BIG BANKS AND THE "SMALL MAN "
• By F. E. STEELE.
WnEN extensive amalgamations were taking place among the big banks towards the end of the War period, one of the many arguments put forward to justify the policy of amalgamation was that that policy was rendered desirable, and even necessary, in the interests of the big customers of the banks, who were themselves, in many instances, huge amalgamated concerns, with very large requirements for banking accommodation. There were substantial grounds for this contention, but an argument against amalgamations, put forward simul- taneously, was that whereas the big banks, by amal- gamating, might be better able to assist the large com- mercial and industrial concerns, one result of their becoming so big would be that they would care less and cater less for the needs of the small customer. This contention is still frequently put forward. Is it well founded ? Obviously, any line of policy which favours the big customer at the expense of the small one, which encourages large transactions but fails to encourage thrift, is bad for the community as a whole. It is there- fore worth while to consider what the big banks have been doing since the amalgamation period, and what they are doing now, to encourage thrift on the part of the " small man."
Let us take a concrete instance, which is better for such a purpose than any number of abstract statements. The coal industry has, unfortunately, been very much to the fore of late. What are the big banks doing for the colliers, as distinct from the colliery companies ? The answer to this question should afford a fair test of the truth or falsity of the contention that the banks, while always willing to help the big concern, neglect the small depositor.
AIDING THE MINER.
In a particular mining district in the Midlands very well known to the writer a large number of colliers have accounts at the branches of the joint stock banks. Some of these are deposit accounts, and on all of them interest is allowed, notwithstanding the smallness of many of the deposits and the considerable trouble involved in keeping the accounts. Amounts of £1 and upwards are received, and withdrawals arc made by the depositor signing a simple deposit account form of receipt. The depositors are encouraged to bring their deposit books to be entered up at each transaction, but neither credits nor withdrawals are refused if the book be not produced. Some of the colliers have small current accounts, in connexion with which cheque books arc issued in the ordinary way, and the banks in the district make no difficulty whatever about advancing money to the account holders for such purposes as buying or even building a house. Some of the branches in the district in question have a number of sub-branches, close to the coal pit, so that the facilities offered, both by way of deposit and current account, arc brought practically to the doors of the men engaged in the leading industry of the district, and are greatly appreciated and utilized. . What has been stated above with regard to the facilities for thrift afforded by the joint stock banks to :workers in the coal-fields in one district is, generally speaking, true of every district in the country where coal is hewn, and, further, is true of every district through- 'out the country where the various other forms of industry are carried on. Not only does it apply to these, but it .applies to a large extent to those neighbourhoods in which the people are not engaged in industry at all but are none the less in need of facilities for thrift. The form which those facilities take naturally varies with the character of the district. Only one form has been specifically mentioned here. But in all parts of the country sueb facilities, in one form or another, are offered.
" HOME " BANKS.
The thrift facilities afforded to people in industrial areas and in the poorer districts are not confined to adults. The Yorkshire Penny Bank, for example, which holds deposits running into tens of millions; encourages thrift among children and young people by appointing voluntary agents of the bank among the teachers in the schools throughout the area of its open, ations, whilst more than one of the "Big Five" have initiated a scheme under which "home banks," in the form of a special kind of receptacle for savings, of which the bank holds the key, are furnished to young people' and others, who bring the boxes to the bank from time to time in order that their contents may be taken out and credited to a deposit account, on which interest is allowed. In the case of certain American banks, as well as in that of an English municipal bank, this last men- tioned system is said to have been made use of to a very, large extent by adults as well as by young people, and to have been highly successful.
. With regard to agriculture, a matter which has been engaging the serious attention of the Government in the present state of the agricultural industry is whether the facilities offered by the joint stock banks to the small finner and agriculturist are sufficient ; whether they go low enough down within the industry ; and whether they could not, with advantage, be extended, or, as an alternative, supplemented, by the establishment of other. institutions working in co-operation with the existing. banks. This is a matter of great importance, but inas- much as it is concerned mainly with facilities for borrowing it is to some extent outside the scope of the present survey, though closely connected with it. Those who are interested in this aspect of the matter cannot do better than study the "Report, on Agricultural Credit," officially published early this year by the Department of Agriculture.- There is one characteristic of the various inducements to thrift offered by the big banks which deserves to be noted and emphasized in times like the present, when such banks are frequently attacked as " capitalist " institutions. It is that they are not, as a rule, remuner- ative; that in many instances the banks which offer them do so, with their eyes open, at a loss.
PHILANTHROPY IN BANKING.
Long before the War it was stated, on high authority, that every payment into and every withdrawal from the Post Office Savings flank cost the Savings Bank Depart- ment 5d., and we may be quite sure that, since the War, the cost of every such entry has increased. This being so with the Post Office Savings Bank, it would be inter- esting to know the cost per entry, at the present time, of.every small deposit or withdrawal made in the case of the Savings Department of a joint stock bank. That cost would be less than in the case of the Post Office, amongst other reasons because institutions which are privately owned and worked are invariably conducted more economically than those carried on under Govern- ment control. If an estimate Were made of the cost of the savings departments of the big banks it would be found that, after making full allowance for the possibility of small and unremunerative accounts developing, in due time, into larger' and remunerative ones, the greater part of the thrift business of the big banks not only brings in no profit, but is conducted at a loss. - This may not be comforting for bank shareholders, as such, but even bank shareholders are human ; much more so than they are popularly credited with being, witness the sympathetic manner in which allocations of profits towards staff pension funds and kindred objects are received at annual meetings ; and those who are responsible for the general policy of the big banks recog- nize, with the full approval of the shareholders, that the institutions which they direct have a duty to the public as well as to their shareholders, and that in so far as that duty includes the encouragement of thrift, it should be performed even although it may not, in itself, be profitable. In other words, they recognize that there is a place for philanthropy, as well as for money-making, in the operations of concerns conducted primarily and justifiably with a view to making a profit.
Previous page
