OCR Text |
Show BANKS. Editor Intermountain Catholic: Will you please explain what is meant by national banks? Are they more secure than private banks, or banks controlled by corporations? What'guarantee does the government govern-ment give? J. F. C. Pueblo, Colo., Aug. 23, 1008. National banks are banks organized under the laws enacted by the United States congress. They are no more secure than private or state banks, as j such. The government does not guarantee depos-, depos-, its. When a national bank invests its capital in government bonds, it deposits those bonds with the treasurer of the United States, and issues money as against them. Ihe government holds tho'se bonds as security for the money so issued, in order that there may be no danger of the money of the country coun-try becoming depreciated. When the national bank pays to the United States treasurer an amount equal to that issued by the bank, the bonds are then turned back to the bank. State banks are organized under state laws, which usually contain restrictions carefully guard-, ing the interests of those dealing with the bank, and adapted to local conditions. These banks, the same as the national banks, are under the supervision supervi-sion of a bank examiner, who regularly visits and audits the books and accounts of the bank. Both of the above kinds of banks are controlled by corporations. A private bank is where an individual in-dividual or partnership engages in the banking business, without being incorporated. Such banks have become comparatively rare, although some of the strongest banks in the country are private banks. As a rule, bankers themselves do not like this method, because in case of death the business would have to stop temporarily, if not permanently. As stated above, a bank is neither necessarily safe nor unsafe because it belongs to any of the three classes mentioned. In deciding as to the safety of a bank, one should look at the men in control, their character and methods of business, whether conservative or speculative; the amount of capital put into the business, the length of .time it has been in business, the character of securities in which its money is placed, and whether it is paj ing dividends and adding to its surplus. |