While it is a comparatively simple matter to state the amount of either the insurance or savings bank element in a single policy, it is by no means easy, as things go, to classify the company’s actual expenses on this basis.

Fortunately, we can pretty accurately determine what these amounts should be in any particular case.

In the first place, there are institutions in our midst devoted solely to receiving and conserving small sums of money; doing, in fact, exactly what our insurance companies are undertaking to do with the reserve and contributions thereto.  These savings banks are required by law to make returns to the State commissioner, from whose official report we can get a very good idea of the expense attendant on doing this business.

Confining ourselves to the city banks, where the conditions more nearly resemble those of the insurance companies, we find in thirty-eight combined institutions for saving in the State of Massachusetts a deposit in 1888 of $192,174,566, taken care of at an aggregate cost of $455,387, or about 24-100 of one per cent.

The same ratio carried out for all the savings banks in Massachusetts gives a trifle over 25-100 of one per cent.; we may, therefore, consider 1/4 of one per cent. as expressing pretty nearly the cost of receiving, paying out, and investing the savings of the people.

We must remember in this connection that in the popular estimation, the savings bank is an important factor in the public welfare, and in the towns and smaller cities there are often found public spirited men willing to give their services to encourage this mode of saving; but public sentiment has not yet given to life insurance the place which it is destined, sooner or later, to occupy by the side of the savings bank.  Hence the services of able managers can only be obtained by a liberal outlay of the corporate funds.  A satisfactory adjustment of the matter of expenses will, perhaps, do more than anything else to bring about this recognition on the part of the public.

In the case of the savings bank it is safe to say that for double the present outlay a liberal salary could be paid to all the officers.  Following the analogy, we are led to infer that if this be the case in savings banks, then 1/2 of one per cent. of the reserve should be an ample allowance for the special labor required in the purely banking portion of the business.

In this we have the concurrence of the late Elizur Wright.  In an essay on this subject he says: 

“The expenses of the five largest savings banks in Boston, in 1869, did not exceed 4-10 of one per cent. on $28,000,000 deposited in them.  They certainly had twice as many transactions, in proportion to the deposits, as any life insurance company could have with the same amount of reserve, so that 1/2 of one per cent. on the reserve seems to be ample for all working expenses save those of maintaining the agencies and collecting the premiums.”