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18 Conservative.
WHAT IS A ItAXK ?
IJY W. C. COHNAVELL.
THE DEPOSITORS.
A hank is a place where money is loft
for safe keeping.
The people who leave the money do
not want to use it at once , and do not
want to take the risk of keeping it in
their homes or ofliccs , or of carrying it
around with them.
These people are called the depositors.
They are not as a rule rich people.
Laborers , workmen , mechanics , far
mers , store-keepers , doctors , lawyers ,
ministers , brokers , capitalists and clerks.
All these are depositors.
They are all the people who have any
money little or much and who want
their money kept safe until they are
ready to use it.
There are millions of them.
If a bank is hurt all these people are
hurt. *
This money is left in charge of a man
who is called a banker.
He is paid a salary or wages for tak
ing care of the money just as another
man is paid wages for talcing care of
horses.
He is a "hired man. "
THE STOCKHOLDERS.
The bank itself must have money of
its own before depositors will put in
their money so that they may feel that
their money is safe.
The bank's is called "
own money "cap
ital. "
This is put in by a number of people
sometimes by a very largo number
each of whom puts in a little.
The money put in in this way is stock
money , and cannot bo drawn out , but
must stay in at the risk pf the business.
The people who put it in are called
stockholders.
The number of people in the United
States who have put up money in tlu's
way to start banks now in operation is
estimated at five hundred thousand
(500,000) ( ) .
They are men and women of all clas
ses , many of them holding only small
amounts of stock.
They have put in all together one bil
lion and fifty millions of dollars ( $1,050-
000,000) ) .
These people are the banks.
The banker is hired by these people.
* Wo have in round figures :
Saving Banks Deposits , amt. , ? 1,810,5 ! > 7,000 ;
No. people , 4,875,000 ; av. each , $871.00.
State BankH , Trust Companies and Private
Banks , amt. , * 1HO,888,000 ! ; No.peoplo , 1,600,000 ;
av. each , 000.00.
National BankH , of whom 1,724,000 have less
than $1,000 each to his credjt , unit. , $1,701,053-
000 ; No. people ; 1,029,000.
Building and Loan Associations , amt. , $500-
000,000 ; No. people , 1,800,000 ; av. each , 280.00.
Or , all in together , five thousand three hun
dred and fifty millions of dollars , owned by
ten millions of thrifty people owning , many
of thorn , only a few dollars apiece , and , at the
average , only about $500 apiece.
When the depositors put their money
in they do so with the understanding
that they can draw it out at any time.
The banker is expected to keep it
safely for them until they want it.
One way to do this would be to lock
it up in strong boxes in a vault , and
carefully guard it until called for.
If this were done the money would
not do anybody any good , wliile so
locked up.
THE BOimOWEKS.
In the place where the bank is started
there are storekeepers , fanners and
manufacturers.
All these people have some property
of their own.
Some of them have enough money
and property so that they do not need to
borrow.
But some of the storekeepers at cer
tain seasons of the year have trusted
out a large part of their property.
The farmers , the workmen and other
dealers and all land of people owe them.
Their stock of goods needs filling up.
There are two ways in which the
storekeeper can get money to buy new
goods.
HELPING THE STOREKEEPER.
He can crowd the people who owe
him and make them pay up.
Or he can borrow money to. buy now
goods with.
The people who owe him pay him
once or twice a year and oftener , but
cannot pay now without pressure and
discomfort.
So he goes to them and says , "Give
me your notes at three and four months ,
and pay them when they come due. "
And the debtors give their notes.
The storekeeper takes these notes to
the bank and and writes his nanio on
them , and asks the banker to lend him
the money that he needs.
Now the banker has in his safekeeping
ing the money that depositors have left
with him to bo kept until they want it.
They nro liable to want it at any
time.
But all of them do not want all of it
at one time.
Only a few of them want some of it
every day.
Many of them want only a little , once
in a while.
Most of those who draw out some of
it to use , get it back after a while , and
keep bringing it to the banker to hold
until they need it again.
So he finds while ho must keep on
hand enough to pay , every day , those
who may want to use a part of their
money , the larger part of the whole of
the money stays with him all the time.
Ho finds that while ho must keep in
cash ono-fifth to one-quarter of all the
funds , the other three-quartern will be
perfectly idle ,
This three-quarters then ho is at li
berty to lend out if he can lend it safely.
When the storekeeper comes to him
with the notes of his customers ho looks
over the names of the signers of the
notes.
He knows them all , and knows that
they wall probably pay the notes when
they come duo.
Ho luiows the storekeeper is good ,
and that if some of the people do not
pay their notes the storekeeper will , because -
cause ho has signed liis name on the
back of the notes , and so guaranteed
them.
So he lends the storekeeper the money ,
deducting the interest , and thus , because
of the bank in his neighborhood , the
storekeeper can buy more goods and pay
his bills , without crowding the farmers ,
the laborers and others who ewe him.
THE PROFITS.
The interest on the notes which the
banker buys from the storekeeper is pro
fit to the bank , and with other interest
earned in the same way goes to help
pay the rent for the bank building , the
wages of the clerks and officers and the
other expenses.
If any is left over after paying all
these it belongs to the people who have
put in the stock money.
Sometimes there is enough left to pay
them six per cent interest per year on
their money. Sometimes there is enough
to pay more than six , sometimes less.
This profit money , if there is any , is
usually divided up twice a year , but
generally not more is divided than
would pay the stockholders six per cent
a year.
The rest is kept so that if the bank
meets any losses it will have something
to pay thorn with without calling for
more stock money.
This amount kept is called "surplus. "
For the last three years the interest
earned for all of the stockholders in banks
all over the United Slates has been less
than six per cent.
HELPING Tim MANUFACTURER AND
WORKMAN.
The manufacturer in the place where
the bank is located is in the same con
dition as the storekeeper.
At certain seasons of the year ho has
trusted out all his money.
Ho wants to buy iron , copper , coal ,
wood , wool , timber , cotton.
Ho wants money to pay his men their
wages every week.
Ho cannot collect it in fast enough.
Ho goes to the bank as the storekeeper
did and borrows to keep things going
until ho collects in.
His men do not have to stop work and
wait until he collects.
Their wages are paid right along.
This is because ho can borrow at the
bank.
If there were no banks in the place to
collect in the idle money and loan it to
him ho would have to stop or do a smal
ler business and hire fewer men.
So if it wore not for the bank the men
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