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 per cent. on the deposits should be set aside annually for a reserve fund. Since 1876, when this

per cent. of the ear

law was passed and from per cent. to 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.

bank has never yet been determined. The views of the trustees of the Provident Institution have been expanding since Mr. Savage said "that if ever the bank should have $10,000,000 on deposit, it would be time to close the doors," until now they have over $35,000,000, and stand ready to receive more.

If the banks go on receiving deposits, two questions arise: first, whether the business of considering and making investments and regulating the policy of the bank will not occupy the whole time of the Board of Investment and involve their being compensated; second, whether the increased assets can be satisfactorily invested without extending the list of possible investments.

Up to this time the board is content with the present circumscription of investments, and anticipates no difficulty in investing what moneys they receive.

All legislation should follow out the original intention of the founders of this great charity. As savings banks have been long established in Great Britain, and as the whole subject has been very frequently discussed and very thoroughly investigated from 1817 to 1863, it may be worth while to recount briefly their experience and their conclusions derived from that experience.

1. That security rather than a high rate of interest is chiefly regarded by the class for whom savings banks were instituted, and interest rather than security by those for whom they were not instituted, has been constantly urged by those entitled to know, and abundantly proved by the increase of deposits of the former and the withdrawal of the deposits of the latter class under the gradual reduction of the rate of interest from 4 per cent. in 1817 to 3 per cent. in 1861, when the complete security provided by the post-office savings banks, then established by Mr. Gladstone, but allowing only 2 per cent. interest, rapidly depleted the old savings banks with their higher dividends but imperfect security.

December, 1874, 5,068 post-office banks; 3,045,000 depositors; £23,158,000 deposits.

The experience in England, as well as in France, Germany, Holland, and Switzerland, has further demonstrated that the

millions deposited in savings banks prudently invested will not, year by year, yield a higher income than the best government securities, and that as the deposits, and consequently the investment, increases, the difficulty increases, and that the security of the principal is in inverse ratio to the interest.

An investigation into the working of savings banks in Great Britain for forty years revealed a loss to the government who received the deposits of the savings banks, of $22,000,000 on a payment of $192,000,000, or about 12 per cent., equal to about

per cent. per annum, a portion of which was incurred by loss of interest on a necessary cash balance, on funds not at once invested, but principally by an invariable loss on the sales and purchases of consols; and an analysis of the records of our savings banks would confirm this experience; for as, by their fundamental conditions, savings banks are bound to receive and repay deposits at the will of the depositors, it is obvious that the immediate or almost immediate investment of deposits as they are received entails the frequent purchase of stock at high prices in prosperous times when deposits are pouring in, and that immediate repayments of deposits on demand must, conversely, involve the frequent sale of stock at low prices in times of depression when deposits fall off and withdrawals are numerous. The expense of conducting the banks,―rent and salaries, etc., which in England is defrayed by the per cent. difference in rate of interest allowed by the government to the banks and that allowed by the banks to the depositors, would here have to be taken from the interest earned, and reduce still further the amount credited to depositors.

This loss, incident to the average transactions of savings banks, is especially and wantonly aggravated, not by those who from time to time deposit their surplus earnings only to be withdrawn in case of absolute necessity, but by those who abuse this charity by temporarily depositing large sums in several banks when interest is low and stocks high, and withdrawing as soon as the rise of money and the decline in stocks allow of a more profitable investment.

To prevent this abuse of savings banks, imposing extra work and responsibility upon unpaid benevolent trustees, and entail

ing certain loss of assets, no person is allowed to deposit in more than one bank in Great Britain, upon pain of forfeiting his deposit; and to prevent fraudulent trusts, no person making a deposit as trustee can withdraw such deposit except in the presence of and with the receipt of the other party.

To lessen the loss consequent upon immediate withdrawals and immediate conversion of stocks into cash in times of depression, notice is demanded proportionate to the amount to be withdrawn.

These are wise precautions tending to limit the privileges of savings banks to those who need them, and tending to secure to those who withdraw and to those who leave their deposits repayment of principal and interest; but there still remains the fact that savings banks are peculiarly exposed to losses without compensating gains.

The tariff of an insurance company, fire, life, or marine, is adjusted so as to leave a profit on an average of gains and losses, founded upon the statistics of many years. The value of their investments is not affected by fire or death or disasters by sea; and yet the fire companies with all their accumulated profits could not withstand a conflagration, nor could the life companies endure a prolonged visitation of the cholera. Much less could any savings bank without any accumulated profits, and whose range of investments, necessarily limited, and forced upon the market when money is tight, declining rapidly with every sale, cash any considerable portion of its deposits, principal and interest, and at the same time guarantee principal and interest to the remaining depositors, unless a considerable reserve fund be accumulated out of the interest received.

A surplus, or reserve fund, is needed to guard against insolvency from the fluctuations of values, and the normal conditions of a savings bank, without anticipating any prolonged panic which might exhaust any reserve the banks would deem reasonable, and drive the savings banks to suspend, as did some of those in Holland a few years ago, owing to the great decline in government stocks; or to demand an extension, as in France in 1843.

We must legislate for the good of the whole, not for individ