The citizen. [volume] (Berea, Ky.) 1899-1958, 1907-12-19
MONEY TALKS
What a Bank Uoes with the
Money People Deposit with IL.

sate-keeping with the understandable
that they can draw out a part or all
of it at any time.
The people of Madison, jackson and
Rockcastle counties have left more
than hundred and fifty thousand
dollars of their money with the Berea
Bank and Trust Company for safe
keeping. This large amount of money
belongs to more than a thousand diff
ferent people. 1t is their money, de-
posted in the bank fer safe-keeping.
and the bank must pay it back to
them whenever, they call for it.
But the bank can not keep on hand
all the time in actual cash all the
money that people have left with it
for safe-keeping. 1t would not be a
prudent nor a safe thing to DO, FOR so
much money would be too rich prize
for robbers and bandits. And it would
cost the bank a great deal to take
care of so much money
II the bank kept every dollar Of the
peoples money on hand in real gold
and silver all the time, they would
have to put it in a strong box in the
vault and hire men with guns 20 stand
watch over It, But to do all this
would cost a great deal Of money, and
if the bank did it they would have to
charge the depositors for the expense
OF taking care of their money.
But the banks of the country have
found from experience that only a
few people are likely to want a part
of their money at any one time. Soma
of them want only little of it occas-
lonally and as a rule one set of peops
VIII put into the bank every day lust
about the same amount that another
set OF people will want to draw out.
So the bank keeps in its safe about
i've dollars out of every hundred that
the people leave with it and about ten
more dollars out of every hundred that
is left with it, the bank re-deposits
for safe-keeping with strong banks in
large cities like New York. Cincinnati
and Louisville. The bank can get
this money from the city banks at an,
time by sending for it.
And in order to pay for the expense
OF taking care Of the peoples money
and running the bank, the remainder
Of the peoples money, varying from
one-half to hree-fourths of all that ia
left with 1t for safe-keeping, is loaned
out on short time notes to other peo-
pie who can furnish good security.
In making these loans, the directors
always remember that 1t is other peo-
pies money they are handling, and
they take nothing but the very best
security, such as first mortgages on
good real estate, or the personal en-
dorsements of two or three good men
who can afford to pay the note IL
the man who borrows should be unable
to do so.
And the money is really safer loaned
out in this way than 1t would be in the
banks strong box, for it is a great
deal harder for a thief to steal and
run away with farm than it is for
him to break open a bank safe and
steal the money that is in IT, And al
most all of the loans that the bank
makes are for very short time. like
three or six months, so that If the
people want their money the bank can
collect the notes and pay it back to
them.
And II the directors should make a
mistake and loan money to some one
who can not pay 1t back, the depos-
itors can not lose anything. for there
is the banks capital OF fifty thousand
dollars and its surplus OF ten thous-
and more of its own money which
stands between the people and ans
loss. Then too, there is the double liza
bility of the stockholders. which puts
fifty thousand dollars more or $4,000
in all, between the people and the loss
of a single penny. This is the Drotec-
ton which the law gives to people who
put their money In a bank for safe
keeping. The bank must lose all Of its
own money before any depositor can
lose anything at all.
So this is what the bank does with
the peoples money. Part Of 1t they
keep in actual cash in their cwn strong
box in the bank. Another part they
keep in actual cash deposited In banks
in other places like Louisville, Cincin-
natl and New York, subject to their
call at any minute. And the rest OF
the peoples money is loaned out to
their own neighbors on short time
notes secured by the very best Sc
curity.
And this is why every bank that is
honestly managed by directors who
are good business men is safe. The
larger the banks capital. and the bet
ter the men who manage the banks
affairs. the safer the bank. ,a.4 -
eres Bank & Trust Company