SAVINGS BANKS. — They may still be defined, in the words of De Gerando (q.v.), as a public deposit to which any individual may entrust at will the money he wishes to save, which accumulates for him compound interest, and from which he may withdraw it in whole or in part whenever he desires.
Yet the ability of savings banks to increase the deposits entrusted to them through compound interest presupposes that they exercise full credit operations. They nevertheless still differ from ordinary banks in that the collection of savings constitutes their purpose, and their employment is merely a means of reimbursing expenses and paying interest to depositors.
To give a more precise idea of such institutions, it must be added that the monetary savings they aim to attract are those typical of family-run enterprises which socially constitute the less affluent classes, formed with a view to mitigating the economic consequences of work-related risks and also to gradually transforming themselves into a complementary or exclusive part of future income.
It has been rightly observed that, in an initial phase, such savings are more a function of the spirit of providence than of the desire to earn interest; only when savings have reached a certain size do they become sensitive to the allure of income on pure capital, provided, however, that it derives from entirely secure investments. Hence it follows that the investment forms of savings banks are so constrained by this latter condition that it is appropriate to repeat that the active operations of such entities appear as instruments of passive operations and not vice versa, as is the case in ordinary banks.
The ancient and small savings banks knew only four types of investment: mortgage loans, with very slow repayment and low interest; loans to artisans, shopkeepers, small farmers, and workers; investments in government bonds; and loans to municipalities for the services of charitable congregations, hospitals, and schools.
Now it is clear that in these investments the emphasis is placed more on security than on liquidity, the nature of which makes savings banks, as De Gerando affirmed, «a creation of the genius of charity», also a source of rural, proletarian, and civic charity, charity in the passive chapter and charity in the active chapter of the balance sheet.
And thus, at their origin, which occurred in the last quarter of the 18th century, savings banks were considered by moral and religious bodies, by men of the Church, and by Christianly enlightened philanthropists as one of the most effective means, together with private and legal charity, to combat the scourge of pauperism and to enable the economically humbler classes to lift themselves up through the self-imposed accumulation of part of their earnings to supplement future income in times of need or to accumulate capital.
In due course, in addition to traditional deposits—those of the humble—deposits from the middle class also flowed into savings banks, which at first glance seemed like parasitic deposits taking advantage of institutions created for the poor. The former deposits aimed at the formation of a nest egg, while the latter were merely working capital deposited by merchants and farmers who sought at the same time safekeeping, interest, and an accounting record. This increase in deposits led to the advent of large savings banks and imparted a different direction to their investments, since security alone was no longer sufficient; liquidity also became necessary.
May it be said that large savings banks, following the evolution described, have lost their original and essential character? It may be answered that the increase in deposits of this type of savings bank does not frustrate the purposes and reasons for their existence, but rather makes these purposes achievable «at lower cost» and even adds new ones.
This is confirmed by Italian legislation (Consolidated Law approved by Royal Decree No. 967 of 25 April 1929), which, by subjecting all savings banks, large and small, to uniform regulation, obliges them also to group into federations for the purpose of mutual moral and financial assistance and to establish a common guarantee fund to better secure the trust of depositors, for whom the formation of savings, strictly speaking, represents the principal intent of their access to these meritorious institutions, in which is infused the beneficent spirit of Christianity, which ever informs true civilization.