If the funds are withdrawn before interest time, the depositor loses the interest.
The postoffice savings banks which were established in England in 1861 at first were tried at only a few postoffices, but later the system was extended to include all the money-order offices in the United Kingdom.
In the United States the Postal Savings System was inaugurated under act of congress in 1911. On June 30th, 1912, the number of depositors was 8,113, and the deposits were approximately $20,300,000.
Deposits bear interest at two per cent per annum, principal and interest being guaranteed by the United States Government. Accounts may be opened and deposits made by any person of the age of 10 years or over. Deposits are received from individuals only, and not from corporations, associations or firms. Receipts for deposits are given in the form of postal savings certificates which are issued in denominations of $i, $2, $5, $10, $20, $50, and $100 each. No person is permitted to deposit more than $100 in any one month, nor have more than $500 on deposit at one time. A depositor is permitted to exchange his deposits for sums of $20, $40, $60, $80, $100 or multiples of $100 up to $500 into United States bonds bearing interest at 2½ per cent per annum, payable semi-annually. Full information concerning the Postal Savings System may be obtained at any depository office or by addressing the Postmaster General (Postal Savings System), Washington, D. C.
A trust company is a banking institution organized under the laws of a state. In some states trust companies are not permitted to exercise all the functions of a bank; in other states banks are permitted to perform the functions of a trust company in addition to general banking. Trust companies act as trustees, guardians, administrators and executors of estates, conservators, agents, etc. In short, they can act in all matters of trust as if they were human individuals. A trust company can be appointed guardian by a court for orphan children. It can manage the estate of a dead person. It can be appointed to take care of an insane person or to manage the affairs of a spendthrift. Its varied and many functions bring it into close personal relationship with its clients. It also acts as trustee for railroads and other corporations issuing bonds, and does many things which banks cannot do. Many trust companies have savings departments, and, besides, do a large real estate business.
One of the most important services rendered by a bank is the transmission of funds or credit from one part of the country to another. For instance, a debtor in New York who wants to pay his creditor in Chicago, pays the money to a New York bank which, for a small charge, gives him a draft on a Chicago bank. This he sends to his Chicago creditor, who presents it to the bank in Chicago and receives the money. No money is sent by the banks in New York to Chicago, because Chicago banks send drafts to New York, and an account of how they stand toward each other is all that is necessary, and in this way the sending of money from one place to another is avoided. In the same way, one bank in a large city is constantly paying out money in exchange for checks and drafts which strictly should be paid by another bank. But instead of the first bank making the second bank at once pay back the same amount, all the banks of the city meet together once or twice a day, each showing how much it has paid out for the others, and how much they have paid for it, and the difference only is paid in cash. This is called a clearing-house. The first clearing-house originated in London. Many cities in the United States now have them.
Following are the number of banks, with their capital, surplus, deposits, etc. in the United States, as shown in the report of the comptroller of the currency for 1911:
National Banks. Number, 7,301, capital stock paid in, $1,025,441,384; surplus, $670,-041,576; United States bonds to secure circulation, $707,204,380; national bank notes outstanding, $696,982,033; deposits, $5,489,-995,011.
State Banks. Number, 17,115, divided into following: commercial banks, 12,864; capital, $452,944,684; surplus, $170,566,937; deposits, $2,777,566,835; loan !and trust companies, 1,251; capital, $385,782,993; surplus, $400,406,067; deposits, $3,295,855,895; mutual and stock savings banks, capital, $72,177,899; surplus, $261,834,082; deposits, $4,212,583,598; savings depositors, 9,794r 647, having an average deposit of $430.09.
There are also 1,116 private banks, having a capital of $21,872,416, surplus $7,329,974 and deposits, $142,277,224.
Bankrupt is a term applied to a person who is unable to pay his debts, and bankruptcy laws are laws which prescribe the methods by which the estate of an insolvent debtor is applied in payment of his debts and the debtor himself is relieved from further obligation.
Bankruptcy may be voluntary or involuntary. Voluntary bankruptcy occurs when a debtor asks to be declared a bankrupt, involuntary bankruptcy when his creditors ask it. In the United States Congress legislates as to bankruptcy, though the states may do so, but a federal statute suspends a state law covering the same ground. Congress has four times passed a national bankruptcy law, that of 1898 being the latest. Proceedings begin by a debtor committing an act of bankruptcy, either by becoming unable to pay or by attempting dishonestly to alienate his property. Then a petition
