gold and silver coin being, until then, at a premium, and not in general circulation, but since then the term has embraced various forms of currency, which it is important for every bank to know, in order that it may intelligently carry out the requirements of the law in the matter of reserve. The following list of the various forms of “lawful money" available for reserve purposes existing at present is, therefore, given: 1. Gold coin of the United States. 2. "Standard" silver dollars of the United States. 4. Certificates for gold coin deposited with the Treas- 5. Certificates for silver dollars deposited with the Treasurer of the United States. 6. United States "legal-tender" notes. 7. Certificates for "legal-tender" notes deposited with the Treasurer of the United States. 8. Gold clearing-house certificates. In order that reserve may readily be computed at any time, and that the information required for reports of condition (which are always called for past dates) may be fully and accurately stated, it is absolutely necessary that a daily and exact record of the amount of each kind of the various kinds of currency should be kept for this purpose. That this may be done, it will of course be necessary to See note on page facing first page. assort the cash on hand at close of business each day, and in doing this, National-bank currency should be separated from other forms of paper currency, and in case a bank has any notes of its own issue on hand, these should in turn be separated from those issued by other banks. Deposits, and Sundry Items which are allowed to Offset Deposits. The term "deposits," used in those portions of the law which bear on the subject of reserve, embraces not only all classes of what are known as "individual deposits" held by a bank, but deposits made by the United States Government and by its disbursing officers also. Balances due to other National banks and to State and private banks and bankers, being, as a rule, payable on demand, have always been regarded as "deposits" also, and any bank holding these has been required to maintain a reserve upon such balances, balances due from other banks and bankers being allowed to "offset" the balances due to them; but when in any case the amount due from banks and bankers exceeds the amount due to them, such excess can not be applied in reduction of liability on other "deposits," and amounts due from and to banks and bankers are then excluded from both sides of the calculation necessary for determining "deposits" and reserve required thereon. The other items of a bank's "resources" which, under the various rulings of the Comptroller's office, are admitted to offset or reduce its liability on "deposits" are as follows: 1. "Exchanges for clearing-house," viz.: checks on other banks in same place, which are members of a clearing-house. "Checks on other banks in same place." 2. 3. "Bills of other National banks" held by the bank. Bills of the bank's own issue are, of course, not admitted to offset its liabilities on "deposits." Reciprocal Accounts with Reserve Agents. It is the custom with some banks to keep recip rocal accounts with their "reserve agents," and in' such cases the question arises as to how these items should be treated. 66 As the law provides that a portion of a bank's reserve may consist of balances due to" it "from associations approved by the Comptroller of the Currency," such items should, as a rule, be treated as follows in computing reserve: 1. If the balance of any such "reciprocal account" is an amount due from the "reserve agent" bank, such balance may be treated as available for reserve. 2. But, if such balance represents an amount due to the "reserve agent," then it should be regarded as "due to other National banks," and so treated. Examples showing how Reserve should be computed in Ordinary Cases. To clearly illustrate how the reserve of a bank should be computed in any ordinary case, two examples are given here; the first (Form A) of a bank which should have 25 per cent. on hand; the second (Form B) of a bank which should have 15 per cent. on hand. Each of these examples is computed on a form identical in every respect with the printed blanks now used in the Comptroller's office for this purpose. The great advantage of this form consists in the fact that down to the point of finding the amount of "deposits" upon which reserve is to be maintained, the process is the same for all banks regardless of location. Beyond this point it is only necessary to apply the proper proportion required by each case (viz., 25 per cent. or 15 per cent.), and the proper distribution of the reserve in bank and in hands of agents required in such case. In exceptional cases, which are defined and illustrated on pages 12 to 20, all that is needed is to extend the ordinary computation a little further by a very short and simple calculation. Concise rules for this calculation are given on page 12. With a copy of this general printed form, and the few rules referred to, the computation of reserve in the case of any bank, under any circumstances, becomes an easy and simple matter. Form A.-Calculation of the Lawful-Money Reserve of National Banks Located in Reserve Cities and Central Reserve Cities. Items on Which Reserve is to be Computed. is the entire reserve required, which is Net reserve to be held. $3,476,782 869, 195 2,250 $866,945 |