SAVINGS BANKS.

Globe, Volume IX, Issue 1285, 2 May 1878, Page 3

SAVINGS BANKS.

A contemporary gives the following summary of an article in the January number of the “British Quarterly” on “Savings and Savings Banks.” It gives an interesting description of the institutions for the encouragement of thrift in Great Britain (says the “Economist.”) The question of the limit to the sum which depositors are allowed to place in a Savings Bank is considered, and a proposal made that this limit should be enlarged from its present amount of £l5O to £SOO. There is every desire on the part of the banking community to assist in the promotion of thrift throughout the country, but the objection made, and properly made, to this proposal, and which is entirely overlooked in most remarks which are made on the subject, is the following The Government system of Savings Banks is a system of banking without reserves. The whole of the amount lodged by the depositor is invested, and no specie reserve is formed against this liability. There is a very strong and a very proper objection to Government undertaking to carry on any business without undertaking also the natural precautions which ordinarily ensure safety. Trusting to the faith which is reposed in itself, the Government assumes an almost unlimited responsibility in the way of receiving deposits, and thinks it needless to form an adequate reserve against this responsibility. Bankers know only too well that at any time of crisis, when deposits are called for on a sudden, the Government will need to have recourse to the same source of supply as that to which bankers must turn to themselves, though the Government has not assisted to form any part of that reserve which is the mainstay of the banking interests of the country. The more proper course for the Government to take would be to direct the savings of the country into the way of investments in the funds, rather than to hold them as deposits at call.