The daily star-mirror. (Moscow, Idaho) 1911-1939, 1923-07-21

etJ .
positor tries to keep fafr-sized
balance in the bank, there is al
w9ys more money on hand than is
needed TO pay those who are draw
ing against their depl sits. The
law requires that the bank keep
certain percentage of TIE de-
posits in it's vaults in actaai cash
This cash is called the 5ar6's re-
serve. q. At the end Of t., tirst
month, let us say, the baik had
in its safe. as reserve about
twenty thousand dollars. There
should always be enough cash held.
by the bank to take care of the
normal amounts of money needed
by its customers.
n ow Banks Earn Money
What does the bank do with it's
capital stock and with the balance
of deposits In excess of the cash
held as it's reserve? Part Of tho
money from the sale of shares of ;
capital stock, of course, had to DO
spent for the bank building and itp.
equipment, which cost about TWEEN
ty thousand dollars. The balance
of the capital stock would be thirty
thousand dollars. The balance OF the
deposits in excess of the reserve at
tie end of the first month was eiBh-
tv thousand dollars. This was one
hundred and ten thousand dollars
in all. It was invested or loaned out
at interest to business people OF
good standing, who promised TO
repay the money 20, the bank N
thirty, sixty, or ninety days. The
interest on these loans and 1nves
ments provides the earnings of the
bank. out of which salaries and
other expenses are paid. This prac-
tice of loaning money is called
discounting, or giving credit.
Credit Is what the bank deals In
Just as the merchant buys and
sells goods, so the banker buys
and sells money and credit.
"The assets of bank, just as IN
the case of store or other busi-
ness, are the property owned by
the bank They are cash on hand,
promissory notes represerti'' the
money loaned out at in; {. to
borrowers, the bank building, and
borrowers, the bank building, and SO
forth. In like manner the liabilities
are what the bank owes to others, to
the stockholders, to deposftors and
SO forth As the town grows and
the business Of the community OK
pands, the deposits Of the bank
become larger and other banks Or
ganize No matter how large our
great city banks become, they are
all organized and conducted upon
the same principle and for the
same purpose as the bank In the
small town.
Usino Banks Heir Everybody
"Scaroely anywhere 10 there
financial Transaction In which
the bank does not have d.
rect or an indirect part, slther
through the stockholders, the
management, or the deposItors.
Every successful business per-
son makes use Of tho bank
for borrowing money, for tho
safekeeplng Of money and vaIu-
abes, and in other ways. Tho
wonderful strides our country
has made In the field OF conn.,
merce can be accounted for
largely by the manner in which
tho banks have been made use
Of by tho people. As anyone
cuItivates the habit of saving,
and handles savings and all
other transactions through the
bank, he is being real heIp to
his community, because the
bank ls the reservoir Into
which flow the savings Of the
people Of the community, to
be used by the banker In help
linz to develop the Industry and
life Of the community. The
bank helps the people to suo-
Deed, and thu community 70 I,
prosrsss."
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