A

1. Who were the Lombards?

2. Why did not the Christians ordinarily loan money?

3. Why may a banker expect to have a balance in his hands?

4. What is the difference between bank deposits and bank notes?

5. What are the essential differences between a commercial bank and a savings bank?

6. Why does a bank desire to loan its money ?

7. What is the difference between a commercial bank and a trust company ?

8. What are the functions of an investment bank?

9. What is a "bank statement"?

10. What is the difference between a loan and a discount ?

11. Why is a bank's capital a liability?

12. Would the banker consider his investment a liability? Explain.

13. Define "bank deposit."

14. How does deposit currency differ from other kinds of currency ?

15. How did the two United States banks differ from state banks ?

16. Describe state banking between 1832 and 1863.

17. How did the National Bank Act affect banking in the United States ?

18. In what respects did the Federal Reserve Banking Law improve banking ?

19. Just how, if at all, was this system instrumental in selling Liberty Loan bonds?

20. Locate the regional banks.

B

1. Make a list of the banks in your community. a. Which of these are: i. Commercial banks? ii. Savings banks? iii. National banks? iv. State banks? v. Private banks?

1-8 b. Which has the largest capital ? the smallest capital ?

c. Which are members of the Federal Reserve Regional Bank?

d. Which own bank buildings ? which rent ?

2. Get a bank statement from some banker or from a newspaper.

a. Which kind of a bank is it (national, state, etc.)?

b. Inquire of some banker about any items you don't understand.

c. Divide the "cash on hand" by the "total deposits." i. What does the result show?

ii. Do you consider this a safe margin? Why?

d. Can you judge the age of the bank by its statement ? Explain.

3. Suppose you were one of ten persons to make equal deposits of money ($1000) in a bank, and that there are no other depositors.

a. Will the banker be likely to loan any of this $10,000? Why?

b. Is it correct to say that you have $1000 in this bank. Why?

c. Would the other nine persons be justified in making the same statement ?

d. Have the ten of you $10,000 in this bank ?

e. State exactly what each of the ten has. i. Is it money in the bank ? or ii. Is it the right to demand money of the bank?

4. Examine a bank check.

a. How many names appear on the check?

b. Notice that it is payable on demand.

c. How many times and in what ways does the amount named in the check appear?

d. What is the difference between a bank check payable to bearer and one payable to order ?

e. Would a check be a legal claim if it were written on a sheet of paper twelve inches square? on the margin of a newspaper ? on a cuff ?

C

1. Turn to any bank statement such as the one shown in this chapter, and determine how it would appear after each of the following transactions has been completed: a. A deposit of $10,000 in money.

b. A 60-day note for $2000 is discounted at 6% and one-half of the proceeds is left on deposit.

c. A check for $1000 is cashed.

d. $3000 of the undivided profits are credited to stockholders.

e. A note of $5000 is paid in cash.

/. Bonds having a face value of $1000 are sold for $1050. 2. Explain why the following are liabilities: a. Deposits.

b. Capital.

c. Surplus.

d. Undivided profits.

Supplementary Reading

Bullock, Introduction to the Study of Economics, 3d ed., pages 279-288.

Ely, Outline of Economics, 3d ed., pages 282-315.

Fetter, Economics, Vol. II, pages 95-129.

Johnson, Introduction to Economics, pages 280-302.

Seager, Principles of Economics, pages 341-356.

Seligman, Principles of Economics, 5th ed., pages 518-553.

Taussig, Principles of Economics, 2d ed., Vol. I, pages 331-399.