PROVIDENT INSTITUTION FOR SAVINGS.

THE first savings bank in this country to do business was the Philadelphia Savings Fund Association, in November, 1816; it started before it was incorporated.

On the 13th of December, 1816, the Provident Institution for Savings was incorporated. The forty-eight persons named in the Act of Incorporation included the Lieutenant-Governor, the United States Marshal, two judges, four lawyers, three clergymen, thirty-two merchants and tradesmen, and five mechanics; some of them eminent, all of them respectable citizens.

The first officers were, William Phillips (Lieutenant-Governor), President; James Prince (United States Marshal), Treasurer, and James Savage (lawyer), Secretary.

There is a tradition that the bank was founded partly at the urgent request of good Bishop (afterwards Cardinal) Cheverus, that his people (as he called his flock) might have a place of deposit and so not spend or lose their little savings, and that a few years later, also at his request, the partial withholding of earnings and five years' surplus dividends were adopted to induce these same people to keep as well as to deposit their money in the bank.

Founded as a charity by thoughtful, conscientious, disinterested men, it has steadily developed for seventy-seven years from 961 accounts at the end of 1816, with a deposit of $76,000, to 90,000 accounts at the end of 1892, with a deposit of $35,590,000, and during this period not the loss of a dollar by dishonesty.

The average deposit at present is $388. The range of deposits is from the minimum received, $1; to the maximum received, $1,000. The lowest amount drawing interest is $3; the highest amount drawing interest is $1,600.

The bank, in starting, paid 5 per cent. per annum on its deposits; later, the rate was reduced to 4 per cent., and, in addition to this regular dividend, an extra one paid every five years, as mentioned above, often amounting to an additional 4 per cent., making an average per annum of from 7 to 8 per cent. to the depositors at that date, if their money had lain there the whole five years, and proportionately to those whose money had lain a fraction of that period. As these dividends, unless called for, were added to the principal, the depositors received compound interest.

More than half of the depositors are either foreigners or children of foreigners, the Irish the earliest and most numerous, and after them the Germans and representatives of all nations. Of late years dividends and interest on funds have declined, and the rate has been reduced to 4 per cent.

The paid officers are the treasurer, assistant treasurer, and fourteen clerks; and the annual expenses, including taxes, average per cent. on the deposits.

There are twelve vice-presidents and twenty-four trustees (in all thirty-six trustees), chosen annually by the corporation. There are about one hundred and twenty members of the corporation living out of about five hundred members elected from the commencement to the present time.

The uninterrupted success of this institution is due to the quality of men chosen into the corporation, and from that into the Board of Trustees, but more especially to the Board of Investment elected yearly by the trustees.

This board, composed of nine, including the secretary, meet the treasurer once a week, receive and dispose of all applica

tions for loans, and decide upon investments; and the seventyseven years' prudent, skilful management of these vast funds by unpaid trustees, taken from the busiest, most high-priced lawyers, merchants, and manufacturers, is one of the most creditable chapters in Boston's history.

The directors of a manufacturing company, of an insurance company, of a bank, have a personal interest as stockholders in the wise conduct of the business; but the Board of Investment of a savings bank are absolutely disinterested in performing their tedious task.

The average service of the members of this responsible body has been ten years, of three of them thirty years; men whose services as trustees etc., are in demand for all their working hours. But it would be invidious to single out any one of them for mention save Mr. James Savage, who may be considered the founder of this great charity, and who as secretary, treasurer, and president, and above all as president of the Board of Investment, rendered invaluable services for over forty years. In the face of ridicule and distrust, which deterred many of the leading men from co-operation, and turned back some of the original undertakers, the project might have been abandoned had it not been for his courage and resolution. He made the first deposit of $10; he paid the first extra dividend for five years out of his own pocket, to be refunded when it could be without disturbing the investments. His faith, his good sense, his aggressive honesty, his independence combined to establish and maintain the bank upon its proper basis, so that through all these years it has been conducted strictly as a charity to the poor and helpless; security, rather than profits, aimed at.

Some banks having allowed and even courted deposits of many thousands, either to swell their assets or to oblige influential customers, a law was passed in 1876, limiting deposits to $1,000 each, a limit self-imposed by the Provident Institution from the beginning.

The withholding a portion of the income not only served to check withdrawals in hope of an extra dividend every five years, but it also furnished a reserve fund to meet losses. But as most banks did not adopt this practice, and as those which did

were periodically left destitute, the legislature, recognizing this normal condition and the need of a permanent reserve to guard against insolvency in the event of a run upon the banks, decreed that from per cent. to the deposits should be set aside annually for a

per cent. on

reserve fund.

law was passed and from 1 per cent. to

Since 1876, when this

per cent. of the ear

nings per annum added each year to the reserve, no five years' extra dividends have been declared by the bank.

Unscrupulous persons have imposed upon the bank by opening several accounts as trustees, and subsequently withdrawing the deposits without the concurrence of the persons interested. The doubt as to the existence of these beneficiaries has led to a law requiring the trustees to give their names, but it would be safer to insist upon the presence of both beneficiary and trustee when the money is deposited and when withdrawn.

The accounts are balanced every six months, and are audited and the assets examined every twelve months for the Board of Investment, by a sworn and accomplished auditor, who is changed every two years, and also by the bank examiners, and by a committee of the corporation.

The enormous amount of $393,000,000 deposited in the savings banks in this State Dec. 31, 1892, might lead one to suspect that the law limiting the individual deposit had been to some extent evaded. But the increase in the aggregate deposits, while irregular, ranging from per cent. 1876-1877 to 20 per cent. 1852-1853, has been uninterrupted, averaging, from 1834 to 1894* a period of sixty years, 14 per cent. per annum. The very small addition to the deposits from December, 1876, to December, 1877, of only per cent., may perhaps be ascribed to the law enacted in 1876 fixing the maximum at $1,000 each, and the consequent withdrawal of the large sums, sprinkled about by persons who shamefully misused these charitable institutions. The ratio of increase of deposits from 1864 to 1874 was 247 per cent.; from 1874 to 1884, 21 per cent. This reduction is due to a diversion of savings from the banks to the endowment orders, so called.

What limit, if any, shall be fixed upon the total in any one

*I assumed the rate of progress from 1892 to 1894.