banking william a. scott

BANKING WILLIAM A. SCOTT UNIVERSITY OF CALIFORNIA AT LOS ANGELES [...]... them, is the author's hope and desire Wm University of Wisconsin A Scott CONTENTS PAGE Chapter I The Nature, Functions, and Classifi- cation of Banking Institutions Performed by Banking Services 1 1 Insti- tutions 1 2 The Economic Functions 3 Classification of Banks 4 Banking Institutions 6 II The Nature and Operations of Commercial Banking 11 of Chapter 1 Commercial Paper 11 2 The Operation 13 3... statement of the Since and problems of banking readers, designed primarily for American principles is it special attention has in this country clearly to draw been given to conditions An effort has been made the line between commercial and investment banking and to indicate the problems peculiar to each That it may assist the average person in understanding present- day banking problems and thus contribute... and Investment Companies 144 4 Land Banks 147 5 Stock Exchanges 163 6 Some Defects in ing Machinery Our Investment Bank166 References 171 Index 173 BANKING CHAPTER I The Nature, Functions, and Classifica- tion of Banking Institutions >"pHE -* "bank" and "banking, " terms, are applied to institutions and to businesses which differ considerably in character, func- and methods, but which nevertheless have... supplement and aid them Banking $ Classification of Banks differ Banking Institutions from one another chiefly in the nature and degree of their specialization, in legal status, in the and in the place they occupy system to which they belong Some banks devote the major portion of their effort to the conduct of exchanges and are called commercial banks, others to investment banking and are called investment... departments in agricultural, industrial, or Banking Institutions commercial enterprises or loan them to public Commercial banking, however, main concern, their other departments corporations is their being side issues of greater or less importance Investment banks according to circumstances also frequently carry These two as a side issue are sometimes on commercial banking mixed lines of business in such... amended since known as national banks, and that date, are those incorporated by the states under the Banking Institutions terms of general banking acts or of general incorporation laws are These latter are known endowed with as state banks privileges which enable them to exercise commercial and some investment banking Other banks functions also are incorporated by our states under the terms of general laws,... Reserve (e) 6 Lack of Elasticity in the Plans for Reform Chapter V Commercial Countries 1 System Currency Common 91 95 97 Banking in Other 101 Features 101 Contents PAGE 2 The English System 104 3 The French System Ill 4 The German System 119 5 The Canadian System 126 Chapter VI Investment Banking 1 Saving and Savings Institutions 136 136 2 Trust Companies 141 3 Bond Houses and Investment Companies 144... Issue of Notes 19 Commercial Banking 1 35 The Supply 2 The 3 Rates of Cash Selection of Loans and Discounts 35 40 44 Contents PAGE Protection against 4 (a) Unsound Practices 46 Capital and Surplus Requirements and Double Liability of Stockholders (b) Inflation 46 and Means of Protect- ing the Public against (c) Other Means Adequacy and Economy of Service Commercial Banking Chapter IV 49 of Safeguarding... these institutions perform in modern society differences i Services Performed by Banking Institutions From the point of view of their customers may these services be grouped under the fol- The safekeeping of money and other valuables the making of payments the making of loans; and the making of investlowing heads : ; ; I Banking 2 ments It is and some in common a practice everywhere, notably countries,... subdivisions of countries and nations, brought about by purchases and sales on credit, are offset without the use of money The practice of depositing surplus funds with banks for safekeeping and consequently Banking Institutions of using them as paymasters has resulted in the upon banks for currency any form, and has thus thrown upon them reliance of everybody in the responsibility of directly utilizing sources . keep money and valuables on deposit, or to act as paymaster, or to make loans, or to sell bonds, stocks, and mortgages would not make an institution a bank or an individual a banker; but to make a business of. PRINTING COMPANY, CHICAGO 3 C~ EDITOR'S PREFACE In Europe the average man looks upon the bank as a benefactor. Through its agency he secures capital at low rates for his busi- ness. In America the bank is too often re- garded as a necessary evil, certainly not with affection. Yet. BANKING WILLIAM A. SCOTT UNIVERSITY OF CALIFORNIA AT LOS ANGELES