16. BANK SUPERVISION. About 1860 it became evident that some means must be adopted for repressing the mixed bankiniT sys tem then in vogue and to provide a uniform and safe system in its stead. Federal enact ment soon provided for a uniform system, and the provisions National banks to ex amination by representatives of the Comptroller of the Currency increased the safety of the system. In many States the State banks are examined by officials of the State Supervisor of Banking. National banks are examined every six months. The examiner comes un announced and the bank is for the time being under his control. He is obliged to examine the books, verify the cash and examine the investments and securities. The difficulty of passing judgment on the quality of all loans is the loophole through which many impru dent, or worse, operations are carried on despite the vigilance of the examiners. Private banks are now, in many States, subjected to special State supervision.
Benefits of Banking • Institutions.— These institutions afford a permanently safe place where the individual may deposit his moneys. And this is much more of a privilege than may appear on the surface. For not only is the secure place of deposit supplied, which other wise would be wanting, but the bank practically insures the safety of the funds committed to it: if in any way loss is sustained by robbery or fire or by some other cause, the bank is bound to make good the loss, and this regard less of the fact that the depositor may not be a profitable customer, as many dealers are not. In fact, the number of depositors who simply use a bank as a convenience, whose deposits are not large and whose multiplicity of small checks are a trouble, as they are the despair of the individual bookkeeper, is legion. Nevertheless the bank takes such accounts, holds the money subject to innumerable little drafts which are made good by new deposits equally numerous and small; and thus the active little account is maintained from year to year, often only a source of trouble and expense to the bank, which actually receives no adequate return for its services as warden and agent. It is to be noted, too, that in this country the services rendered the individual by the banks differ greatly from those afforded by like corporations in some other countries, notably in France.
To cite one instance: In that country every note when due must be paid to the bank officer in hard cash; a check on that or some other bank, duly certified, would not be received. In fact, the bank's messenger visits the payer of the note and demands the payments of the exact amount in cash, or protest and legal proceedings follow.
Relation of Banks to the Community.— But leaving this phase of the subject, a glance will show how vital is the relation of a bank to the community doing business with it In a word, it may be said to receive all the money that comes to that community and to disburse it a.s desired by the customer. Not only so, but when he cannot comtnand the money re quired to transact his business, the banlc may supply the desired amount. Thus it is, estates are cared for, income in the shape of interest is paid, vast sums are oonunitted to its keeping, while by its loans made at times of emergency the bank enables the business of the community to be transacted; and this principle e:ctended stands for the business of the world. It is easy to see that a misfortune to such. an insti tution means a calamity to a commututy, and a series of them means panic, with its conse quences of impoverishment and distress, and sometimes ruin to countless thousands. How disaster in this direction has been wrought in the past those familiar with the history of banking in the earlier days, when banks were not subject to the restrictions of the present time, and when the failure of a bank often meant irreparable loss to innocent holders of their circulating notes, are fully aware. But when we go, farther and take the most super ficial glance at the great industries of the country, we obtain some conception of what banks and banking mean. Is it too much to say that without cre&t and banlcing facilities the =paralleled facilities of our gigantic railway systems, stretching from ocean to ocean and conveying the enormous crops of the countnr by which we are enabled to feed the world, would be in vain? In the last analysis we shall find that it is not car wheels, but it is money, that moves the great harvests of a continent — as for that matter, of the world. And the money would be lacicing but for the banks; these, and not steam or elecnicity, stand be tween the nations and starvation.