1. Saving and Savings Institutions, 136 2. Trust Companies, 141 3. Bond Houses and Investment Companies, 144 4. Land Banks, 147 5. Stock Exchanges, 163 6. Some Defects in Our Investment Banking Machinery, 166 References, 171 Index, 173 BANKING CHAPTER I THE NATURE, FUNCTIONS, AND CLASSIFICATION OF BANKING INSTITUTIONS The terms, "bank" and "banking," are applied to institutions and to businesses which differ considerably in character, functions, and methods, but which nevertheless have certain common features which justify their being grouped together. We can best prepare the way for a discussion of these differences and common features by a description of the services which these institutions perform in modern society. _1. Services Performed by Banking Institutions_ From the point of view of their customers these services may be grouped under the following heads: The safekeeping of money and other valuables; the making of payments; the making of loans; and the making of investments. It is a common practice everywhere, and in some countries, notably the United States, almost a universal practice for people to intrust their money to banks for safekeeping. To a degree, hoarding, in the sense of locking up money in private vaults and other receptacles and keeping it under the eye and in the personal care of the owner, is still practiced, but it is doubtless on the wane in all civilized countries. The practice of intrusting to banks the safekeeping of other valuables, such as important documents, jewelry, plate, etc., is also widespread and growing. The service of the safekeeping of money naturally leads to the second, the making of payments. When we intrust our means of payment to a bank, it is natural that we should also make it our treasurer and disbursing agent, and so we do. If we have payments to make to people at home, in other cities of our own country, or in other countries, we usually order our bank to perform the service for us. Loans of almost all kinds are made by banks, and certain kinds, namely, those to business men for the everyday conduct of commerce and industry, are made almost exclusively by them. For the most part these are short-term loans. For long-term loans banks are also one of the chief resorts, but in some countries these are not to so great a degree monopolized by them as the short-term variety. For the investment of the surplus funds of people banks are the chief agencies. This function takes the form mainly of the sale of stocks, bonds, and mortgages, and sometimes of the promotion of new enterprises.