wilfully makes a false statement with intent to deceive any person authorized to examine into the affairs of the bank, or who shall make false entries in the books of account of the bank is guilty of a felony and upon conviction may be punished by a fine of not less than $1000 or more than $5000 or by imprisonment not less than one year or more than ten, or both. The bank cannot loan its funds to its officers unless there is sufficient security. "It shall not be lawful for any bank to loan to any of its officers, directors, clerks, or employees any of the funds of the bank without a responsible endorser or sufficient collateral security, unless the same shall have been authorized, both as to amount and security, by a resolution of the board of directors, to be recorded." It is also unlawful for any officer of a bank to certify any check, draft or order, unless the person by or against whom it is drawn has the funds in the bank. Any check, draft or order so certified by a duly authorized officer of the bank shall be a good and valid obligation against the bank. Banks may receive the usual rates of interest and may also receive interest in advance according to the usages of banking institutions. A debt is considered bad, if not secured, if the interest has not been paid on same for one year and must be charged to the profit and loss account. Embezzlement is punished by imprisonment in the state prison not exceeding twenty years. The words "Bank", "Banker", "Savings Bank" and the like cannot be used by any person, firm or corporation not under the supervision of the commissioner of banking according to the provisions of the banking law.

MUTUAL SAVINGS BANKS.

Organization.-"Any number of persons, not less than twenty, nor more than fifty, may associate for the purpose of organizing a mutual savings bank to receive on deposit the savings of laborers, mechanics, farmers, servants, minors, and others: and to loan the same for the benefit of such depositors; three-fourth of such number of persons or corporators shall reside in the county where the proposed bank is to be located."

The subject is not deemed of sufficient general interest to be treated at large here. The statutes are explicit in regard to the formation of such corporations, and provide how the business is to be conducted. The provisions of the statutes are such that a mutual savings bank cannot do a general banking business in the commercial sense.

SECTION II.

NATIONAL BANK S.

The principal features of the national banking system will be pointed out. Congress has implied power to establish national banks under the constitution. The National Banking Act now in force was passed by Congress June 3, 1864, and has since been several times amended. Its general scheme is not unlike the present state law. The Treasury Department has charge of matters relating to national banks, the chief officer of the department supervising national banks being the comptroller of the currency. The United States statutes provide that not less than five persons may form an association for banking purposes, the same to continue not more than twenty years, with the privilege of renewal for twenty years more with the consent of the comptroller. The powers of a national bank are defined by the statutes, and are limited to the discounting of promissory notes, drafts, bills of exchange and other evidences of debt, receiving deposits, dealing in exchange, coin and bullion, loaning money on personal security and issuing circulating notes. It can only hold such real estate as is necessary for the transaction of its business, and can only take security on real estate for an antecedent debt and then cannot hold it longer than five years. There can be no national bank with a capital of less than $100,000 except that banks with a capital of not less than $50,000, may, with the approval of the secretary of the Treasury be organized in any place the population of which does not exceed 6000 inhabitants, and except that banks with a capital of not less than $25,000, may, with the sanction of the Secretary of the Treasury be organized in any place the population of which does not exceed 3000 inhabitants. In cities of 50,000 and over the capital must be at least $200,000. One-half of the capital must be paid in before the bank can commence business. The balance must be paid in monthly installments of at least 10 per cent. each. Shareholders are "held individually responsible, equally and ratably, and not one for another, for all contracts, debts and engagements of such association, to the extent of the amount of their stock therein, at the par value thereof, in addition to the amount invested in such shares." No dividend can be declared before one-tenth part of the net profits for the preceding one

half year are added to the surplus fund. A national bank may be made a depositary of public moneys by depositing with the Secretary of Treasury additional security, usually United States bonds.

We will briefly touch on the subject of circulating notes. Each bank having a capital stock of $150,000 or less must deposit in the treasury of the United States registered interest bearing United States bonds to an amount equal to onefourth of its capital stock, while banks having a capital of over $150,000 must deposit not less than $50,000 in the same bonds. Each bank may then receive circulating notes to the amount of 90 per cent of the market value of the bonds deposited, but not exceeding 90 per cent. of the par value or paid in capital of the bank. No bank can be compelled to circulate notes. Each bank must keep on deposit in the treasury of the United States an amount in money equal to 50 per cent. of its circulation for redeeming same.

All national banks must keep on hand a reserve of 50 per cent. but 60 per cent. of this may consist of balances on deposit in banks approved by the comptroller in reserve cities. Banks in "reserve cities" may keep 50 per cent. of their reserve as deposits in a "central reserve city" i. e., New York, Chicago or St. Louis. These reserves must be kept up, under penalty of liquidation. Each bank must make not less than five reports annually to the comptroller.

Among the restrictions imposed on a national bank are that it cannot loan more than one-tenth of its capital to one person, firm or corporation; nor can it lend money on its own shares of stock; nor can it be the holder or purchaser of its own stock, except to secure a bona fide antecedent debt and then it cannot hold same longer than six months. It cannot hypothecate its own notes nor can any of its capital be withdrawn. It cannot at any time become "indebted or in any way liable to an amount exceeding the amount of its capital stock at such time actually paid in, except for notes in circulation, moneys deposited with or collected by it, bills of exchange or drafts against money actually on deposit to its credit, or due to it, and liabilities and dividends and reserve profits."

SECTION III.

BANKING IN GENERAL.

Deposits. A deposit is the delivery to the proper officer or agent of a bank of money or negotiable paper by the owner to be placed to his credit, or of money or other personal

property for safe keeping. Deposits are either general or special. A deposit is general when made with a bank to be placed to the depositor's credit. The title of the property passes to the bank and the relation of debtor and creditor is established. Money deposited in the usual course of business usually creates a general deposit. A special deposit is a deposit of money or other property with a bank for safe keeping in which the title does not pass to the bank and the relation of bailor and bailee is created. The identical thing and not one of equal value must be returned. The degree of care which a bank must exercise in relation to special deposits depends on whether it receives compensation for its services or not. If a bailee for hire, it must exercise ordinary care and is liable for damages resulting from the failure to exercise same; if a gratuitous bailee, it is only liable for gross negligence. (See Bailments.) Unless a different intention appears, the presumption is that if loose currency or properly endorsed negotiable paper is deposited with a bank, it is a general deposit, but if gold or silverware, or other valuables, in a box, package or bag are deposited, the presumption is that a special deposit has been made. The nature of the deposit determines. A special deposit may also be a specific deposit, which is a delivery to a bank by the owner of money or commercial paper to be used for some particular purpose. In such a deposit the title does not pass to the bank, nor is the identical thing to be returned. Such a deposit creates the relation of principal and agent.

The pass-book.-A pass book is a small book, usually furnished by a bank to its customers, in which entries of the transactions between them are made. The return of a passbook and cancelled checks by a bank is equivalent to a request that the depositor examine the account within a reasonable time, and accept the same or report to the bank if he does not find the same correct. If no objection to the same is made within a reasonable time, it becomes an account stated and the presumption then is that the pass-book is correct, but this presumption may be rebutted. Entries in the pass-book may be shown to establish the fact that a deposit has been made.

Certificate of deposit.-A certificate of deposit is an acknowledgment in writing by a bank that it has received from a certain person a definite sum of money, and usu

ally contains a promise to repay the same to the holder or bearer, or to a certain person or his order, upon the terms therein stated. If it is payable to bearer or holder, it may be transferred by mere delivery; if payable to order, it is transferred by endorsement and delivery, the same as other negotiable paper, being in fact equivalent to a promissory note. The statute of limitations begins to run on a certificate of deposit from its date, or if not dated, from the time of the delivery of the instrument. Our supreme court has held a certificate payable "in currency" to be payable in money and therefore negotiable.

Collections. The making of collections is an important branch of the banking business. When paper is sent to a bank endorsed "For Collection", the title to same does not pass to the bank. It creates an agency on the part of the bank to perform the service. The customer is usually credited with the amount of the paper, but such credit is given conditionally, and if the collection cannot be made, the bank may cancel the credit given. A bank need not sue on paper given it for collection. When a bank receives paper for collection, it is bound to exercise reasonable care and diligence in the discharge of the assumed duties. It must act for the principal's best interest and preserve the liability of the several parties to the holder of the paper. If the party lives at a distant place, the bank must 1) forward the paper in proper season to sub-agents, or correspondents, selected with due care; 2) send such sub-agent or correspondent any special instructions that may have been given; 3) make inquiry with due diligence if notice of arrival or proceeds of the collection do not arrive within a reasonable time. But here the liability of the bank to which the paper was first given for collection ceases. In the leading Wisconsin case on this subject, where the defendant company had received for collection a note at Madison, Wisconsin, against a party residing at Stoughton, about twenty miles distant, and the note was duly forwarded to a notary public, at Stoughton, who did not protest the same, whereby the indorser was discharged and the debt lost, the court said: "The bank contends that the contract implied by the reception of a note against a party residing at a distance from its place of business was not absolutely to make due presentment and give notice, but to place the note in the hands