Police

Feb 14

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Many of the regulatory powers of government involve some kind of policing activity. In the United States, for example, the Immigration and Naturalization Service is empowered to apprehend illegal aliens. The Customs Service can inspect anything imported into the country and may search for contraband. The Internal Revenue Service may use any means at its disposal to collect taxes and to prosecute those who fail to file income-tax returns. This article, however, deals with local, state, and national law-enforcement agencies normally described as police forces. The words police and politics are related. Both are derived from the Greek term for city-state and have to do with the administration and oversight of communities of people. Police operations vary from nation to nation. In some states police forces are highly militarized and nearly indistinguishable from the armed forces. Police are nonmilitary groups that have several basic functions. They patrol neighborhoods on foot or in automobiles, seeking by their presence to preserve public order and to discourage lawbreaking. They are in charge of traffic regulation, which means assuring a smooth flow of traffic as well as detaining drivers who break the rules of the road. Police departments are charged with controlling such commercial vice as prostitution, gambling, and narcotics peddling.

Banks

Feb 11

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Financial institutions are companies that deal in money or money equivalents, such as stocks and bonds. The financial institution that most people know best is the commercial bank—an establishment in which individuals, businesses, government agencies, and even other banks deposit money. From these deposits the bank makes loans to individuals, businesses, government agencies, and other banks. The interest earned on these loans is a chief source of income for the bank. Banking operations of this kind are similar around the world. This article emphasizes commercial banking in the United States. Banks make their profits from interest earned by renting money in the form of loans or by making investments. In order to have money to loan or invest, a bank must first raise the funds—primarily by means of equity capital, deposits, or non deposit funds. Deposits represent the largest source of commercial bank income—usually more than 80 percent. The three main kinds of such accounts are demand, savings, and time deposits. A commercial bank is a corporation, and its owners are the stockholders. From the bank’s profits the stockholders are paid annual dividends. Only a small proportion of a bank’s income—just over 5 percent— comes from equity capital invested in the bank.