The function and the methods of the savings bank are very different from those of the commercial bank. The latter, as we have seen, serves the business man who needs current funds or credit to carry on his business. The savings bank serves the man of small earnings and without capital by providing a safe place to keep his savings and an experienced agency for investing them so as to yield him an income.

The savings of the average wage-earner are usually not large enough to admit of his investing in bonds, mortgages, and other forms of investment open to the man of means, nor is the man of small income qualified by experience in such matters to select a safe and profitable investment. But the savings bank takes these small savings of scores of individuals, which collectively amount to very considerable sums, and invests them for the depositors in such ways as to insure safety and a fair return. It thus encourages among the masses habits of thrift and industry, and accumulates for productive uses money which otherwise would lie idle or be squandered in unwise expenditures. From the standpoint of the employment of funds also there is a wide difference between savings banks and commercial banks. The function of the savings bank is primarily that of investment, while the commercial bank makes advances to business concerns for current needs. The savings bank invests the depositor's savings to bring profit to him; the commercial bank loans its credit to make profit for itself. The savings bank exists for the saver; the commercial bank for the borrower.

Savings banks are of two general kinds, mutual and stock. The early savings banks established in America were modeled after those of England and were of the mutual or trustee type. They were directed by a board of trustees who managed the affairs of the bank and in some cases actually did the clerical work without pay. In the mutual savings bank of to-day the trustees or directors serve from the same disinterested and philanthropic motives. It has no capital, no stockholders, and is operated for the exclusive benefit of the depositors, who receive all the profits over and above the expense of running the bank. The tendency in recent years, especially in the newer sections of the country, has been in favor of savings banks organized as stock corporations which aim to produce a profit to the stockholders as well as the customary interest to the depositors. Most stock savings banks transact both a commercial and a savings business, and some of them carry very few savings accounts.

The "guaranty savings banks," peculiar to New Hampshire, are a cross between the mutual and the stock types. They do not transact a commercial business, but they have "special deposits" which are virtually capital stock. They pay a certain stipulated rate of interest to general depositors and the surplus goes to the special depositors. The charters of these banks usually stipulate that the special deposits shall always equal at least ten per cent of the deposits. These special deposits are therefore in the nature of capital stock and constitute a kind of guaranty fund for the general depositors.1

The annual report (1913) of the Comptroller of the Currency tabulates 1,978 savings banks, of which 623 are mutual and 1,355 stock savings banks. The total deposits amount to $727,403,950 and the number of depositors 10,766,936, the average deposit account being $139.07.

1 Kniflin: The Savings Bank and Its Practical Work, p. 60.

Mutual savings banks are confined chiefly to the manufacturing centers of New England and the Eastern States, there being only 23 such banks outside of that section. The distribution of the 1,355 stock savings banks is as follows: 9 in New Hampshire, known as guaranty savings banks; 44 in the Eastern States; 192 in the Southern States; 870 in the Middle Western States; 58 in the Western States; and 179 in the Pacific States. The average rate of interest paid to depositors in mutual savings banks in 1913 was 3.94 per cent; the average rate in stock savings banks ranged from 3.12 to 3.70 per cent.