Show r rOUP lOUR PU PUBLIC L l r IV F. F. F A. A On Th The Business of Banking The farmers of this nation to come aline into their own must moat study business We Ve must as a class understand the We fundamental principles that underlie every Industry its functions to society and its relation to agriculture for fol r there can be no Intelligent co operation without under understanding standing Mr bit F F. A A. president of the National City Bank of New York when asked What asked What Is a bank r f said in part The first and most familiar function of a bank is r that of gathering up the idle money moey of ot a community small sums and large and thus forming farming a pool or reservoir reser reset voir upon which responsible persons may dr draw w as they have temporary use for money moneys It is evide evident that this makes large sums in the aggregate available for the employment of labor and the development of the community But much more is accomplished hed than the use ef of the money actually deposited in the banks for by the use of drafts checks and banknotes bank banknotes banknotes notes the efficiency of money is multiplied several times over Deer A Avery very large business for example one ono of the great beet beer packers may use very little actual money on one side of Its bank account will be entered the checks and drafts it is dally receiving from everywhere In payment for meats while on the other side will be entered the checks it draws in payment for cattle etc its only use of money being for small payments to labor and otherwise If It there were but one bank in a community rand and everybody paid aH ail bills by drawing checks on that bank and everyone receiving a check Immediately Immediately immediately imme Imme- deposited It In the bank the amount of money in the bank evidently would not change at all and the entire business of the community would be settled on the books of the bank And the situation Is but slightly changed when there Were are several banks for they daily dally exchange amon r themselves all alt the checks they receive on each each other which practically offset themselves although the small balances are paid In cash This Is called clearing andin and andIn andin in every large city there is a Clearing House where representatives of the banks meet daily dally to settle their accounts with each other A bank is constantly receiving from Its ts customers particularly those that are shipping products to other localities drafts and checks drawn dran n on banks in other cities clUes which it usually sends for deposit to a few correspondent banks in the central cities with which it maintains permanent accounts Inthis In Inthis Inthis this way these scattered credits are consolidated and the bank draws upon open these accounts In supplying customers with the too means of Hof making payments away from home As each local community sells Eells and buys about the same amount abroad in the course of a year these payments largely offset each other It is evident that the banks are arc very intimately related to the trade 1 I and industry of a country The banker Is a dealer in credit much more than thana a dealer in money and of course his own credit must be above question He exchanges his credit for the credits acquired by bythe the c customers and lends credit for their accommodation but he must conduct the business with such judgment that he can always meet his own obligations with cash on demand This is the essential thing thing about about bank credit that it shall always be the We same as cash |