ded by the
dangers of the present system, and an administration of the funds of
the federal government which is free from the evils of the independent
treasury system.

CHAPTER V

COMMERCIAL BANKING IN OTHER COUNTRIES

In contrast with that of the United States, the characteristic
features of the commercial banking systems of Europe are the central
bank performing important functions for all other financial
institutions and for the government; a relatively small number of
large institutions with many branches mediating between the central
bank and the people; and the use of commercial and bank bills instead
of promissory notes as the chief instruments of loans and discounts.

_1. Common Features_

The central banks differ considerably in organization and business
methods, but perform essentially the same functions; that is, they act
as financial agents for their respective governments; discount
high-grade commercial and bankers' bills for other banks and usually
for private persons; administer the cash reserves of the entire
country; and furnish the greater part and, in some cases, the entire
supply of bank notes.

The other large banks do most of the business with the public, the
central bank's relations being chiefly with them and with the
government. They conduct checking accounts with merchants,
manufacturers, farmers, and others; receive and invest savings
deposits, and deal in certain classes of investment securities;
conduct the domestic and foreign exchanges; discount various kinds of
commercial and banking bills, frequently those not available for
discount at the central bank; and make advances on personal and other
kinds of security. Their main offices are located either in the
central money market of the country or in important financial centers,
and their branches are extended to all places in which banking
facilities are supposed to be needed. As a rule, they are less
restricted by legislative provisions than are the national and state
banks and trust companies of the United States, and are less carefully
supervised and inspected by public officers.

Commercial and bankers' bills are widely used as credit instruments
between buyers and sellers and between bankers and their customers. A
common method of procedure, when a sale is made on time, is the
drawing of a bill for the amount due, by the seller upon the buyer,
payable at the end of the credit period agreed upon, and accepted by
the