In the fulfilment of these offices, banks, as public corporations of known character, offer inducements. for the introduction of foreign capital. This incidental benefit is of great importance to the advance of a new country.

Through these offices, banks render important services to the finances of sovereigns and states, steadying and strengthening the bands of government, and furnishing timely aid in the emergencies of war and of great national enterprises.

SECTION II. THE UNITED-STATES NATIONALBANK SYSTEM.

The limits of this work do not give place for a history of banking, or any notice of foreign banks. The present bank-system of our own country must, however, be briefly presented.

This system was established by Act of Congress in 1863. It is under the charge of a bureau of the Treasury Department, the chief officer of which is the comptroller of the currency.

Under this act a national bank may be organized by any number of persons not less than five, the capital in any instance to be not less than $100,000, except that in cities containing a population not exceeding six thousand, banks may be established with a capital of not less than $50,000; in cities having a population of fifty thousand or more, the capital of each bank must be not less than $200,000.

Not less than one-third of the capital must be invested in United-States bonds, upon the security

of which circulating notes may be issued equal in amount to ninety per cent of their current marketvalue, but not to exceed ninety per cent of the par value of the bonds deposited. The notes, officially certified by the Treasurer of the United States and the Register of the Treasury, are receivable at par in the United States in all payments to and from the government, except for duties on imports, interest on the public debt, and in redemption of the treasury-notes. They are redeemable on demand in lawful money of the United States.

A subsequent act of Congress laid a tax of ten per cent on the circulating notes of previously existing State banks, in consequence of which most of those banks re-organized under the national system. Thus our present bank-currency consists of notes of national banks, which are of uniform value in all parts of the country, the payment of which is guaranteed by the government. Provision is made for frequent visitation of the banks by government officials, to investigate their operations; stated reports are called for; and the comptroller of the currency may appoint a receiver to wind up any bank which is in an unsound condition.

The national banks may receive deposits, sell bills of exchange, and loan money at the rates of interest allowed by law in the States where they are located. For the circulating notes this system provides all the security which the credit of the United States can give. But it provides no security for deposits and other liabilities, except that all shareholders are held individually liable to the extent of

the amount of their stock, in addition to what they have paid for their stock. The law now fixes no limits to the number of banks that may be organized, or to the total amount of notes that may be thrown into circulation. The circulation has ranged from three hundred to three hundred and fifty million dollars. Of the more than two thousand national banks which have been organized, very few have failed, and the public has incurred no loss on the currency.

From Feb. 25, 1863, to Nov. 1, 1879, there had been organized 2,438 national banks. Of these only 81 had been placed in the hands of receivers to be closed, 307 had gone into voluntary liquidation; leaving 2,050 in operation at the last-named date, with capital $455,240,000, deposits $713,400,000, and circulating notes outstanding $337,181,418.

The system will be further illustrated by a statement of the liabilities, the resources, and the profits of the banks.

The Liabilities are as follows:

1. The capital stock.

2. The circulating notes.

3. Deposits.

4. Balances due to other banks, especially from banks in the great cities to those in the country.

5. Surplus funds and reserves, held to strengthen the banks against contingencies, which are a virtual addition to the capital, and belong to stockholders. 6. Undivided profits and unpaid dividends.

7. Miscellaneous liabilities, small obligations not classified.

The Resources embrace the following items:

1. Loans, which represent the chief business of the bank.

2. United-States bonds deposited with the comptroller.

3. United-States bonds and other stocks and bonds held as investments. The reserves take this form. 4. Balances due from other banks.

5. Real estate, a place for business and property taken for debts.

6. Exchanges and cash items, — bills of exchange, drafts, &c., on hand.

7. National-bank notes and legal-tender notes, held to meet daily calls for currency.

8. Legal-tender notes and specie, for the redemption of circulation.

9. Miscellaneous resources, small items not classified.

In a regular bank statement the liabilities and resources thus presented balance each other, and the items on either side show the actual condition of the bank.

The sources of Profits of banks are,

1. Interest, from several distinct sources.

a. Interest on United-States bonds deposited with the comptroller.

b. Interest on circulating notes loaned.

c. Interest on the remaining capital and reserves loaned, or held in productive stocks.

d. Interest on a portion of the deposits also

loaned.

2. Premiums on exchange.

3. Commissions for collections.

Claims from

abroad are often sent to a bank, as an agent of established character, for collection.

With prudent management the profits of banking are sure, and compare favorably with those of any other business. The undue expansion of loans, in order to increase profits, involves the danger of throwing the centre of gravity outside the base, with a consequent downfall.

Private banking-houses exist in all parts of the country, and fulfill all the offices named except the issue of circulating notes. Some of these have gained a character and standing which command a world-wide confidence. Their credit rests upon personal integrity, wise management, and large resources accumulated through years of devoted industry.

Savings banks, mostly without capital, simply receive and loan deposits. The savings banks of our country, 673 in number, thus manage funds amounting to over $750,000,000, drawn from some millions of depositors.

In May, 1879, the entire banking business of our country was represented by 6,360 institutions, whose aggregate capital was $656,500,000, and which had credited on their books deposits amounting to $1,893,500,000.

The comptroller of the currency, in his report dated Nov. 1, 1879, estimates the circulating methium of our country as follows: