J.- s Wives I1.\NK

ADS. XOT AS KFFF.CTIVE AS THEY MIGHT BE.

ADVERTISING THE SAVINGS BANK 475

not persuade you to do something, it has failed in its
purpose.

Having come to this point it must bring your conviction
to the point of action; and if a bank advertisement has
brought you to the point where you determine to sit down
and ask for information, even to inquiring how to open
an account with the bank, or even persuaded you to save
your money, that advertisement has not been in vain. It
has been well said that an ad. must have a good position to
secure an audience; it must be well dressed to create an
impression; it must contain convincing talk to inspire action.
Attention, impression, action — the ad. that arouses these
three emotions is the successful ad.

Savings Bank Advertising Should Be Educational.

We are well aware how the people were educated dur-
ing the free silver craze, for then the bankers say that it
was essential that the people should be educated in banldng
principles, and it has been said that they literally poured
out millions to properly educate the public on this question,
and it has been claimed that this was the first educational
political campaign since the times of Hamilton, Jackson
and Lincoln.*

Printers' ink plaj'-s an ever more important part in
political campaigns, and the value of judicious advertising
is coming to be recognized in politics as well as in business.
And savings bank advertising must essentially be educa-
tional.

The savings bank has nothing to sell but its services, and
these it offers without money and without price — yea more,
it pays for the privilege of serving; but the general pubhc
does not look upon it in that light, and many do not know
the why and wherefore of the savings bank at all. And all
the advertising sent out should therefore be instructive. The
idea of inculcating thrift must ever be uppermost. The de-
positor should have clearly set before him the fundamental
idea of the savings bank, the value of a reserve fund, the
benefits of saving, the earning power of money; what the
bank aims to do for its people and how it does it; what use

*St. Elmo Lewis before Chicago Chapter A. I. B.

476 THE SAVINGS BANK AND ITS PRACTICAL WORK

Irving Savings
Institution

lis Oiaabcrs St.» New Yorlu

Tb» Trustee of this BAak Iiat* deotixml ja-
ter«at ftt tli« r»t« oC

par uinum on ail mima frors
\\ ta »3,00i>— «nUUe<l theret*
■xn Vt2. SI, IWT. paTibla oa
^r.S af.tr Jan. 10. lWi8. X>e-
poalu made oa or b«Cor« Jaii-
10 will draw tDtsreat from
Jan. l9t.
W. H. B. TOTTEN, pT«<J<!*Dt.
GEOnOE B. DL'NNINO, Secrttary,

THE MANHATTAJT

ftAVJ.NGP INSTinxION,

K08. 644-I4S liROADWAT.

IISTH 8BiU-AN?nrAL DIVIDEND.

lJec«mber 10th. leoT.
1%t Truat»ea of (hla JaetltuUoa bava <]••
claratS Intereat at tho rate Of

FOVR PER CENT,
par aoDum on an tuxus not exce^dlnr t3,000
rttmafaDlnff on deposit darlu tho three or alx
moQtha endlDir on the Slsriiiet.. payable oa
and after Jasuary >Oth, 190~

A^ U. to t p. U. Saturday fro

JOSEPH BIRD, rro«ld«a(.

The Metropolitan Savings Bank.

i uu] 9 Tnino AV lopp Coopor IiuUtuW.)
CHAKTEBi;!) 1S52.

109th DIVIDCKD.

Now Tork^Eoc. 10th, IBOT.
IinXREST JOR THE HAI> YEAR liNDINO
I>ECi:Ml^Ea 31.^T. 1W7. o

FOUR PER GENI. Per Annum

EUTWAHD eHCRER. Secrelary.

Htnny aicaeL riiANK e. vooelX

HKIiRY8!EQSt.aco}
raivATi ■ARKias

Paid-Oa DcpoaiU from $1 to S3,000

«o''°wiT'._ °^^?*"'° "" "^ BEFORE J*N-r
?.?»•.„ ORAW INTEREST FROM JAN Y I
«7m^Jv"„'^°IJV° •■*^*»'-= 'F OES.REO,

o;°rA"u:R?ANi"juLY."" •"='«^" ««"

P«»<>.lr. w.T b« »lih,l,.— , ^ ,|„

yilhou, ,i,i„, ,„,;,. ■'

•10TK:.*'*i)'/nu'l'?." *"* '""^ REOUIRED

wTtmorawau OF o?i>ob';t°'''^°''' ''°" ""

• JiSiaT'/Ji"."!" ^"^ CONDUCT OF ou«
wu^d/^CSS ARE UNDER THE DIRECT SUPPr

u2k??i.»r^^^f'. ''^'' EN-JAOBO IN L«01T.
»«Arr MERCANTILE BNTERPRlSta.

•WTa roa oirovijir.

Hc,M.,» A.M. » gjo P.M.

^•"•Vf A««T. Ca«Hii«

T/ie Bowery Savings Bank,

lis AND 130 BOWEHV

NEW VORK. Df. 1« ><">'•

1 Kml'SDnuAl .llTliI»n« tt tUe r«le of

FflfB-PER CENT.

n«r ftimcnn ft«s been declAr«l' ftnfl will b«.

iredlltJ to df l>o»Uoi» tm «U «mr,« of Jli.OO.

nlilc* «ti»ll B«" '"" il'P»""C'l " !<•"'
U.r« montfi .D tho Ir" U.T o' ^""'Z
Dfit and will b<. liV-iblcoo «ad aflAT
Monilw. J«uu«rj 20111. 1808.

Money <l«poalt«l on ot Otiiin .'aooiity 10
■rill Oni» Interest from January I. IKOB-

'.lOHN'J. SINCLAIR. 1st VlcePrca*.
HENBT A. SCHENCK. 2niJ Vlw Prea'U •
WILLIAM H. Kn'OX. Scoretsry.

THE BANK FOR SAVINGS

IX TUB CITY OF NKW YORK.

wards entitled thereto, and payable on and
after Jan. 20th. 1EK)8. -

ThA dividend will be cr<°Mllte<1 to depositors aa
prlnr^lpal. Januor/ 1st. 1908.

DfposltB made on cr fcpforc January 10th will
dr*w lnter»Bt from January Ist, 1608.

JAMES KNOWLES.

Union Dime Savings Institution

BROADWAY, 31D ST.. AND «TH AVENUE,
GREELEY SQUARE. NEW YORK.

Interest FoUf Per Cent

Per annum from |5 to $3,000. Credited Jaji-
U£.ry lat, payable Jamiary l«th. or any tima
later. CHARLES Z. SPHAOl*B. PpeBldent

FRANCIS M. LEAKE, Treasurer.

■WILUAM G. ROSS, Secretary.

The Brooklyn Savings Bank,

COB. riERRErONT d f IJ.SfO.N STREETS,
BKOOKJ.VN. N. V.

December 14. I60T.
INTBREST AT THE n\1E OF

FOUR PER GENT. PER ANNUM

wi:i b» credited to dcposltora n-lth thla bank.
Jtinuary lat next, on all eums entitled thereto,
(pavabl©_on_ftjid a_fter_January 20lh.)

BRYAN H. ?M1TH. Ppesldent.
FELIX E. FLANDREAU. Caahler.
EDWIN p. MAYaNARD. Coriiplroller.

SEAMEN'S DANK FOR SAVINGS,

1 74 and 76 Wall SL-eet,

1 ■ THE TRUSTEES HAVE ORDERED THAT
J INTEREST be paid to deposUo.s ontltlod thtre-
jnder th» by-lawo, ond In accordance with

pnding Lee, Slat, 1907.

ud the alx months

-,.. -- - -- -<''l!rft *hreo thousantl

dollars at the rate of FOL'A I'ER CENT, per

Payable on end after MonTf^J-. Jan. 20th, 1008.
DANIKL BARNES, PresldeoL
OEOROE M. HALFEY. CBsUler

New York. Dec. 18th, 1907.
I>flpoalL9 jnadc on or before Jan. 10th tUI draw
tntereat from Jan. let.

GREENWICH SAVINGS BANK

H. E. Cor. Rtli At, and 16th St.

INTEREST AT;tHE RATE OF FOUR PER
ClfNT. PER ANNVU will be credited de-
■ >."BIX MONTHS and THREE

3NTHS BNDlSO DEC,
i froni five dol"

1907,

hour?jld dol-
:to under tho by-latr., pa7-

lara, entlTled th<
abls Jan. !0, !90S,

• JAMES QUINLAN, Preeld«nt. '

CHARLE.S M. DIJTCHER, TreM,

•J. HAMPDEN nO^B, Secretary

FORM 143. — SAVIXGS BAXK ADS. PRINT TOO FINE AND CROWDED.
TOO MUCH FOR THE SPACE.

it makes of funds left in it.s care, and the safeguards and
security afforded by it.

Much of this educational work need not be paid for, for
the press is e\'er ready to print interesting items along this

ADVERTISING THE SAVINGS BANK 477

line as matters of news, and our best known savings institu-
tion no doubt occupies its enviable position to-day largely
through the fact that it has received much space in the
press for w^hich it did not pay, and such favorable com-
ments have been its very best advertising medium.

The problem in savings bank advertising is not usually
a question of money, although some bankers hold that a
savings bank has no right to use the monc}'^ of one man to
obtain the money of another; but the question is, how to
do it and where to do it most effectively. Much of our
savings bank advertising is absolutely thrown away. It can
hardly be called charity, because the local newspaper is not
a charitable enterj)rise. We have all w^itnessed hundreds
of dollars contributed to the daily papers with no other
thought than to sustain the local sheet. The same space
filled with bright, snappy, educational talks would have been
much more beneficial, both to the bank and to the reader,
but the trouble has been the bank men did not know how,
and it may be the}^ never gave the matter due thought.

Three Mistakes ix Advertising.

Savings banks everywhere have made three mistakes in
their advertising: First, they have looked upon it as a
necessary evil and have carried a "standing" advertisement
so long in one spot and in one "set-up" that it has become
rooted, and is worth less than the paper it is printed on.
The matter usualh^ inserted is, the name of the bank and
the officers, hours of business and list of trustees, with a few
rules and regulations. Xo one ever thinks of reading this
the second time, and many could say it over by heart from
seeing it so often. The waste of money in tliis line must be
appalling in the course of a year; and it is appalling, for
the same amount of money ought to buy imhlidtij, whereas
it buys nothing.

The second error has been in emphasizing the interest
rate. To advocate the accumulation of principal is much
better education than to emphasize the interest rate: for no
change of interest rate can alter the value of saving as a
habit. It is true this is an attraction, and perhaps one of
the principal ones ; but the saving bank has another function
besides the payment of interest. It is to accumulate prin-
cipal. And tiiis is more important than to pay interest.

478 THE SAVINGS BANK AND ITS PRACTICAL WORK

The savings bank has itself to blame when the depositor
gets wrongful notions about these questions. Take the
New York situation, for example: For upwards of ten
j'-ears the New York banks have been educating their de-
positors to expect four per cent, interest, and four per cent,
is now so firmly fixed in the minds of the savings bank

DEPOSITS

INTEREST

September First

NAUGATUCK
SAVINGS BANK.

Savings Bank
DEPOSITS

NAUGATUCK
SAVINGS BANK.

Each Member of

the Family Should

Have a Bank

account.

«^You cuj t.-'feia with
• dollu

NAUGATUCK
SAVINGS. BANK.

INTEREST BEGINS

NAUaTUCK
SAVINGS BANK.

Four Per Cent

'NAUGATUCK
SAVINGS BANK.

INSDRANCE

NAUGATUCK
SAVINGS BANK.

THE BANK WILL
BE CLOSED

NAUGATUCK
SAVINGS BANK.

$975,000

$373
"$3,000

H. A. DALBV.

WEDNESDAY
NIGHT

NAUGATUCK
SAVINGS BANK.

FOUR TIMES
EVERY YEAR

NAUGATUCK
SAVINGS BANK.

INTEREST BEGINS
OCTOBER FIRST.

Four P.t Cent I.
the Rils. ^

NAUGATUCK

SAVINGS DANK.

DIAMONDS

INTEREST
Your Account

January and July

NAUGATUCK
SAVINGS BANK.

INTEREST

On Mortgages

-NAUGATUCK
SAVINGS BANK.

MONEY

NAUGATUCK
SAVINGS BANK.

$1,856,000

NAUGATUCK
Savings Bank.

CREDIT!

NAUGATUCK
SAVINGS BANK.

Why Save
Money?

.«a

NAUGATUCK
SAVINGS BANK.

Payable to Either

The Survivor.

NAUGATUCK

SAVINGS BANK.

"VT^hy Save
nSiConey?

NAUGATUCK
SAVINGS BANK.

MONEY

NAUGATUCK
SAVINGS BANK.

FoHT Per Cent

INTEREST

Paid on

DEPOSITS.

NAUGATUCK
SAVINGS BANK.

Baok by Mail

NAUGATUCK
SAVINGS BANK.

FORM 144. EXAMPLE OF SPACE EFFECTIVELY USED.

people as a fair savings bank rate that when it becomes
necessary to reduce the interest rate as a matter of good
banking and buikl up surplus account, there goes up a long
find lusty wail when the cut is made. But had these banks
been hammering into the heads of the people the idea that
three and one-half per cent, was a fair rate and the im-
portant thing was the accumulation of principal, the results
both to the banks and to the depositors would have been dif-

ADVERTISING THE SAVINGS BANK 479

ferent; and the banks have no one but themselves to blame
if the people cry out for the full measure of interest, or go
where they can get it.

The third error is in making the advertising spasmodic.
The usual procedure is to advertise the dividend only, twicq
a year for a few weeks. This is very well and good; but if
the educational aspects of the savings bank were held prom-
inently before the people day in and day out throughout the
land, a different generation of dejDositors would soon be
born. Better to have two inches of live matter, well se-
lected, readable and catchy, every day, than two hundred
inches in a special edition.

The argument frequently heard that "ours is the only
bank in the community and everybody knows where we are
and what we do," is not well taken; for while a great many
maj' know where j^ou are, they do not understand what you
do, or how you do it, and have yet to be convinced that you
can render them a service. Whoever earns more than he
spends is a legitimate object for savings bank solicitation,
and until you have on your books every man and woman
in tliis class in 3^our bahwick, you have not exhausted your
field. There is everywhere hidden wealth which can be
brought to light if the owner is convinced that he can safely
entrust it to your keeping; and when he is satisfied that you
can take better care of his money than he, you will be made
custodian and trustee.*

The mere fact that a bank has been in operation for fifty
years and lives in a fine house is well and good — but a big
building has the same psychological effect as a church
steeple, — it indicates that here is a bank that stands for
something ; but like the church steeple pointing to heaven,
it will not win many converts until that for which it stands
is firmly impressed upon the minds of those who see it.

The Mediums.

The mediums for disseminating savings bank informa-
tion are: First, the newspaper. It cannot be denied that
newspapers are read, and read by everybody. And the ad.

*For one of the most interesting and practical papers on savings bank adver-
tising, see address of E. St. Elmo Le\vis before the Savings Bank Section,
American Bankers' Association, at New Orleans, November, 1911, found in the
book of proceedings, American Bankers' Association, for 1911.

4.'S0 THE SAVINGS BANK AND ITS PRACTICAL WORK

Little
^lobn prudent i

PEOPLES

Cor. Wo«d and Fourth. PltlaDur«t>
At rK« iLqt of o«:
Mb pTcecnt witK
inm-Mt '4% compounded
twice a ]pear) h«»*

•I04.04 I

Original dtpoftft
of »ioooo at
birth had, at
the a^ of 1 9
DoubUd Xteetf
i^% compounded
Mfm-annu&UT)
and amouattd to

vfthotrt an?
9orrf or worti
on Ka part
Op«B ftik actoont today — don't »»!l—

and eaJoT tlie feeling of bftcomlDB

PEOPLE^^

iS/IVINGS BflNK

Oor. Wood and fourth, PIttabursh

CapttAl and S'nrhia. l2.i>0«i.M«.0t.

iWmdt nr JM. fm /tfm:ifc«((oN.>

PEOPLES

5/IVINGS B/INK

Oor. Wood and I

IV«a 9^ AA. fmr /<n(^(«UM.»

«II7.I7

• "Young jlobn
prudent

Banh account
when b« was four
Tears old. showed
a Balance of

or an increase
of %\7 17 in four
fcars which wae madt ;
possible by the 'i

1 pounded

seml-annuaUy.

A portion of your

PEOPLES

^/IVINGSBANKl

I Cor. Wood>ar
IpPaloA our MM

I t-ourth. PMtaDurgh
I AdL tor /d«nM;looIlonJ j

5/5VINGS B/INK

Cor. Wood and Fourth, Piitabursh
Capital and Surplus. $2,000,000.00.
iStt our tieit AA. for Idtmtlflcatton.y

PEOPLES

.SiAVINGS BiflNR

Cclul .Dd Stirplns. 12.000,000.00.
Ow. Wood and rourtn, PttuburaK

rOHM 145.

for-youreelf, boy or rinusnt.r.

PEOPLES

i ^/lUINGS BiANK

j Fourth and Wood. Pltlsburch, Pa.

-Tlirs AD. AWAKENS CURIOSITY AND WIIX BE FOLLOWED UP BY THE
READERS.

JVIaeter
"^obn prudent

at the age of

baUn« of

(4% eonrpocmded
rerrj six motrt*»)
of (48-59 ^
the amount
deposited for
blm, at the time
of bla birth, bf
bis fatbsr.

vtngs win tncreaso.

PEOPLES

|30 )?C£rBl decided

to Uaw in this
banti a» * neet egg,
the $100.00 which
his father deposited
for him when he

i born and which
bad grown to

t Rt this Bank at

miounded ceml-atinuaUy,

>:t in 18

^S/W^INGS MNK

Oor. Wood and Fourth. Pittaburgh

Capitol and Sun

Ad. f^r tdentificatio».f

ADVERTISING THE SAVINGS BANK 481

that is well placed and well displayed and well written will
be read. It is, of course, one of the most expensive of the
many mediums, but its very costliness is evidence that it
produces results. One need but watch the largest adver-
tisers of the country, particularly the department stores,
to be convinced that newspaper advertising pays, and pays
well. They would not use this medium so freely if it did
not produce results.

All newspaper advertising should be carefully done. It
must be remembered that the audience is, in a large sense,
the same year in and yescr out, and to impress them with
the merits of the case, the matter, while it may not be new,
must be presented in an ever changing dress in order to
attract and convince. If good "cop}^" cannot be written by
the one in charge, there are numerous agencies that make
a specialty of supplying well written and catchy bank ads.
But among the many things that may be emphasized in such
advertising are:

The strength and soundness of the bank; its investments
and its general polic3\

The trustees or managers; their standing in the com-
munity, and their successes in their own callings.

The gi'eat value of a rainy day fund.

The accumulative power of interest.

The services of the bank in helping depositors to accu-
mulate money for a definite purpose.

The security of the vaults.

The courtesy extended to every depositor.

The growth of the bank as shown by statistics.

The interest rate and rules.

The record of savings banks in the State and the free-
dom from losses.

The acceptance of small amounts on deposit.

Young people can be appealed to to save in order to
accomplish their cherished ambitions, and examples without
limit may be cited to show how saving has laid the foun-
dation for many fortunes.

Middle aged people may be appealed to to save in order
to be independent in old age and sickness.

Married people are susceptible to appeals to save for
the sake of those dependent upon them.

In addition to this may be mentioned timely stories of

482 THE SAVINGS BANK AND ITS PRACTICAL WORK

OPEN AN ACCOUiM

-w'/Qi^

In ihe Or«envjlle bavinK« Rank
for>our son. The first stArt in
life towards »caltll nmJ richrs
lonMils in >3vin< a little al ^i
tlmr. Tbi> inslilulion nut unlv 1
Kiiarantres absolute security lf>c^
nil money !•■?' ■■iit.d with thcn^'
but p^y, 4 p r c.nl inlercsl Vo
>:<» upe.ian acciunl uilh a •,•»

.■v*^ -o .C'° «•" "<* -»*

Greenville Savings Bank k Trust Cp/*:::'^*!!^ C^-;r'-""-''^"°^'/

GKKKN\11>UK. MIWS

FORM 146.^ — SOME GOOD SAVINGS BANK ADVEBTISIN'G TALK.

ADVERTISING THE SAVINGS BANK 483

"human interest" showing what other people have done in
the way of saving; how fires and thieves and rats have
destroyed the savings of years, and how a bank account
would have prevented these losses ; good advice in the matter
of get-rich-quick schemes and other questionable ways of
making money; proper investments, etc.; — in short, acting
on the principle that people are more interested in people
than in things, aim to reach them through the medium of

Two & Two jLirrffoniTrg!

■\ yf I T^ Bank has always made a

iVl aKe r* OU r feature of small deposits. It

accepts any amount from
1 0 Cents to 3,000 Dollars. We believe it is more important
to the individual that he accumulate a bank account than to
offer him large inducements in the line of interest, although we
have paid FOUR PER CENT for the past four years.
If you will make it a habit to deposit weekly, if only a dollar,
you will find that twice trvo makes four.

The Home Savings Bank

804 Manhattan Avenue George H. Gerard, President

FOEM 147. ^A WELL DISPLAYED AND HELPFUL SAVINGS BANK AD.

their human side rather than to pound cold logic and hard
facts into their heads.

The second medium is the booklet, to be distributed
both to old and prospective depositors. This should be
educational in its tone, full of human interest, illustrated if
possible, well printed and on good paper. It should set
forth many of the matters enumerated above, and while
general in its aspect it should point but one way — to the
savings bank that issues it. It should be distributed Avith
care and with regard to the people to whom it is to appeal.

The tliird medium includes gratuities of all sorts, blot-

484 THE SAVINGS BANK AND ITS PRACTICAL WORK

ters for the school children and office people, rulers, pencils,
etc., which are sure to be carried home and used.

Fourth: The little home banks, which are treated under
another chapter.

"Good will advertising" in church papers, fair pro-
grammes, and kindred organs must be looked upon as con-
tributions pure and simple and in the nature of good will
offerings — and can hardly be called advertising; some would
go so far as to call it "throwing money away"; perhaps it is.
Advertising has a cumulative effect; it "piles up," as it

The Remains'
of $400 Hid
■n an Oven

'RE MADE
iViONEY
CONE

^oney In;
^^nk earns!
Interest and I
I s ready
^*s needed.

FORM 148. AN OBJECT LESSOlf IX ITSELF.

were. The ad. that is read to-day reiterates and reinforces
that of yesterday. It is like the repeated blows of a small
hammer, — bound to crack something if kept up long
enough; and the proposition is to make your name so well
known that the man with money to deposit instinctively
turns to you. The account that is opened is, as a rule,
bound to grow, and if the customer is pleased his account
will bring another. Your best medium, after all, is the
good will of your people. If they like you they will tell
others, but if they dont, they will also carry tales.

CHAPTER XXXI

DORMANT ACCOUNTS

No single feature of savings bank management is more
generally misunderstood on the part of the public than the
matter of dormant accounts. In some localities rumors are
frequently heard that the ornate buildings of savings insti-
tutions have been built with these unclaimed balances, and
such erroneous ideas have caused much unfavorable criti-
cism of the bank management.

The impression is quite common that the bank or the
State eventually comes into possession of these moneys.
This is true in but a few States, notably Pennsylvania and
Massachusetts, wherein after thirty years the money is paid
over to the State treasurer, who must hold himself in readi-
ness to repay upon presentation of duly authenticated
claims. In New York the debt remains forever an obliga-
tion of the bank. That all such notions are fallacious needs
no refutation at this time, and we confine ourselves to the
more interesting side of tliis subject.

The New York savings banks — in fact large banks
everywhere — are constantly hunting up people whose ac-
counts have become or show the possibility of becoming
dormant, and frequentlj^ the rightful owners turn up
through such "detective work," some to get a handsome
reward for their forgetfulness, and others to get a like
reward for the forgetfulness of others.

It does not always happen that the owner of the book
is found, but every effort is made to locate the legal repre-
sentatives, whoever and wherever they may be, and the
common notion that the savings bank encourages these dor-
mant accounts and endeavors to "hold on to them" is
erroneous in the extreme.

A recent investigation covering this subject, made by
the Savings Bank Section of the American Bankers' Asso-
ciation, showed that very few banks encourage dormant
accounts, and this practice is not common, the usual custom
being to find the rightful owner as speedily as possible and
tender him his money; or better, to prevent the account

486 THE SAVINGS BANK AND ITS PRACTICAL WORK

becoming dormant by constant care, and when an account
shows any hkeUhood of becoming quiescent to request the
depositor to reinstate it by a deposit or a withdrawal.

Some banks stop interest after a stipulated term run-
ning from ten to twenty-two years, while a few continue
to pay interest as long as the account remains on the
books.

Much of the dormant account money now held by the
banks originally belonged to men who went into the Civil
War and never returned, and sailors who have been lost at
sea. In fact, it is said that the largest amount of dormant
money in Xew York (the total is about $2,500,000 for the
State) is in the bank which has catered especially to the
sailor class. The author met a sailor at one time who had
on his person pass books of savings banks and postal sav-
ings banks all over the world; and it can readilj^ be seen
that if he were lost at sea there would be the likelihood of
all these accounts becoming dormant.

In one bank a man was found who had deposited money
in the bank a long time ago and after quarreling with his
family had changed his name; after a long himt he was
found, but refused to acknowledge that he was the man
who made the original deposit, and the bank had to take
legal proceedings to compel him to accept it. A woman
deposited money in three different banks under three differ-
ent names; her heirs were hunted up tliirty-five years later
and given the money. A bricklayer had deposited two
hundred dollars a long time ago and forgotten it; he was
handed eighteen hundred dollars, and no less a personage
than Chauncey M. Depew is charged with the serious crime
of forgetting that he had money in a savings bank for
nearly a quarter of a century. One of the richest widows
in Xew York had five thousand dollars she had forgotten.

One day a woman walked in one of the New York
banks and said her husband had died in Panama j^ears ago,
leaving her a deposit of $3,000; they paid her $8,000.

Another bank book came in from Scotland, representing
an account of forty years' standing; the bank had worked
on the case for several years. The heirs of Fannie Cleier,
who lived at Ithaca at one time, can obtain $5,000 upon
proper proof to the proper bank. Also the heirs of Henry
Morse, who held fifteen shares of stock in one of the richest

DORMANT ACCOUNTS 487

banks in New York, may obtain $2,891.07 upon furnishing
proof.

The sentimental side of these dormant accounts may be
seen from the following instance: A young woman de-
posited $400 in a bank some years ago, and died shortly
afterward; her mother was hunted up and tendered the
money, wliich she refused, on the ground that the daughter
had run aAvay from home and become wayward. It is said
that another bank, not a savings bank, holds $100,000
belonging to two sisters who came from Ireland. The heirs
of Sarah H. Williams, who died a few years ago, leaving
no trace of her relatives, have forty-thousand coming to
them.

Dormant Accounts Full of Romance.

Wliile these dormant accounts are full of romance, the
banks see in them only a nuisance; and while they are a
source of trouble and expense, they are also full of human
interest, as the following incidents will testify:

One day in the early Nineties a quaint-looking old lady
came into the great hall of the Bowery Savings Bank. She
looked as if she had stepped out of an old picture. She had
corkscrew curls; a lace shawl hung about her shoulders; her
hands were incased in old-time mitts. On her head was a
poke bonnet of the Fifties. With some embarrassment she
approached one of the clerks and inquired for the clerk who
had charge of the old accounts. On being taken to the
dormant-account clerk, she explained her mission with some
difficult}^, and said:

"I saw an advertisement in the newspapers saying that
you were looking for information concerning WilKam
. I can tell you the name of one of his relatives."

"What is your interest in the depositor?" asked the
clerk.

The old lady blushed and the tears came to her eyes.

After wiping them with the corner of her shawl, she
said:

"Years ago he was my sweetheart and we became en-
gaged. But he died before we were married." She paused
a moment, then added: "And I am still single."

She took some of the glamour out of the romance when
she asked if she could get the money.

488 THE SAVINGS BANK AND ITS PRACTICAL WORK

The prosaic law, however, did not recognize sentimental
attachments, and the relatives got the deposit.

Another case is that of Ellen.

For many years a ruddy-cheeked Irish woman was a
regular depositor at the bank. She joked and laughed with
the clerks, and she was very popular. She ^vas an apple-
woman, and carried a basket of fruit through various office
buildings.

Then, one day, she stopped coming to the bank.

Six or seven years passed and then the dormant-account
clerk got busy.

He had little difficulty in finding her in a tumble-down
tenement house on the East Side.

"Why haven't you been to the bank?" asked the clerk.

"Shure, I didn't think it would run away," she replied.

"But what have you been doing with your money?"
asked the clerk.

"Putting it ilsewhere," replied Ellen, with perfect
serenity.

Then she dug out of dark corners four bank-books for
deposits aggregating tliirty-five thousand dollars.

"Where did you get all this?" asked the clerk in aston-
ishment.

"Fifty years of apples," was the immediate reply.*

Methods of Handling Dormant Accounts.

Turning from the sentimental to the prosaic, we find the
common procedure in the matter of dormant accounts to
be as follows: Of course the entry of a deposit or draft
indicates that the book has been presented, and the dor-
mancy period therefore begins to run from that date.
Where no transaction is made, but the book is presented
for entry of interest, t which in most banks revives the ac-
count, a distinctive check should be made against the date
of the last interest entered, which indicates tliat the interest
has been credited up to that point. Accounts showing no
such check marks or other indications of life should be
listed, the last address set opposite and a letter sent to the

•Saturday Evening Post.

fMany banks follow up all books that have not been presented for a term of
years (about five) and endeavor to get them in, using old directories to run down
the addresses.

DORMANT ACCOUNTS 489

depositor. This failing, the newspaper should he utilized
and a list of names prominently posted in the bank, with
foot note asking depositors to furnish, if possible, informa-
tion as to the whereabouts of the missing people.

Most banks make provision in their by-laws for dor-
mancy, the time running from ten to thirty years before
such a state exists. The usual rule is to stop interest after
the stipulated time, but some banks "close" the account. If
by the term "close" is meant to merge the funds with the
property of the bank — in a sense confiscating the money of
the depositor — this would clearly be illegal. The proper
course would be to carry to "dormant accounts" in an as-
sembly of such unclaimed balances, with reference to the
original account. A dormant account register is helpful
and should be arranged as an index, with the follomng
data: Date of first deposit, name, last transaction, last
known address, efforts to find, final result, etc.

Many banks encourage small balances, which act as
"seed," and through wliich they hope to re-establish re-
lationsliips with the depositor.

It is quite common to notify depositors of the import-
ance of keeping the account alive, and notice is generally
found on the pass book, asking the depositor to present the
book at stated intervals for the entry of interest. More
extended notice of the rules regarding quiescent accounts
is generally found in the by-laws, the following being typi-
cal, and extremely fair:

All accounts to which no deposits and upon which no draft shall
have been made for twenty-two years in succession shall be considered
dormant accounts, and neither such accounts, nor the interest which shall
have accrued thereon shall draw any interest after the expiration of
twenty-two years from the time of the last deposit or draft. Such
accounts shall cease to be dormant after a subsequent deposit or draft
shall be made thereon. Accounts of depositors whose pass-books have
been presented at the bank for the entry of interest earned, within the
period of twenty-two years, shall not be deemed dormant accounts.

The Amount of Dormant Account Money Small.

In Massachusetts, the dormant accounts amount to
about $225,000, and by the decision of the Supreme Court
upholding the constitutionality of the law providing that
after thirty jesLVs these accounts shall be turned over to the

490 THE SAVINGS BANK AND ITS PRACTICAL WORK

State, this money will now be held by the State instead of
the banks to await proper payment. In the Salem Savings
Bank, the second oldest in Massachusetts, the accounts do
not amount to more than $8,000, but included in this is the
famous deposit of one John Bellas, who deposited $300 in
1856 and has never called for it. All track of the man has
been lost, and it now amounts to over $3,000 bj^ the accumu-
lations of interest. In the Salem Five Cent Savings Bank
there were eighty-nine "dead accounts" of twenty years and
more standing, the total being only $16, varying from five
cents to sixty-five cents. (In former years this bank re-
ceived five-cent deposits.)

In New York State recently there developed a claim of
over tliirty-five years' standing. The deposit was in the old
Tliird Avenue Savings Bank of New York, one of the
historic and dramatic failures of history. Upon proper
proof the amount will be paid over to the rightful heirs.

In one of the hundred-milhon-dollar banks of New
York, these dormant accounts under the twenty-two year
rule amount to less than $75,000.

As an indication that these accounts are not really aban-
doned, but rather quiescent or sleeping, the fact was
brought out recently in a newspaper article that within a
year five accounts in a large New York bank, which had
been untouched from twenty-five to thirty j^'ears, had be-
come active.

The greatest number of these dormant accounts are
small balances, left for sentimental purposes, frequently
under the interest limit, and therefore never grow.

CHAPTER XXXII

SOCIETY ACCOUNTS

In handling accounts of societies, lodges, church organ-
izations, and other bodies of like character, it is necessary to
use extreme care in making payment, in order that the bank
may hold the receipt of the officers who are authorized to
withdraw the money of the organization. Such bodies are
ajjt to have internal quarrels, wliich are often long extended
and bitter; and if there is any fund belonging to the organ-
ization, naturally this is a factor in the dispute. For in-
stance, in a quarrel of this character, a fund of less than one
hundred dollars belonging to a church society played an
important part in splitting the organization into two fac-
tions, one of which withdrew and formed another church.

The bank should at all times be in position to say, in
law, that it has exercised due care to ascertain who were
the proper officers authorized to draw funds, and that pay-
ment has been made to them in due course. The proper
procedure would be to require a resolution of the govern-
ing body designating the bank as depository and authoriz-
ing certain officers to open account and receipt for moneys.
This authorization is sometimes provided for in the bylaws
of the society; if not, a special resolution is in order. In the
savings bank, most of the society accounts are with unincor-
porated organizations, whose financial operations are inade-
quately covered in the by-laws, and often more or less "slip-
shod." Before opening accounts of this kind it is well to
liave clearly expressed authority to do so, preferably by res-
olution passed at a regular meeting, certified to by the secre-
tary. The proper officer is usually the treasurer, but fre-
quently one, two and even three trustees (preferably two
out of three) are required to sign with him; but too many
names are not desirable on account of the difficulty in ob-
taining the signatures of all, if more than two are required
to sign; but however this may be, in so far as the bank is con-
cerned all it needs is specific direction as to who is author-
ized to draw the funds, and then to adhere strictly to its
contract. Such officers are changed frequently, and after

492 THE SAVINGS BANK AND ITS PRACTICAL WORK

SOCIETY ACCOUNT — ONONDAGA COUNTY SAVINGS BANK

Book
Pagft..

FORM 1
Name of Organization ^''°'' N°

This is to certify that the persons whose signatures appear on the reverse side of
this card hold the offices indicated and are authorized under resolution adopted at a

meeting of the above organization held

to withdraw funds deposited to the credit of said organization in the Onondaga County
Savings Bank.

, .01 Prtsident

Impress of Seal.

(Use the other side)

Date Secretary

^"Whcn you change officers the Bank must be notified on blank forms provided-for that purpose.

FORM 149. CERTIFICATE OF AXTTHOHITY TO DRAW OX SOCIETY ACCOUNT.

SOCIETY ACCOUNT — ONONDAGA COUNTY SAYINGS BANK

FORM 2

For ourselves and the organization in whose name this account No.

IS opened, we hereby agree to be bound by the By-laws and Regulations of the Onon-
da'^a County Savings Bank, and all orders signed by us are to be binding upon the
organization until the bank shall have been notified in writing of changes in officers
affecting this account and the signatures of the new officials are properly recorded on
its books.

HrestJenl.

■■■■■ Secretary.

Impress of .Seal here Treasurer.

Trustee.

, Trustee.

Date ..7... .> Trustee.

l^^Only officers who will sign checks should record their signatures here.

FORM 150. SIGNATURES OF OFFICERS AUTHORIZED TO DRAW FUNDS. REVERSE OF

FORM 149.

once opening the account, it becomes necessary, from time to
time, to determine who are the successors in office to those
who are already recorded as being in position to receipt for
the funds; in such cases authorization from tlie old officers,

SOCIETY ACCOUNTS 495

SOCIETY ACCOUNT — ONONDAGA COUNTY SAVINGS BANK

FORM 3
Name of Organization Book. No

Page.

This is to certify that at a regular meeting of the above named organization

held it was resolved that an account be opened in the

Onondaga County Savings Bank, in the name of the organization as above, and that
funds deposited in the said bank may be withdrawn upon order signed by

( Here insert the titles as "the secretary and treasurer" and iiot names of persons!) "

with the seal, and the said bank is hereby authorized to recognize the signatures of the
above officers in making payments.

Impress of Seal.

Date Secretary

FOHM 151. AUTHOBIZATIOK TO OPEN SOCIETY ACCOUNT, DESIGNATING WHO SHALI.

DRAW FUNDS.

CHAMSCS rN OFFICCHS^ FORM 4.

SOaETY ACCOUNT— ONONDAGA COUNTY SAVINGS BANK
Name of Organization Papre Booi: No :. ..

Onondaga County Savings Bank:

Please take notice that at a 'meeting of the above named organization
held -.•.'^-•«. •. 19 the following changes were made in our officers;

PmiJenI in place of-

. Secretary itf place of--,-
Treasurer in place of,-,-
Trustee m place of —
Trustee iii place of

■Trustee in place of

Secretary President

S^This form must be filled out and returned to the Bank before any payments are inade on the account.

FORM 152. NOTIFICATION OF CHANGE IN OFFICERS OF SOCIETY.

certifying to the election of their successors and giving the
signatures of both, is a very helpful feature. Xo savings
bank is safe in deaUng with an organization of tliis kind
"vvithout some such protection.

494 THE SAVINGS BANK AND ITS PRACTICAL WORK

Pay

WITHDRAWAL— SOCIETY ACCOUNT

Page-

Syracuse, N. Y., I 9

®n0nia5ci (dnuntg g^autngs IBank.

- or bearer,

....-..., Dollars, $ !.

Name of Organization

SEAL

President

Secretary

Treasurer

Trustee

S^"Only officers authorized to draw funds should sign.

FORM 153. WITIIDHAWAI. FORM, SOCIETY ACCOUNT.

The Dangers of Society Accounts.

The danf>ers attending society accounts are well illustrat-
ed in the following case which ha2:)pened in New Y^ork re-
cently :

The bank had been dealing with the treasurer of the
society for a number of vears and had come to know him

SOCIETY ACCOUNTS 495

Information for Associations desiring to open an

account with the Dollar Savings Bank of

the City of New York

Associations wishing to open an account with a Savings Bank,
should file with the Bank a certified copy of their By-laws, if the
By-laws give authority and direction for opening an account. If
the By-laws do not give such authority, a suitable resolution should
be adopted at a regular meeting, recorded in full upon the minutes,
and a certified copy handed to the bank. A blank form is attached
on the following page, giving the resolution required in such a
case, and furnishing a form for the Secretary to fill out. The
Bank will need on one of its signature cards, the signatures and
addresses of those appointed to open and take charge of the
account.

The Treasurer of the Association should be authorized to
open the account and make deposits and withdrawals, or three
members should be appointed custodians of the account, two out
of the three being required to draw. If three members are ap-
pointed, they should be permanent, and be chosen irrespective of
whether they are officers or not. When a change of those in charge
of the account becomes afterward necessary, the Association
should pass a resolution making the change. Blank forms may be
obtained at the Bank.

FOKM 154. ^aULES FOR OPENIJfG SOCIETr ACCOUXT.

496 THE SAVINGS BANK AND ITS PRACTICAL WORK

by sight. Frequent drafts were made on the account, and
the account was finally closed, the order apparently being
regular and properly signed, with the seal attached. The
treasurer explained that the organization had changed its
seal, wliich accounted for the appearance of a new seal on the
order. His power to draw had been revoked, but he
had made several drafts, nevertheless, having had a
seal made for the occasion; and the bank having been per-
suaded to pay upon this false statement was brought into
court to test its position. The mere fact that the seal had
been changed should have incited further inquiry and elicited
a certificate from the old officers as to the changes, both in
the official staff and the seal.

In the forms herewith given it will be seen that provision
is made for such notification and it is most desirable that
such authorizations be on file with the bank, which should
be kept together in numerical sequence for ready reference
when payment is required.

CHAPTER XXXIII
SCHOOL SAVINGS BANKS*

The Man and the Idea.

If, as the Sage of Concord observed, "every great insti-
tution is the lengthened shadow of a man," the school sav-
ings bank (now past its quarter-century mark in this
country), is the lengthened shadow of the late John H.
Thiry. It is, Uke many of our good things, an imported
idea, Mr. Thiry being a native of Belgium, and the system
here is modeled after that in use in France, Belgium and
Germany. Mr. Tliiry early became impressed with the
extravagance of the American children, and concluded
rightfully, that improvidence in youth means improvidence
and perhaps poverty in old age; and if habits of thrift are
not learned in youth the chances are against their acquire-
ment later in life. He sought a remedy, and found that it
lay in one of two (or both) places, the home and the school
room. Being a trustee of the public schools of Long Island
City, to which place he had retired after a successful career
in New York as a dealer in old and rare books, he nat-
urally turned his attention to the school as the most hkely
medium. The school teaches other things — ^why not thrift?
was his argument. He found no difficulty in gaining the
consent of his fellow trustees to try the experiment. It
succeeded; and for twenty-five years Mr. Thiry has been
the school savings bank's best friend, its ardent and con-
stant advocate and its only statistician,! even copyrighting
his forms so as to keep in touch with those who would use
them. Wherever it has been given a fair test, it has not
only succeeded, but has won the admiration of all. Bank
men and educators have looked upon it and pronounced it
good. New York has legalized it, and the Bank Commis-

*This chapter is taken from "How to Operate a School Savings Bank,"
issued by the Savings Bank Section, American Bankers' Association, and pre-
pared by the author.

tMr. Thiry's large collection of school savings bank literature was devised
to Mrs. S. L. Oberhalaer of Philadelphia, who will continue his work.

497

498 THE SAVINGS BANK AND ITS PRACTICAL WORK

Junior Xl^^^Department

THE SCHENECTADY SAVINGS BANK, Cor. state & Clinton

Open every day in the year, except Sundays and Legal
Holidays, between 9 o'clock A. M. and 3 o'clock' P. M., and
for DEPOSITS ONLY, every FRIDAY NOT A HOLIDAY,
between five and eight o'clock P. M.

As often as the 5 cent or larger deposit reaches $J.OO,
transfer is made to regular pass book on interest.

Order for any amount less than $1.00 must be endorsed
by Parent or Guardian.

Please keep your envelope and card from being soiled.

Deposit tickets may be had at the window with "JUNIOR"

s'gn.

FORM 155. DEPOSIT CARD AXD COVER, SCHOOL SAVINGS BANK.

NO. x985

Schenectady, N. Y 191 —

THE SCHENECTADY SAVINGS BANK

Transfer ONE DOLLAR to Interest Bearing Account

Name

Junior Department

Junior No. By

FORM 156. — TRAXSIER ORDER, SCHOOL SAVINGS BANK.

SCHOOL SAVINGS BANKS 499

sioner for Massachusetts has advocated its introduction
into every public school of the state, having after extended
inquiry into the subject, officially endorsed it as a factor
of no mean importance in the promotion of thrift in the
commonwealth.

The Spokane and Eastern Trust Company' of Spokane,
Wash., which has about 2,500 accounts with school children,
aggregating $35,000, and a copyrighted system of its own,
says: "We consider its influence for good to be almost
beyond calculation. While we do not look upon it as a
profitable enterprise, since the cost of blanks and bookkeep-
ing is very large, j^et there is no branch of our business in
which we take more pride. Looking at it from a broad
and humanitarian standpoint, we believe that we are doing
a wise and useful service to the countrj'' in fostering a spirit
of saving among the school children." Prof. Elmer E.
Brown, U. S. Commissioner of Education, says: "I am
confident that a proper teaching of thrift in connection
with the teacliing of sound ideas with reference to expendi-
tures must occupy a larger place in our educational work in
the years to come." Grand Rapids, JNlich., has it in every
school in the city, and the superintendent says: "Everybody
here is in favor of the school savings bank; we find that it
does a great good in localities where the population is com-
posed largely of laboring people; but we do not consider
this the most beneficial of the results obtained, for habits of
thrift and economy are being formed wliich will ultimately
be of great value to the next generation." The Woman's
Christian Temperance Union has not only officially en-
dorsed it, but is actively engaged in promulgating the
idea, and has been responsible for its introduction in a large
number of places.

How TO Install a School Savings Bank.

Naturally, the first step in such a movement is to obtain
the consent of the school authorities. The bank must not
approach this subject as an advertising scheme (although
it is a most excellent one*), nor as a money-making propo-

*ln a controversy between the banks of a Western city and the Board of
Education, arising through granting permission by the board to one bank
to operate the system, one banker stated publicly that he would give ten thousand
dollars for the exclusive right to operate a school bank in that city.

500 THE SAVINGS BANK AND ITS PRACTICAL WORK

sition, wliich it is not and cannot hope to be. The bank
man's motive must be largely pliilanthropic, leaving it to
the moral influences to recompense liim for the time and
money spent in this endeavor. But if the matter is pre-
sented in its ethical aspect as teaching habits of thrift, les-
sons in banking methods, etc., the consent of the school
authorities will not be difficult to obtain, since it can be
shown by statistics that it will not take more than fifteen
minutes of the teacher's time weekly (often an argument
against it), if the teacher is to be the medium through
which the system is to operate.

Plan No. 1.

Plan No. 1 contemplates active cooj)eration on the part
of the teacher. The equipment necessary is (1) a supply
of school pass cards, ^vliich constitute the scholars' receipts

(page 502) ; (2) the teacher's record, which may be a
duphcate of the scholar's card (Form 159) ; (3) deposit
list (page 504) ; (4) a placard "Monday is Bank Day"; and
on the reverse side "To-day is Bank Day," to be hung in
the room as a constant reminder of the school savings bank.
On a stated day, preferably Monday, the bank is declared
open for deposits, and the cliildren bring whatever sums
they may have to the teacher, who receipts for the same
upon the school pass card, the dates of each hank day being
already pnnted therein, thus making rapid work possible.
The deposits are also entered on the deposit hst (page 504),
from which they are posted to the teacher's record cards
Form 159). This list, a carbon duplicate of which is re-
tained by the teacher, goes to the principal with the money.
He assembles the deposits upon his deposit list which goes
to the bank, the principal also retaining his carbon copy.
Account is kept with each teacher of the amount deposited
weekly for record purposes. After the fourth JNIonday of
each month, the cards are examined and all balances show-
ing one dollar or more (only even dollars are transferred)
are charged to the pupils and entered upon the transfer list

(similar to No. 160), which is sent to the principal and by
him to the bank where accounts are opened in the names
of the pupils. The odd cents remaining on the card are
held over until even dollars are accumulated. The bank
sliould onen account with the schoc^ fund in gross, crediting

SCHOOL SAVINGS BANKS

501

Section School Savings Bank

Class No

School No _ _

Pupil . ._.

Directions :— Put the money in this envelope, write the amount opposite
the proper date, hand to the teacher Monday momine and be sure to insert
your card. Envelope will be returned to you on Friday.

Date

AMOUNT

Date

AMOUNT

1911

Sept. 4

Feb. 5

Oct. 2

Mch. 4

Apr. 1

Nov. 6

Dec. 4

May 6

1912

Jan. 2

June 3

IM 157. SCHOOL SAVINGS BANK ENVELOPE, USED IN PLAN 2, P. 509.

502 THE SAVINGS BANK AND ITS PRACTICAL WORK

the deposits weekly, and charging against them the trans-
fers and other withdrawals. The pass books are usually
retained by the i)rincipal until the close of the school year,
so that monthly transfers may be duly made, the pupil's
card being his receipt in full. To withdraw money requires
an order of the parent, countersigned by the principal. The
detail work can often be turned over to senior pupils, as
is done in the Henry Barnard School, of Hartford, Con-
necticut, which opened the school savings bank system in
November, 1906. The total amount of deposits has been

SCHOLARS DEPOSIT CARD

SCHOOL SAVINGS BANK

OF THE

Savings Bank Section,
American Bankers' Association

SECTION SAVINGS BANK
DEPOSITORY

REGULATIONS

Always bring your card.

Any Imount from 1 cent upwards may b« deposited.

Money will only be received on bank days (Mondays)
from 8 to 8:30 o'clock.

When your deposit reaches one dotiar the Section
Savings Bank will issue a bank book in your name, and
at the end of each month the nen dollars on your card
will be transferred to your book. The books will be
kept by the pnncipal until the end of the school year.
Your card is your receipt in the meantime.

Withdrawals can only be made on written order of
the parents on Friday arternoom at Ihree o'clock. The
teacher will give you order for your parents to sign.

louM 158. — scholar's deposit card.

Card No

Clasff

Pi.pir. N.m.

1911

DATE

Dltltl

IrUb

DATE

D«1ll

B.UI1U
S.PI. 4

OtL 2
9
16

23
30

No.. 6

O.c. 4

J.o. 2

22
29

Forward

Feb. S
12
19
2S

McK. 4
11
18
25

Apr. 1

i JUM 3
10
17
24

FORM 159. — scholar's deposit card
(reverse of 158)

about $17,000, and 1,500 cliildren are enrolled. About
1,100 cliildren have deposited over $2 each and have bank
books. The work is in charge of the Ninth Grade pupils
and ijroves an eoccellent training school, all being under the
supervision of the office.

In some schools the work is done by a representative
of the bank, who visits the schools at a stated time each
week and receives all deposits and makes all entries, re-
lieving the teachers of all the work. Thus in Lowell, Mass.,

SCHOOL SAVINGS BANKS 503

the work was first done by the principals and teachers, but
the plan was so successful that two savings banks offered
to do all the collecting for schools wliich would inaugurate
the system. This reheved the teachers of all the work and
responsibility and made the scheme simple and business-like.

The banks send their representative to each school once
a week. The bank employee (a young woman) is fur-
nished a table in some convenient room or corridor, and
the pupils having deposits to make are excused and form
in line for the purpose of deposit. Deposit slips are made
out by the pupils, which are verified by the collector, and
entered. The work takes about thirty minutes. One bank
issues a bank book for the smallest deposit, while the other
only issues books for one dollar or more.

The latest statement shows that in that city 1,780 books
have been issued, representing deposits of over $9,000. The
withdrawals have been remarkably light. In nine out of
twelve schools only forty- two depositors withdrew in 1910,
and the withdrawals were less than $100. Inquiry shows
that pupils going from grammar schools to high schools,
or to work, generally continue their deposits with the banks.

But where the teachers cannot or will not cooperate in
this work, a plan whereby the only work required of the
teachers is the collection and distribution of envelopes, will
be presented in Plan No. 2.*

The Minneapolis Plan.

One of the most comprehensive and "workable" school
savings bank systems is in operation in the city of INIinne-
apolis, Minn., and embodies ideas which in many places
will prove to be the solution of the whole problem, i. e.,
the bank assuming full charge of the work and doing it
through salaried employees, the only assistance asked of
the teachers being their moral support. A brief description
of the Minneapolis plan, in the words of Mr. Newton F.
Hawley, Treasurer, Farmers' and Mechanics' Savings
Bank of that city, is herewith given:

"The bank employs for its work five bright, intelligent
and enthusiastic young women as collectors. They go to
the various schools once a week, explain to the children,

*Page 509.

504 THE SAVINGS BANK AND ITS PRACTICAL WORK

when necessary, the system and its purpose, as well as the
benefits of learning to save. These collectors receive the
money presented by the children. Not exceeding five dol-
lars in the aggregate is the amount received from any one
child. The collectors attach to a stamp card furnished by
the bank variously colored lithograph stamps equal in
amount to the money offered by the child and the card is
returned to the child. Accounts can be opened and money

DEPOSIT LIST

Sfrtinn StIiddI dauinga Sank S'SBtrm

CU.S No.

Dale

Record of Deposits received by me this dayw and
credited to the pupils listed below. Cash to the amount
of $ - herewith.

Signed

FORM 160. DEPOSIT LIST.

can be withdrawn only upon the written request of the
parent or guardian of the child, and money can be with-
drawn only by the surrender of the stamps attached to the
child's card. Rules are plainly printed upon the card. But
little bookkeeping is necessary. Few cards are lost. The
child is impressed with the value of preserving the card and
is thus taught to carefully safeguard at least one thing
among its many possessions.

"No bonus or reward of any kind is offered for ac-
counts. No interest is paid until the account is transferred
into a regular pass book in some savings bank. No appeals
are made except those which are purely educational and

SCHOOL SAVINGS BANKS 505

which suggest the right uses for which money is to be saved,
and those things wliich children naturally want to buy and,
therefore, can be induced to save their money for. The
collectors incite the children to earn money in the various
ways which appeal to children, such as selling papers, doing
odd jobs, raising flowers and vegetables, saving the allow-
ances of money given to them as presents, and money which
they usually spend for candy and entertainment. The chil-
dren are encouraged to save for the specific thing they want
— for baseball, football and tennis outfits, sleds, skates,
canoes, books, presents to others and a hundred concrete
things. We trust to the tendency that in doing these spe-
cific things the children will unconsciously acquire the sav-
ing habit and with it the strength of character to resist,
economize, to accumulate and to plan ahead.

"A few statistics may be of interest. The number of
children depositors when the bank took over the system in
June, 1908, was 1,735; in June, 1911, the number was
16,841. The amount on deposit in June, 1908, was $2,025;
in June, 1911, $27,475.00. The total number of children
who made deposits during the school year of 1910-11
was over 21,000 out of a total school population in the
forty-seven grade schools of about 39,000, and the total
amount deposited during the year was $45,677.27. Of the
amount withdrawn nearly one-half was taken out and put
into regular savings pass books in this or some other sav-
ings bank.

Results.

"A few words as to results. Two years is too short a
time for a satisfactory test of a system involving so many
individuals. Already, however, the great educational value
of the plan seems apparent. Teachers and parents by the
score and by the hundreds commend it and volunteer many
specific cases, showing benefits to their particular children.
Many a dime and dollar is earned and saved where other-
wise it would not have been; but better still — many a child
learns frugahty and the habit of economy and saving.
Seemingly the effects well establish the benefit of the system.

Philanthropists in Fact as Well as in Name.

"The expense of its operation is, of course, greater than
any interest or income that can come from the funds col-

506 THE SAVINGS BANK AND ITS PRACTICAL WORK

"Si 3

- i 5

(b) N.«.«ofil«liftn.

(d) Sl«mp to the -ftiu* of iVt dtpcM.t.

2. Stamps Mt/ST" be put on the
card by the agent or in his pres-
ence. No stamps arc to be taken
from the station detached from
stamp card.

3. Be very sure that all the
blanks on the detachable signature
card are properly Hlled out.

4. Send this signature card to
the central office as directed.

5. Depositors should be care-
fully instructed as to wbece and
when the stamp cards are rcdeem-

6. When a depositor accumu-
lates two dollars or more h<: should
be urged and assisted to open an
account in some reliable savings
bank, where he can secure interest
on his deposits; urge this fact as
an inducement.

7. No cards or signature slips
are to be DESTROYED. 1/ by
any chance a mistake is made \q
filling out the blanks, return the
card and slip to the central office.

SCHOOL SAVINGS BANKS 507

lected — being about three to one. This expense can be
justified possibly on two grounds: First, the purpose for
which the trustees of a mutual savings bank give their ser-
vice is pliilanthropic and educational. In an institution
such as the bank in question, in which there are about 50,000
depositors in a city of about 300,000 inhabitants, there is on
the average one depositor for every six men, women and
children in the city. Such a bank in such a city is really a
public educational institution. It has not been deemed
improper, therefore, that the bank should lend itself to some
of the purposes to which the trustees in founding and main-
taining the bank have devoted themselves. Then also, while
it is not the custom of the bank to advertise, j^et there can
be no question but that this sj^stem which sends its literature
in a form to be prized and safeguarded into nearly every
home in the city will become in time, if not at once, of value
from simply an advertising standpoint. But whatever the
expense may be, it is small for a large bank — much smaller
in any one year than some commercial banks of no greater
deposits spend in a month for advertising, and is amply
justified in practice by the benefit bestow^ed upon the great
number of cliildren and the ultimate prosperity and char-
acter of the depositors in the bank and of the community in
general. Whether it is possible to trace back to the bank
in dollars and cents the comparatively small amounts which
it spends on this system may be difficult. But that the
people of the American city need education in thrift and
economy, and that this system gives such an education to
the children in the most plastic time of life there can be no
doubt, and in my own opinion the bank itself as well as the
community will profit by it."*

There are many places, however, where the school au-
thorities favor the establishment of the school savings bank,
and while not over aggressive in their endorsement, would
be willing to have the plan tried if it would not interfere
■with the other duties of the teachers. It also happens that
the teachers are at times inclined to look upon the work
as an additional burden to their already crowded Hfe, and
if they enter into the work at all, do it with a coldness

*From an address by Newton F. Hawley, Treasurer, before the Savings
Bank Section, American Bankers' Association, Los Angeles, Cal., September,
1910.

508 THE SAVINGS BANK AND ITS PRACTICAL WORK

Fun

idiana

4-« •"

C -2"

<»^ 1

4-1

-o «

•r •£

o
en

O c

Pi:

a, ■!

a.
s

STA

ddress

^ -^n

e <s

■e c
•5 3

? Q

z
o

Q
Z

o
u

Q
Z
<

I. 7^i« card it not trantferable.

II. Deposits can be made through the
South Bend Provident Fund only by buying
and aitachinR the stamps, sold by i', lo its
stamp deposit canls. When one card is fill-
ed another can be had upon application.

III. Stampi will be redeemed only when
attached to a stamp card.

IV. Money can be withdrawn only by
signing the receipt oa this stamp deposit
card and by giving it up at the stamp station
at the St. Joseph County Savings Bank. be.
tuieen 9:30 and 10:00 A. M. on Saturdays.
One week's notice of intention to withdraw
may be required.

V. No sum can bd withdrawn less than
the amount represented by all the stamps
attached to each card.

VI. If this stamp deposit card is tost or
destroyed, no payment will be made thereon.

VII. Five cents will be charged fof all
cards on which the amountwithdrawn isless
than fifty cents.

Vllt. In case of he disability of « minor
deposi'or, the amount of the deposit may be
wit>'drawn by parents or guardian,

IX. The Souih Bend ProviJent Fund is
not a savings bank, bul only an agency for
the deposit of small sav'ngs. It is only re-
sponsible for the deposit of at] moneys re-
ceived by it in some institution duly author-
ized by law to receive trust fuads

X. Alf deposits must be made and accept*
cd sub) ct to the above rules and conditions.

^1
8

55 2

-o

1 E S^s i

llIP

W. 0 Davies
C. A. Carlisle
L. P. Hardy
Samuel Adler
Mrs. L. Le Vto
Mrs. C. J. Reyno
Miss van den Bos
Richard Elbel
Daniel Rich
T. E. Howard
Marshel Hughes
Samuel Leeper
W. W. Lewis
Donahue

4-i

• • .8'

-n

< £

W lU O z S

= -ll •r.Jf^tc

C/5

>
O

o
0.

dARD EL
CARLIS
. MANNl
. F. H D
> CARRIE

o:
1

W. A. Funk
Marvin Campb
J C. Ellsworth
Otto M Knoblc
Arthur L. Hubl
Mra.F.H.Dun
F. S. Fish
Mrs. B. G. Kel
Rev. W. F. Ho
Rev J. F. DtC
U. Grant Mann
Mrs. M. L Hit
Mrt. W. E. Ml
Jo

RIC
C. A
U.C
MRS
MIS

D.uck ik.. S'(A>lui. C.rd ind xrid l« C.nli.l 0K<:.

Signature ,„

Oa^MlMr >»•! iltn full .•»« h*r* .nrf .ndt

Address

Parent's Name _

I b. Md unlil d.p».;t !• «ilkdr<

- Age

tiiutd

Wilkdratt

Himarki

u Wo. o«.Mii Cw4 .r lA. .

- Amoam PaU,t

C*#4 1* «mmW ImL »*b MM U'*. I

SCHOOL SAVINGS BANKS 509

which is apt to spell defeat. It therefore becomes necessary
to find some way by which the work may be taken out of
their hands and yet operated through the school as the
proper and natural medium. Plan number 2, "The En-
velope System," overcomes these obstacles.

Plan No. 2.

The macliinery necessary is: First, a stout manilla
envelope wdth an unbreakable clasp, on the outside of which
provision is made for the name, school and class number ^
and a series of dates representing bank days (No. 157).
Second, a scholar's deposit card, consecutively numbered,
similar to the one used in Plan 1. Third, the bank's record
card, numbered to correspond with the scholar's pass card,
and a duplicate thereof. Fourth, a deposit list.

The pupils washing to make a deposit obtain an envelope
from the teacher, insert the money, writing their name on
the outside with the amount in its proper place. These are
collected by the teachers and bunched and sent to the bank,
where all records are made. An envelope containing no
card indicates that the pupil is a new depositor. After the
card is first issued it is inserted in the envelope with the
money and returned in the same manner after the entry
has been made at the bank.

The process at the bank would be somewhat as follows:
Taking the envelopes of one class, and heading the deposit
slip with the date and class "A," the contents of each en-
velope is counted and compared with the amount on the
outside, entered on the deposit list and scholar's card, and
the list footed for each class. Postings are made from the
deposit list to the bank's duplicate records by a junior clerk
at leisure, and the total carried to the school fund. Once a
month the cards are looked over and each card showing a
balance of a dollar or more is charged the even dollars and
transferred to the pupil's pass book, which is retained by
the bank or the principal until the end of the school year.
The envelopes, bunched in classes, are sent to the teachers
for distribution, thus making their collection and distribu-
tion the only work delegated to them. The plan works
exceedingly well and can be done by one of the boys with
perfect safety, and is apt to commend itself to the school

510 THE SAVINGS BANK AND ITS PRACTICAL WORK

authorities where other plans would not meet with a hearty-
reception.

The Stamp System.
» Plan No. 3.

The Stamp System of School Savings Banks is in op-
eration in a large number of places throughout the country,
being conducted by various agencies, such as charity organ-
izations, church societies, thrift workers and pubhc schools.*
The idea is exceedingly simple: The scholar's receipt for
liis deposit is a stamp instead of an entry in a bank book.
jNIanilla cards are provided containing spaces for the plac-
ing of stamps, wliich are sold in various denominations,
usually not higher than 25 cents. (Forms 161, 162.)
It is recommended that a fee of one cent be charged for
the card, inasmuch as those who have had experience in tliis
work have found that better care is taken of the cards and
fewer lost if they are paid for than if they are given gratuit-
ously. The agency that provides the stamps (a bank for
instance) sells them to the distributors for cash, and keeps
them supplied ^vith the various denominations. These may
be in amounts of 10 cents only, making a card represent,
when filled, $1.00; or, as is usually the case, a column is
provided on the side of the card for the extension of the
amount of each row of stamps, and the total footed when
the card is full. This, when presented to the bank becomes
a cash voucher for the amount called for and will be cashed
in, or a pass book issued for it.

One of the merits of this system is its simplicity. An-
other is the fact that the depositor can see his money grow,
an object lesson in itself. Postage stamps represent money
to the average person, and when well engraved have a value
that does not attend mere book credits, and a card of stamps
is quite likely to be given better care than a mere record
of deposit. The accounting process is also simple; the bank
receives cash for its stamps; the money is kept separate,
and all cash payments are made from this fund, and trans-
fers for bank books charged to this account.

In the stamp system operated by the Associated Chari-

•See the "Minneapolis Plan," page 503.

SCHOOL SAVINGS BANKS

511

ties of Somerville, Mass., one cent is charged for the card,
bringing in a revenue of about $50 a year, which helps in
the general expenses of the movement The teacher sells
the stamps, and children are requested to bring five, ten
and twenty-five cent pieces with which to purchase stamps.
Each teacher has a capital of $5 worth of stamps, replaced
as the need requires by collectors. Stamps are ordered in
denominations sufficient to meet the demands.

In Grand Rapids, Mich., the movement started in 1894.
The School Board was carefully canvassed by an enthusi-

ScHOOL System section savings bank

NAME _ Signature ,

0 Address Age

FORM 163. CARD LEDGER WITH SIGNATURE AND OTHER DETAILS FOR SCHOOL SAVINGS

BANKING OVER THE COUNTER.

astic member and consent obtained to try the experiment
in four of the j^rimary schools. There was a feeling of un-
certainty at first wliich gave way to enthusiasm, for the
first term's trial was eminently satisfactory. The plan is
now in operation in all but the liigh school.

One of the savings banks furnishes all blanks and ap-
pliances and makes collections from the schools, and fur-
nishes each teacher with a coin bag and a pocketbook
containing 500 penny stamps.

At a stated hour, varied as may be deemed wise, the
pupils are invited to bring in their money and purchase
stamps; the stamps are placed in a folder which holds fifty
stamps, redeemable at the bank in cash, or received as a
deposit. Stamps are replenished each week.

Pupils are also instructed in the handhng of money,
banking methods, thrift, etc. The bank devotes Saturday
mornings to the children, and one hour after school on

512 THE SAVINGS BANK AND ITS PRACTICAL WORK

Wednesdays, during which time a clerk is detailed to this
work.

Four thousand eight hundred and twenty-five children
are now doing husiness in one hank, and the aggregate
deposit is more than $52,000.

School Sayings Banking Over the Counter.
Plan No. 4.

The savings bank man desirous of fulfilling the mission
of his institution in "inculcating habits of thrift and econ-
omy on the 2)art of the masses" is often at a loss to know
just where to begin, and after looking into the school sav-
ings bank idea becomes convinced that it has in it the
essential elements of such an endeavor, and determines to
undertake this work, but finds the proposition either too
larse to handle or the school authorities lukewarm or hostile
to the idea; and not finding an opening in this field must
devise some other method to accomplish the same purpose.

Plan Xo. 4 has this in mind, the intent being to afford
a quick and easy method by which the deposits of children
may be safely invited without disrupting the bookkeeping
system or consuming a large amount of time. The school
authorities will often assist in giving publicity to such an
idea rather than coojierate in any other method.

The advantages of this plan are: It brings the children
directly into contact with the bank; teaches them how to do
banking for themselves and often brings the parents also
into close relationship with the bank. It is a most excellent
advertising medium. The only drawback is the probable
time it would consume and the present plan aims to handle
the work with as great despatch as possible.

The proposition resolves itself into finding a quick
method of opening accounts, as well as a quick method of
handling subsequent transactions. First, we dispense with
the signature card and combine it with the card ledger or
loose leaf sheet, the only data necessary being the deposit-
or's signature, age, school attended and address, and these
are taken in a few moments. A scholar's pass card of little
better quality and larger in size than the ordinary school
card is used to give tone and weight to the whole matter.
Tliese can be purchased for a few dollars a thousand, and

SCHOOL SAVINGS BANKS •

ol3

•H*

*ss;

1-
liJ

111

if)

w
»
c

Z
<

ett

«_^

J5-

Cu
3
Q.

<J3

Z16I '1 'fpf
t>3ne|eq

CT)

0- o

3161 'I 'f'N
S39ueieq

3I6I'IIH<JV

7161 'I V^^W
ssDuepg

3161'! S'J
saouBjeg

3161 'r"«f

sssueieg

II6I'I :>'a
saouEieg

1 161 'I "AON
osueieg

514 THE SAVINGS BANK AND ITS PRACTICAL WORK

should be made out of tough bristol board similar to the
cover of a regular pass book.

Designating a window as "school window" in charge of
a junior clerk, all transactions are there made to keep the
work awaj^ from the regular tellers.

The deposits as received are entered on the "deposit
list" and on the cards, and the cash placed in a box by itself.
Once or twice a week the net balance in the school cash is
put through the regular channels and is credited to "School
Sj'stem" on the deposit ledger, in bulk, reserving enough in
the tray to pay anticipated withdrawals. Postings are

HOME SAVINGS BANK

DATE

DEPOSITS

W<THD.<kH«t..

BALANCE j

DATE

DEPOSITS

W.THOItAWAL.

..L..C. i 1

* FORM 16j. child's pass CARD, FOR SCHOOL SAVINGS BAXKING OVTt^R THE COUNTER.

(folds IX THE middle)

made from the deposit lists to the school ledger (a book by
itself), as opportunity affords. The total to the credit of
school system on the regular deposit ledger should equal
the balance to the credit of the school accounts, thus acting
as a trial balance. Withdrawals are paid on the order of
the parent only, and these withdrawals may be deducted
from the gross deposits in transferring the money into the
bank's cash. As a matter of fact the deposits will average
mucli larger tlian 10 cents, and frequently run up into
dollars. In order to advertise this plan widely, no better
scheme can ])e oi)erated than to supply the schools with
blotters (all teachers are glad to get them), lead pencils,
pads, etc., which are very cheaj) and very effective, and
moreover the matter goes just where it is intended to go
and depend upon it, it is read. Another way is to use a

SCHOOL SAVINGS BANKS 515

slogan such as "Deposits from ten cents upward received";
"You can bank with us if you have ten cents," etc., on all
the regular advertising matter put out.

When the deposit on the card reaches say $5, a pass
book in the regular form may be issued, charging the school
fund and putting the transaction through as a regular de-
posit, allowing the depositor to use the card to accumulate
another $5 and so on.

Note; The Schenectady (N. Y.) Savings Bank has a very complete and
comprehensive "Junior Department" modeled somewhat after the above, but
much more elaborate in its bookkeeping system. The bank will gladly answer
inquiries relative to this department of its work.

CHAPTER XXXIV

INSURANCE ON MORTGAGED PREIMISES

The whole proposition of keeping the records pertaining
to insurance on mortgaged premises resolves itself into
having a record of each policy and the details connected
therewith, properly classified according to expiration dates.
This record may he kept by the card system or the bound
book. The classification is quite generally by date of ex-
piratic », as this is the most important feature of the record
and the one which permits a ready division. If the card

EXPIBtS

Name

No.

*dd-ess

Policy No.

Pioperty

Company

Bfote-

MtCMCD Mtv >6. U«T I.IBIORV auncAU As3a4>

FORM 166. IXSUIIANCE KlXOltl).

system is used, a card is made out for each policy, and filed
under its expiration date, first under the year, then the
month and the day, and it is an easy matter to see that each
day's policies are in hand before the time limit expires. If
the bound book is used (or loose leaf ledger) a very good
arrangement is to have a sheet for every day, numbered
from 1 to 31, with index tabs to indicate the division of the
hof)k into months. The usual data taken is: Name of as-
sured, amount of policy, company, agent, street and num-

INSURANCE ON MORTGAGED PREMISES 517

ber, policy number, loan number, and date of expiration;
the latter always being the first item listed.

The rules regarding insurance differ. Some banks will
accept any policy issued by a reliable agent, while others
will accept pohcies only in designated companies. A few
banks insist upon the policy being written by their OAvn
broker, a practice which does not generally obtain and is
not to be commended. The fairest rule, both to the bank
and to the borrower, would seem to be, to accept a policy
in any reliable company, and a list of companies acceptable
to the bank may be given to the borrower as a guide in
placing the insurance. Some banks even go so far as to
keep a record of the amount of insurance in force in each
company, so as to scatter the risks among many companies.

Notice may be given to the borrower or to the broker,
a week or so in advance, that a certain policy will expire on
a certain day, and if not replaced will be written at the
direction of the bank; but notice to either is not obligatory
and does not as a rule obtain; the bank may proceed to pro-
tect itself under* the terms of its mortgage as soon as the
old policy lapses.

It is important that every policy has a "mortgagee
clause" making the insurance first payable to the bank in
case of loss by fire. In large banks, where the loans num-
ber up into the thousands, this is very important — in fact,
in every case of a mortgage loan it is quite essential — for
fires are frequent and losses are constantly being paid that
would not come to the notice of the mortgagee were it not
for tliis clause, which necessitates drawing the check to both
the mortgagee and the borrower, thus requiring the endorse-
ment of both before payment can be made thereon. And
only by withholding its endorsement until the property is
replaced in its original condition can the mortgagee assure
himself that fire losses do not imperil the loan. It is also
important that any changes in title, alterations and other
factors that affect the nature of the risk be noted and steps
taken to alter the policy accordingly, as soon as the facts
become known.

CHAPTER XXXV

FIXGER PRINT IDENTIFICATION

In identifying depositors, savings banks thus far have
depended upon signatures and test questions. Some banks
rely solely upon the former, except in the case of illiterates
and foreigners, when the test questions are taken. It would
seem that one who can write a passable signature and

.■.•iSJ.»>-

FORM 167. COMPLETE laiPRESSIOXS OF THE FOUR FIKGERS OF A RIGHT HAXD

Note the peculiar designs on the flnprer tips, as compared with the almost uni-
form dark lines across the first and sooond joints. The former are the finger
prints proper, which are used for identification.

The white lines are furrows; the black lines ridges. The wide white lines
are flexures or folds of the skin These being subject to changes, are of but
little value for Identification purposes.

answer the questions relative to a man's family history
would be, by that token, the owner of the book; but a per-
usal of the cases wherein savings bank matters have been
litigated, or the reading of current savings bank history,
Mill demonstrate that this test falls down frequently.

FINGER PRINT IDENTIFICATION

519

In the well-known case of Wall vs. Emigrant Industrial
Savings Bank, cited elsewhere, the impostor knew all these
facts, and in the case of Kenny vs. Harlem Savings Bank,
Farley, the perpetrator of the fraud deceived the bank
eleven times. It is not a difficult matter to steal a pass book
and by a little skillful maneuvering obtain all the data neces-
sary to pass the usual test ; especially is this true of foreign-
ers, who are coming to our shores in ever increasing num-
bers, and are rapidly becoming a factor to reckon with in
savings bank management; or, as one savings bank man
puts it, "they came after the elusive American dollar, and

X "z. .5~ EcL^ J^ Ajtr

't^ai/t^.M/tiAy

Father's r^me

Zj/Xa^d^^ A^omjA

Mother's name-

j^t^^H'^yiUyO X'-CiAJirtL/

l^Z^^Lx wif. j^L/yiA^s-v^Myi^UXy

' ^'-'^^fi>^ziA^%jcC -/^yz

FORM 168. SIGNATURE CARD USED BY THE GREEN POINT SAVINGS BANK.

by the looks of our lobby they are getting it." The most
dangerous frauds are those perpetrated by members of the
same family, when all test questions are easily answered.

Some banks will not accept the money of illiterates, and
in so doing they negative the very purpose of their ex-
istence. Were they not designed to care for the monej^ of
the masses — those who could not properly care for their
own? And if the^^ were created primarily as depositories
for the poor and the ^ignorant, it is hardly fair to penalize
a man's ignorance by refusing to take his money when he
appears with it. And \el, the bank is not called upon to
take undue risks, and such it undoubtedly takes when it

520 THE SAVINGS BANK AND ITS PRACTICAL WORK

accepts the money of the man whose identity is hard to
cstabhsh. These ''Americans in the making" are not always
easy to identify. They are chumish, often shrewd, and
difficult to do business with without an interpreter, and
cases are frequent where the book has been stolen by a
boarder and the usual tests successfully passed and money
obtained without great risk of detection. In one case, in
opening an account for another (both Poles), the one de-
positing wrote his own name instead of that of the owner
of the fund, and for five years the bank was dealing with
one man having another man's name on his book. When
payment was asked, it took a long time to get the matter

Made by same finger as first print in the
Greenpoint sample record.

Made by tlie same finger as the first print
in the Williamsburgh sample record.

FORM 169. SPECIMENS OF ROLLED IMPRESSIONS.

straightened out. A Finger Print test would soon have
demonstrated they were different people.

There is but one sure test of identity, and that is the
Finger Prints. These are not, as many would suppose,
mere smudges of black, but "steel engravings" wrought on
the tips of the fingers b}^ the Almighty, as distinctive as the
lathe work on a ten-dollar bill and as lasting as human life.
Xo man ever writes his name exactly twice alike; but he
carries a signature on his finger tips that never changes from
the cradle to the grave. According to the English expert,
Galton, the chances of exact duplication are one in sixty-
four billion.

This is no new discovery, for the Chinese have used
them many years, and in police work everywhere, finger
print identification has long been used as a sure means of
identifying criminals. In its adaptation to savings banking,
it is, however, a comparatively recent innovation.

It is not necessary to know the technical side of Finger
Prints in order to use them successfully, but it is highly

FINGER PRINT IDENTIFICATION

521

desirable to know how to take a good impression and to
know something of tlie terminology of the system. I'or
instance, it is much better, in reading or comparing a print,

Signature Card Used by The Willi amsburgh Savings Bank

474277

AMOUNT
$

IVI ^^ U I'll I

/co

I hereby agree to be bound by cond;tionB printed on reverse elde.

'd.

C^i'i2^3^ciStA/n • rilo ^a-?>^

-6n "^A

Age

v^^2 Birth pi

place

^^^^^^ C^^^

W
^

<yz^^ry7^.^^

Residence •^yV 6 ^^^^^^ ^ ~7

'A.

<^o

As Joint Tenants

Occupation 'T^^^^ y^^fcz-

either to draw
Survivor to t»ke all

FORM 171. REVERSE OF FORM 170.

We. the andersigned depositors, In THE WILLIAMSBURGH SAVINGS BANK.
for ourselves, our executors, administrators, aud assigns, respectively, herebf
assent and agree to be bound and governed by the By-Laws and Regulations of
THE WILLIAMSBURGH SAVINGS BANK, in the Borough of Brooklyn, City
of New York, relating to deposits io said Bank, an abstract of which is printed in
the Pass Books issued by said Bank.

FORM 170. FINGER PRINT SIGNATURE CARD.

522 THE SAVINGS BANK AND ITS PRACTICAL WORK

to say to one's self, "two ulnar loops and a whorl," than to
say, "yes, that one looks like this one," without being able
to designate wherein the hkeness rests. For this reason a
few lessons by a competent instructor are most valuable.

It is not my purpose to go extensively into tliis subject,
which opens up a world of its own, but to recommend the
system to any bank desiring a quick and perfect test of
identity. It does not require an interpreter at the window
and has none of the anno}dng features that attend transac-
tions with those who cannot sj)eak English. The apparatus
is exceedingly simple: A printer's roller, a slab of glass
and a tube of quick-drying ink constitutes the outfit. In
taking an impression, the glass is slightly inked and the
three fingers* of the right hand are pressed hghtly upon the
glass, and then upon the paper. When properly done, the
result is a clear-cut, steel-engraving-like effect, which can
be as readily compared as a signature, and much more
safely. In fact, tellers working with both Finger Prints
and signatures express a preference for the Finger Prints,
as the easiest and quickest read. A little benzine on a
small sheet of tissue paper with a few drops of wintergreen
to take away the odor cleans the hands in a moment, and
twenty seconds will record the print and clean the hand.

The test questions should also be taken in Finger Print
accounts, in case it is impossible (as it sometimes is) to get a
good print when the depositor returns with calloused hands.

The movement started in Brooklyn in the fall of 1911,
and the following banks in New York State are now using
the system: The Williamsburgh, Greenpoint, East Brook-
lyn, and German, of Brooklyn, the Albany Savings Bank
of Albany, Onondaga County Savings Bank of Syracuse,
the Fulton Savings Bank, and others. A casual study of
the prints herewith shown and comparison one ^dth the
other v,n\\ quickly demonstrate that they are radically dif-
ferent and the reading an easy matter.

*Index, middle and ring fingers.

(NOTE. — At least fifty banks are now using' the system designed by Mr. P. A. Flak,
Box 83, New York. Since the above was written the Onondaga Co. Savings Bank has
demonstrated the practicability and eflSclency of the Finger Prints, in frustrating an
attjmpted forgery. The presenter of the book was brother to the depositor and passed
every test but the finger print. He is now [Nov. 1, 1912] held for attempted grand lar-
ceny.)

CHAPTER XXXVI

HOME BANKS

The little home banks which have been so widely used
by banks and department stores serve two purposes: First,
they are good advertising; and, second, they are good col-
lectors. They range all the way from a small and cheap
vest pocket bank, capable of holding two or three dollars in
loose silver, to a costly "non-pickable" ornament for the

DOLLAR SAVINGS BANK.

third avenue, near 148tm street
New York.

According to Our recbrds you have
at yuur }wme one of our Auxiliary

Banks. I^o..jf^S^e> which does

not appear to have been brought to
the Bank for quite some time, anrl
lends us to Uiink you a.re not making
use of it.

We would lie plea/Sed to hare you
Ining this Juxilianj Banjc in as soon
as convenient, and have the account
checked up. And. as it is co.tting you
a small rental per quarter, unless yon
desire to retain the Bank, it can be
marked off your pass-book.

Yours truly,

W. M. KEll.V,

Secretary.

FORM 172. NOTICE TO HOLDERS OF H03IE BAXKS.

mantel shelf. Some makers have even gone so far as to
install a clock in the bank, which must be wound (naturally)
to keep it going; but it costs a dime to wind it.

Thousands of these banks have been put out by pro-
fessional solicitors, who work for firms that make a busi-
ness of obtaining new accounts. The usual proposition is
to require the depositor to make a deposit of about $2.50,

524 THE SAVINGS BANK AND ITS PRACTICAL WORK

which secures to him a small bank and a pass book for the
full amount, the dejiosit being in the nature of a guaranty
that the bank will be returned. The firm usually asks a
lump sum for securing a certain number of accounts, or
works on a commission basis with a minimum guaranty. Great
care should be taken in such an endeavor to ascertain that
the firm is rehable and that the deposits are bona fide.
There have been cases where the solicitor was working on
a commission and offered to bear part of the initial deposit
in order to secure a new account; and it is obvious that the

$2.50 Norwich, Conn.,

•5 /X

THE DIME SAVINGS^ANK,

OF NORWICH. CONN.

Pay to yourselves Two and 50-100 Dollars on my Deposit Book
\^(s O^n /y<5" provided 1 fail, on demand, to return Auxiliary Bank
N<^ ^ 'y C> in good condition.

Witness: Sign here:

FORM 173. STANDI XG ORDER FOR THE VALUE OF THE HOME BANK.

account which must be paid for in tliis manner is not a de-
sirable account.

It is needless to say that the banks should be of good
material and well made, so that they cannot easily be
opened, and should have good locks; for if trouble develops
witli the locks, they become an intolerable nuisance. The
cheap bank has a cheap lock; and cheap locks are most un-
satisfactory.

The banks are not sold, but loaned, somewliat as a pre-
mium to help the depositor get started, and to enable him to
save the small amounts that would otherwise be fritted
away. Being a constant reminder of the saving habit, and

HOME BANKS

525

constantly inviting the deposit of small amounts, they can
and generally do fulfill a useful mission. The key is, of
course, retained by the bank. Some people are apt to use
the banks for convenience only, accumulating a small
amount and then bringing the bank in to be opened and the
contents returned. Such use of the banks should not be en-
couraged for a moment.

Care should be taken to keep some record of the banks
outstanding, for if an account is closed against which a bank
is charged, the bank has lost its hold thereon, and must take

Received of THE BANK FOR SAVINGS one Safe. No which I ogree

to return w^en called for by letter sent to my address, as given on this card, or forfeit
ONE DOLLAR of the deposit which I have this day made, and 1 hereby airree to the
regulations of THE BANK FOR S.WINGS.

Accourvt No.
/ ( ( (^ f

Account Opened

Amount of Deposit

Sign Here

Where and When

B°^" /3.^<j^,jVj._uUs ,^/i^.^f--r^ //^7.^

Father's Name

•^^j^^f^yU^.^^,^

Mother's Maiden Name

Occupation /^ a.y\^,A-A^^^2—

FOKM 174. SIGNATURE CARD AXD HOME BAXK RECORD C03IBIXED.

the chances of the holder being honest. It is well, therefore,
to stamp each bank book, as well as the ledger account,
"Home Bank Taken 7^9/1 1," and crossing it off when re-
turned.

Tellers are not in love with these httle "feeders," inas-
much as they come in at all times, A\dth all sorts of money
in them, adding not a little to the work of these tired offi-
cials. They are most likely to come in at busy times, for
the sake of getting the benefit of interest, and it is well
to have it clearly understood that no banks will be opened
during interest periods unless left for that purpose. In
some cases a special clerk is detailed for this work.

Some banks take a receipt for the bank on a card, while

526 THE SAVINGS BANK AND ITS PRACTICAL WORK

\' WEST SIDE SAVINGS BANK v

110-112 Sixth Avenue, Corner Ninth Street- Opposite Jefferson Market.

New York,-f^;C^^^^<^^ i^- /9</i.

%ecervcd of WEST SIDE SAVINGS BANK, (DNE HOME SAVINGS
BANK, No. ^h^^ . y>i coinideration of the said IVEST SIDE SA VJNGS
BANK loanitig me this Bank free of charge, I hereby agree to keep on deposit
ivith the said WEST SIDE SAVINGS BANK not less than $/ .co, and to
forfeit the said stun of $r.oo in the event of the Bank being lost, destroyed or not
returned when called for bv Jejler fiebosited inlhe »'fiitto mjv^ addt-ess. as^^ivgi
onJhis_rccei^ BoxJd%rinw^g}ulo'7hr~TfS:S^^ BANK

once a month and^its contents deposited iviihJJicm.

SolicijMS IName_^2 . V ~^ Cy-C-^ — '-'^^--^^^-^,

FORM 175. COXTRACT WITH DEPOSITOR IN COXXECTIOX WITH HOME liAXK DEPOSIT.

THK BANK FOR SAVINGS

FIRST AVENUE and UNIVERSITY STREET

# <pvON'T FORGET that
g^ \J Pocket Banks !

you

have one of

our

Why not bring it in
contents in your book

and

let us credit

the

—

—^

If it's only one cent— i

t's a

gain!

OPKN SATURDAY EVENINGS

O 'F, M. TO 8 P. M.

FOR.-M 17(). JOLI.OW UP CARD FOR USE WITH THE HOME IIAXK.

others give tliem out with little or no ceremony. Some even
go so far as to keep tabs on every bank and can tell where
each one is at any particular time — a very good idea. Some
bank men are of opinion that they are a good
thing, while others who have tried them regard them after
a time as "old junk."

A perusal of the different forms submitted herewith will
indicate the rules under which these banks are loaned.

CHAPTER XXXVII

INTEREST OX MORTGAGE LOANS— TAXES

jNIortgage loan investments form the principal asset of
the mutual savings banks of this countiy, and the interest on
these investments is the largest item in their earnings. As a
matter of fact, the greater part of the profit which attends
savings banking comes from such investments on account
of the liigher rate that usually obtains thereon. Bond in-
vestments taken as a whole for a series of years, will rarely
show any great profit over and above the interest paid to de-
positors. The low income on bonds, together with the
shrinkage in values which has been going on during the past
few j^ears, has made bond investments a perplexing question,
and many bankers are now buying bonds only ^\hen the
mortgage limit is reached.

In a canvass of this question, made in 1911 by the Com-
mittee on jNIethods and Systems of the American Bankers'
Association, Savings Bank wSection, it was found that the
loss through mortgage loans is a negligible quantity, and
the experience of banks in all j^arts of the country in tliis
regard has been eminently satisfactory. For instance, a
bank in Vermont has placed a million dollars a year for
twenty years in Western farm mortgages (a line of invest-
ment which requires careful study and accurate knowledge
of economic conditions, with more than ordinary care and
judgment) without the loss of a single dollar and usually
at good rates. For such reasons mortgage loans are particu-
iarly favored by savings bank men, and form the principal
investment feature of the business. Having properly placed
the loan ^vith a safe margin, and obtained insurance run-
ning to the bank, the next thing in order is to periodically
collect the interest. Some institutions, particularly in the
large cities, make it a point to notify all borrowers about one
month prior to the due date of the interest, but this is not
obligatory and in some institutions does not obtain. INIort-
gages are usually taken with interest falling due at uniform
dates, although a few banks have the interest fall due every
six months from the date of the mortgage, which necessarily

28 THE SAVINGS BANK AND ITS PRACTICAL WORK

Inotice

J\ro. 8978 BRING THIS NOTICE WITH YOU

On Jane 1st, six months interest amounting to

t.„^_ ..•. -. - •- Dollars, S^.

GREEN POINT SAVINGS BANK

MANHATTAN AVE. Cor. Calyer St.
BROOKLYN. NEW YORK

OPEN DAILY FROM 9 TO 3.
SATURDAYS B TO 12 NOON.
MONDAY EVEN1N6S FROM 6 TO 8.

will be due on your bond and mortgage of ^l600.

GREEN POINT SAVINGS BANK

A. B. Dabtor

362 First Are., j^

Brooklyn, H. Y.

Ireceipt

JVo. 8978 Brooklyn, JV. Y.
Received from, mortgagor named below,

Forty Dollars, SkO,

en^^N I'ONf SAVINGS mi

MANHATTAN AVE. Cor. Calyer St.
DROOKUYN. NEW YORK

OPEN DAILY FROM 0 TO 3.
SATURDAYS S TO 18 NOON.
MONDAY IVENINSS FROM B TO S.

six months interest to June 1st, on bond for ^1600,

GREEN POINT SAVINGS BANK

A. B. Debtor

362 First Ave., y^

Brooklyn, S, Y,

JVo. of Mortgage S978

Date Paid

Interest paid to June 1st

Received by

Amount rec'd. Forty

• ---••«»- — -« — --._____ Dol7n.r<t Jl40«

Amount of Mortgage

#600.

Nam,e and Address

of
Mortgagor. ** ®*

Debtor ^<7,
362 Firtt AT«., ^

Brooklyn, S, T«

lOUM 177 A, li, C. TRIPLICATE FORM OF INTEREST RECEIPT. THE THREE FORJIS ARE MADE AT ONE

TIME BV CARllOX PROCESS, "a" IS THE NOTICE WHICH GOES TO THE MORTGAGOR IN AN "OPEN
face" ENV'EI,0PE; "b" is the interest receipt which is torn off, and DATED AND
STAMPED WHEN INTEREST IS PAID; "c" IS THE POSTING SLIP. USED BY THE GREENPOINT
SAVINGS BANK OF BROOKLYN^ AND A MOST EFFICIENT SYSTEM.

INTEREST ON MORTGAGE LOANS— TAXES

529

complicates the computation of the accrued interest and can-
not be recommended, for it is much better to have all interest
falling due at the same time. The interest, of course, is fig-
ured on each loan at the rate stipulated, and quite common-
ly the receipts are made out in advance of the time of pay-
ment, so that all that needs to be done when payment is
made is to date and sign the receipt. Stubs are generally
used which, when detached, become the credit tickets.

In order to collect interest promptly several banks have
a very excellent plan of fines. Thus, all bonds are writ-
ten at, say five per cent., with the stipulation that if the in-
terest is not paid before a certain date (as January 10 and
July 10) the interest will be collected at the legal rate, wliich
places a penalty upon tardiness and rewards promptness.

FORM 178. INTEREST RECEIPT WITH STUB.

How well this works may be seen from the fact that in a
bank with over four thousand mortgage loans, all but about
fifty are collected before the penalty accrues. The proced-
ure of a large bank, which features mortgage loans will ex-
emplify how efficient the work of collecting interest can be
made. The interest on all mortgages falls due January 1
and July 1. Prior to those dates the interest on each mort-
gage loan is figured and jotted down in lead pencil; receipts
are made out for each loan under number and borrower's
name, with stub. These are checked back, both as io name,
number and amount, and are then sorted alphabetically and
arranged in pigeon holes. The collection is made at a des-
ignated window where nothing else is handled during the ten
days' rush. Careful count is made of the number of pay-
ments each day and at the close of the period (July 10 and
January 10) the number of receipts on hand, j^lus the num-

530 THE SAVINGS BANK AND ITS PRACTICAL WORK

ber of payments made, must equal the total number of open
^iiortgages.

Shortly after July 10th and January 10th, a list is made
up of the interest i)aid, as shown by the ledger accounts,
whieh nnist agree n\ itli the interest received, as shown by the
income account, which proves the postings to have been
correct. The total of the interest paid, plus the interest
unpaid, as shown by the receipts on hand, is the amount of
interest that was due on mortgages at the close of the semi-
annual period. Thus:

Interest received on mortgage loans,

June 1 5— Julv 1 $10,582.59 Number of Items 567

July 1-10 . .* 90,872.69 Number of Items 1 175

Total as shown bv mortgage

ledger " .$101,455.28 Total Items 1742

Total unpaid interest as shown by

receipts on liand 7,896.59 Number of Items 170

No. Mortgages,
Total interest due July 1 $109,351.87 Verified by Count 1912

A clerk busies himself posting interest to the ledgers as
fast as it comes in, the only check on this work being the
aforesaid trial balance. Un]3aid interest is listed, the mort-
gagor notified and every effort made to collect; and that
which is not collected within a reasonable period is placed in
the hands of the attorney for collection or foreclosure.
(Other forms will be found in chapter on Audits, page 428.)

Taxes.

The most important collateral features connected with
mortgage loans are the insurance and taxes. The property
should at all times be adequately covered by insurance, the
policies running to the bank with mortgagee clause attached.
This is treated elsewhere. The payment of taxes is import-
ant, owing to the fact that taxes are a })ri()r lien to a mort-
gage and should not be allowed to jeopardize the interest of
the mortgagee. There are three methods of keeping track
of unpaid taxes: Fir.st, to re(]uire the presentation of the re-
cei])ted tax bill at least once a year (Form 123). This is
quite commonly done in Xew York City, and both the city

INTEREST ON MORTGAGE LOANS— TAXES 531

and water tax bills are shown each year to the bank of-
ficials. Notation may be made on the ledger account or
other record that taxes against the ])roperty have been paid
to a certain date (page 408, last column to the left) . Those
remaining unpaid are followed up until ])ayment is made or
other measures taken to protect the bank. The second
method is to have a tax search made at stated times. This
is done for a nominal fee by title companies in large cities
or can be obtained from the tax office. The third method
is to wait until the list of unpaid taxes is published, as is the
practice in many places, when the list of mortgages is
checked with these lists and the taxes either paid by the bank
and charged to the mortgagor, or steps taken to compel the
owner to make payment himself. Those remaining unpaid
at the time of the sale are usually paid by the bank, and
projDer receipt taken which becomes a charge against the
property, and if not redeemed will in time give the bank a
tax title to the property. The latter method is probably the
most frequently used; but whichever method obtains it is im-
portant that taxes are not allowed to accumulate against
mortgaged premises.

CHAPTER XXXVIII
INSOLVENCY IN THE SAVINGS BANK

The depositor who steps to the teller's ^^dndow and
hands in liis money, taking therefor a pass book, may think
he becomes a mere creditor of the savings bank and that the
bank owes him so much money as is represented by liis pass
book credit ; but he is mistaken. In a certain sense the bank
does owe him the money; not as a creditor, however, but
rather as a partner.

He may also be under the impression that he has left
his money for safekeeping and the pass book is his receipt;
and in tliis, to a certain extent, he is correct; but in law he
has become more than a mere creditor and the bank more
than a mere bailee or debtor. They have joined forces, and
he has said, in law, "take this money, combine it with that
of other people; invest it according to law. Out of the
earnings iirst pay the expenses of administration, and give
me the balance as interest in proportion to my contribution
thereto."

If he is a wise depositor, he will also add, "but before
paying me my interest, reserve enough as surplus to fully
protect me from losses of all sorts, particularly in the de-
preciation of investments"; and to this he should add, to be
technically correct in his attitude, "and if losses accrue
v/hich could not be prevented, and you, the managers, have
not been remiss, I will hold j^ou harmless and bear my share
of the loss." If he but knew this, he might hesitate to "join
the bank" and prefer to go to some other institution where
he would become a simple creditor, with the stockholder's
liability added to the surplus, as his protection.

Cases are on record in a number of states where de-
positors have not only suffered loss by reason of unforeseen
happenings, but where the officials have stolen the money
and the theft could liave been prevented by more careful
methods; and yet the courts have jilaced the burden on the
depositors.

That the depositor is a partner is borne out by the
definition of partnership in the Standard Dictionary, to

INSOLVENCY IN THE SAVINGS BANK 53S

wit: a partner is "one who takes part or is associated with
others"; and a partnership, "an association founded on con-
tract (in this case the pass book) between two or more
persons to combine their money, effects, labor, skill, or any
or all of them in lawful commerce or business and to share
the profits and hear the losses in certain proportions."

Partnership Tested by Insolvency.

The ordinary method of winding up the affairs of an
insolvent institution is to appoint a receiver, assemble the
assets and distribute the same among creditors. In some
states, where a bank is insolvent, the banking department
takes charge and liquidates the bank, in a manner similar
to a receiver, but avoiding the expenses attendant upon
receivership; but in a savings bank the procedure is often
different. We find several instances of insolvent banks re-
habilitated by the simple operation of scaling down the
h* abilities (deposits) by charging each depositor his pro rata
share, thus making the liabilities equal to or less than the
assets. Two cases of this sort have recently apeared in
Massachusetts. The assets of the Marblehead Savings
Bank depreciated to such an extent that it became neces-
sary to either liquidate or charge the depreciation to the
depositors. The bank was placed under temporary in-
junction in June, 1904, and reopened its doors August 15,
1907, having neither received nor paid out any money to
depositors during that time. This was, of course, not a
"scaling down" of deposits, strictly spealdng, or charging
off the loss, but rather suspending p>ayment, and using the
funds without interest obligation until the deposits auto-
matically increased by their own increment, to the point
of solvency. The cost to the bank was $3,480.15 in ex-
penses, and the depositors lost but the interest in the interim
— namely, IOV2 per cent.

On January 30, 1909, the Bank Conmiissioner for
Massachusetts advised a similar procedure for the Green-
field Savings Bank, whose real estate loans had become
unproductive, seriously impairing the earning power of the
bank. Operations Mere therefore suspended until such time
as the investments again became productive.

During the year 1910 a scaling of 25 per cent, was made
in a case in Maine (the losses were due to stealings on the

534 THE SAVINGS BANK AND ITS PRACTICAL WORK

part of the treasurer), and in another INIassachusetts case
ix scaHng of 1.5 per cent, was made for losses due to Hke
cause.

As the proofs of this Chapter are being read (^Nlay 6th,
1912,) the information comes to hand through the financial
press, that the same process has been used in the case of the
tVindsor Locks Sa^'ings Bank, AVindsor, Conn., which was
restrained from paying out anj^ funds or dividends for a
period of three months from January 27, 1912. The bank
re-opened on April 27 under Court order, the directors
having scaled the deposits 26 per cent. The bank was
authorized to pay depositors 50 ])er cent, of their claims at
once, and out of over 1,600 depositors but 228 drew the full
allowance on the opening day. The deficit of $147,369 was
due to thefts on the part of officials and suit is contemplated
against the trustees for laxness of management.* •

The first savings bank in New York to be so restored,
not by suspension of dividends, but by directly charging the
depositors their share of the losses, was in the case of the
Oswego City Savings Bank, which occurred in 1879. The
deposits in this instance were scaled 10 j^er cent., and the
bank resumed and has prospered ever since. Since then
the same process has been applied to the Chenango Valley
Savings Bank, of Binghamton; the National Savings Bank,
Buff'alo (now out of existence), and the Ulster County
Savings Institution of Kingston. The latter is a matter of
court record, and the facts are as follows :

On or about September 17th, 1891, a defalcation of
$36.5,91 8. .50 was discovered in the Ulster County Savings
Institution, Kingston, N. Y., due to abstractions of the
treasurer and assistant treasurer. The banking department
thereupon began an examination, and upon discovering the
true facts, the bank was closed and the matter reported to
the attorney-general. Proceedings were instituted to dis-
solve the bank and a temporary receiver was appointed. The
deficiency was less than 15 per cent, of the assets ($2,474,-
465.89) and permission was asked of the court to "scale
down" eacli deposit in tliat proportion and resume business,
rather than liquidate. The matter was presented under
l)etition of depositors, showing that this was the universal

*Such suit lias now l)C"cn instituted iiv the bank conniiissioners of the State.
(Nov. 28, 1912.)

INSOLVENCY IN THE SAVINGS BANK 535

desire on the part of depositors, and no depositor expressed
Bny unwillingness.

Such a course was eminently sane, and would continue
in existence an old and well established institution, wliose
success was universally commented upon prior to that time,
and whose life was in jeopardy solelj^ through the pecula-
tions of its trusted officials, who were both sentenced to
long terms in prison. It would be much cheaper
in the end to thus charge off the deficiency, rather than go
through receivership, as the latter process would necessitate
calling in loans and mortgages, and work undue hardship
upon borrowers. The question at issue was "Could this be
legally done?" The court said, in reply to this question,
"It has been the policy of this state for a long series of
years to permit savings institutions, whose assets, from any
cause have shrunk below their liabilities, to resume business
w'herever it could be done upon a solvent basis, and this
course has been uniformly * * * recommended by the
banking department.

"In his report for 1883. Bank Superintendent A. B.
Hepburn said: 'Xo one can make a study of the failed
savings banks without perceiving how much better it would
have been for depositors in many instances had the deposits
been scaled so as to render the bank solvent, and they had
been allowed to continue business. Tliis department and
the courts now have by law sufficient power over the tenin-e
of office of savings bank managers to secure the removal of
incompetent or unfaithful men. With the funds still in the
hands of the trustees, under the direction of the court and
subject to the supervision of the superintenden.t. the deposit-
ors would have realized much more money, and the expensive
management and costly and interminable litigation which
succeeds insolvency, as the night the day, would have been
avoided. It seems that our courts now have the power to
reduce each individual deposit to an amount sufficient to
render an insolvent savings bank solvent, and authorize
the managers of the bank to charge against each separate
depositor such amount.'

"The statute, which authorizes the institution of actions
hke the present, provides that 'the court before which such
proceedings shall be instituted shall have power to grant
such orders, and in its discretion, from time to time, to

536 THE SAVINGS BANK AND ITS PRACTICAL WORK

modify or revoke the same and to grant such relief and
render such judgment as the facts or evidence in the case
and the situation of the parties and the interests involved
shall seem to require.'

"The power thus conferred seems to be sufficient to en-
able the court to make such orders and such disposition of
the institution and its affairs as may appear to be for the
best interests of the institution, its creditors and its deposit-
ors." Here follows one of the best expositions on the func-
tions and relations existing between savings banks and their
depositors to be found anywhere.

The Bank and Its Depositors as the Court Sees It.

"Savings hanks are quite unlike ordinary hanks. Com-
monly, banks are business corporations, have stock and
stockholders, and paid officers, and conduct their affairs
Mith a view to profit. Their relation to their deimsitors is
in no sense one of trust. They receive deposits, to be paid
upon the check or draft of the depositor, without interest
01 addition. Their profits, if any, are distributed among
their stockholders, and the losses fall upon them, and their
property is subject to sequestration, at the suit of any
creditor. A savings hank is an institution of quite a differ-
ent character. Its relation to its depositors is in a large
sense one of trust and confidence. It has no stock and no
stockholders. Its depositors are not entitled to draw checks
against it. It does not receive deposits to be paid upon
demand simply, hut for investment on securities, taken for
the hen c fit of depositors. Its assets are held for distribu-
tion among its depositors ratahly, and its losses fall, in like
manner, upon its depositors. No creditor or depositor can,
by diligence in the pursuit of any legal remedy, obtain any
advantage over any other creditor or depositor. Its profits
and its losses fall on each dej)ositor according to his just
proportion, and no depositor has a right in the distrihution
of its assets to ohtain or receive his dejjosit in full at the
expense of the other depositors. The assets, after deduct-
ing necessary expenses, are held simply as helonging to and
as security for all depositors. It would seem, tlierefore,
that no depositor has any just cause of complaint, if he is
not permitted to receive his deposit in full, in case the
assets are insufficient to pay all the depositors in full. Nor

INSOLVENCY IN THE SAVINGS BANK 537

would the trustees be justified in exhausting or even im-
pairing tlie assets of the institution by payment in full of
diligent depositors, and thereby leaving those who are less
vigilant to receive a less sum than would be theirs if a just
and ratable distribution were had. Under the circum-
stances, the assets of the hank being held for all the de-
positors, and the losses sustained by all, and there being no
right in any depositor to insist upon the paj^ment of his
own claim in full at the expense of others, it is clear that
the loss already sustained may and shoidd be thus distrib-
uted, and the bank, if possible, permitted to resume busi-
ness for the benefit of all depositors alike, that in the end
each depositor may receive as much as possible."*

Courts of equity in other States have exercised the
power of scaling down deposits and authorizing the re-
resumption of business. This was done in the case of the
Newark Savings Institution, and the court said: "The de-
postors (in the absence of fraud on the part of the man-
agers, from which personal liability would arise) have no
recourse whatever for repayment of their principal or in-
terest to anything, except the general investments, of the
institution. * * * Xo depositor has, under the charter
or in equity, a right to any particular security in hands of
the institution more than any other depositor."

In 1871 similar proceedings were taken in Connecticut.
In this case the deposits were scaled twenty-four per cent.,
being deducted by the trustes themselves, and a joint reso-
lution was subsequent^ passed hj the Legislature ratifying
their action. Action was afterwards brought by a deposi-
tor whose account had thus been reduced, to recover the
amount deducted, and the Supreme Court, without giving
any effept to the resolution of the Legislature, held that the
action was lawful and proper and that the depositor could
not recover. Like proceedings have been taken in New
Hampshire, where there is a statute authorizing the same.
Again, in JNIassachusetts, in the case of Lewis v. Lynn
Savings Institution (148 Mass. 235), the rule laid down in
the Connecticut case was approved and applied. In this
instance the court says: "But to the depositors themselves
the undertaking of the corporation is that it will receive and

*People V. Ulster County Savings Institution. New York Savings Bank
Cases, p. 9.

538 THE SAVINGS BANK AND ITS PRACTICAL WORK

combine the deposits, and manage and use them to the best
practical advantage according to the judgment of the
trustees, and give to the depositors in just proportion
among themselves the benefit of such management. There
is no absolute promise to pay any depositor in full."

Enough has been cited in authority to sustain the con-
tention that the relationshiji existing between a bank* and
its depositors is of a triple nature, and that, while the de-
})ositor is a creditor, and a beneficiary , he is also a mernher
of a corporal ion. Its gains are his gains; its losses are his
losses. (See also Chapter XII, "The Bank and its De-
positors.")

*Mutual savinss bank.

SUBJECT INDEX

Abstract of Title 401

Accounts, Forms of 193

Accounts of Deceased Persons.. 448

Accounts, Undesirable 170

Account, First Savings Bank, in

United States 19

Active Savings Bank Account,

Example of 301

Adding Machine and Trial Bal-
ance 339, 342

Advertising Should be Educa-
tional 475

Advertising Mediums 479

Advertising, Mistakes in 477

Advertising the Savings Bank... 473

Agreements, Invalid 162

Alteration of accounts 274, 276

Amendments to Bylaws 181

American Postal Savings Banks. 75

Amortization Defined 414

Amortization of Bonds 411

Amortization Methods 417

Amortization, How to Use Tables 419
Amortization, Legal Requirement 414

Application, For Loan 180, 397

Appraiser 154, 387

Appraisal 401

Assent to By-Laws Implied .... 209

Assignments 279

Assistants, Duties of 159

Attachment, Writ of 287

Attempts to Better Conditions,

Early 15

Attending Committee ...146, 147, 157

Attorney 150

Attorney, Power of 271

Audits 428

Audits, Details of 432

Audits, Mechanical 438

Audits, Psychology of 430

Audits, Scope of 432

Audits — Schenectady Idea 440

Audits, Trustees, in Various

States 437

Available Fund 136, 137

Average Savings Account 93

Baltimore, Beginning of Savings

Bank of 20

Balance Posting Method 330

Bank and Depositors, Relation-
ship 204

Banking by Mail 442

Banking Past and Present 101

Binghamton Trust Co. Case 21, 24, 26

Birth of Savings Banks S

Bond Amortization (Full Treat-
ment) 411

Bond Defined 411

Bonds, Employees 159

Bonds, Transfer of 1T9

Borrowing by Trustees (Avail-
able Fund) 136

Bound Book, Defects of 309

Branch Savings Banks 11

Buildings, Savings Bank in New

York, Table of (Insert) 98

Building and Loan Associations

in Pennsylvania 17

Building and Loan Associations

in United States 92

Burial Expenses of Deceased De-
positors 449

By-laws 144

By-laws, Legal Status of 144

By-laws, Model Set 182

By-laws, Publication of 179

Cards and Loose Leaves Com-
pared 303

Care, Due, Bank Protected When

Used 211, 213, 215

Cash, Proof of 294

Certificate of New Bank, Filing. 106

Charitable Bank 5

Charity or Philanthropj% Is the

Savings Bank 22

Characteristics of Mutual Savings

Banks 57

Charter, Steps to Procure 105

Checks on Deposit 163, 261, 297

Checks on Depositaries 177

Check Register, Importance of. . 263
Classification of Sa\ings Banks. . 55
639

540

SUBJECT INDEX

Conmiittees, Dutks of 154

Committee Duty 119

Comptroller, Duties of l^-t

Connecticut, Deposits in 46

Consent, Mutual 208

Co-operative Credit 72

Co-operative Credit Banks 68

Cost of Buildings 392

Coui^on System of Posting 320

Days of Grace 373, 375

Death of One and Both Parties in

Joint and Trust Accounts.... 456
Debtor and Creditor (Bank and

Depositors) 205

Deceased Persons' Accounts....

174, 281, 448, 453, 456
Defoe's, Daniel, Scheme for a

Savings Bank 3

Deposit, First 188

Deposit Ledger 298

Deposit Ledger, Evolution of . . . . 299
Deposit Tickets, Banks Training

Depositors to Make 227

Deposits 219

Deposits by Check 1(53, 2G1, 297

Deposits, Entry of 162

Deposits in New York City,

Amount of 49

Deposits in Other Banks 138, 180

Deposits, Limitation of 160

Deposits, Miscellaneous 256

Deposits, Miscellaneous Provi-
sions concerning 162

Deposits, Scaling of 532

Deposits, Special 162

Deposits, Table Showing Distri-
bution of 49

Deposits Without Book 259

Depositor's Duty to Bank 214

Depositors, Geographical Distri-
bution of 93

Depositors in U. S 44

Depositors Must Subscribe to By-

I-aws ] fiO

Depositors, Xumber of in United

States 93, 95

Depositors to share earnings.... 3.56
Depository Banks, Selection of. 117

Dividends 172, 3.55

Dormant Accounts 171, 485

Dormant Accounts, Methods of

Handling 488

Drafts, Miscellaneous 256

Due Care— What Is? 213

Duncan's, Henry, Bank 7, 11

Early Problems 11

Earnings, Estimate of 363

Earnings, Schedule of 365

Effects of Savings Banks, Far

Reaching 49

Employees 158

Employees, Bonds of 159

Employees, Oath of 158

English Postal Savings Banks... 74

English Savings Banks, Early... 5

Ethics of the Savings Bank.... 112

Evolution of Deposit Ledger.... 298

Examinations — Audits 177

Examining Conunittee 156

Example of Savings Bank Help-
ing a Family 50

Executive Committee 158

Expenses, Bills for 178

Expenses of Xew Bank 189

Factors in Realty Values 389

Farm Loans 397

Fees for Attendance at Board

Meetings 119

Finance Committee 154

Finger Print Identification 518

First Savings Bank 3

Fraud, Old English 347

Frauds-Cuff St. & Rochdale 435

Frugality Bank 6

Fimctions of Savings Banks 21

Fundamental Elements in the In-
stitution of a Savings Bank... 2
Funding Committee 154

General Orders 267, 270

Germany, Savings Banks in_... 62-68

Gifts of Pass Books 170

Groups, Accounting by 317

Grouping Accounts 317, 339

Guaranty Savings Banks in New
Hampshire 60

Ileljilng tlie Masses 46

Home Banks 523

Home Made Orders 256

SUBJECT INDEX

541

Identification 267

Identification, Finger Print 518

Identification, Helps to 198

Identity, Mistaken 284

Illinois, Savings Banks in. Com-
ment Upon 80

Illustrations of Various Meth-
ods of Amortization 419-427

Inception of Savings Bank

Movement 1

Income on Realty 393

Income, Proof of 436

Insolvency 532

Insurance on Mortgaged Prem-
ises 516

Insurance, Regulations Regard-
ing 405

Interest, Credit of 172

Interest Distributing for 376

Interest, Figuring 368, 370, 379

Interest, Monthly or Quarterly.. 371
Interest Methods in Various

Banks 381

Interest on Mortgage Loans,

Collection of 527

Interest or Dividend, Distinction 355

Interest Rates, High 360

Interest Rate in United States.. 93
Interest Rate in Stock Savings

Banks 94

Interest Rules 369

Interest, Rules for Distributing

376, 378

Investments, How Made 180

Investments of Savings Banks

Generalized 83

Investments of Savings Banks in

United States 45

Iowa, Savings Banks in. Com-
ment Upon 80

Joint Accounts 167

Joint Account, Death of One

Party 456

Joint Account, Death of Both

Parties 457

Junior Department 515

Laws, Inadequate 82

Laws of States Regarding Trus-
tees 100

Laws, State, Regarding Divi-
dends 360

Legality of Bonds 412

Legality of Loose Leaf and

Cards 305, 310

I>ife Insurance Companies in

United States 92

Limit Accounts 12

Loans, Ap])lications for 180

Loan— Closing 404, 408

Loose Leaf and Card System

Compared 303

Losses in New York State 3

Lost Books 168, 284, 462

Lost Books, I^aws of Several

States Regarding 467

Lost Books, Legal Aspects of... 463
Lost Books, Methods in Com-
mon Use 471

Lost Books, Procedure in 465

Maine, Deposits in 46

Management of Savings Banks..

112, 145

Market, Real Estate 387

Married Women 167

Mechanical Teller of Union Dime

Savings Bank 229

Meetings, Attendance at 148

Meetings, Attendance At in Dif-
ferent States 118

Meetings, How Called 148

Meetings, Special 148

Methods, Early, in Vogue Today

10, 11
Methods, Interest, (Monthly and

Quarterly) 371

Minors 167

Minutes of Meetings 149, 158

Modern Savings Bank, First.... 6

Money, Cost of 364

Money, How to Count 225, 292

Mortgage Loans 385

Mortgage Loans of Savings

Banks in I'nited States 46

Mortgage Loans of Savings

Banks in New York 46, 385

Mortgage Loans in Mass. Sav-
ings Banks 385

Mortgage Loan Safeguards. .394, 396

Mortgages, Transfer of 179

Motives for Organizing Savings

Banks 99, 102, 107

Movement, The Savings Bank 1

542

SUBJECT INDEX

Municipal Savings Banks 6:2, (J8

Mutual Savings Banks 55

Mutual Savings Banks in the

United States, Location of . . . . 78
Mutual Savings Banks in the

United States, Resources of... 78
Mutual Savings Banks in the

United States, Number of, etc. 77
Mutual Savings Banks in the
United States, Map Showing

Distribution of 79

Mutual Savings Banks in the

South and West 81

Name, Change of, on Pass Book. 275
National Banks, Savings Deposits

In 90

Nationality of Depositors, Table

Showing 48

Nature and Functions of Sav-
ings Banks 21

Negro and Savings Banks 81

New Accounts, Table Showing

Details of 48

New Savings Bank, Conception of 99

New Account, Opening 19,S

New York City, Debt of 4.3

New York, Savings Bank Move-
ment in 16

New York State Savings Bank,

Map of 80

New York State Saviijgs Banks,

Buildings of 98a

Nominating Committee 158

Notary's Certificate 257

Notice to Depositors 181

Occupation of Depositors, Table

Showing 47

Officers 150

Offices, Duplication of in Several

States llfi

Officials, Savings Bank 145, 146

Opening Account 193

Order of Business 149

Orders, General 267, 270

Orders, Home Made 243, 256

Organization Expenses 189

Organization of Savings Bank.. 96

Origin of Savings Banks 3

Other States, Death of Depositors

In 460

Overs and Shorts 291

Papers in Mortgage Loans 404

Parochial Bank 11

Pass Book a Contract 198, 199

Pass Book, Assignment, Gift, and

Transfer of 170

Pass Book, First Use of 10

Pass Book Not Negotiable 207

Pass Book, Payment on Presen-
tation of 211

Pass Book, Possession of 209

Pass Book, Regulations 170

Pass Books, Discussion of Forms,

Etc 199, 202

Pass Books, Rules in 206

Pass Books, Transfer of 170, 277

Pass Books, Veriiication of 436

Paying Teller 240

PajTTient, Care in 207, 213, 215

Pennsylvania, Dearth of Mutual

Savings Banks in 78

Pennsylvania, Birth of Savings

Banks in 17

Peoples Banks 68

Physician's Certificate 259

Postage on Banking bj' Mail.... 447

Postal Savings Banks 73

Postal Savings Banks in America 75
Postal Savings Banks in England 74
Posting and Proving Methods...

316, .324, 333

Power of Accumulations 41

Power of Attorney 271

President, Duties of 151

Proof by Groups 348

Proof of Income 436

Proportion of Savings Accounts
to Population in Various States 58

Quarterly or Monthly Rules, Ex-
perience of Banks 370, 372

Quorum 149

Raiffeisen Banks 69

Ra iny Day 33

Rate of Interest, Differential... 357

Real Estate Movements 395

Realty Values, Basis of Mortgage

lyoans 385

Reasons for Opening a Savings

Account 191

Relation of Bank to Depositor. .

23, 197, 204

SUBJECT INDEX

51.3

Rental Value of Property 391

Reserve Cash of New York Sav-
ings Banks 289

Rules May be Waived 210

Safety, Margin of 392

Safeguarding Depositors 109

Salaries 159

Sales of Realty 389

Savings Bank Defined 21, 25

Savings Bank Movement 1

Savings Bank Distinguished From

Bank of Discount 40, 54

Savings Bank — a Public Benefac-
tor 40

Savings Bank Account, First in

United States 19

Savings Bank Advertising 473

Savings Bank Idea 42, 52

Savings Bank Deposits in Banks

of Discount 139

Savings Bank, Nature and Func-
tions of 21

Savings Banks Allied With Banks

of Discount 140

Savings Banks in New York

State, Map of 80

Savings Banks in the United

States 77

Savings Banks in United States,

First 14-20

Savings Banks in United States,

Map Showing 79

Savings Banks in the South and

West 81

Savings Banks in the United
States, Growth of and Other

Statistics 86, 95

Savings Banks in Germany 62-68

Saving by Compulsion 37

Saving by Education 35

Saving By Encouragement 38

Saving by Incentive 34

Saving by Sacrifice 37

Savings Deposits in Various

States 89, 92

Savings Deposits of the United
States, Compilation of, by

American Bankers' Assn 87

Savings in United States,

Amount of. Etc 44

Scaling Dejjosits 532

Schedule of Earnings 3CG

School Savings Banks 36, 88, 497

Seal 178

Search 401

Secretary, Duties of 1,J3

Securities, How Kept, Transfer

of 179

Shorts and Overs 291

Sick and Aid Societies 52

Single Name Account — Death of

Depositor 456

Society Accounts 176, 491

Speculation or Investment

(bonds) 412

Spendthrift Habit 32

Stamp System (See School Sav-
ings Banks)

State's, The Part in Banking... 84
Stock and Mutual Savings Banks

Distinguished 25, 26

Stock Savings Banks Discussed. 59
Stock Savings Banks, Invest-
ments of 94

Stock Savings Banks, Niimber of

Depositors 94

Stock Savings Bank, Table

Showing Deposits of 95

Stop Orders 284

Sunday Bank 6

Supplies, Bills for 178

Surveyor 154

Systematic Saving, Example of.. 43

Tax Receipts 179

Taxes on Mortgaged Premises . . . 530

Teller 237

Teller, Mechanical 229

Teller, Paying 241

Teller, Work of 226

Teller's Cash 288

Teller's Qualifications 219

Teller's Work, Methods of Check-
ing 230-235

Test Questions 195

Thrift a Habit 31

Thrift Defined 30

Thrift, Germany, France 29, 31

Thrift Habit 28

Thrift, Lord Roseberry on 29

Ticket Deposit Banks Requiring
Depositor to Make 227

544

INDEX TO PROPER NAMES

Title, Defects in 403

Transfer of Account 274

Transfer of Securities 1T9, 180

Treasurer, Duties of 15:3, 153

Trial Balance, Comment on.. 336, etc.

Trial Balance, Daily 333

Trial Balance Methods in Vari-
ous Banks 349

Trial Balance, Transition of 345

Trust Accounts in England 13

Trust Accounts 167

Trust Accounts, Rules for Trans-
ferring 283

Trust Accounts, Death of Trus-
tee 457

Trust Account, Death of Benefi-
ciary 459

Trust Account, Death of Both

Parties 459

Trust Company Doing a Savings

Bank Business 26

Trustee Savings Banks 55-58

Trustee, Who May Be 113

Trustees, Attendance at Meetings

118, 148

Trustees, Authority of 148

Trustees, Audits By 437

Trustees, Borrowing By (Laws

of Several States) 127, 147

Trustees, Contril:)utions of 189

Trustees, Duty of 118, 147

Trustees in Early Days 115

Trustees, Laws of States Regard-
ing 100

Trustees, Lial)ility of.... 139, 133, 316

Trustees, Meetings of 148

Trustees, Number of 146

Trustees, Number of in Different

States to Organize 105

Trustees Presumed to Know the

Work of Bank 132

Trustees, Qualification of in dif-
ferent States 114

Trustees, Removal of 116

Trustees, Remuneration of .... 147
Trustees, Remuneration of. Laws

of Several States Regarding. . 120

Trustees, Responsibility of 146

Trusteeship Desirable 104

Undertaker, Payment to 449

United States Bonds Held by
Savings Banks 45

Vacancies 149

Verification of Pass Books 353

Verification of Pass Books in

Massachusetts 436

Vice-President, Duties of 151

Withdrawals (In General) 236

Withdrawals by Mail 167

Withdrawals, Notice of.. 163, 164, 251
Withdrawal Notice, First Use of 11

Withdrawals, How Made 165, 166

Withdrawal Methods 345-256

Withdrawals, Suggestions Con-
cerning 253

INDEX TO PROPER NAMES

(Banks, hanlicrs and other persons)

Adrian (Mich.) State Savings

Bank 208

Albany Savings Bank... 17, 178, 522
Albany Exchange Savings Bank

222, 378, 380, 401, 407, 461

Albany County Savings Bank. 331, 450

American Savings Bank, Buffalo. 386

Androscoggin County Savings

Bank (Me.) 465

Augusta (Me.) Savings Bank. 309, 213
Bangor Savings Bank, Bangor,

Me 350, 333, 333

Bank for Savings, N. Y..4, 16, 17, 20,

96, 98, 137, 147, 291, 358, 361, 476

Banking Law Journal 13

Barclay, W. A. Jr 2

Bauer, M. F 225

Bayard, Andrew 18

INDEX TO PROPER NAMES

515

Bentliam, Jeremy 5, 6

Berkshire County Savings Bank,

Pittsfield, Mass 232, 238

Biddle, Clement C 17

Binghamton Trust Co 21, 24, 26

Bloomfield (N. J.) Savings Insti-
tution 24, 133, 217

Bolle's Practical Banking

5, 54, 146, 356, 439
Bolle's Modern Law of Banking.

238, 465

Boston Savings Bank 207

Bowery Savings Bank.l2, 96, 97, 98, 115,

146, 204, 205, 208, 214, 231, 240, 244,

245, 249, 255, 257, 263, 268, 291, 296,

324, 326, 388, 446, 447, 464, 476, 487

Bristol County Savings Bank

(Mass.) 463

Brooklyn Savings Bank

210, 358, 463, 474, 476
Brown, Marj' Wilcox (Develop-
ment of Thrift) 28, 34, 69, 72

Brown, Elmer E 499

Burroughs Adding Machine 343

Bushwick Savings Bank, Brook-
lyn 358

Carlyle, Thomas 7

Cayuga County Savings Bank,

Auburn, N. Y....235, 238, 313, 329

Chalmers, Dr 7

Charitable Bank 5

Charlestown Five Cent Savings

Bank 281

Chattanooga 'Sa\ings Bank 212

Chelsea Savings Bank, Norwich,

Conn 196,197, 204, 278, 340

Chenango Valley Savings Bank,

Binghamton, N. Y 3, 534

City Savings Bank, Brooklyn.... 358
City Savings Institution, Lowell,

Mass 270, 280

Citizens Bank (Ga.) 213

Citizens Savings Bank (N. Y.)..

46, 197, 242, 358, 464
Citizens Savings & Trust Co.,

Cleveland, 0 473

Cleveland (Funds and their uses) 411

Clinton, Dewitt 16, 17

Colorado Savings Bank 27

Colquhoun, Patrick 15, 16

Comptroller of Currency, Report
1910 77, 86

Connecticut Savings Bank, New
Haven 226, 263, 266, 294

Corn Exchange Bank, New York

262, 275, 276, 277, 278, 279

Cortland, N. Y., Savings Bank. 224

Delestre, Hugues 3

Defoe, Daniel 3

Dennison & Sons 315

Dime Savings Bank, Brooklyn... 192
Dime Savings Bank, Norwich,

Conn 192, 212, 226, 524

Dime Savings Bank, Williams-
burgh, Brooklyn 218

Dollar Savings Bank, Pittsburgh

80, 194, 207, 463

Dollar Savings Bank, New York 246,

250, 258, 443, 446, 454, 458, 495, 523

Dry Dock Savings Bank 19, 98

Duncan, Henry 7-10

Duncan's Bank, Henry 7

East Brooklyn Savings Bank

206, 374, 451, 464, 522
East River Savings Bank, New

York 358

East Side Savings Bank, Roches-
ter 206, 237

Eddy, S. M 315

Eddy, Thos 15, 16

Eddy, Thos., Jr 16

Edinburgh Savings Bank 7, 10

Ellenville (N. Y.) Savings Bank 212
Emigrant Ind. Savings Bank,

New York

258, 268, 285, 286, 291, 393, 463, 519
Empire City Savings Bank, New

York 474

Enterprise Bank, Charleston, N.

C 482

Erie Co. Savings Bank, Buffalo

98, 139, 213
Eutaw Savings Bank, Baltimore

233, 249, 263, 291
Excelsior Savings Bank, New

York 358

Exeter Savings Bank 11

Farmers Savings Bank (Virginia)

133, 216

546

INDEX TO PROPER NAMES

Farmers & Mechanics Sa\-ings

Bank, Minneapolis 503

First National Bank, McKees-

port, Pa. . . '. 482

Fitchbiirg, Mass., Savings Bank 351
Franklin Savings Bank, Boston.. 463

Franklin, Benj 30

Franklin Savings Bank, New

York 358

Freedmens Savings and Trust Co. 81

Frugality Bank 6

Fulton (N. Y.) Savings Bank 522

German Sav. Bank, New York

212, 288, 400, 401

German Savings Bank, Brooklyn. 522

Germania Savings Bank, Brook-
lyn 192, 308, 215, 358

Gillespie National Bank (Illinois) 482

Gladden, Washington 30

Greenfield (Mass.) Savings Bank

394, 533

Greenpoint Savings Bank, Brook-
lyn 519, 520, 522, 528

Greenville (Miss.) Savings Bank
and Trust Co 482

Greenwich Savings Bank, New
York 231, 234, 327, 358, 452, 455, 476

Griscom, John 16

Hale, Thos 17, 18

Hamilton, James H. ("Savings

and Savings Institutions")....

4, 53, 56, 58, 62, 63, 64

Hanhart, Wm 87

Harlem .Sa\-ings Bank, New York

340, 463, 519

Harris. H. N 68

Hawley, N. F 503, 507

Hennepin Co. Savings Bank

(Minneapolis) 310

Hepburn, A. B 535

Hoboken Bank for Savings

252, 353, 535
Holyoke (.Mass.) Savings Bank 381
Home Savings Bank, Albany.... 463
Home Savings Bank, Brooklyn

43, 108, 262, 292, 314, .374, 483, 514
Home Savings Bank, Boston. 353, 3.32
Home Savings Bank, Macon, Ga. 482
Howard Savings Institution,

Newark 464

Hudson City (N. Y.) Savings

Institution

194, 228, 238, 381, 382, 405, 444

Institution for Savings of Mer-
chant's Clerks (New York). 97, 115

Irving Savings Institution ( New
York) 358, 476

Jefferson Co. Savings Bank,

Watertown, N. Y 350

Jones, William 18

Kejes, Emerson (History of

Savings Banks in U. S.)

4, 15, 56, 137, 141, 142, 356, 357, 359

Kings Co. Savings Bank, Brook-
lyn 358

Knox, William E 249, 334

Lewins, William (History of Sav-
ings Banks in England and
Ireland) 4, 8, 14, 38, 56, 236

Lewis, E. St. Elmo 473, 475, 479

Lewiston Savings Bank (Maine)

214, 463

Lynn, Mass., Institution for
Savings 44, 537

Maiden Lane Savings Bank, New
York 358

Malthus 5, 52

Manhattan Savings Institution,

New York 476

Manufacturers Savings Bank,
Troy 142

Marblehead (Mass.) Savings
Bank 533

Mariner's Savings Bank, New
London, Conn. . . .' 381

McCrea, John 18

Mechanics Savings Bank, Hart-
ford 283

Merrimack Co. Savings Bank,
Concord, N. H 212

Merrimack River Savings Bank.

204, 308, 214

Metropolitan Savings Bank, New
York 211,358, 463, 476

Middletown (Conn.) Savings
Bank 192, 223, 246, 334

Mills, Andrew 19

INDEX TO PROPER NAMES

547

Monetary Commission, Nat'l 75

Monroe County Savings Bank,
Rochester, N. Y 403, 44G

Nashua (N. H.) Savings Bank..

133, 207, 216
National Savings Bank, Buffalo. 534
Naugatuck (Conn.) Savings Bank 478

Newark Savings Institution 537

New Bedford (Mass.) Savings

Institution . . 192, 233, 251, 270, 279

New York Savings Bank 358

Norwich (Conn.) Savings Bank

200, 468
Notes on Postal Savings Bank

Systems 75

Oneida Co. Savings Bank, Rome,
N. Y 192, 220, 409

Onondaga Co. Savings Bank,
Syracuse, N. Y. 228, 492, 493, 494, 522

Oswego City (N. Y.) Savings
Bank 534

Paine, "W. S. (Failed Savings
Banks) (New York) 56

Paine's Banking Laws

20, 22, 115, 119, 124, 125, 136, 140

Parochial Bank, Stillorgan 11

Paterson (N. J.) Savings Institu-
tion 228, 229, 242, 247, 295, 335

Pennsylvania Trust Co., Reading,
Pa 482

Peoples Bank & Trust Co., New
Haven, Conn 482

Peoples Savings Bank (Conn.) . . 209

Peoples Savings Bank, Pitts-
burgh 480

Peters, Richard, Jr 17

Philadelphia Savings Fund So-
ciety 17,

18, 19, 20, 78, 98, 189, 234, 251, 291

Portsmouth (N. H.) Savings
Bank 163, 212, 230, 255, b51

Poughkeepsie (N. Y.) Savings
Bank 96, 124

Pratt, Capt. (Carlisle Indian
School) 36

Providence (R. I.) Institution
for Savings 258, 259, 264, 265

Provident Institution for Sav-
ings, Southampton 11

Provident Institution for Sav-
ings, Bath 11

Provident Institution for Sav-
ings in Boston 15, 20, 263, 463

Pulleyn, John J 393

Queen City Savings Bank &

Trust Co 311

Quintan, James 231, 330

Raguet, Condy 17, 18, 19

Raiffeisen Banks 6, 9, 69

Riclmiond Co. Savings Bank

(Staten Island) 406

Roberts, Curtis 19

Rochdale Savings Bank 435

Rollins, Montgomery

411, 415, 419, 420, 427

Roseberry, Lord, on Thrift 29, 31

Roxbury (Mass.) Savings Bank. 210

Ruskin, John 30

Ruthwell Savings Bank (Fron-
tispiece) 7

Rutland Savings Bank 209, 211

Salem Savings Bank 490

Salem Five Cent Savings Bank

482, 490

Saturday Evening Post 38, 488

Saugerties (N. Y.) Savings

Bank 286, 382

Savage, James 15

Savings Bank of Baltimore. . .20, 356
Savings Bank Section, Amer-
ican Bankers Association

44, 87, 230, 299, 307, 311, 370,
430, 437, 461, 471, 479, 497, 507, 527
Savings Bank of the Grand

Fountain, U. O. T. R 81

Savings Bank Centenary Me-
morial 7

Scammon, R. H., letter from... 60

Schenectady Savings Bank

353, 440, 498, 515

Schulze-Delitzsch 69

Seamens Savings Bank (N. Y.) 476

Second Ward Savings Bank 465

Seibert, Chas. L 234, 328

Smith, Jonathan 18

Smith, Joseph 5

Society for Savings, Cleveland... 212
Society for Savings, Hartford ... 338

548

CASES MENTIONED IN THIS WORK

Southold (N. Y.) Savings Bank.

212, 316, 410
Spokane and Eastern Trust Co.,

Spokane 499

Sprague, Chas. E 182, 227

230, 299, 321, 330, 415, 419, 420, 421
Springfield (Mass.) Institution

for Savings 313, 346, 352

Standard Trust and Savings

Bank, Chicago 474

State Savings Bank, New York . . 3
State Savings Bank, Topeka, Kan. 201

Sterrett, J. E 428

Stocker, John C 18

Strafford Savings Bank, Dover,

N. H 192, 331

Strawbridge, John 18

Suffolk Savings Bank, Boston... 363

Sunday Bank 6

Supreme Court of U. S 22

Syracuse Savings Bank 529

Third Avenue Savings Bank, New

York 462, 490

Thiry, J. H 497

Thompson, Robt. J 66

Troy Savings Bank 123

Tyler, Daniel E 96

Ulster Co. Savings Institution,

Kingston, N. Y. . . .3, 23, 534, 537

Union Dime Savings Bank, New

York 182

190, 197, 201, 227, 230, 234, 237, 241,
258, 269, 271, 281, 299, 310, 330, 363,
404, 406, 421, 432, 434, 439, 470, 476

Union National Bank (Missouri) 216
Union Savings Bank, Mobile,

Ala 482

Union Savings Bank, Patchogue,

N. Y 442

Union Square Savings Bank....

97, 115, 284, 358

Utica Savings Bank

212, 256, 273, 381, 390

Wakefield, Priscilla 5

Warren Five Cent Savings Bank 24
Washington Savings Bank, New

York 3

Wendover Bank 6

West Side Savings Bank, New

York 358, 526

Western Savings Fund Society,

Philadelphia. .192, 248, 263, 272, 466
Wildey Savings Bank, Boston..

232, 248, 249
Williamsburgh Savings Bank,

Brooklyn 3, 97, 98, 189,

201, 215, 362, 358, 474, 530, 521, 522
Windsor Locks (Conn.) Savings

Bank 534

Wolff, Henry (Peoples Banks).. 68
Woman's Christian Temperance

Union (School Savings Banks) 499
Woonsocket (R. I.) Savings

Institution 266

Yawman & Erbe Mfg. Co... 306, 308a

CASES MENTIONED IN THIS WORK

Allen vs. Williamsburgh Savings
Bank (69 N. Y. 314) 215

Appleby vs. Erie Co. Savings
Bank (62 N. Y. 12) 213

Bank for Savings vs. Miller (177
N. Y. 461) 364

Barrett vs. Bloomfield Savings
Inst. (64 N. J. Eq. 425) .24, 133, 217

Beaver vs. Beaver (117 N. Y.
421) 275

Bradee vs. Warren Five Cent
Savings Bank (127 Mass. 107) 24

Brown vs. Merrimac River Sav-
ings Bank (67 N. H. 549)

204, 208, 214

Burrill vs. Dollar Savings Bank
(92 Pa. St. 134) 207, 463

Clark vs. Saugerties Savings
Bank (62 Hun. 346) 286

CASES MENTIONED IN THIS WORK

549

Colorado Savings Banks vs. Ev-
ans (13 Col. App. 334) 27

Donlon vs. Provident Savings In-
stitution (127 Mass. 183) 463

Eaves vs. Peoples Savings Bank
(27 Conn. 299) 209

Erie Co. Savings Bank vs. Coit
(104 N. Y. 532) 139

Fowler vs. Bowery Savings Bank
(113 N. Y. 450) 205

Gearns vs. Bowery Savings Bank

(135 N. Y. 557) 214

Geitelsohn vs. Citizens Savings

Bank (17 Misc. Rep. N. Y. 574) . 242
Gifford vs. Rutland Savings Bank

(63 Vt. 108) 209, 211

Gold rick vs. Bristol Co. Savings

Bank (123 Mass. 320) 463

Grerly vs. Nashua Savings Bank

(63 N. H. 145) 132, 207, 216

Heal vs. Richmond Co. Savings
Bank (127 App. Div. 428) .... 406

Hoffman vs. Union Dime Savings
Institution (191 N. Y. 529) 271

Hooper vs. Taylor (39 Me. 224) . . 305

Hudson vs. Roxbury Savings In-
stitution (176 Mass. 522) 210

Hun vs. Van Dyke (26 Hun. [X,
Y.] 567) 130

Hun vs. Gary (82 N. Y. 65) ... .

21, 131, 205, 216

Kelly vs. Buffalo Savings Bank

(180 N. Y. 171) 307

Kelly vs. Beeres (194 N. Y. 49)

274, 278
Kelly vs. Emigrant Ind. Savings

Bank (2 Daly [N. Y] 227)... 463
Kenney vs. Harlem Savings Bank

(61 Misc. Rep. [N. Y.] 144)..

240, 463, 519
Kimball vs. Norton (59 N. H. 1) 208
Kummell vs. Germania Savings

Bank (127 N. Y. 488) ....208, 215

Ladd vs. Augusta Savings Bank
(96 Me. 510) 209, 213

Ladd vs. Androscoggin County
Savings Bank (96 Me. 520) 465

Langdale vs. Citizens Bank (121
Ga. 105) 213

Leavitt vs. Yates (4 Edw. Ch.

165) . 139

Lewis vs. Lynn Institution for

Savings (148 Mass. 235) 44, 537

Levy vs. Franklin Savings Bank

(117 Mass. 448) 463

Marshall vs. Farmers Savings
Bank (85 Va. 676) 133, 216

Matter of Totten (179 N. Y. 112)

276, 457

Mills vs. Albany Exchange Sav-
ings Bank (28 N. Y. Misc. Rep.
251) / 464

Mitchell vs. Home Savings Bank
(38 Hun. [N. Y] 255 463

Mulcahy vs. Emigrant Industrial
Savings Bank (89 N. Y. 435)

285, 286

New York Life Insurance & Trust
Co. vs. Baker (165 N. Y. 484) 415

Paine vs. Mead (59 How. Pr. 318) 132
Paterson vs. Paterson (59 N. Y.

574) 451

People vs. Binghamton Trust Co.

(139 N. Y. 185) 21, 24, 26

People vs. Third Avenue Savings

Bank (98 N. Y. 661) 463

People vs. Ulster Co. Savings

Bank (64 Hun. [N. Y.] 434) 23, 537
Pierce vs. Boston Savings Bank

(129 Mass. 425) 207

Queen Citj'' Savings Bank &
Trust Co. vs. Reybum (U. S.
Circuit Court, E. Pa., July 31,
'08) 311

Schofield vs. East Brooklyn Sav-
ings Bank 451

Schoenwald vs. Metropolitan Sav-
ings Bank (57 N. Y. 418) . .211, 463

Smith vs. Brooklyn Savings Bank
(101 N. Y. 58) 210, 463

Sullivan vs. Lewiston Savings
Bank (56 Me. 507) 214, 463

Union National Bank vs. Hill
(148 Mo. 380) 216

Wagner vs. Howard Savings In-
stitution (52 N. J. Law 225.) 464

550

INDEX TO FORMS

Wagner vs. Second Ward Sav-
ings Bank (76 Wis. 2i2) 465

Wahrus vs. Bowery Savings Bank
(^1 X. Y. 543) ^04, 464

Wall vs. Emigrant Ind. Savings
Bank (64 Hun. [N. Y.] 249)

258, 463, 519

Wall vs. Provident Savings Insti-
tution (3 Allen [Mass.] 96)... 463

Whalen vs. Milholland (98 Md.
199) 207

Williams vs. McKay (46 N. J.
Eq. 25) 133, 216

INDEX TO FORMS

(References are to pages)

Adding Machine 343

Advertisements, Savings Bank...
473, 474, 476, 478, 480, 482, 483, 484

Amortization Sheet 426

Application for Loan

398, 400, 402, 404, 406, 407

Appraisal 386, 388, 390, 409

Assignment of Pass Book

252, 275, 276, 277, 278, 280, 281

Attachment, Writ of 287

Attorney, Power of 272

Banking by Mail (Instructions)

443, 444, 445, 446
Buildings of New York State

Savings Banks 98a

Blanket Order 270

Card Index 304

Card Ledger, Detail of 306, 308a

Card Ledger Desk 308a

Checks, Record of on Deposit Slip 265

Check Register 262, 264

Classification sheet, coupon sys-
tem 320, 322, 324

Classification proof, coupon sys-
tem 327

Coupon System 320, 322, 324

Deceased Persons' Accounts

450, 452, 454, 458
Deceased Persons, Payment to

Undertaker 450

Deposit Book 333

Deposit Journal 300

Deposit by Mail 444

Deposit, Receipt for 224, 226, 228

Deposit Ticket 220, 221

222, 223, 226, 228, 230, 232, 235, 265

Distribution Sheet 372, 374, 377

Distribution Sheet, Coupon Sys-
tem 320, 322, 324

Dividend Notices 358

Dividends Order for 270

Draft Book 333

Draft memorandum for banking
by Mail 447

Envelope for General and "Home
Made Orders" 273

Farm Application Loan 398, 402

Finger Prints 518, 519, 520, 521

Home Banks, Forms Used in
Connection With.. 523, 524, 525, 526

Identification Check 247

Identification of Signature. .268, 269
Indemnity, Receipt, Lost Book 466

Index, Card 304

Insurance Record 516

Interest Methods 370

Interest Notice 434

Interest Receipt 432, 528, 529

Interest Sheet

338, 340, 368, 370, 372, 374, 377, 382
Interest Sheet and Trial Bal-
ance 340, 344, 346, 368, 370, 374, 382

Journal (Deposit) 300

Journal — Cash 318

Journal, Deposit and Draft

316, 318, 333

INDEX TO FORMS

551

Ledger Account 377

Ledger, Card 310, 314

Ledger, Loose Leaf 315

Ledger, Mortgage 408

Ledger, Skeleton 338, 346

Loose Leaf Ledger 315

Loose Leaf Ledger Sheet 210

Lost Books 464, 465, 466

Lost Book, Affidavit 468, 470

Lost Book, Transfer of 470

Mail Withdrawal 442, 443, 444

Mortgage Ledger 408

Mortgage Loan Record 405, 409

Notary's Acknowledgement

241, 244, 250

Order-Blanket 270

Pass Book — Assignment of (See

assignment of pass book)

Pass Book (Cover). 196, 198, 200, 212

Pass Book (Inside) 190, 192, 194

Payment— Stop 283, 285

Physician's certificate 259

Postage, Charge Memo of 447

Power of Attorney 272

Proof of Daily Deposits 234

Receipt (Mortgage) 410

Receipt for Interest 432, 528, 529

Receipt for Deposit (See With- •

drawal Order)

Re-deposit Slip 279, 286

Requisition for Check 444

Savings Bank Account 302, 378

Savings Bank Buildings (N. Y.

State) 98a

School Savings Banks, Forms

Used in Connection with 498,

501, 502, 504, 506, 508, 511, 513, 514

Sick Person's Order 259

Signature Card 202, 203

Signature on Loose Leaf Ledger

Sheet 210

Signature, Finger Print 519, 521

Signature Slip 208

Signature, Verification of ...268, 269
Small Balances, Withdrawal of

Without Administration

450, 452, 454, 458
Society Accounts, Forms Used

in Connection With

492, 493, 494, 495
Stamp System (See School Sav-
ings Banks)

Summary Sheet, Coupon System 326

Teller's Cash Sheet. .290, 292, 294, 295

Teller's Report of Cash

288, 294, 295, 296

Teller's Turnover Sheet 288, 296

Transfer of Account

278, 279, 280, 284, 286

Trial Balance Sheet 338

340, 344, 346, 368, 370, 372, 374, 382

Withdrawal, Blanket Order 270

Withdrawal Book 250

Withdrawal by Mail.... 442, 443, 444
Withdrawal form (in pass books)

206, 208, 218
Withdrawal — "Home-Made Or-
der" 243

Withdrawal, Joint Account 237

Withdrawal — Xon-Signing De-
positors 240, 246

Withdrawal — Notary's Ac-
knowledgment 241, 244, 250

Withdrawal Orders and Re-
ceipts 237, 238, 240, 241, 242, 244, 246,
248, 250, 253, 255, 258, 259, 266, 270
Withdrawal Order, Sick Per-
sons 258, 259

Withdrawal Order With Wit-
ness' Certificate 246

Withdrawal Without Adminis-
tration 450, 452, 454, 458

UNIVERSITY OF CALIFORNIA, LOS ANGELES

THE UNIVERSITY LIBRARY

This book is DUE on the last date stamped below

OCT 2 019511

JAN g 8 mf

;^U6 1 1 I960

fSS^

u^ufi

URL *•" ^

41fl0f

URtCDT

SEP 1

Form L-»
23m-10,'«(2*H)

THE LIBRARY

UNIVERSITY OF CALlFOB>4U

LOS ANGELES

Vllimmmnui

i "MM Mil // III r

^ 1158 0059^' i769* "^

Internet Archive Audio

Featured

Top

Images

Featured

Top

Software

Featured

Top

Books

Featured

Top

Video

Featured

Top

Mobile Apps

Browser Extensions

Archive-It Subscription

Save Page Now

Full text of "The savings bank and its practical work; a practical treatise on savings banking, covering the history, management and methods of operation of mutual savings banks, and adapted to savings departments in banks of discount and trust companies"

See other formats