Savings Banks

institutions that receive small deposits and allow compound interest on them. They flourish chiefly in industrial cities where they perform a great service by caring for the many small savings of wage earners. In addition to regular banks that pay interest on deposits, there are nearly 1,500 savings banks in the United States with savings deposits aggregating almost $5,000,000,000. They are operated under state laws intended to guard the interests of depositors. Among other customary provisions is one authorizing the banks to require reasonable notice of intended withdrawal of deposits. This feature is designed to prevent the hasty withdrawal of funds by reason of an unreasonable panic. Savings banks are usually ready to pay on demand, but, without such provision as that named, the banks would be unable to loan to borrowers and could not afford to pay interest on deposits. In 1910 Congress made an appropriation for the establishment of postal savings banks.

Germany claims credit for the origin of savings banks. The first savings bank in Europe was established at Brunswick in 1765. A savings bank established at Hamburg in 1778 still exists. Others followed. In Great Britain as early as 1697 Defoe suggested the need of such an institution. The idea of "frugality banks" was revived in 1797. Two years later the first British savings bank was actually established. By the middle of the nineteenth century the deposits in British savings banks had grown to $1,500,000. In 1861 savings departments were opened in connection with British postoffices. Extensive systems of savings banks under private management exist in the English colonies and in the countries of continental Europe. In France a supplementary system is operated through the postoffices and schools. A large part of the French national debt is cared for by the savings of working people. Denmark forbids the management of savings banks for profit. See Banks