Each National bank, according to the law, is required to be examined °at least twice in each calendar year,° but this law is not fully complied with by the examiners. The Comp troller of the Currency and his assistants are responsible for these examinations. In some cases it is lcnown that more than 12 months have tasessed between the examinations of cer tain b In some States the laws require two exami nations a year, but the makers of the laws, in many States, do not provide sufficient funds for the department having oversight of the work to make the examinations. Both the Na tional and State laws are therefore not com plied with in regard to the governmental super vision. But let it be said to the credit of those in charge of the various departments, that even with their handicaps they have, in quite a few cases, prevented dangerous •and questionable practices from arising and continuing in banks that otherwise would ahnost certainly have resulted in heavy losses to or complete failures of the banlcs.
The active management of a bank is lodged in its board of directors. The National Bank ing Law requires five or more directors for each bank. The position of director is not simply an honor, or a recognition of success as a business man; neither is it for the sole purpose of giving the bank prestige by the use of the director's name. The directors are in tended to be the real and actual managers of the banks. But here also is failure to comply with legal requirements. Probably not one bank in 10 is really managed by the directors. Experience with failed banks has proved that if the directors had done their legal duty the banks would not have failed.
The directors delegate certain duties to the president, vice-president, cashier, assistant cashier, treasurer and assistant treasurer, or other officers, and then in too many cases pay no more attention to the details. The men so appointed must be trusted but the trust reposed in them should not lead the directors to allow them to perform their duties without the active supervision of the board or special committees of members of the board.
The president is the head of the bank, rep resenting the directors to the other officers, em ployees and customers of the bank, and on the other hand is their representative to the board.
The vice-president is the assistant of the president, if he has any active duties in the bank, and usually has a certain part of the executive work under his supervision.
The cashier or treasurer has special over sight of the cash resources of the bank and of its records, as well as its staff of employees.
The assistant cashiers and assistant treas urers are to assist in the care of the details of the daily work In addition to the different kinds of bank ing institutions mentioned above, as being in the United States, there are two other kinds, the Federal Reserve banks (see FEDERAL RESERVE SYSTEM, article 12) and the Farm Land banks. These have not been dealt with because they are government institu tions and the public has practically no voice in the organization and management of such banks. There are 12 Federal Reserve banks and their purpose is to serve thegovernment and the National banks, and the State banks that join the Federal Reserve system. All member banks must be stockholders and de positors in these banks — they have no choice in the matter. These Federal Reserve banks are to furnish aid in the way of loans of currency to member banks when they need it.
There are to be 12 Farm Land banks. Their purpose is to loan money secured by mortgages on farm lands, and the banks are to issue bonds secured by the mortgages. The interest rate on the bonds is not to exceed 5 per cent. In addition to these banks there are to be National Farm' Loan Associations formed by men who will borrow from the banks. These associations are stock companies and each appli cant for a loan must subscribe for stock equal to 5 per cent of the amount of the loan. The par value of the stock is to be five dollars a share.
The Federal Reserve banks are managed by the Federal Reserve Board and the local officers of each bank. The Farm Loan banks are to be managed by the Farm Loan Board and by the registrars and other officers at the local banks.
The value and utility of these banks have not been demonstrated, and some bankers question both the value and utility of both of these government institutions, while other bankers consider them of great value.
Bibliography.— Knox, John Jay, of Banking> (New York) • Reihi, C. W., (Literary Remittances by a Banker' (New York 1910); Banking Laws of New York, Ohio and Other States; (National Bank Organization' (National City Bank, New York) ; S. 'Treasury Department, National Bank Act' (Washington, D. C. 1915).