The New York herald., 1921-06-20
The Functions of a Bank

In
year aggregated than fifty times the average de-
posts, which indicates that the average life of deposit
or stay on its books, about week. When allow
ance made for many comparatively inactive accounts
it will be how very active the others have been
AS rule, each deposit the collection of paper
item of some kind which involves further bookkeeping
and represents service.
In backward countries banks but little used by the
masses of the people, and money boarded becoming
dead asset. bank becomes pool, into which arc
drained thousands of small sums easily wasted or not
wasted unproductive by themselves and the SO
cumulated become active agencies in the life of the
community. Untold millions of gold and silver have
flowed into India and disappeared. If the would
deposit them in banks in industrial or railway
securities the effect would be radically change indus
trial and living conditions that country The increased
demand for labor would raise wages the newly provided
industrial equipment would increase production, the
higher earnings Of the people would absorb the produc-
ton, and the general standard Of living would be raised
Wage-earners who contribute the capital fund in
modern countries have the satisfaction only of eceiv-
ing, capitalists the their investments but Of
knowing that they also increasing the demand for labor
The Servant of Business
nEPOSITS in commercial and savings banks differ in
- character. The latter made largely in money
more or less permanent granted interest allowance
and do not involve any understanding borrowing
accommodations Commercial deposits the other hand
consist of the receipts and working capital Of
business houses and made largely in the form Of
checks drafts discounted paper arising daily from the
business. The Bank undertakes these items into
cash. and the is based upon an understanding
that will render these services and extend line of
credit based upon the worth and average balance
of the customer.
Under this arrangement the relations between the bank
and its customers reciprocal In each line of trade
and industry it is commonly the that the for
capital credit is less fuctuatng, that at
times each bank will accumulate cash balances
while other times needing borrow. If the business
of bank well distributed in various lines and partcu-
larly if is large bank, doing business in different
parts of the country and in other countries, these huc-
tuations in individual balances and needs will tend to off
and compensate each other thus securing the greatest
economy and best results in the use of the combined
capital
This and the need for large capital handle the heavy
volume Of modern business have been the chief motives
in the tendency consolidation among banking insu-
tions in the principal trading countries in years.
particularly in London.
AS general rule, the banking business is conducted
upon the principle that the depostors Of bank have
first claim upon borrowers, and it safe say that
bank hold its in competition unless is able
satisfy its patrons that is conducting its business upon
this basis. 1t amounts to pooling of certain liquid,
shifting resources which be available for all the
members of the pool they want them, and in fair pro-
portion to their contributions.