Phillips County herald., 1923-03-08

their deposits. Since every deposit
or tries to keep fair-sized balance
in the bank. there is always more
money ON hand than 10 needed to pay
those who are drawing against their
deposits. The law requires that the
bank keep . certain percentage of
the deposits In its vaults In actual
cash. This cash is called the banks
reserve. At the end Of the FIRST
month. let rs say, the bank had in its
safe. as reserve. about twenty thou
sand dollars. There should always
be enough cash held by the bank to
take care Of the normal amounts Of
money needed BY it, customers.
How Oanks Earn Money
what does the bank do with its
capital stock and with the balance OF
deposits IN excess Of the cash held %
IT. reserve? Part Of the money from
the sale Of shares Of capital stock. Of
course. had to be spent for the bank
building and it, equipment. which
cost about twenty thousand dollars.
The balance Of the capital stock
would BE- thirty thousand dollars.
The balance Of the deposits In excess
Of the reserve at the end Of the first
month was eighty thousand dollars.
This was one hundred and ten thou.
sand dollars in all. It was invested
or loaned out at interest to business
people Of good standing. who prom
ised to repay the money to the bank
in thirty. sixty. or ninety days. The
interest on these loans and invest
ments provides the earnings OF the
bank. out Of which salaries and other
expenses are paid. This practice Of
loaning money 10 called discounting.
or giving credit. Credit 10 what the
bank deals In. Just ~ the merchant
buys and sells goods, 90 the banker
buys and sells money and credit.
The assets Of . bank. Just ~ IN
the case Of . store Or other business.
are the property owned By the bank
They are cash on hand. promissory
notes representing the money loaned
out at interest to borrowers. the bank
building. and 90 forth. In like man.
nsr the liabilities are what the bank
owes 70 others, to the stockholders.
~ lspositors and 10 forth. A the
to4n grows and the business Of the
community expands. the deposits Of
the bank become larger and other
banks organize. No matter how large
our great city banks become. they are
all organised and conducted upon the
same principle and for the same pur.
pose NJ the bank IN the small town.
Using Banks Hslps Everybody
"sesresiy anywhere 10 there Q
financial Transaction In which the
hank does net have . direct or an
indirect part. either through the
steekholdsrs. the management. Or
the dspesitersL Every sueeess.
sul business person makes use Of
the bank for berrewIns money.
for the safskssplnO Of money and
vaeusbiee and In other ways.
The wonderful strides our esun.
try has made In the field Of esm.
msree cen be aeeeuntsd for
largely BY the manner In which
the bsnks have been made uss o.
BY tine people. A. anyone eulti.
vates the habit ~ savlnO. snd
haRtlss sswlW0s end sll other
transactions through the bank. no
10 being . rssl help 70 HE com.
nnunIty tsesuss the bank 10 the
rsssrvslr Int which hew the saw.
Inos N the psepls u the ssm.
WsUnity. 70 b wed BY the banker
In helping . dsvslsp the indus.
try and lie o. the community.
The bank hsips the people TO
succeed. end the community 10
nAnneoaa~