and the distaste for the bad ones, together with the effort to avoid losses without making enemies, give to the country banker's life a piquancy that to the public servant is unknown."

In the first place, banks are thick — too thick in places, the bankers themselves agree. They are thickest in the western states. Nebraska has a bank for every 1750 persons, Kansas one for every 1850 persons. It would seem that a bank for every 350 families is too many, or that it argues a state of unexampled surplus prosperity. The real cause lies deeper. The western states have been yielding wonderful prosperity to the bankers for years. Hundreds of country banks have paid their stockholders fifteen to twenty per cent annually in dividends and surplus. As the debts on the farms have decreased and a savings fund has accumulated, the possessors have sought to invest it where it would return the largest interest-naturally seeking banking as offering great reward. While the farmer's first thought is land, he may be waiting the chance to "buy right" —and in the mean while puts his idle money in bank stock.

When a new town is started there is a rush for the position of banker. It is common to have four or five applications filed for the incorporation of the "First" National Bank before the townsite is fairly ready for settlers. Two or three banks are started when the first train whistles at the unpainted depot. Some of these are little more than realestate firms under another name; others have actual banking intelligence behind them; time weeds out the poorer ones and strengthens the substantial institutions. A Boston capitalist saw an opportunity to start a bank in a town out near the Colorado line. Some local business men heard of his plan and there was a two-hundred-mile race to the capital to secure a charter. The Boston man won - but there were two new banks in the town.

In the older settled states this does not

occur. There the bank is almost a heritage, kept in a single family or group of families, and he is indeed hardy who ventures to dispute the business monopoly. But there is less profit in the old community, for loans are at a lower rate and demand for them is light.

Yet there has seemed to be plenty of money for deposit in all the new banks. Said the cashier of a little bank, whose stockholders are nearly all farmers, in a town of two hundred and fifty people, two hundred miles west of the Missouri River,

"When we started five years ago experienced bankers told us we might get $15,000 in deposits but we could not hope for more; that we might pay 10 per cent dividends, and probably would have some losses. We have $61,000 deposits, all out of the immediate vicinity, have paid 24 per cent dividends each year, and have not yet lost a dollar!"

Little wonder that there is a desire to start banks in prosperous western villages!

In the mean while these bankers are doing much to educate their patrons in the proper functions of a bank. Said one, "We have taught many farmers to carry a bank deposit and pay their hired help with checks. In this way we have secured accounts from many hired men. It is surprising, the number of persons who, in the past half-decade, have been educated to modern business ways. At first some hesitated because of their inability to write checks properly, but patience and education are showing them the advantages of the system."

One of the treasured resources of the country banker for years has been the public auction or "vendue," the Easterner might call it. Sitting by the side of the crier or auctioneer, the banker would accept at a discount the notes given for the stock and implements purchased, and would reap a handsome profit from the day's work.

That is changed. The other day an old-fashioned banker took his assistant's

place and went out to a public sale — for this survival of early custom remains with us throughout the land. He had not done this for years, but remembered the old way. He waited at the table while the sale went on, but was astonished to see buyer after buyer walk up to the auctioneer, give a check for the purchase, and go away. Others paid currency but very few came to him. The farmers knew his business there and were much amused. Finally one approached him. "Why did you come out to-day? It's rather cold."

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The banker was game. "Oh, I just wanted to see how things were selling I am glad to know you are so prosperous." He then ordered his livery team and drove back to town.

At many a sale running into thousands of dollars practically every purchase is for cash. The banker of to-day seeks business, rather than selects from an abundance of business offered him, as in the past.

Fortunately for the banker the "interior" has been using a great deal more money of late years than ever before. The many investment enterprises at home, the remarkable growth of western and southern cities, the development of the small town as a business centre and as a residence for retired farmers, the building operations exceeding the ability of contractors and manufacturers, the land boom of the Middle West, the irrigation enterprises of the semi-arid region, all have combined to make a demand on the country banks that has led constantly toward the expansion of credit. When the financial disturbance of last October went, like a paralytic stroke, from the cities of the East to the remotest hamlet of the newer states, it found the country banks with large loans, with heavy balances at reserve centres, and, with few exceptions, compelled to suspend currency payments either altogether or temporarily, or to limit the amount paid over the counter to a single depositor to fifty or one hundred dollars a week. It was

the severest test that ever came to the country banker, and the success with which he met the embarrassing conditions, and his sturdy fight back toward normal conditions, are evidence of the substantial basis of his business.

The country banker exerts his greatest influence on national finance during the crop-harvesting season. Whether it be in the gathering of fruit in California, of cotton in the South, or of wheat in the plains region, the banker comes in direct touch with the worker.

Take the wheat harvest, as covering the widest area and creating the most intense demand during its existence. In a single state twenty thousand harvesters are needed besides those already at work on the farms. Through the labor bureaus and railway departments whole trainloads of workers are secured from states at a distance. These helpers are mostly itinerants and they have no local standing. A grain-raiser went among his laborers one Saturday night, and, asking their names, proceeded to make out checks for the week's work.

"What shall we do with them?” asked

one.

"Cash them at the bank, of course." "Who will identify us?"

The employer saw the point, tore up the checks, and secured currency with which to pay the men. That made a demand on the bank. Scores of other farmers were doing the same thing. Hundreds of other communities did it. The result is that the country bankers draw millions of dollars from the "reserve centres" every harvest, and to some degree change national financial currents thereby.

This outpaying goes on until autumn, and then the farmer begins to sell his grain and the tide turns. It does not turn so rapidly now as it did when the western farmer was heavily in debt. Then he sold all his products as soon as possible and took the check therefor to the bank, where it was applied on his mortgage

notes. Now he has few debts, or at least has them well in hand and can manage them without haste; hence comes about a new condition. From what he sees outside the brass-railed window the country banker can answer the query that has puzzled more than one captain of finance - why does currency disappear so rapidly from circulation in autumn ?

The farmer needs money in autumn clothes to buy, help to pay, preparation for winter. Whether or not he has a bank account, he likes to have plenty of cash at home; so he sells a load of grain or other farm products and secures fifty dollars or thereabouts. This he takes from the bank in currency, putting the bills deep in his capacious pockets.

Supposing that out of the hundreds of farmers surrounding each country bank ten do this in a day · the banker pays through the brass-railed window $500 in currency, most of which will for a time be carried in pockets or hidden in bureau drawers. Suppose this goes on in two thousand country banks of the agricultural states, and is continued for one hundred days preceding December 15it accounts for a vast sum and is one explanation of the "interior's " mysterious absorption of currency each autumn. It is a direct outcome of widespread prosperity, which allows to each farmer the privilege of having his pocketbook bulging with money.

Of course this currency returns. In summer the harvest hand spends some for clothes, some for amusement, some for railroad fare. The farmer buys necessary articles and holiday goods at the local stores, and the money comes back in the merchants' accounts; he pays his tax, and the county treasurer sends it to the bank; he makes his annual settlements and the bank deposits grow - but every year for half a decade the return has been slower and longer delayed. Increasing prosperity has allowed the farmer to carry his pocket money more generally and for a more extended period.

The Western farmer's fiscal year really VOL. 101-NO. 2

ends with the first of March. Then it is that he moves to his new farm; then he settles with his neighbors; in some states that is the date for listing his possessions for taxation. As that time approaches, he begins to arrange for the business of the coming months. If he has a larger amount of grain in store, he sells it; if he has been feeding stock, this is the time when he sends shipments to market; he deposits his surplus in the banks or invests it, which is but another way of sending it on its way to the banker's care; and there is a general readjustment of the financial situation in the grain-raising states. In the older commonwealths and in those communities where the industrial activity overshadows the agricultural, less variation occurs.

As a result of these new conditions the country banker has had each year a larger problem to consider.

It is really a three-fold problem. In addition to furnishing funds for the working period, there is the function of helping the farmer hold his crop when he so desires. The after-harvest prices may be low; it may be advantageous for the producer to hold his corn and wheat. He goes to the local banker. The bank lends its capital and gives its advice in the undertaking, sometimes to its own loss.

Then, too, there is the development of local industries. In every community are certain opportunities, or what are believed to be opportunities, for the profitable use of capital, and there are men, usually without sufficient capital, who wish to test the propositions. The banker has another visitor to the little room behind the brass-railed counter, and upon his advice and promise is the enterprise launched. These enterprises employ local capital, give work to those who are usually compelled to be idle during certain months of the year, bring new families to town, build up the community in wealth and in commercial importance, and altogether are its inspiration. Behind them is usually a country bank and the country banker's advice.

In addition there is the handling of the bank's funds between harvest periods. For a few months there must be a large supply of currency and loanable capital; for another period, little is demanded. This applies to sections where mixed farming is not the general rule. The Eastern and New England states do not have this condition to the same degree as the Middle West, the South, and Pacific Coast states. Thus it is that this problem comes in its most striking form to the newer banking sections of the nation, and is a new feature of the country banker's service.

This very prosperity has compelled the country banker to learn in late years a broader system of financiering than he knew in earlier times. The banks of the West's first period of development were freebooters of finance. They "charged what the traffic would stand" to a greater extent than the most predatory railroad manager ever dared. The interest rates were at times confiscatory, and the wonder is that the borrowers were able to pay them without going into bankruptcy.

As the conditions of settlement became more stable, the interest rate decreased, the business became systematized, and the banker met his customers on the level. Then, as there came about yet greater financial independence in the newer states, the bankers of the country towns had to learn another lesson: how to care for their surplus deposits. The farmers

were

not borrowing, the merchants needed only moderate accommodations, and the bankers sought other means of employing their money safely and profitably.

Out of this situation has grown the western market for "commercial paper," the notes and short-time loans of great manufacturing and mercantile houses. Every bank of prominence, in country as well as in town, receives daily long lists of offerings of this sort. The interest rate was as low as 4 per cent in 1904 and 1905. It has risen. until 7 and 7 per cent were offered last summer for

the best securities, the borrower reserving the option of taking up the loan at a premium before maturity. The country banker has learned to buy and to sell this kind of paper, and in the exercise of these broader operations has become familiar with national financial trends and influences in a way that would have been impossible had he served only his immediate community.

Along with the development of the country banker's business has come a new medium of contact with more extended fiscal operations, the "financial drummer." He represents the commercial enterprises that need a great deal of outside money and are not content to wait on the purchases of their securities through the usual method of mail communication. He goes directly to the banker, carrying his offerings, and makes a sale of sixty-day notes as a commercial traveler would dispose of an order of dry goods or clothing. Further, he initiates the banker, unfamiliar with the larger field, into wider interests and so is helpful in many ways.

Perhaps, too, the banker has lost something of his imposing personal influence in this changing attitude of the rural sections toward financial matters and broader knowledge of world events, owing to the reading of daily papers and magazines in remote localities. With the accretion of wealth there is less awe for mere dollars than in early times.

For instance, in the frontier village the banker was formerly the only man with money. He held the reins of the town; if he had a rival, it was some other banker. Then the little room behind the counter was much more potential than to-day; without the consent of its presiding genius few of the town's enterprises could succeed. A reciprocal honoring of the man who made all this possible came in the electing of the banker to every position of prominence for which he expressed a desire. He was the state senator, the mayor, the Sunday School superintendent, the president of the fair

association, and the chief delegate to the conventions of his party.

When one of these financial PoohBahs failed, paying three cents on the dollar, at his request I prepared for publication a blanket resignation in which he laid down twelve presidencies and civic positions at one swoop. Perhaps, had he been content with a modicum of glory, he might have managed his bank more successfully.

But much of that has passed away. The banker occupies, naturally, a place of prominence in a small town as he does in the large one; but he is in these days merely one of many business men, each independent of his fellows financially and each working for the town's good. The banker works with them hand in hand, lending capital's aid in helping them across the rough places and aiding them in the transaction of the everyday affairs of trade; but he does not assume to patronize and dictate as in the earlier period of greater dependence on his good will.

Of course, if the time comes when there is doubt of the country bank it is a serious thing - much more serious for the banker than is such condition for the city financier. The latter may call on the clearing house to protect him; his fellow bankers may heap gold coins on his counters to reassure the frightened depositors -but the country banker must fight it out alone. The other bank in the town is usually too anxious for its own safety to spare much of its cash, and it may take many hours before assistance can be secured from the nearest city. The country depositors have had sometimes an ugly way of sitting in the bank office with drawn revolvers, guarding their rights, and the town policeman is often unable to regulate matters to the bank officers' desires.

However, those scenes are of the old order rather than of the new.

In eleven Middle West agricultural states, where the development of country banking has been most notable during

the past decade, are seven thousand banks, state and national. Of the state banks over two thousand have a capital of ten thousand dollars or less each, and they are the banks in the small country towns. In all this territory failures during the past decade have been rare, those occurring being due to rascality and special weaknesses rather than to general conditions. To this group of banks, more than to any other, does the East look for financial indications affecting trade and money. Next to them is the South and then the Pacific Coast. Into

every financial discussion enter the problems of these country bankers' opinions, their plans and their needs.

The state legislatures are constantly raising the standard of the banks. In few commonwealths can a banking house have less than ten thousand dollars capital. Every legislative session adopts new laws to insure the safe management of banks; many of these laws are so framed that the smaller banks especially will be protected.

In Oklahoma, the newest state of the Union, has been enacted a law, to take effect February 15, 1908, whose operation is intended to insure depositors against loss. It provides that, after rigorous examination, state banks shall be allowed to participate in the benefits of a guaranty fund secured by an assessment of one per cent of the average deposits of the past year. This fund, gathered from all the banks, is in charge of the state banking board and may be increased as necessary by further assessments. When a bank fails, the bank commissioner takes charge of its affairs and forthwith pays off the depositors in full, using money from the guaranty fund for that purpose. He then settles the bank's business as would a receiver, paying his collections to the guaranty fund, which becomes a preferred creditor. If there be more than enough to recoup the fund-in other words, more than enough to settle the depositors' accounts - the remainder is turned over to the