Topic three

BANKS AND BANKINGS

A bank will keep your money safe, or it will lend you money.
But its services do not stop there.
Banks were developed to keep people’s money safe and to make it available when they
needed it. Since money was invented, people have been borrowing and lending it. Italy had
famous moneylenders. In fact, the word bank comes from banco, the Italian word for bench,
for the moneylenders used to sit on benches.
Before there were banks, these services were provided elsewhere. Long ago some people
took their treasures to the temples for safekeeping. Jewelers also took valuable objects for
safekeeping, and when people needed money, they could borrow from them. But some people
did not trust others to keep their money. When they had more than they needed, they bought
things as a way of keeping their wealth. Some men bought cattle. Others bought land. Still
others bought valuable jewels and objects of gold and silver.
A modern bank accepts people’s money for safekeeping. It also lends money and offers
many other services. The experience of a businessman will show some of these. James Jones
has a furniture store and buys his goods from different parts of the country. It isn’t convenient
for him to send money through the mail, and he doesn’t want to keep big sums of money in
his store or in his home. So he goes to the bank and opens a checking account. He puts
money in the bank regularly, and the bank keeps it until he writes checks for that amount.
When Mr. Jones orders furniture from another city, he simply writes a check which looks like
the one on the following page. This check is as good as money to the owner of the Modern
Furniture Company. He can take it to his bank and cash it, that is, he get money for it.
Now and then Mr. Jones deposits money in a savings account at the bank. The bank then
uses this money and pays him a certain percentage on each dollar every year. For example, if
he deposits $1,000 and the bank pays him 4 percent, he will have earned $40 at the end of the
year. This payment is called interest. Of course, he doesn’t write checks on his savings
account.
Mr. Jones can usually borrow from the bank if he needs money. If the bank lends him
money, he must pay interest for its use. He arranges for a bank loan at the loan department.
Sometimes, instead of putting his money in a savings account, Mr. Jones wants to invest it in
some business firm, and he may ask the investment department of his bank for advice.
Mr. Jones does other business at the bank, too. He has the insurance department take care
of the insurance on his store and house; that is, he agrees to pay regular premiums and the
bank agrees to pay him a certain amount of money in case of fire or other damage to his
property. When he travels, he buys traveler’s checks from the bank to use instead of money.
And rents a safe-deposit box in the bank for his valuable papers.
Mr. Jones gets still other services from the bank. A man in the estate department helped
him write his will. When Mr. Jones dies, the bank will settle his affairs and advise his family
what to do about the business.
It’s hard to imagine what our complex business affairs would be like without the services of a
bank.

No. 205
Date : march18, 1964
Pay to the
order of : the modern furniture company $250.00
two hundred and fifty and no/100 dollars
AMERICAN SECURITY & TRUST CO.
Fairfield games g gones

Understanding ideas
1. Find two sentences that are true :
a. Some people did not trust others to keep their money.
b. People can write checks on their savings accounts.
c. A bank is a place where people can put their money for safekeeping.
d. Banks lend money without charging interest.
2. Match the different departments of a bank with the services they offer.
a. savings department a. accepts a person’s money and cashes his checks
b. estate department b. helps a person write his will
c. insurance department c. pays a person interest on money he keeps in the bank
d. loan department d. insures a person’s house against loss
e. investment department e. lends money to a person, charging him interest
f. checking department f. gives a person advice on investing money
Understanding words
Find words in the lesson that are opposites of these words: (a) lend, (b) worthless, (c) simple,
(d) save, (e) now and then.

Interpreting ideas
1. If you save any money, is it better to keep it in your house or in a bank? Why?
2. Which services in a bank could you make use now? Which ones might you make use
of later?

Let’s talk and write about banks

1. Why were banks developed?
2. Where does the word bank come from?
3. What are some of the ways in which people used to keep their wealth?
4. How does a checking account work?
5. How does a savings account work? What is interest?
6. What does a loan department do?
7. What does an investment department do?
8. What does an insurance department do?
9. Why does Mr. Jones rent a safe-deposit box?
10. What is a will? What will the bank do when Mr. Jones dies?