_Dunbar, C. F._, Theory and history of banking. 2d ed., 1901. _Fisk, A. K._, The modern bank. 1903. _Holdsworth, J. T._, Money and banking. 1914. _Kinley, David_, The specie reserve in a banking system. J. P. E., 20: 12-24. 1912. *_Phillips_, chs. IX, X. _Scott, W. A._, Money and banking. 1903. _Veblen, T._, Theory of business enterprise. 1904. *_White_, bk. III, chs. I-III. QUESTIONS. 1. What does a bank do for a community? 2. What are the functions performed by a bank? 3. What are the sources of income to a bank? 4. Explain the most important ways in which the deposits of commercial banks originate; and state which of these ways creates the greatest amount of demand liabilities of the banks. 5. Do all banks issue notes? Why? 6. What is the advantage to a bank of the right to issue bank notes? 7. How does the issue of bank notes differ from the lending of funds to depositors? 8. Can a bank that issues its own notes afford to lend cheaper than the ordinary capitalist? 9. Two men A and B have notes each for $1000 discounted at the same bank. A is credited on the bank's books with the right to draw $950. B receives $950 in the circulating notes issued by this bank. Are the bank's liabilities increased to precisely the same extent by the two transactions? Does either transaction immediately lessen the bank's cash reserve? 10. The following are the items of a report of a National Bank: Capital stock, $50,000; Cash on hand and in banks, $77,066.21; Circulation, $49,400; Bills payable, $10,000; United States and other bonds, $239,050; Deposits, $465,417.41; Surplus and net undivided profits, $30,952.58; Loans and investments, $289,653.78. (a) Separate and arrange these items in accordance with a regular bank statement and prove your answer. (b) Show how these items illustrate the essential functions of a bank, explaining in detail the nature of these functions. 11. Sort out from the following items the resources and liabilities and show the equality of total resources and total liabilities: