The whole spirit of the National Bank Act in relation to loans is to prevent the advancing of money on anything but "quick assets." In other words, loans must not be made on any security, that can not be turned into money quickly. For this reason a National Bank can not lend on real estate as a security. Also it should not accept notes having longer than ninety days or four months to run. The fundamental principle of the law is the guarding of the depositors' money; to have it ready for them at all times. But the whole fabric and theory of banking is founded on the fact, demonstrated by centuries of experience, that at no one time do all the depositors want to draw all their money from all the banks. Also that every day some loans are due and can be converted into cash if necessary.
Payment of demand, or "call," loans can be demanded any day. On time loans, payment can not be asked for until the maturity of the note, the day agreed upon by the bank and the borrower.
On demand, or "call," loans the interest must be paid at the end of every three months, or when the loan is paid. On time loans, the interest, or discount, is paid in advance.
Notes reading one, two, three, or four months after date are due, of course, one, two, three or four months after the date of the notes. But thirty, sixty, or ninety-day paper is not due in one, two, or three months. This is a common error. The exact number of days must be calculated. The following table for determining the maturity, or "due date," of thirty, sixty, or ninety-day paper is herewith given:
TABLE FOR FINDING MATURITY OF NOTES AND DRAFTS
At 30, 60, and 90 Days
| DATED IN MONTH OF | AT 30 DAYS Will be Due Same Date in | AT 60 DAYS Will be Due Same Date in | AT 90 DAYS Will be Due Same Date in |
| JANUARY | February less 1 day | March plus 1 day | April |
| FEBRUARY | March plus 2 days | April plus 1 day | May plus 1 day |
| MARCH | April less 1 day | May less 1 day | June less 2 days |
| APRIL | May | June less 1 day | July less 1 day |
| MAY | June less 1 day | July less 1 day | August less 2 days |
| JUNE | July | August less 1 day | September less 2 days |
| JULY | August less 1 day | September less 2 days | October less 2 days |
| AUGUST | September less 1 day | October less 1 day | November less 2 days |
| SEPTEMBER | October | November less 1 day | December less 1 day |
| OCTOBER | November less 1 day | December less 1 day | January less 2 days |
| NOVEMBER | December | January less 1 day | February less 2 days |
| DECEMBER | January less 1 day | February less 2 days | March |
| EXAMPLE.—Paper dated March 15th at 90 days is due June 13th. | |||
| TO PROVE.—Exclude day of date, then 16 days in March, plus 30 days in April, 31 days in May, 13 days in June equals 90 days. | |||
| Paper apparently due, from this table, on February 30th, is, of course, due March 2d, or apparently due April 31st, is, of course, due May 1st. | |||
| In Leap Year allowance must be made for 29 days in February. | |||
| For paper payable in States allowing grace use table, then add days of grace. | |||
National Banks can lend only a certain proportion of their deposits.
In New York, Chicago, and St. Louis, called Central Reserve Cities, National Banks must keep on hand, in lawful money, a reserve of twenty-five per cent. of their deposits.
In Albany, Baltimore, Boston, Cincinnati, Cleveland, Detroit, Louisville, Milwaukee, New Orleans, Philadelphia, Pittsburg, San Francisco and Washington, called Reserve Cities, the National Banks must have the same reserve of twenty-five per cent. of their deposits. But the National Banks in these last-named thirteen cities can keep one-half of their reserve in National Banks located in any of the three Central Reserve Cities, viz.: New York, Chicago and St. Louis.