The main features.  Sec. 12.  The continuous plan.  Sec. 13.  The distribution of earnings.  Sec. 14.  Possible developments of savings institutions.

Sec. 1. #The nature of saving.# The motives actuating the different classes of lenders may, for our present purpose, be reduced to two:  to postpone the consumption of income, and to obtain a net income from wealth (or investment).  Saving always is relative to a particular period and is for more or less distant ends.  The child saves its pennies to go to the circus next week, the working girl saves her dimes for a new hat next spring, the earnest high school pupil saves to go to college next year, and the provident man saves for his family’s future needs and for his own old age.  But always, to constitute saving, there must be for the time a net result:  the excess of income over consumptive outgo in that period.  This is easily distinguishable from various forms of pseudo-saving of which many persons that are really spending all their incomes are very proud.  Such forms are:  planning to buy a particular thing and then deciding not to do so, but buying something else; finding the price less than was expected, and thereupon using this so-called saving for another purpose; spending less than some one else for a particular purpose, such as food, but off-setting this by larger outlay for another purpose, such as clothing; spending all one’s own income but less than some one else with a larger income.  We may define saving as the conversion, into expenditure for consumptive use, of less than one’s net income within a given income period.

Saving goes on in a natural economy both by accumulation of indirect agents and by elaboration so as to improve their quality.[1] It goes on to-day by the replacement of perishable by durative agents, as in replacing a wooden house by one of stone or concrete, and by producing wealth without consuming it, as in increasing the number of cattle on one’s farm.  But saving has come to be increasingly made in the form of money (or of monetary funds), and in this chapter we shall consider some of the ways in which this can now be done.

Sec. 2. #Economic limit of saving#.  There is an economic limit to saving, as judged from the standpoint of each individual.[2] The ultimate purpose of every act of saving is the provision of future incomes, either as total sums to be used later or as new (net) incomes to be received at successive periods.  The economic limit of saving in each case is dependent upon the person’s present needs in relation to present income and conditions, as compared with the prospect of his future needs in relation to his future income and conditions.  Each free economic subject must form a judgment and make his choice as best he can and in the light of experience.  There is no absolute and infallible standard of judgment that can be applied by outsiders to each case.  Yet there is occasion to deplore the improvidence that