Part II: Banking and Insurance

PART II BANKING AND INSURANCE CHAPTER 7 THE FUNCTIONS OF BANKS § 1. Nature and classes of banks. § 2. Functions of banks. § 3. The essential banking function. § 4. Demand deposits. § 5. Discount and deposit. § 6. Nature of banking reserves. § 7. Time deposits. § 8. Bills of exchange, domestic. § 9. Issue of notes. § 10. Divergent views of typical banknotes. § 11. Banking credit as a medium of trade. § 12. Productive services of banks. § 13. Earnings of banks. § 1. Nature and classes of banks. A bank, as one first comes to know it, is a building (or a room in some building) in which there is a fire-and burglar-proof safe. In this room are men receiving and paying out money and acting as bookkeepers. Usually, howe\er, the word bank means, not the building, but the business organization or the enterprise as a whole. Banks perform a variety of useful functions in every modern community. All these functions touch in some way upon the use of money, and banking problems always are related to money problems. It is our purpose now to understand the nature and work of banks in relation to the general business activity of the community.