In case the party for whom the sureties have bound themselves should become a defaulter, the bank is likely to experience some difficulty in securing prompt payment of the losses sustained. None of the sureties, of course, would be anxious to pay. One waits on the other to pay his proportion of the loss, fearing that if he pays the others may in some way avoid their liability.

Again, the bondsmen may be good customers of the bank, and for fear of getting their enmity, the bank will not push them too persistently. They may not be in as good financial condition, either, as they were reputed to have been at the time the bond was given, and as a consequence there may be considerable litigation, and owing to the constant quibbling and delays, the matter may drag on for an indefinite period. Rather than suffer the hardships that the losses would entail upon them, some will resort to every artifice and technicality known to the legal fraternity. It is not enough that bondsmen are men of reputed wealth; they should be men of good character and strict integrity, who have always met their obligations with characteristic promptness.

CORPORATE SURETYSHIP.

The advantage of corporate suretyship over individual suretyship is now almost universally conceded, and banks nowadays bond their

officers and employes at their own expense through a Surety Company. In the selection of a company to go the security of its employes, it is important that the bank first satisfies itself as to the strength and standing of the company. The directors should not give first consideration to the cost of the bond, preferring the cheapest regardless of the standing and solidity of the companies, but should look first to safety and stability. They should be governed by the reputation of the Surety Company, not only for its ability to pay, but for its willingness and promptness in paying; whether the company is strictly reliable, or whether in the past it has resorted to mere technicalities to avoid the payment of losses.

Corporate or individual bonds do not cover losses resulting from bad judgment, incompetency, or gross neglect. They guarantee only against fraud and dishonesty. The directors should also bear in mind that when an officer or other employe of the bank is promoted, or in any way employed to serve the bank in any other capacity than that specially designated in the bond, it is necessary to issue a new bond -unless the original bond should contain a clause to the contrary. Although the position to which he is transferred may be attendant with no greater responsibility, or even less responsibility, the bond given simply relates to

the conduct of the principal while holding the position specially designated in the bond.

The sureties, however, will not be relieved of their liability, nor is it necessary to make a new bond, when the original bond binds them not only for dishonesty in the specified capacity, but "in any other capacity or employment in or concerning said bank to which he may hereafter be transferred or appointed by the said Board of Directors."

NATIONAL BANK RESERVES.

DIFFERENT CLASSES OF BANKS.

National banks are usually classified as follows:

Central Reserve Banks,

Reserve Banks,

Country Banks.

"Central Reserve Banks" are those situated in "Central Reserve Cities." Any city with a population of 200,000 or over, may become a Central Reserve City by three-fourths of the banks located therein making and signing a written application to the Comptroller of the Currency. At present there are three Central Reserve Cities as follows:

New York,
Chicago,
St. Louis.

Reserve Banks are those situated in "Reserve Cities." Any city with a population of 25,000 or more may become a Reserve City. It is necessary for three-fourths of the banks located in cities of this size to sign a written

application to the Comptroller. There are now thirty-four "Reserve Cities."

All banks situated outside of the Central Reserve and Reserve Cities are designated as Country Banks. Banks of this class cannot act as "Reserve Agent" for any other national banks.

RESERVE AGENTS.

A reserve agent is a national bank situated in a Central Reserve or Reserve City which has been chosen by another bank as a depository for part of its "Reserve Fund." Before designating a bank its Reserve Agent a bank is required to make formal application to the Comptroller of the Currency to secure his approval. The Comptroller will not likely disapprove of the bank's preference in this matter unless the institution selected should be in bad repute.

WHAT MAY BE COUNTED AS RESERVE.

A bank's Reserve is the amount of available cash on hands to meet the daily requirements of the business, and as a safe-guard against extraordinary demands of the depositors. The amount of Reserve carried by a bank is based upon the amount of its net deposits, and depends upon whether it is a Central Reserve, Reserve, or Country Bank. The "Net Deposits" are the total gross deposits less the amount "due from" other banks,