13. SAVINGS BANKS. Savings banks are of two lcinds, stock and mutual.
Stock The stock savings bank is to all intents and purposes quite like a bank of discount, having capital stock, and is, there fore, owned and controlled by the stockholders, to whom the profits belong after paying the agreed rate of interest to the depositors. Such banks are to be found largely in the West and South, there being no such institutions in the Eastern States. They are essentially banks of discount with the word °savings° in their title. They transact chiefly a commercial busi ness and carry comparatively few savings ac counts. According to the report of the Comp troller of the Currency, there were 1,529 of these institutions reporting as of 23 June 1915, with capital stock of $92,982,798, loans amount ing to $850,304,207, deposits of $1,047,039,650.93, of which $754,443,330 were savings deposits. The depositors numbered 2,977,968, of which 2,380,496 were savings depositors.
Mutual The mutual savings bank. with which this article has mainly to do, is of an entirely different type. It is, as the above term indicates, a mutual institution, without stock and therefore without stocicholders, being owned by the depositors Collectively and con trolled by a body of trustees who in law rep resent them, but are not elected or appointed by them. The depositors are, in a sense, part ners, in that the profits belong to them and the losses, if any, are legally assessable upon them, the latter process being, however, a rare occurrence.
We can best obtain a clear idea of the sav ings bank by distinguishing it from a bank of discount. The latter is a stock corporation, organized to receive funds on deposit, which it may treat as its own upon the implied agree ment to return the same upon demand. It loans on promissory notes, buys commercial paper, bonds and other securities, issues bank notes and operates quite largely through the checicing system, by which the bulk of its funds are dispersed. All the profits belong to the stockholders, upon whom losses fall, should there be any. It is the business man's bank.
The savings bank caters to the small saver. It receives funds on deposit as trustee for the depositor, to invest for his account. It does not, as a rule, malce any discounts; buys no commercial paper; issues no bank notes, and honors checks only when accompanied by the passbook of the depositor. It is permitted to ask notice of withdrawal as a protective meas ure in times of stress, while the bank of dis count must pay on demand or suspend. The
contract of the savings bank with the depositor is in essence this: That it will accept the funds offered for deposit, invest them according to law in certain prescribed securities, repay the same upon notice (which is, as a rule, waived, although in some instances is enforced in very large banks as a daily procedure), apportion the earnings among the depositors after pay ing expenses and establishing a surplus or guaranty fund for their protection against losses. Out of the foregoing comparisons we may evolve the following as a fair definition of a mutual savings bank: eA savings bank is a mutual institution conducted for the bene fit of the depositors, without profit to the managers or trustees, for the purpose of re ceiving on deposit, for safe-keeping and invest ment, such sums as shall be offered by the depositors, repaying the principal on demand or upon legal notice, and distributing the earn ings among the depositors as interest-dividends, after paying expenses and setting the remain der aside as a surplus fund for the protection of all.° The savings bank has well been likened to a reservoir into which pour the little streams for the purpose of combining them into a larger stream for mutual investment purposes. The savings bank makes capitalists by the weld ing power it possesses, malting the small sums effective by working them together.
Origin of Savings Banks.-- The origin of savings banks is in doubt, there being various claimants for the honor of first conceiving the savings bank idea. Daniel Defoe, of °Robin son Crusoe° fame, is mentioned as the first to conceive the savings bank, in a plan whereby the government was to receive the deposits of the people. A French writer has asserted that the idea dates back to one Hugues Delestre in 1610. Such institutions were also formed in Brunswick in 1765; Hamburg in 1778; Berne, Switzerland, in 1787; Basel in 1792; Geneva in 1794. But so far as is known, the savings bank as we know it to-day wa.s the outgrowth of none of these. The movement in England had its inception in the schemes of the Rev. Joseph Smith and Priscilla Wakefield. The former in 1798 conducted a plan whereby it was agreed to receive sums for safe keepuig, repaying the same at airistmas-time with a bounty subscribed by his rich parishioners. The deposits could be withdrawn at any time.