THE STATEMENT CLERK 273 202. The statement clerk. The statement clerk has charge of the giving of information concerning the condition of the accounts of depositors. He checks up the pass books and issues the monthly statements of account to the depositors of the bank. 203. Other employees. The other employees of the bank are a stenographer, a correspondence file clerk, a telephone switchboard operator, a lobby watchman, and three janitors. The head janitor in this bank has an extraordinary position. He is in charge of all clerical supplies and keeps a perpetual inventory of them. He stamps and seals all outgoing letters, wraps all packages, and is the postoffice messenger. He stamps the indorsement of the bank on all clearing house checks. He prints the names of depositors on their check blanks. He has charge of addressographing and multigraphing. CHAPTER XVIII KINDS OF BANKS IN THE UNITED STATES 204. The interest of the business man in kinds of banks. There are different kinds of banks. They are unlike in many ways. All try to give safety. As far as the business man is concerned the most important differences are those of service. Some banks do business primarily with banks. These also have great interest for the business man because it is by means of them that the bank which does have contact with the public is enabled to give better and additional service to its customers. An individual does not transact business with a Federal land bank, but it is from the Federal land bank that the farm loan association gets the money to lend to the farmer. An individual does no business directly with a Federal reserve bank, but the existence of the Federal reserve banks enables men with good security to borrow freely when otherwise it might be impossible. 205. A system of local independent banks. - Banking in the United States is characterized chiefly by numerous local independent banks. The American people have believed strongly in the right of anybody to start a bank and opposed any development of a great centralized bank such as other nations boast. The First Bank of the United States, with branches all over the United States, became a political issue and the bank was unable to get its 20-year charter renewed. It liquidated in 1811. In 1816 the Second Bank of the United States was chartered for 20 years but it too became a political issue and in SYSTEM OF LOCAL INDEPENDENT BANKS 275 1836 passed out of existence. State owned banks were tried by several states but they either failed or liquidated after some success as in Ohio and Indiana. From the very beginning local banks with state charters had been organized and they multiplied rapidly after 1811. Only a few states, as New York, Ohio, and Virginia, have permitted branches. In New York and Ohio there can be no branches outside the city in which the parent bank is located. Because wildcat banking showed that banks must be regulated, the country settled down to a policy of independent local banks regulated by the state. The national banking system inaugurated in 1863 provided for local independent banks under national control. If a state bank with branches converts itself into a national bank it can keep its branches. The interpretation of the national banking act handed out by the Comptroller of the Currency in 1922 under which a St. Louis bank was the first national bank to open branch offices, confines branch offices to the city in which the national bank is located. Such an interpretation may not be upheld by the courts. In spite of the need for centralized banking, efforts toward such legislation failed until in 1913 the Federal reserve act was passed. This act created not one bank but twelve regional banks; not big separate banks to compete with, the locals, but banks owned entirely by local banks, to be patronized chiefly by these banks, subject to regulation by a governmental board. Such opposition as is now made against the Federal reserve system is due mainly to conflict with the activities of local banks. The farm loan system is an organization of local farm loan associations, subject to governmental regulation. It was provided for farmers as a governmental enterprise and has had to be heavily subsidized. There is little independence in the local units and the plan would have failed but for the monetary gain to the borrower. The system is now self-supporting. Each of the land banks reported good net earnings for 1922. Local banks in the United States are either private or incorporated. If incorporated they receive their charters from and are subject to the supervision of the state or the nation. Incorporated banks are either state or national banks. Of about 31,000 banks in the United States, about 8000 are national, 22,000 state, and 1000 private. State banks are divided into loan and credit companies, savings banks, trust companies, safe deposit companies, commercial banks, and banks with two or more of these functions. It is common practice, however, to designate the state commercial banks as state banks." 206. Private banks. At one time anybody, except a corporation without such powers, could accept deposits and make loans. This would constitute a banking business. Unless such a business is incorporated according to the banking laws of the state or nation it is a private bank. Since most banks are regulated by the government, ignorant persons would assume that any bank was so regulated. Therefore most states do not allow a private bank to use the words bank, banker, banking, savings, or trust company, in either its name or advertising. Some of the most successful banking enterprises have been, or are, private banks, but so many incompetent firms have caused their customers to lose money, that there is a growing tendency to require that private bankers be examined by state examiners, and make regular reports to the state commissioner of banking. Such reports may be available as public information without a requirement that they be published as are the reports of incorporated banks. Some states prohibit any banking except under supervision. Some states do not allow private banks to 1 The report of the Comptroller of the Currency each year gives the number of banks in the United States. STATE (COMMERCIAL) BANKS 277 accept savings accounts; some forbid them soliciting and receiving deposits of any kind. Private banks have performed a great service in communities where there was not sufficient business to pay an incorporated bank to open. The small ones are usually conducted in connection with some other business, often real estate or brokerage. The large private bankers are financial houses that specialize in buying and selling foreign exchange and securities, both domestic and foreign. 207. State (commercial) banks. This name is commonly applied to the banks operating under a state charter which do a commercial banking business. Such a bank receives deposits, makes loans, discounts notes, drafts, and bills of exchange, and buys and sells exchange. 208. Mutual savings banks. In the northeastern states savings banks are mutual. There is no capital stock. The bank is operated by a board of trustees in the interest of depositors. No rate of interest is guaranteed. The depositors receive dividends in proportion to their deposits. Loans are made as by other savings banks but not to an officer or trustee of the bank. A portion of the earnings must go to build up a guarantee fund or a surplus until a certain proportion of the deposits (often 5%) is reached. 209. Stock savings banks. The savings bank which has capital stock and is owned by stockholders guarantees a rate of interest to the depositor and endeavors by efficient management to make enough more to pay dividends to the stockholder. It usually succeeds in doing this. In New Hampshire there are savings banks (non-stock) whose depositors are divided into two classes. The ordinary or general depositor is guaranteed a rate of interest on his deposits. This guarantee is provided by special depositors who are allowed to have deposits not to exceed 10% of the total deposits. After the guaranteed rate of |