The total liability to the public is equal to $88.31 of the total assets, and the balance, $11.69, belongs to the proprietors or shareholders. The latter consists of capital, $6.33, and reserve and undivided profits, $5.36. A reference to the profit-and-loss sheet on page 120 shows that the dividends declared were equal to 10 per cent of the capital, or 5.47 per cent on the capital and reserve. The net profit earned on capital and reserve is 10.50 per cent or, as it is generally published, 19.30 per cent on the paid-up capital. The method of basing earnings on the percentages to paid-up capital is a misleading one, and should be abandoned by the banks and financial papers or used only in conjunction with the percentage on capital and reserve. To base earnings on capital not only gives an erroneous idea to the public of the earning powers of banks, but does not form a fair method of comparison.

In case of the insolvency of a bank the shareholders are liable to be called upon for an amount equal to the par value of their shares.