savings bank


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savings bank,

financial institution that, until recently, performed only the following functions: receiving savings deposits of individuals, investing them, and providing a modest return to its depositors in the form of interest. A common form of savings bank, the mutual savings bank, was traditionally the only type that accepted savings deposits exclusively (see bankingbanking,
primarily the business of dealing in money and instruments of credit. Banks were traditionally differentiated from other financial institutions by their principal functions of accepting deposits—subject to withdrawal or transfer by check—and of making loans.
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). Mutual savings banks are state-chartered institutions, owned by their depositors and managed for their mutual benefit by self-perpetuating boards of trustees. Savings deposits may also be received by a credit unioncredit union,
cooperative, not-for-profit financial institution that makes low-interest personal loans to its members. It is usually composed of persons from the same occupational group or the same local community or institution.
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 or a savings and loan associationsavings and loan association
(S&L), type of financial institution that was originally created to accept savings from private investors and to provide home mortgage services for the public.

The first U.S. S&L was founded in 1831.
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. However, due to extensive deregulation in the banking industry (primarily during the 1980s), the distinction between savings banks and other financial institutions has become increasingly hazy. Federal deregulation laws in the 1980s gave savings banks the opportunity to become federally chartered institutions, to convert themselves into capital stock corporations, and to come under the supervision of the Federal Home Loan Bank Board. New lending powers, the removal of ceilings on interest rates, and takeovers of struggling small banks by larger ones have made the mutual savings bank, as it was understood until about 1980, largely obsolete.

Bibliography

See M. Mayer, The Money Bazaars: Understanding the Banking Revolution Around Us (1984); F. H. Ornstein, Savings Banking (1985).

Savings Bank

 

a credit institution, the basic function of which consists in attracting monetary savings and temporarily free monetary resources of the population.

In the capitalist countries the assets accumulated in savings banks are one of the sources for the formation of loan capital. The activities of the banks promote the redistribution of national income in the interests of the ruling classes. “The millions entrusted to the savings banks are in the final analysis actually controlled by these very same bank capital magnates” (V. I. Lenin, Poln. sobr. soch, 5th ed., vol. 27, p. 334). In most countries, savings banks originated at the end of the 18th century and the beginning of the 19th. Savings banks were established by private companies, municipalities, and the state, especially from the second half of the 19th century. Usually, the state savings banks were closely linked with the postal system. During the stage of imperialism the money attracted to the savings banks is channeled through the state credit system and is used chiefly to finance the military expenditures of the imperialist states and cover the budget deficit.

At the beginning of 1974, the balance of deposits at savings banks was $96.4 billion in the USA, £5.4 billion sterling in Great Britain (Sept. 30, 1973), 162 billion francs in France, and 176.9 billion marks in the Federal Republic of Germany. Most of the deposits belong to rentiers and to small- and medium-scale entrepreneurs. The workers own only a small share of the total deposits. The savings of the majority of the working people are forced. The deepening of the internal contradictions and crises inherent in capitalism, inflation, and uncertainty about the future compel the working people to curtail consumption and start saving to protect themselves in case of unemployment, sickness, and disability or to support themselves in old age.

Savings banks were founded in St. Petersburg and Moscow in 1841. By the beginning of 1914, there were 8,553 savings banks in Russia, including 1,026 central ones and 7,527 branch and registered savings banks. The total balance of deposits, including deposits by juristic persons, was about 1.7 billion rubles. There were approximately 9 million depositors. Large-scale depositors prevailed, especially members of the urban and rural bourgeoisie. The tsarist government used the resources of the savings banks to strengthen the police state and to finance capitalist enterprises and farms owned by the pomeshchiki (landlords) and kulaks.

In the socialist countries the savings and temporarily free assets of the population that are mobilized by the savings banks are used to develop the economy and culture and improve the well-being of the working people. In the USSR the savings banks represent a single, all-Union, centralized credit institution, the main purpose of which is the development of a savings system, including the extensive attraction of the free monetary assets of the population, the floating of state domestic loans, and the provision of payment and cashing services for the public, enterprises, organizations, and institutions. Other savings banks operations are stipulated in the bank charters. Savings banks are juristic persons operating on the basis of economic accountability.

The state labor savings banks, which were established by a decree of the Council of People’s Commissars of the RSFSR on Dec. 26, 1922, operate under a charter approved by the Council of Ministers of the USSR on Nov. 20, 1948. Before 1963, the savings banks were administered by the Ministry of Finance of the USSR. Since Jan. 1, 1963, they have been under the jurisdiction of the State Bank of the USSR (Gosbank), which makes possible the more efficient use of the funds mobilized by the savings bank to provide credit in the national economy.

The savings deposited in savings banks represent the portion of the people’s monetary income that is free after current material and cultural needs have been satisfied. Most of these savings are purposive, intended for payment for a trip to a resort or for the purchase of durables (motor vehicles, motorcycles, and furniture, for example) or cooperative apartments. The continuous rise in the standard of living of the working people and the increase in their monetary income have resulted in a regular increase in savings bank deposits (see Table 1).

By the end of 1974, there was an average of 395 savings accounts per 1,000 inhabitants, and the average per capita deposit was 312 rubles. For every 1,000 income-earning inhabitants (the majority of depositors) there were 639 accounts, averaging 504 rubles each. In 1974 the turnover in savings bank deposits was 43.2 billion rubles in receipts (including 8.5 billion rubles in transfers from the incomes of the working people) and 33.0 billion rubles in payments. The assets deposited at savings banks are kept in accounts at Gosbank. Because these assets are fairly stable, they serve as an important source of Gosbank’s credit resources.

The state guarantees the security of the money entrusted to the savings banks, the secrecy of deposits, and the payment of them on first demand by the depositors. Savings banks accept demand deposits, time deposits (at least six months), and conditional lottery and current account deposits. For time deposits, savings banks pay 3 percent interest per annum, and for the remaining types of deposits, 2 percent per annum. For the lottery deposits, the income is paid in winnings determined in semiannual drawings. Demand deposits are most popular with the public, constituting 70 percent of the total savings in deposit accounts by the end of 1974. The income from deposits (interest

Table 1. Deposits of the public in Soviet savings banks (at year’s end)
 19401950196019701974
Number of deposits (million)..........................17.314.352.280.1100.0
city ........................................11.610.438.358.973.9
countryside...................................5.73.913.921.226.1
Total deposits (billion rubles) .........................0.71.810.946.678.9
city ........................................0.61.68.734.157.2
countryside...................................0.10.22.212.521.7
Average deposit (rubles)............................42124209581789
city ........................................50151228578774
countryside...................................2652157591830

or winnings) is not subject to state and local taxes and fees. The depositor has the right to receive the deposit in part or in whole. He may dispose of the deposit personally or through a representative, and he also has the right to will the deposit to one or several persons, regardless of whether they are his legal heirs, or to the state or public organizations.

In addition to deposits made by the public, savings banks keep the assets of plant and local trade union committees, mutual assistance offices, and other primary social organizations not engaged in economic activities, as well as the funds of the rural (settlement) soviets and institutions supported by rural budgets. The savings banks float the bonds for the state’s 3-percent internal lottery loan, sell tickets for the prize lotteries held in the Union republics, and pay out the earnings on state bonds and lottery tickets. Since December 1974, they have paid the retired bonds of the state loans floated by subscription before 1957, in comformity with the established dates of their repayment. Savings banks perform operations related to the transfer of deposits and carry out clearing operations authorized by depositors. They issue and reimburse letter-of-credit payments, and they issue credit checks for various consumer durables purchased by the public at state and cooperative trade organizations.

The largest service operation of the savings banks involves the receipt of apartment rents and payments for municipal services, for the support of children in institutions, and for insurance. In 1974 the savings banks received 7.6 billion rubles in such payments. They also carry out operations related to the payment and cashing servicing of state enterprises, institutions, organizations, and kolkhozes.

By the end of 1974, there were 79,500 savings banks. Depending on their functions and the number of personnel, savings banks are classified as central, first-category, second-category, and local. The central savings banks direct the activities of the savings banks of cities and raions. In all the Union and autonomous republics, krais, and oblasts, as well as in certain major cities, there are state labor savings banks administrations that directly supervise the operations of savings banks. The entire system of savings banks is run by the Board of Directors of the State Labor Savings Banks of the USSR.

In other socialist countries the steady rate of growth of the economy and the continuous improvement in the well-being and cultural level of the people have resulted in the extensive development of the activity of savings banks in attracting deposits by the public. By the end of 1974, the total savings banks deposits had reached 6.9 billion leva in Bulgaria, 70.8 billion forints in Hungary, 55.0 billion marks in the German Democratic Republic, 216.2 billion złotys in Poland, and 107.2 million krona in Czechoslovakia. The savings banks in these countries offer a broad variety of accounts. The most common are demand deposits, except in Hungary, where time deposits prevail. Lottery deposits are important in Czechoslovakian savings banks. Characteristic of the savings banks in the other socialist countries is the development of credit operations, such as the granting of loans to the public for housing construction and the purchase of consumer goods and durables. The savings banks also sell lottery tickets (Hungary), buy and sell savings bonds (Poland), and keep the assets of various organizations (Rumania).

REFERENCES

Marx, K., and F. Engels. Soch, 2nd ed., vol. 6, pp. 589–90; ibid., vol. 25, part 1, p. 443.
Lenin, V. I. Poln. sobr. soch, 5th ed., vol. 5, pp. 144–47.
Lenin, V. I. “Iz ekonomicheskoi zhizni Rossii.” Ibid., vol. 6.
Lenin, V. I. Ibid., vol. 27, pp. 333–34.
Lenin, V. I. “Luchshe men’she da luchshe.” Ibid., vol. 45.
Valler, L. Sberegatel’nye kassy v zarubezhnykh stranakh. Moscow, 1960.
Spravochnik rabotnika sberegalel’noi kassy. Moscow, 1971.
Sberegatel’nye kassy SSSR za 50 let. Moscow, 1972.

A. P. GNUTOV and M. A. NAIDIS

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