A bank statement is a balance-sheet of the bank's main ledger, and is sworn to by the cashier and attested by several of the directors. It is published at the time of its making in the local newspaper.

The resources in such a statement usually consist of items due from other financial institutions, bank bills, and specie on hand, bonds deposited with the United States treasurer; loans and discounts, consisting of discounted notes, drafts, etc., owned and held by the bank and which are maturing and being paid from day to day; real estate, etc.

The liabilities consist of the accounts due depositors and other banks; outstanding circulation of bank notes; undivided profits; surplus fund; original capital stock, etc.

Bank Debits and Credits. The bank's debits for any day may consist of.

1. Deposits - the gross amount of money received on deposit.

2. Matured Loans - notes discounted that have been paid.

8. Interest - money received for interest from all sources.

4. Exchange - money received as exchange on collections.

5. Discount - the discounts on notes and other commercial paper.

6. U. S. Treasury - remittances received in payment for notes sent for redemption.

7. Circulation - new bank notes of the bank's own issue received from Comptroller of the Currency.

The bank's credits may consist of.

1. Checks - paid during the day.

2. Loans - gross amount of net proceeds of paper discounted.

3. Expense - running expenses of the bank

4. Interest - on deposits and rebates on prepaid discount paper.

5. Exchange - cost of collections made, charges on foreign paper, etc.

6. Dividends - paid stockholders.

7. U. S. Treasury - cash sent for new small legal tenders, etc.

8. Circulation - notes of the bank's own issue retired in any way.

Value of Paper Offered for Discount. One of the most valuable parts of a banker's education is to learn whom to trust. Every bank should have a well-organized and thoroughly equipped credit department, in charge of some one who can be relied upon to investigate carefully all names referred to him by the officers.

A man who desires to borrow money from a bank should offer the same confidence that he would offer if he were going to a wholesale dealer to buy goods. The merchant has a commodity to sell and he looks for facts which will aid him in determining the line of credit to be granted. The banker has money to sell and he should be doubly sure of the responsibility of the party to whom he is selling it because the money does not belong to him. A banker has a right to expect the fullest confidence on the part of the borrower, and the borrower should furnish him with a complete and detailed statement of the condition of his affairs. It is safe to conclude that when a borrower refuses absolutely to give any information as to his financial condition, his credit is not in the most favorable condition.

Many of the banks have blank forms which they from time to time ask borrowers to fill out. These statements show in detail the assets and liabilities of the firm in question; they show the notes which are outstanding, the mortgages on real estate, and many other particulars including the personal or individual credit of members of the firm, if a partnership. The total net worth of the borrower should be first considered; then the character of his business, whether it is speculative or staple; then his record and standing in the community;then his business habits; then a consideration of whether he is in enterprise abreast with modern ideas and methods.

The paper offered for discount is of a variety of kinds. The larger proportion of it is from customers of the borrower who have extended their credit by paying their accounts in notes instead of in cash. Such paper is really, though having two names, very little better than single-name paper, for it is not the maker's credit, but the payee's, which the bank usually considers. Many very small notes offered for discount usually indicate a very needy condition.

There are times when the character of the merchandise owned by the borrower should be considered. What would it bring under the hammer? Groceries and raw materials can usually be turned into cash at a forced sale at very small discount from current prices. Not so with hardware, glass, dry goods, boots and shoes, books, etc. Machinery and fixtures are not a bankable asset upon which to base credit.

The banker should also note his borrower's bills payable. Why did he give notes? Are they met promptly? Many houses prefer to sell their own paper in the open market and keep their banks open for accommodations when they are unable to secure outside credit.

The insurance carried should be considered, also the volume of business done. A large business on moderate capital, with long credits, will naturally have large liabilities, while a small business, with liberal capital, and short credits, should have small liabilities.

There are many firms which carry two or more bank accounts and others who sell their paper to out-of-town banks. In buying paper it is important to ascertain whether the firm is in the habit of taking up paper at one bank by floating a note at another.

A prominent banker classifies paper as to its discount value as follows:

1. Bankers' paper including bills of exchange.

2. Remittance paper - bills drawn by houses abroad on banks or correspondents in Europe.

3. Inland drawn paper - bills drawn by shippers of goods on the houses to whom the goods are shipped.

4. Brokers' paper - bills drawn by importers against commodities placed in brokers' hands for sale.

5. Trade paper - bills arising out of our manifold trades and industries.

6. Drafts with bills of lading attached.

7. Paper having personal indorsements.

8. Paper secured by collateral.

9. Individual - or one name paper.

Mercantile Agencies. In large cities and towns, bankers and other business men should avail themselves of the advantages offered by mercantile agencies. These concerns report to their subscribers upon the credit of men in various lines of business. They gather their information from a variety of sources. This service has been very much improved of late years, and after making all due allowance for the inherent defects of the system, it is still a useful adjunct to the man who is giving credit. Bradstreet's and Dun & Co. are the two largest mercantile agencies in this country.

Savings Banks. Savings banks have no special capital owned by stockholders. Their capital is the money received on deposit, which, of course, is the property of a great many people. Every depositor is an owner in the bank, and the profit is paid to depositors in interest. This capital is invested in choice securities. The corporation is simply the agent or trustee of the whole body of depositors, and works for their account and benefit and not for its own.

In most of the states, the savings banks are organized under State laws and are in a limited way under State supervision. Their chief purpose is to encourage the saving of money by the common people.

In some countries government savings banks have been established. In Canada almost every post office is a branch of the government post office savings bank.