SAVINGS BANK. — It may still be defined, borrowing the words of De Gerando (v. BIBLICA), as a public deposit institution, to which anyone may entrust at will the money he wishes to set aside, which accumulates its proceeds for him at compound interest, and from which he may withdraw it in whole or in part whenever he wishes.
But the possibility that savings banks have of increasing the deposits entrusted to them by means of compound interest presupposes on their part the full exercise of credit. They nevertheless still differ from ordinary banks in that the collection of savings constitutes their purpose, while putting them to work is merely the means of reimbursing themselves for their expenses and paying interest to depositors.
To give an even more precise idea of these institutions, it must be added that the monetary savings they aim to attract are those typical of the family enterprises that socially make up the less well-off classes, formed with a view to mitigating the economic consequences of the risks of work and also to gradually becoming a supplementary or exclusive part of income.
It has rightly been observed that, in an initial phase, such savings depend more on the spirit of foresight than on the desire to receive
interest; only when the savings have reached a certain size do they become receptive to the inducement of an income on pure capital, provided, however, that it derives from entirely secure investments. Hence it happens that the investment forms of savings banks remain so closely bound by this latter condition as to make it appear—as it is worth repeating—that the active operations of such institutions are an instrument of their passive operations, and not the reverse, as occurs in ordinary banks.
The old and small savings banks knew only four forms of investment: mortgage loans, repayable only very slowly and at 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 these investments have security more in view than the liquidity of the investments themselves. Their nature makes savings banks, “a creation of the genius of charity,” as De Gerando declared, also a source of landed, proletarian, and civic charity—charity on the liabilities side and charity on the assets side of the balance sheet.
And therefore, at their origin, which occurred in the last quarter of the eighteenth century, savings banks were regarded by moral and religious institutions, by churchmen, and by Christianly enlightened philanthropists as one of the most effective means, together with private and legal charity, of overcoming the scourge of pauperism and enabling the economically humbler classes to raise themselves by their own efforts through the prudent setting aside of part of their earnings, in order to supplement their future incomes in times of need or to accumulate capital.
In the course of time, in addition to the traditional deposits—that is, those of the humble—deposits from the middle classes flowed into savings banks, which at first glance appeared to be deposits from parasites coming to take advantage of institutions created for the poor. The purpose of the first deposits was to form a nest egg; the second were merely working capital, paid in by merchants and farmers who sought at the same time safekeeping, interest, and an accounting record. This increase in deposits brought about the advent of the large savings banks and gave their investments a different direction, because security alone was no longer sufficient: liquidity also became necessary.
Is it legitimate to say that the large savings banks, as a result of 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 the existence of savings banks themselves, making it possible to achieve these purposes “at lower cost” and indeed adding new ones to them.
This is confirmed by Italian legislation (Consolidated Text approved by R. D. 25 Apr. 1929, no. 967), which, by subjecting all savings banks, small and large, to the same rules, also obliges them to group themselves into federations for the purpose of mutual moral and financial assistance, and to establish a common guarantee fund in order better to ensure the confidence of depositors. For these depositors, the formation of savings, understood in the strict sense, represents the principal purpose of their resorting to these meritorious institutions, imbued with the beneficent spirit of Christianity, which always informs true civilization.