5. Cash, consisting of money of any kind on hand in bank, and “cash items," consisting of checks on other banks in the same place, or any other items which can readily be turned, or "converted," into cash or its equivalent.

Sometimes a bank sustains losses in its resources or assets through ill-judged investment of its funds by its managers, or the dishonesty of its officers or employes, to such an extent that it is unable to pay its liabilities to creditors. In such a case the law creating the bank usually provides for the appointment of an officer, called a "receiver," who takes charge of all its affairs, collects all debts due to the bank, and pays off the creditors pro rata, either in full of their claims or as far as the funds realized or collected from the assets will go. If anything is left after the creditors are paid, the remainder is divided among the shareholders, but if the assets do not yield enough to pay the creditors in full, the law usually provides for collecting a pro rata amount from each shareholder sufficient to make up the deficiency, up to an amount not exceeding the par value of the shares held by the stockholder.

This is called making or "levying an assessment" on the stockholders.

The payments made to the creditors are called “dividends," and the bank is said to have "failed," or to be "insolvent," because its assets can not be "liquidated," or quickly turned into ready money with which to pay off its creditors.

Frequently the shareholders of good, or "solvent," banks wish to stop doing business and withdraw the funds invested

of the bank, or the various forms in which its funds are invested.

The "liabilities" usually consist of:

1. Capital stock, surplus fund and undivided profits, for which the bank is liable to the shareholders or stock

holders to whom they belong.

2. Deposits of all kinds, for which the bank is liable to the depositors who placed them with the bank.

3. Circulating notes outstanding, for which the bank is liable to whoever holds or owns the notes issued by the bank.

4. Borrowed money of any kind, for which the bank is liable to the party or parties from whom it has borrowed any funds.

All the parties, except the shareholders, to whom a bank is liable or indebted, are called "creditors" of the bank.

The "resources" or "assets" usually consist of:

1. Loans and discounts, represented by notes, drafts, or any such instrument upon which funds have been loaned out by the bank.

2. Bonds, stocks, real estate mortgages, or any "securities" of this kind which are owned by the bank as investments.

3. Real estate which the bank owns, such, for instance, as the building in which it does business, or such as it has been compelled to take in payment of loans made on security of real estate.

4. Amounts due from other banks and bankers, consisting of deposits made with them, or amounts due for "collections" sent them.

5. Cash, consisting of money of any kind on hand in bank, and "cash items," consisting of checks on other

banks in the same place, or any other items which can readily be turned, or "converted," into cash or its equivalent.

Sometimes a bank sustains losses in its resources or assets through ill-judged investment of its funds by its managers, or the dishonesty of its officers or employes, to such an extent that it is unable to pay its liabilities to creditors. In such a case the law creating the bank usually provides for the appointment of an officer, called a "receiver," who takes charge of all its affairs, collects all debts due to the bank, and pays off the creditors pro rata, either in full of their claims or as far as the funds realized or collected from the assets will go. If anything is left after the creditors are paid, the remainder is divided among the shareholders, but if the assets do not yield enough to pay the creditors in full, the law usually provides for collecting a pro rata amount from each shareholder sufficient to make up the deficiency, up to an amount not exceeding the par value of the shares held by the stockholder.

This is called making or "levying an assessment" on the stockholders.

The payments made to the creditors are called "dividends," and the bank is said to have "failed," or to be "insolvent," because its assets can not be "liquidated," or quickly turned into ready money with which to pay off its creditors.

Frequently the shareholders of good, or "solvent," banks wish to stop doing business and withdraw the funds invested

in the stock. In such a case the stockholders take a vote on the question, and, usually, if two-thirds of the total number of shares vote for it, the bank goes into "voluntary liquidation," which means that it pays off its creditors in full and divides what is left after this among the shareholders.

The banking system is greatly developed in the United States. Estimates made by the Comptroller of the Currency in his report for 1899 show that there were then nearly 13,000 banking institutions of all kinds in the United States, with an aggregate of resources, or "banking power," of over $12,000,000,000. This "power" is greater than that of the whole of Europe, including Great Britain.

Of this total about $7,500,000,000 consisted of "deposits" made by about 13,000,000 individuals, firms and corporations, known as "individual deposits." About $2,400,000,000 of these deposits were made in "savings banks" by some 6,100,000 depositors.

These facts and figures illustrate what great and valuable service is rendered to the public by banking institutions in safe-keeping its funds, either such as are saved from earnings by economy and thrift, or are temporarily idle; and, at the same time, in loaning a portion of them out, or otherwise employing them, so that all great as well as small undertakings may be carried on for the benefit of society.

Besides the safe-keeping of deposits and the making of loans and other investments, the commercial banks render a very great public service in furnishing the means and machinery for making "exchanges," by which small and large sums of money can be safely and quickly sent to any part of the United States or of the world.

CHAPTER II.

VARIOUS KINDS OF BANKING.

AS STATED in the first chapter, the business of banking in the United States, where it has had the widest and highest development, is conducted by institutions which may properly be classified as follows:

1. Commercial banks;

2. Savings banks;

3. Loan and trust companies.

COMMERCIAL BANKS.

The business usually done by and properly belonging to "commercial banks" may best be defined by the following extract from the National Bank Act, section 5136, paragraph 7, describing the "incidental powers" which may be exercised by any bank organized under the laws of the United States, viz:

"To exercise, by its board of directors, or duly authorized officers or agents, subject to law, all such incidental powers as shall be necessary to carry on the business of banking; by discounting and negotiating promissory notes, drafts, bills of exchange, and other evidences of debt; by receiving deposits; by buying and selling exchange, coin and bullion; by loaning money on personal security, and by obtaining, issuing and circulating notes according to this title," or law.