, 1923-08-01

The bank plays such an essential
part in the life of every community
that every one ought to have a clear
conception of what 1t is. and why 1t
goes hand In hand with human prog
ress. One Of IL large city bankers.
whose boyhood had been spent in a
small town, was recently telling some
friends about his early ideas con-
corning banks. To his youthful mind,
the town bank was merely a larger
model of the small dime bank he kept
at home. He believed that the larger
bank was Just a good, safe strongbox
in which people could deposit their
money. Each day the boy saw people
leave their money in care of the
bank, the duty of which he supposed
to be the protection of the money un-
til It was again needed, when the de-
p~ositors could draw 1t out.
Very soon certain things began to
puzzle this small boy, for he knew
that the officers and clerks of the
bank were drawing salaries. One day
he asked his father some questions
about the bank. The boys first ques-
ton was: Father, II a man takes
a hundred dollars to the bank today.
can he go to the bank tomorrow. and
draw 1t all out AGAIN." Every cent
of it," said the father. "Then," said
the lad, 81 want to know how a bank
can make any money for itself, and
pay salaries and other expenses"
The father gave the following an
swer:
when our bank was organized.
the gentleman chosen as presi-
dent, because he was n of our
leading business men. asked me to
buy some shares of stock at one hun
dred dollars each. I had hoped for a
long time that a bank would be or
ganized In our town. For years, the
men who were operating the iron
mills had to sem to a ne%ighboring
city for money to pay their employees.
Our merchants had always had diff
Guilty in taking care OF the money re-
ceived In their business, and there
had been no place to care for the PEG
pies money. I was glad to buy some
of the shares. In n short time, the
president told me hat fifty thousand
dollars had been paid In by different
people of the town buying shares.
This money made up what is called
the capital stock. The capital stock,
in addition to furnishing money with
which to start a bank. also serves as
a protection to all those who place
their money on deposit.
How Banks Operate
"The bank opened for business and
soon deposits came in from mer-
chants. manufacturing plants. farm
ers, churches. lodges. n other or
ganizations, borough and township
treasurers. wage earners. and women
and children. until at the end Of the
FIRST month about one hundred thou
sand dollars had been deposited. The
bank then had fifty thousand dollars
supplied by Its stockholders and one
hundred thousand dollars which be-
longed to its depositors, or a total of
one hundred and fifty thousand dol
lars. The capital stock and the de-
posts are referred to as liabilities OF
a bank.
Now listen closely" continued the
father. "While II Is true hat the de-
posltors could 90 to the bank the
very mex day and draw out all they
had previously put In. experience has
shown that this Is never done by all
depositors at the same time. There
fore. the bank does not need to keep
on hand all the money that is brought
IN. hut only enough to pay those who
Way wish to draw out part, or all, OF