ORGANISATION OF SAVINGS BANKS AND THE INVESTMENT OF THEIR CAPITAL 75 



They were at first established on the initiativ^e and in the interest 

 of private persons, without any aid or intervention from public authorities. 

 In 1828-30, ParUament granted some of them a credit in the National Bank. 

 About 1840, some Chambers of Agriculture [Hushdlluingssdllskap) pro- 

 moted in their own provinces and under their own supervision the foundation 

 of the first so-called provincial savings banks, of which the chief object 

 was to be to collect the savings of agriculturists, especially in branches 

 in the country. 



Up to 1875 the idea prevailed in Sweden that the State should not at- 

 tempt to legislate for such institutions lest their development should be 

 hindered and the cost of their administration be increased. But since, in 

 the decade including the year 1870, numerous banks had arisen, some of 

 which had lost heavily for want of good administration, the idea of Uberty up 

 to then prevaihng had to yield to the evident necessity of protecting the inter- 

 ests of depositors. Then came the law of 1875 which made it compulsory 

 to give greater publicity to the acts of the administration. This law, how- 

 ever, in spite of successive modifications in 18S8 and 1890 proved insuf- 

 ficient to guarantee the healthy development of the banks, and it was 

 therefore superseded on July 19th., 1892 by a new law still in force except 

 for an amendment introduced by law of May 25th., 1905 § 15. 



By the law of 1875 it was enacted that the savings banks, as they 

 were given the character of institutions of public utility, must not pay 

 dividends. 



The above character was preserved by the law of 1892, by which it 

 was declared essential that these banks should not divide profits among 

 the founders or their heirs. 



The whole of the profits must go to the reserve fund, but, should this 

 rise above 10% of the savings, the Board of iManagement may appropriate 

 the surplus to increase the interest to depositors or to any other 

 purpose considered such as might stimulate economy, especially among the 

 poorer classes. Where the rules permit, the Board may, with the don- 

 currence of the directors, assign one half of the net profits to some 

 benevolent object or to a work of pubUc utility. 



These banks may not undertake any other debit business than that 

 of receiving money at interest and paying it out on demand. 



A bank may not be established by fewer than twenty Swedish citizens, 

 with the permission of the competent authorities in the district where 

 it desires to work. Except in special cases, the initial capital must not be 

 less than 2,000 crowns. 



The administrators (Hufvudman), numbering from 20 to 50, may be 

 chosen from among the founders, and may become directors. 



If the rules permit, the directors may receive an allowance to be 

 paid out of the interest on the capital of the bank. 



But the administrators, even though also directors, may in no case 

 receive remuneration of any kind. 



The rules regarding investments are of special interest. The banks 

 nust not acquire real estate, except in case of necessity as payment of a 

 debt, and they must sell it again as soon as an opportunity offers. 



