24. Large City Savings Bank

The savings bank is a more highly developed institution in the State of New York than in any other state in the Union. The field of operation, both as to deposits that may be received and investments the trustees may make, is so limited and clearly defined that the organization of the staff is a very simple matter. They are purely mutual institutions having no capital and issuing no stock. The law provides that there shall be a board of not less than thirteen trustees, who shall have the entire management and control of all the affairs of the institution. The law further provides that the trustees shall elect from their number, or otherwise, a president and two vice-presidents, and such other officers as they may deem fit. A secretary is usually appointed by the board. The presi-dent devotes his time to the loaning of the deposits and leaves the management of the clerical staff to the under officers, usually the secretary. One of the clerks is designated as paying teller and another as receiving teller. Each may have assistants. The rest of the staff may be classed as bookkeepers. All clerks are directly responsible to the officers.

A worthy comment on savings banks made by John J. Pulleyn, comptroller of the Emigrant Industrial Savings Bank, in an address delivered before the New York Chapter, American Institute of Banking, and appearing in the May 1909 Bulletin of that institute, may; be of interest:

Savings institutions, if confined to their legitimate function, are in no sense banking institutions, and are not permitted to do a banking business. Their funds are not used in any of the general banking operations, consequently they should be kept wholly apart from the control, direction or influence of commercial banks, and their management should be in the hands of independent trustees, who are responsible for the safe investment of their funds. In many states commercial banks are permitted to have their savings department, or to control separately organized savings institutions, and make use of their deposits. This is a bad plan, and ought to be prohibited in the national bank system. Some confusion of mind is caused by the use of the term "bank" as applied to institutions for savings. It is historically as accurate in its application to these as to the loan and deposit institutions, but in modern differentiation proper, a savings institution has no relation to what has come to be termed the business of banking. Savings banks are for the safe-keeping and secure investment of the savings of the people, and the care of these is a trust that should be specially guarded. In New York State and in the New England States generally savings banks are not incorporated institutions with a stockholding interest, and the trustees who have charge of them are not permitted to have any pecuniary interest in the use of their funds. Their funds are not to be used in commercial liens secured or unsecured, but must be invested in a class of securities that is strictly prescribed by law. These investments include real estate mortgages, first liens on improved properties, on a basis of 60 per cent of the value as ascertained by a competent appraiser, or committee of the Board of Trustees, who are able to value the security offered, and to regulate the amount of loan that is amply secured.

It were better to maintain and extend this kind of savings institution all over the United States, than to encourage the tendency to attach their functions to banks now engaged in keeping funds in active employment, and making the utmost use of credit in business operations. It ought to be adopted in all states, and apart from the consideration of uniformity, it is best to keep the administration in regulation of savings institutions within state jurisdiction.

The special argument to permit banks to have a savings department is that it affords facilities for making such deposits in communities where a separate institution for the special purpose could not be maintained; but by a properly regulated and supervised system of branches and agencies for savings institutions in central places, these facilities might be provided without having them attached to banks where they would be subject to more or less risk.