Pooled Savings

About 1810 the Rev. Henry Duncan of Ruthwell, Scotland became worried by the thriftlessness of his parishioners. Persuading them to bring their surplus pennies to the manse each week, he finally hit on the idea of a mutual savings bank. The bank belonged to depositors; there were no stockholders. Long regarded as an excellent means of making the poor help themselves, mutual savings banks rooted quickly in the U. S., but never firmly either south of the Potomac or west of the Alleghenies. In those regions the poor either stayed poor or relied on stock savings banks, commercial banks and building & loan associations. Last week New York State mutual savings banks, which hold more than one-half of the $10,000,000,000 of U. S. mutual deposits, went Mr. Duncan's notion of mutuality one better when they formed for themselves two central credit reservoirs and brought in the U. S. Government as a partner.

First was Savings Banks Trust Co.. capitalized at $107,500,000 on which the R. F. C. on the recommendation of Brain-trusty Adolf Augustus Berle Jr., put up $50,000,000 and the savings banks the rest. Banks which own stock in the trust company may, should the need arise, discount their bonds at S. B. T. just as a commercial member bank discounts its assets at the Federal Reserve. And S. B. T. itself can obtain Federal Reserve credit.

Second central reservoir was Institutional Securities Corp., a mortgage pool which can tap R. F. C. credit up to $100,000,000. I. S. C. will offer one more ready market for mortgages, may ease the pressure for foreclosures in the New York area.

New York savings bankers were quick to point out that these were no emergency agencies but permanent central banks for which they have drummed since 1925. But State Banking Superintendent Broderick bluntly observed: "The mutual savings banks . . . for the first time in their history have access to the resources of the Federal Government." With his banks in an impregnable position, he promised promptly to remove all withdrawal restrictions in force since March. Withdrawal limit is now $250 per week with exceptions for emergencies including vacations.

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