authorizing the messengers to sign receipts for the money, should be given to the messengers for presentation at the savings banks. Forms for such orders are quite commonly printed in the pass-books, together with the rules and regulations of the savings banks which issue the books.

The general principles upon which the rates of interest paid by savings banks are determined are as follows: At certain regular periods of the year (semi-annually, on the first days of January and July, for example), the directors and officers ascertain, by a careful balancing of all the accounts, the receipts from various investments of the savings bank since the last interest-day, and the expenses of the management for the same period; and from these the net profit of the business for the period is determined. This profit, divided pro rata among the depositors, fixes the rate of interest for the period in question.

It follows from these facts that the rates of interest which are paid by a certain savings bank are not necessarily always the same (although in fact there is seldom any variation, except that, at intervals of several years' duration, the rates have gradually decreased, in conformity with the general rule of decreasing interest from investment), and also that the rates which are paid by different savings banks will vary slightly. This latter fact can not be used safely as a criterion in the selection of a savings bank, since it is possible that, with equal safety of investment, one savings bank may make better profits than another, as well as that one savings bank, in order to increase its profits, may take risks which another savings bank will avoid. Indeed, if there is any definite conclusion to be reached from this variation in the rates of interest which are paid by different savings banks, it must be (in conformity with accepted principles which will be hereafter set forth) that a savings bank which pays a rate of interest which is materially higher than the general average in the vicinity should be avoided as not altogether safe.

The work of balancing the accounts of a savings bank necessarily requires a considerable time, and therefore interest cannot be collected by the depositors until some time after

the regular interest-days. Allowing one month for the work of balancing, and assuming that the regular interest-days are January 1st and July 1st, pass-books should be taken to the savings banks to be balanced, and to have the amounts of interest entered, during the first days of February and the first days of August of each year. If there are frequent entries of deposits and of money drawn, that is, if the accounts are very active ones, the pass-books should be more frequently balanced, on or about May 1st and November 1st, in addition to the regular times which have been mentioned, for instance.

For the purpose of quickly verifying the balance in the pass-book, and also for the purpose of having satisfactory data of the account at the savings bank, in case of any misunderstanding while the pass-book is in the hands of the bookkeepers (albeit very improbable), the items which are necessary for the calculation of interest and of the balance may be copied from the pass-book, and the balance computed by the depositor in her note-book before taking the passbook to the savings bank to be balanced or for the entry of interest. Upon receiving from the savings bank the passbook, with the interest entered and the balance recorded, the depositor may, then, quickly compare the figures with those which are contained in her note-book, and may call attention to any discrepancy before leaving the savings bank. If this suggestion shall not have been acted upon before the balancing of the pass-book, the computations of interest and balance ought, at least, to be verified by the depositor in the usual manner, at the earliest opportunity, and the savings bank must be notified at once of any mistake.

The rates of interest upon which depositors in savings banks may calculate, for the regular interest periods which have last passed, are ordinarily announced by notices which are posted in the savings banks some time before the interestdays; if, however, such information shall be lacking, depositors may, for the purposes of the calculations which have been mentioned, assume that there has been no change in the rates of interest since the last payment.

A general rule among savings banks, with regard to the payment of interest upon deposits, is that interest will not be paid upon all deposits for the exact times during which they have been in the hands of the banks, but only upon such sums as shall have been on deposit during an entire period of time between the last two regular interest-days. Thus, if a certain amount shall be deposited in a savings bank on the 1st day of January (the regular interest-days being January 1st and July 1st), six months' interest on the amount will be due on the first day of the following July; but, if the deposit shall be made on the 1st day of February, interest will not begin to accrue until the next interest-day (July 1st following), and the depositor will, therefore, sustain a loss of interest for a period of five months. It is obvious from this fact, that, whenever a choice of times shall be possible, deposits in savings banks should be made during the few days prior to the regular interest-days. For the same reason, when it shall be necessary to draw money, if by waiting a short time the money will remain in the savings bank over an interest-day, the drawing should be delayed, if possible, until after the interest-day; otherwise six months' interest on the amount which shall be drawn will be lost. In some cases, savings banks allow margins of a few days in this respect, in the case of deposits, and announce the fact by properly placed notices, but such cases are to be regarded as exceptional, and cannot be regularly calculated upon.

In conformity with the general rule, when calculating the amount of interest which is due upon a certain deposit, the exact amount which has remained in the savings bank during the entire period of time between the interest-days must be obtained from the figures and the dates in the pass-book, and the interest, at the ascertained rate, must be computed upon this amount. All considerations with regard to the advisability of making deposits in savings banks must take into account this method of paying interest; else depositors may be grievously disappointed when, upon going to the savings banks for their anticipated amounts of interest, they may learn that very little or perhaps no interest at all is due.

Long-continued, steady accounts, which remain year after year in the savings banks, without being disturbed by the frequent drawing of money, will receive, evidently, the benefit of the interest to the greatest possible extent. Indeed, it is for the purpose of encouraging just such accounts, and of discouraging active or variable accounts, that the peculiar method of paying interest which is common among savings banks has been adopted.

At certain times of sudden financial panic and excitement, large numbers of depositors in savings banks become alarmed, and, seriously apprehending the failure of their savings banks, hasten, without due consideration, to withdraw their accounts entirely, sometimes only to place the accounts in much more dangerous positions. Such a rush of frightened depositors constitutes what is called a run" upon the savings banks. If a particular savings bank shall be in a properly sound condition, and able to pay in full all the depositors who may demand their money, a run upon the savings bank will, for reasons which have been already explained, result in an enormous loss of interest to the depositors. If, on the other hand, the savings bank shall be unable, upon so short a notice, to pay all of the amounts which may be demanded by the panic-stricken depositors, the run will cause the savings bank, temporarily at least, to suspend payments.

An occurrence of this kind, while unfortunately it cannot fail to increase the alarm of the depositors, a large proportion of whom may be ignorant people, unable to comprehend the real situation, by no means necessarily indicates that the savings bank is insolvent, or that any one of the depositors will lose anything by the suspension. The condition of the savings bank may be perfectly sound, the business may be prosperous in every way, and the funds may be invested with perfect security, and with excellent discretion, and yet, under the press of circumstances, it may be impossible for the savings bank to obtain money quickly enough to supply the importunate demands of the crowd of depositors. We may suppose, for purposes of illustration, that the total amount of deposits in a certain savings bank is two millions

of dollars, and (for the sake of simplicity) that all the funds, except the sum of two hundred thousand dollars, are invested in first-class mortgage loans, and other unexceptional securities. The savings bank is assuredly in a perfectly sound financial condition. Let us suppose, now, that a sudden and unexpected panic shall arise, and that the depositors at the savings bank shall become alarmed to such an extent that, in one business day, one half of the entire amount of deposits shall be demanded. The result of these conditions will be that the savings bank will be compelled to obtain, within a few hours, a large amount of cash in addition to its own available cash, or temporarily to suspend payment. It will be impossible, evidently, for the savings bank to call in any of its mortgage loans in a single day, and the state of the money market may be such that the requisite amount of cash cannot be obtained in any other manner, in so short a time. Therefore, although the payment of all the demands of the depositors would result in a large saving of interest for the savings bank (if the panic shall occur shortly before an interest day, the saving of interest for the savings bank, and the corresponding loss of interest to the depositors, may amount nearly to the sum of twenty thousand dollars), the perfectly sound institution must close its doors to the clamoring depositors and endure for a time the ignominy of suspension.

In order to prevent calamitous occurrences such as have been described, savings banks very generally provide, for their own protection, by-laws to the effect that no amounts of money shall, at any time, be drawn by any depositor unless a prior notice of thirty, sixty, or ninety days shall have been given of the intention to draw money. Similar rules will be found printed in the pass-books of many, if not practically all, of the savings banks. But the stated rule is to be regarded as entirely precautious, and has not been enforced by the savings banks except under the occasional emergencies of panics and extensive runs. An enforcement of a rule of this character may be regarded, to a certain extent, as equivalent to a temporary suspension of payments, and is therefore considered by many persons in the light of a reflection upon