Modern banking and bank accounting: containing a Complete Exposition of the most approved methods of bank accounting

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•' . ' I H L ' • ^ i c ' ^ t>'- iL ■

M o d e r n b a n k i n g a n d b a n k A c c o u n t i n g :

C o n t a i n i n g a C o m p l e t e Ex p o s i t i o n o f

THE MOST a p p r o v e d METHODS OF BANK

ACCOUNTING; DESIGNED AS A TEXT BOOK ...

E V I R G I L N E A L

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Modern Banking and Bank Accounting

CO N TA IN IN G A C O U P L Z T C EXPO SITIO N OF T H E

MOST APPROVED M ETHO DS OF BANK ACCOUNTING

DESIGNED AS A T E X T BOOK FOR

SCHOOLS AND P R IV A T E STU D E N T S

I A N D A

H A N D B O O K O F R E F E R E N C E F O R B A N K E R S

BY

E . Y I R G I L N E A L , A . M., L L D.

SCRIPT ILLUSTKATIONS BY

E . c . M 1 L L 8

or TNC

U N i v t R s i r y

W ILLIAM S & ROGERS

FU H LISH SIS

NEW YORK ROCHESTER CHICAGO

í ' •

00rTU0H*.''Vn,

WlUJAM * B oouu.

I . » . A V D U W l, P R tH T U AMD aOOKBIHDUt.

C O N T E N T S .

Intn «tory .

Tb« buaipeM, orgksiikUoD u id pncU ed mto-

«fement of bvik«............................................ 5

Natlogd baak*........................................................ 6

Orj^anixaUoD of t Dfttk>n4l b u k ......................... 7

Bute b«ok>.............................................................. 10

FMt»U b tfk i ftod b « a k e n ................................... 11

BftviDgi baoki.......................................................... 11

Loan ft&d trust o o m p u tr* ..................................... IS

O fllcen..................................................................... 1*

Block books ftod recordi........................................ 18

Check iheet meibod of baak eccouniiog............ 90

F * A H X I .

Depertm eaU............................................................ 80

Tellei*' departm ent. ............................................. 80

ReodTing teller........................................................ «1

Receivlof teller work for the etudeat................. 80

Paying Id le r............................................................ 84

Paying teller work for the etudeat..................... 43

Dtecoant clerk.......................................................... M

DlecoQat clerk work for the itudeat.................... 47

Collection c le rk ...................................................... 70

CoHectloo clerk work tor the etudenl. .............. 86

Note teller................................................................ 87

Mote teller work for the atadent........................... W

UaD department...................................................... 108

Kail department work for the aludciti................ 114

ladlTklnal ledger bookkeeper............................... 187

Individual ledger bookkeeper work for the etu￾d e n t................................................................... 188

Qenerml bookkeeper................................................ 187

General bookkeeper work for the »(udent..........148

P A . R T I I .

W ork for the etudeat, June 8»............................. 16S

Receiving teller...................................................... IM

Paying teUer............................................................ 168

Dl^joaatclerk.......................................................... 1«4

CoUection clerk........................................................ IM

PÁoa.

Mafl clerk.................................................................. 178

Individual bookkeeper.......................... i ......................... 176

Work for the etodont. June 80............................. 178

Recelviax teller........................................................ 1T8

Paying u U er............................................................ 178

Dlecouat clerk.......................................................... 180

CollectloB c le r k ...................................................... 180

Note teller................................................................ 181

Mail clerk.................................................................. 188

Individual bookkeeper........................................... 188

General bookkMper.............................................. 188

BA.NKINO c u a x o M a .

Clearing h o u se.................... .......... ......... 184

Draft witli bill of lading atucbed....................... 198

Reaeoae for noa-accepiaoce of draft...................188

Forelga exchange.................................................... 194

Letter« of advice...................................................... 194

Poeted or nominal rate s......................................... 196

Buying and selling exchange............................... 195

Drawing drafts through foreign exchange bank￾ers ...................................................................... 196

Lottere of cre d it........................ ............................ 198

Telegraph.................................................................. 197

Method of writing up bank b o o k ........................ 188

Cancelling checks....................................................SOD

Revenue Stampe.............. ................................ .. 208

Stopping paym ent.................................................. 808

Croeeed checks........................................................ 804

The cheque b a n k .................................................... 806

Another method of handling collections............800

Butement for purpoee of securing credit............809

Traveler*» cheque.................................................... 810

Teller's differeaces.................................................. 810

Lawful money reeerve of national banka.......... 811

Approved reeerre agenU........................................ 811

D epoeiu.................................................................... 811

DeductSons................................................................818

Lawful money.......................................................... 818

Redemption fund.................................................... 818

Computation of reeerve.........................................818

INTRODUCTORY.

All p r0gr«anT0 bankf now prove their aocounta by some method aimilar to the following:

** The ite m of »11 kinds, before being removed from the teller’i dctk, are entered in proper

oolumne upon booki or ghecte» luid th e totftli of tbeie colnroni (which ihow separately the

total checks received for the clearing hoasc, the checks on w i of town banks, the checks of

depositors, etc., etc.), m ost agree with the totals os shown b ; tlie various departm ents to

which the items have been distribnted.”—Banker^» M(iga*in9, /««•«, 1899.

I t seems to be the oooseusus of opinion of the leading bank cashiers and aocouutaots

that th e above embodies th e true principle upon which nil bank aocouilts should be kept.

I t n o t only affords the most satisfactory proof of the varions accounts th a t has ever been

devised, but, all things considerod, it am ounts to a great saving in time. Numerous bauks

have informed us th a t under the old system their clerks were never able to leave before six

o’clock, and often not before eight or nine, while now th e work is practically all completed

by fonr o’clock, and the clerks are gone by half past four or five, it never being necessary

for them to spend long weary hours searching for errors as by the old process.

We believe this book contains the most exbaostive, and at the same time, the most concise

presentation of w hat ipfty properly be termed th e new bank accounting th at has yet been

given. The detailed aooount of the organisation, practical management, and m ethods of

banks is such as we have ascertained to be th e most approved practice, and while m uch of

the m atter given is not usually found in works of this character, we have presented it feeling

th a t there is a demand for more accurate and concise inform ation in regard to the detail

work of banking institution«.

o f TBt

U N I V ^ S I T ”

MODERN BANKING AND BANK ACCOUNTING.

TH E BU SINESS, ORGANIZATION AND PRACTICAL MANAGEMENT O F BANKS.

W h ftt Í8 a Bank! A bank* ii an in ititu tio n organised for the parpóse of receiTing

deposits of money, making loans, discoDoting paper, m aking collections, and effecting the

transmission of money from one place to another. A bank is prim arily a place for the safe

keeping of money. A banker is a dealer in money.

S o u rc e s o f R e c e ip ts. T he disposable means of a bank consist of capital paid in by

the shareholders; notes it can circulate, if it be a national bank; money deposited with it

by its castom en; money collected for customers and banks (which is freqaently held a short

tim e before being pnid); money reoeired in the coarse of transmission (sale of exchange)

which, of coarsc, m ast be repaid in another placo; and bills redisconnted.

S o u rc e s o f B ls b o r s e m e o ts . A bank's disbursemenU consist of checks, drafts, etc.,

cashed by the paying teller; bills discounted; tim e and demand loans made; money paid out

for cu rren t expenses; shipm ents of money to other banks in settlem ents of balances; and

interest paid on time deposits.

P ro fits . T h e profits of a bank arise mainly from discount, interest, dividends on stocks

and bonds held, and collection and exchange.

S e rv ic e s R e n d e re d D e p o s ito rs . T he principal servioes which a bank renders to its

depositors are: Affording a s«ifo and convenient place in which to keep money; paying

checks as directed by the depositors; collccting checks, notes, drafts, etc.; disconnting notes

for and making loans to the depositors; and providing means for the transmission of money.

K in d s o f B a n k s . Banks are divided into th e following classes: national, state, and

private. Banks which issue notes which circulate as money (as national banks) are often

term ed banks of issae, while thoae which do a disoount business, b u t do not iu a e bank notes,

are known as banks’of discount

NATIONAL BANKS.

W h a t is a N a tio n a l B an k T A national bank is á bank organized under an act passed

by Congress, entitled **The N ational Bank A ct” ; and in addition to doing a general banking

bnsiness, it has authority to issue circalating notes against bonds deposited w ith the T7. S.

Treasarer. The governm ent does not own nor conduct the bank, b n to n ly authorises its

creation and proscribes tite mode of doing business. Every banking association doing busi￾ness under this ac t is governed by th e same principles, is subject to th e same inspection,

uses the same forms in m aking reports to th e com ptroller a t W ashington, and is liable to

the same penalties for the violation of any requirem ent of the national banking law.

C o m p tro lle r. National banks are under the direct snpervision of the Comptroller of

th e Currency, W ashington, D. 0 . The com ptroller is appointed by th e President on the

recommendation of the Secretary of the Treasury, by and witli the advice and consent of the

Senate. H e bolds his offico for a term of five years, and receives a salary of $5,000 per year.

* A aj iDsUtutl«» that rcceirca depoaits subject to cbeck, aad loaoa money on aecurUj, U dolag • baokiof

Hu is re<|uired to give bond fur |100»000. He caunot be intereatcd in a n j national bank»

and muBt make a repK>rt to Gungress oncc a year. He ap]x>inta all bank examiners and

receivera for iosolveot national banks.

N a tio n a l B an k E x a m in e rs . These officials are appointed by the com ptroller to

examine th e affaira and report upon tlie condition of national banks. They are paid a

certain am ount for each bank examined. U nder the law there is no lim it tb th e number of

examiners who may be appointed or the number of time« a bank may be examined, both

being left to the judgm ent and discretion of the com ptroller. All national banks, howerer»

are asnally examined at least as frequently os once a year.

P o w e rs . National banks hare power to adopt and use a corporate seal; to bave succès*

sion to r a period of twenty years; to make contract«, to sne and be sued; to elcet directors,

and by its board of directors to elect officers, to make all needful by-laws not inconsistent

with the national bank act, to discount and n ^ t i a t e notes, drafts, bills of exchange, etc.;

to receive deposits, buy and sell exchange, coin and bullion, to loan money on personal

security, and to iMue and circulate its own notes.

An act of July 18, 1883, pioWdM that • natioDtl buik may, aoy time within two y ean preriotii to

the dale of the tenninttioB of iu eziateoce, extend Its period of aucceaalon for oot more than twenty year«,

by the approTol of the comptroller.

The word« “ penooal aecarity '* are used la cootndlaünctioo to real eetate eecurUy, and do not mean

that national bank« are limited to loaning money on the aecurity afforded by iadorser« or penonal aureti««.

On the contrary, national banka have a perfect right to loan money oa atocka aod booda, bUla of lading,

warehouae receipU, choaea in aetloo. or other peraona) chattel«. In the abaence of collateral, banka uaoally

eodeaTor to get at leaai two name« to all paper which they dlecount or upon which they make lo au , but

«u€^ 1« not obligatory nader the statute.

S to e k h o ld e rs ’ L ia b ility . The stockholders of erery national banking association are

held individually responsible for all debt« and engagements of said banking association to

the extent of the par value of their stock in addition to th e am ount inTested in such stock.

In other words, if a stockholder owns 12000 in capital stock of a national bank, and such bank

ihonld fail, he may be called upon by the com ptroller to pay in to th e bank 12000 in cash in

addition to the loss of his stock, if such be necessary for th e adjustm ent of the bank’s liabilities.

R ea l E s ta te . N ational banks are prohibited from holding real estate except under the

following conditions:

The building in which it docs btisiness, and land mortgaged to secure a loan which was

made in good faith upon personal security, b u t such land caunot he held for a longer period

than five years. Banks cannot make loans on their own stock except to prevent losses on

loans previously made.

. R e s e rv e . National banks are required to keep on hand a t all timea a lawful money reserve.

This reserve shall equal 26% of th e deposits if the bank is located in a large city, and 15^ of the

deposits if located in a small city.

O T e re e rtify in g C h eek s. National banks are prohibited under severe penalty from

certifying a check in excess of the depositor's account.

S n r p lo s . Each national bank shall aocnmulato a surplus by setting ap art one-tenth of ite

net profltj before declaring any dividend, until th e surplus equals 20^ of th e capital stock. I t

is further provided th at no dividend shall bo deqlarod in excess of the net profits, after deduct￾log the surplus. I t is unlawful to payout the capital or surplus in dividends, w ithout the sur￾plus is in excess of the required 20^, in which case it may ho disposed of as the bank sees fit.

6 M O D ERN B A N K IN G ANT« BA N K A CCO U N TIN G .

M O D E R N B A N K IN G A N D B A N K A CCO U N TIN G .

R e p o rts to C o m p tr o lle r . HAuks m ust make a t least five reports to the comptroDor

during the year. These reports are made at sach times as the com ptroller m aj call for them.

o r g a n i z a t i o n OF A NATIONAL BANK.

S u cc B ssiv B St e p s N scB seiR Y .

X a m b e r o f P e r s o n s N e c e s s a ry . An association for carrjing on the basiaess of

national banking m a j be organised by any nnm ber of persons, not less than five.

C a p ita l B e q a ir e d . T he national banking law provides th at national banks in cities

of 50,000 persons, or under, m ust h are a capital of not less than 1100,000. If the population

of the city exceeds 50,000 persons no national bank can be organised with a capital of less

than 1200,000. In t^wns of 6,000 inhabitants and ander, national banks may be organised

w ith a capital of $50,000, and in towns of 3000 inhabitants and under national banks may be

organised with a capital of 125,000, w ith the approval of the Secretary of the Treasury.

S e le c tin g a N am e . Any nam e may bo selected which does not conflict with some name

already in ase in th a t particular city. If there are other national banks in the city, but no

F irst N ational bank, th e nam e F irs t N ational cannot be used. No bank or banking associ￾ation except a national bank has a rig h t to the use of the word nationaL”

S e e o rin g S al> seriptioD S to t h e C a p ita l S to c k . This is usually done by a oommittee

appointed to attend to the m atter. I t is generally considered wise to distribute the stock,

so far as can oonvoniently be done, am ong the v a r i^ interests of the city and surrounding

country. For th e purpose of secaring sabsoriptions a blank sim ilar in form to the following

is employed.

St o c k SuascBimoif liisi.

fe, the underalgned, do hereby aubaorlbe for the nuaber of ahsires

of etook set oppoaite our reapeotive oaBee, for the organisation of a

national baaklns aaaoolation, to be orsaaiaed under the \awa of the

United States with a oapltal of One Hundred Thouaand Dollars, divided

Into On# Thousand Shares, the par value of eaoh ahare being Coe Hundred

Dollars: said national banking assoolatlon to be looated In the olty

of Chester, State of PennsyXvsmla, and to be oalled the "Traders

national Bank.*

Bm. u a . Acnsn. . u » .

f x t T f U W v S c T

U

/

✓

N o tice to t h e C o n p tr o l le r . WhcD the promoters beTe selected * neme for the beolc

the comptroUer should be notified end his approrel of the title obtained. The notice should

be signed b j e t leest five subscribers to the stoclc, end reed ai follows:

Ctaeeter, Pe., June 1, 1901.

To the Coiiptroller of Curreaoy*

fMhingtoD. 0* C*

Dear Slri— lotloe le hereby glveo that ve, the underelsaed»

being natural pereone of lawful age. intend, vith othere, to organlae

a national banking aeeooiation under the title of *Tradera lational

Bank of Cheater,* to be looated at Cheeter, County of Delavare» State

of fenneylvania, vith a oapital cf One Hundred Thousand Dollars*

In order that ve nay effeot suoh organisation ve request that

blank forsa be sent to J* C. fillUBs, at Chester» Pa., and if the title

selected shall be approved, that It be reserved for us for the period

of sixty day

8 M O D ERN B A N K IN G A N D R A N K A CCO U N TIN G .

RAH!* RXSIDXHCS*

?>'V

Good F a it h . A statem ent should be mode on the opposite side of the form above given

as to tho business of each of the ai>pUcants, and bis Bnancial strength. Also a statem ent

should bo made by some responsible person acquainted with tho promoters th at the informa￾tion is, in itis opinion, corn*ct, and th a t tho persons are actini? in good faith. W hen conven￾ient it is well for tho application to be intloreed by the member of Congress from th a t d istrict

Natural Persons. The cor|>orator8 m ust be ofttura) persons, th a t is, human beings.

CorporalioDS unU joint stock coin|>ADles cannot become organizers of natioDal banks. P art￾nerships are also cxclnded under the term s of the statute. If a firm desires to take stock

this should be done through one of tho partners until after tlie corporation is formed, when

the stock m a j be transferred to the firm name.

Articles of Association. Persons desiring to organize a oatioDal bank shall enter

into articles of association which specifj in general term s tho object for which the asso￾ciation is formed. I t may contain any provisions not inconsistent with the law. Tho

articles shall be signed by five or more of the persons desiring to form the association, and

a copy of them m ust be forwarded to the com ptroller to be kept on file in his office, while

Another copy should be reU ined by the bank.

Forms. T he forms of articles of association, organization certiflcate, etc., are fam ished

by the com ptroller, and us it is advisable to use these forms, it has not been deemed necessary

to show them in this work. U nJer tho several titles we have given a brief explanation of

th e information which m ust be given.

Organisation Certificate. The national bank act provides th at persons desiring to

organize a national Imnk shall make an organization certificato which shall speoifically state

(a.) the name of tho association (which shall be subject to the approval of the comptroller),

(¿.) thu location, th at is, tho place where its operations of discount and deposit are to be

carried on, (e.) the am ount of capital stock and the num ber of shares into which it is

divided, ((/.) the name« and residences of tho shareholders, and the num ber of shares held

by each of them , and (s.) a statem ent of the fact th a t th e certificate is made to enable such

persons to avail themsoWcs of the advantages of the national bank act.

Signed and Acknowledged. The persons who signed the articles of association m nst

sign the organization certificat4^ and only such persons. Each person signing the certiQcate

is rcqoired to acknowledge his signature thereto before a notary public or a jndge of some

co n rto f record. As soon as acknowledged, the certificate shoold be filed with the comptroller.

Electing B irectors. A fter filing the A r tic le s of association and the organization cer￾tificate, the next step is the election of directors, which is done by a meeting of stockholders

held for this purpose.

Numbers and (Qualifications of Directors. Tite national bank act requires th at

every national bank shall have at least five directors, and each director m nst own at least ten

shares of the stock. They m a st all be citizens of the U nited States, and at least three-fourths

of the diroctors m ost have resided in the stato or district in which the associatioQ is organized

for one year immediately preceding th eir election. Tho office of bank director is a very

rcsponsiUe position, and no man should accept it if his outside duties are such th a t he will

be unablo to give the necessary attention to tho requirements of the position. Every director

m ust U ke an oath th a t be is qualified to fill the office, and th a t ho will faithfully perform

the doties thereof. (Dlank forms are furuished by the com ptroller.)

The président of the bank mnst send the oath of the directors to the com ptroller of

the currency.

Electing Officers. T he directors should elect a president, vice-president, and cashier.

The cashier usually appoints the teller« and employs th e clerks and other assistants.

Paym ent of Capital Stock. A t leust 50)t of the capital stock of every national bank

m ast bo paid in beforu it will be authorized to commence business. The rem ainder of the

M O D ER N B A N K IN G A N D B A N K A C C O U N TIN G . «

•tock shall be paid in insUllments of A t least 10^ coch, as frequently os one installm ent at

th e end of each succeeding m onth from th e time it shall be organixed by th e com ptroller of

the carrency to commence busiooaa. The jiaymcnt of coch installm ent m nst be certified to

by the president or cashicr at the end of the m onth, and such forwarded to the comptroller.

E ith er the president or the cashier may be directed to attend to the collecting of the first

paym ent of 50%. I t is usnally cnstomory to collect the am ount and deposit it in some bank

a n til tbe association is ready to begin business.

C e rtific a te o f O fficers an d B lr e c to r s . When 60% of the capital stock has been duly

paid, a certificate should be made to the com ptroller stating th e am ount paid in as perm anent

capital, the name and place of residence of each director and th e am ount of stock which he

owns in good faith, and th a t tbe bank has complied with all the conditions prescribed by the

national bonk act. This statem ent m ust be signed and sworn to by a majority of the

directors and by the president or cashier.

Deposit of United States Bonds. Every national banking association, before it can

be authorized to commence bnsiness, shall deliver to the treasurer of th e United States

U nited States registered bonds bearing interest, to an am ount not less than one-fourth of its

capital if the capital is $150,000 or less. If the capital is in excess of $150,000, $50,000 in

bonds m ost be delivered. Before tbe bonds are delivered they should be assigned to tbe

treasarer of tho United States. In making th e aaig n m en t great care should be taken to give

tho correct name of the bank. If the word " T h e ” is included in the corporate name, it

should never be omitted.

Coupon bonds may be ased, as the treasurer is authorised to receive them and issue

registered bonds for a like amoanL

Circulation. National banks are entitled to receive circulating notes to the am ount of

90^ of the par value of the bonds deposited with the U nited States treasurer, n n le u the bonds

are below par, in which case they are entitled to reoeive 90^ df their market value. National

banks holding thirty-year 2% gold bonds are perm itted to circulate notes to the fall face

-value o( th e bonds deposited with the U nited States treoonror up to am ount of their capital

stock. An order for these notes should bo sent to the comptroller. The bank pays for the

plates for engraving tho notes, b u t th e notes are priuted by tbe treasury departm ent and

forwarded to the bank. These notes m ust be signed by the president or Tice>president, and

th e cashier.

Tax on Circulation. A tax of 1% per annum on the average circulation is required to

be paid to the treasurer of the U nited States. The tax on the circalation of banks holding

thirty-year 2% bonds is per annum.

Comptroller’s Certificate. When all th e conditious of the national bank act haye

been complied w ith, the com ptroller of the currency issues a certificate authorising the asso￾ciation to begin business. The bank m ust publish the certificate for at least sixty days (a

weekly insertion is sufficient) in a newtpa]>er published in the city or the county in which

tho bank is looated.

STATE BANKS.

H ow O rg an ize d . State banks are organized under the laws of the state in which they

are located. The preliminary stops aro mnch th e same as those in organising national banks.

T he subscription list is taken, articles of association and a name arc adopted, and a board of

directors and officers elected. A copy of tho articles of association is filed with the bank

suporintciidcnt of the state when there is such an officcr, or with tbe com ptroller, and

another copy is filed in the office of the clerk of the coanty in which the bank is to be located.

1 0 M O D ER N B A N K IN G A N D B A N K A C CO U N TIN G .

Circalating Notes. PrcviouBlo J q I j 1 , 186C, aUto banks iasued notce whioh oiroolated

aa iDoDey, bnt on th a t dato th e governm ent impoaed a tax of 10^ on the circnlation of all

atate banka» whioh had the effect of withdrawing the ciroqlation aa the rate waa too high to

allow any profit to th e banka.

DifTereBce Between S tate and National Banka. National banka are organized

onder the national bank act which wua paaaed by tbe U nited Statea Congreaa, and aaid

banka are under the anperviaion of the general governm ent at W uhington. State banka are

organiied onder the lawa of th e varioiia atatea, and are aubjeot to the rBatrictiona impoaed

by the Btatutea of the aaid atatea. N ational banka alone iaaue circulating notea, and thia

latter feature forma tbe principal point of diffierenoe between the two kinda of banka.

Advantages. I t ia claimed t h a t Btate bankB poaaeaa aome advantagea o v e r national

banka, am ong w h ic h are th e following:

They are not examined ao critically; in some caaca they are not required to make returna

to atate officiala, and in no caae anch full returna aa are required by the national bank act;

they can certify cbecka in ezceaa of th e am ount which the depositor may have in the bank,

and are not required to hold U nited Statea bonds.

PRIVATE BANKS AND BANKERS.

P riv a te Banks. A private bank is organised and operated by an individual or a firm.

In opening auch a bank no form ality is required, nnleaa reatricted by atatute. There is no

reaponaibility to the governm ent, state or national. The safety of snch banks consists in

the financial reaponaibility of the individual or individuala who conduct them. The buai￾neaa conducted by them ia m uch the aame aa th at conducted by atate banka. They receive

depoaita on which they usually allow a small rate of interest. They buy and sell exchange,

commercial paper, etc.

P riv ate Bankers. Private bankera aro of two kindB; thoae who conduct a b u ain e as

the same aa private banka, and thoae who deal in foreign exchange. The latter buy com￾mercial b i l lf d r a w n A g a in a t grain a n d other produce ahipped to foreign coiuitriea, sell drafts

on foreign banks, and issu e letters of credit to travelers.

In N«w York all private baokf are «zafnined by tb« «tau baok «zamiaer, aod, with a few ezcep￾Uooa, m triotioo« are ImpoMd «imilar to tboae Impoavd apon «tat« banks.

Bankers and Brokers. Bankers and brokers usually bny and sell stocks and bonds

for their customers, and in addition to this carry on a general banking bnsiness, receiving

deposits, paying sight drafts, checka, etc. They often perm it their costomera to overdraw

th eir aooounta, aa they have for safe keeping the cuatomera* atocka and bonda, and auch

aecoritiea are ample protection for overdrafts to a certain am ount.

SAVINGS BANKS.

How O r g a n iie d . Savinga banka are organized under the atatutea of the different atatea

by a num ber of peraona, uaually more than ten, who make application in due form for the

privilege of organizing auch a bank. Theac aaaociatione are m utual. They have no capital

like a state, national, or private bank, but th eir capital consists of the money p u t into the

bank by th e depositors. £very one who puts in money is practically an owner, and the profits

are divided among tho depositors in proportion to the am ount th a t each has to bis credit.

M O D E R N B A N K IN G A N D B A N K A C C O U N TIN G . 1 1

P u r p o s e . A SHvingt bank it» as iU name implies, an iostitutioo for the purpoae of

encooraging cconomj and oaring for tlie safings of the people. Tho deposita are not subject

to check as in other banks, but tbe depositor is osuully required to give th irty days* notice

when he wishes to withdraw his fands, although in many banks this notice is waived at the

option of the bank.

iD T eetm entB . As safety is considered panunoont to profit, the law prescribes tbe ch ar'

acter of the investments of the B arings institutions. The inTostments whioh are usually

perm itted are loans on pledges of th e stocks and bonds, investments in stocks and bonds,

and m ortgage loans. TTsoally th e stocks and bonds in which savings banks may invest are

prescribed by tbe law. In some states they are allowed to invest in U nited States govern￾m ent bonds and bonds of their state only.

l o t e r e s t . Interest is usnally allowed depositors semi-annually on the first day of Ju ly

and the first day of Juiiuary of each year. T he current rate is at preaent wavering between

4% and 3%. If the interest is not w ithdrawn it will itself draw interest as a deposit.

D iffe re n c e B etw e ea S avingB B a n k s an d O th e r B an k s. T h e savings bank is

intended to serve its depositors only by safely keeping and investing their money for them.

State and national bauks do not undertake to invest the depositor’s money for him, b u t they

provide a safe place for the keeping of h it money, a convenient means of making payment

by check, make collections for him, discount his paper, etc. T hus it will be seen th a t the

state and national banks open their doors to business men, while the savings bank opens iU

doors to savers, to those who wish to lay by a small am ount of money each week or m onth,

as tbe case may be.

LOAN AND T R U S T COMPANIES.

H ow O r g a n iie d . Loan and tru st companies are organised by a nnmber of persons,

usually ten or more, undor the laws of tho various states.

K in d s o f B u sin e ss T r a n s a c te d . These companies usually receive deposits and make

loans» b n t they do not undertake th e collection of commercial paper. They act as agents

for corporations in transferring stocks and bonds, make investments, collect interest, act as

trustees» receivers» executors, adm inistrators, etc. Many companies have boxes in fire and

burglar proof safes which they rent to customers who desire a safe place for tho keeping of

valuable papers» etc.; others make u bnsiness of examining and insuring titles to real esUte.

This latter practice has grown quite extensively w ithin recent years.

OFFIC ERS.

T he o fficers and clerks of a bank are usnally a president» vice-president» cashier, receiving

teller» paying teller, note teller» general bookkeeper» individual bookkeeper, discount cl^rk»

collection clerk, messenger» and porter; together with the necessary assistunts in the various

departm ents.

T he duties of the officers vary slightly in different banks; neither do all banks have

exactly the same number of officers.

P r e s id e n t. Tbo president is tb e chief executive officcr of the bank, and presides at

the meetings of the board of directors and generally exercises the authority of the board

during its roccss. Some banks have a vice-president who assumes the fnnctions of tbe

1 3 M O D ER N B A N K IN G A N D BANK ACCO U N TIN G .