Unusually Might Demand for Loans Is Responsible for Super-Abundance of Funds.

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MAY DECREASE

INTEREST RATE ON TIME DEPOSITS

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Superfluity of Money Shows Prosperous

Condition of New Ulm

and Vicinity.

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Local bankers are seriously considering the advisability of reducing the interest rate on time deposits, in amount of cash which is causing their bank vaults to fairly bulge. The present superabundance of ready money is a veritable drug on the market, and something must be done to offset this superfluity. Twin City bankers pay country banks only 1 3-4per cent interest on surplus funds.

No Demand for Cash.

As a result of the prosperous condition of New Ulm and vicinity, there is no appreciable demand for cash here. Applications for desirable loans are in exceedingly scarce article, especially at the present rate of interest which must be charged by the banks to do a profitable business on the basis of the four per cent they now pay for time deposits. The cost of the operating a bank is conservatively reckoned at two percent.

Would Divert Funds.

People with means are apparently satisfied with the four per cent inter-banks, and prefer to deposit their superfluous funds with them, rather enterprises, even at a higher rate of interest. By reducing the interest rate on time deposits, it is believed, much of the overabundance of funds now in the banks would be diverted to industrial investments, which ample funds with which to make necessary extensions and additions to various industries. This would ensure to the benefit of the entire community.

Nearly $4,500,000.

The combined deposits of the four banks in New Ulm aggregate nearly four and a half million dollars-$4,-486,720.55 to be exact-according to the reports filed with the state bank examiner following the recent call. This is an average of $665.19 for every man, woman and child residing In this city, on a basis of the 1920 censure are an indication of the super-abundance of money here, and tell the story of why the local bankers are deliberating about the advisability, or, rather, the necessity, of decreasing the present rate of interest on time deposits.

Farmers Have Coin.

From 80 to 85 per cent of the money on certificates of deposit in the New Ulm banks is owned by the farmers of this vicinity, the balance representing the share of local residents. The general prosperous condition of the tillers of the soil in this section of the country is a result of vailing high prices for livestock and during the depression period, which swept the entire country after the close of the World war, the wave of their feet again, and a large number of them were able to not only meet their obligations, but to bank a profit.

Takes in Whole County.

The flushness of money is not restricted to New Ulm alone, but also prevails in other sections of Brown brought out by the large amount of deposits in all of the 18 banks in the county. The total aggregates $11,-163,443.77, which, taking the population figures of 1920 (22,421) as a basis, money were divided equally among all women and children-each of them would receive $497.90. As a result, practically every bank in the county is confronted with the same perplexing problem as are the local financial institutions, and they, too, are considering the matter of reducing the rate of interest paid on time deposits.

Brown County Journal,

February 13, 1925

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