is fostered and that prevails, especially among those receiving their incomes in the form of wage or salary.  Considered with reference to the possible maximum of welfare of the individuals themselves, the apportionment of their incomes in time is frequently woful.  It is uneconomic for families of small income to save through buying less food than is needed to keep them in health; but it is likewise uneconomic to spend the income, when work is plentiful and wages good, for expensive foods having little nutriment and then, for lack of savings, to go badly underfed when work is slack and wages are small.  There is for each class of circumstances a golden mean of saving.  The saving habit may develop to irrational excess and become miserliness, but this happens rarely compared with the many cases where men in the period of their largest earnings spend up to the limit on a gay life and make no provision for any of the mischances of life—­business reverses, loss of employment, accidents, temporary sickness, permanent invalidity, or unprovided old age.  Despite the development of late of new agencies and opportunities for saving there is need of doing more toward popular education in thrift.[3]

Sec. 3. #Commercial bank deposits of an investment nature.# If a commercial bank pays no interest on demand deposits there is no motive for the depositor to keep a balance larger than he needs as current purchasing power.  When his bank account increases beyond that point, it becomes available for a more or less lasting investment to yield financial income.  If the sum is small or if the owner is at all uncertain as to his plans or if he is not in a position to find another attractive form of investment, the offer by the bank of a small rate of interest on special time deposits (2 to 3 per cent is not an unusual rate in such cases) will suffice to cause him to leave such funds in the bank.  Since about 1900 the practice has been greatly extended of paying interest even on “current balances” of regular checking accounts (demand deposits).  If the new 5 per cent rule[4] as to reserves against time deposits operates to cause commercial banks generally to pay a rate ranging from 2-1/2 to 3-1/2 per cent on time deposits, their amount will doubtless increase greatly.  But still, in the future as in the past, those depositors having funds that can be invested for considerable periods will seek a higher rate of interest than can be obtained from commercial banks.

In their loaning function the “commercial” banks (as the adjective indicates) serve mainly the special needs of the commercial elements of the community—­business men borrowing for short terms to carry out particular transactions.  Loans made on short-time commercial paper (quick assets) are very suitable to the needs of a bank that has its liabilities largely in the form of demand deposits.  Time deposits can be more safely loaned on the security of real estate and for longer periods.