BY HUMPHREY ROBINSON Edited from a Legal Standpoint by W. Overton Harris, Former Judge of the Jefferson County (Kentucky) Circuit Court, Dean of the Louisville (Kentucky) Law School Designed for the promotion of closer and more satisfactory relations between the public and the banks; for the information of depositors generally, and of those just entering the banking business. BOSTON SMALL, MAYNARD & COMPANY PUBLISHERS Copyright, 1909, 1910 By Humphrey Robinson Entered at Stationers' Hall

After some years of work in a bank, it has been impressed daily upon the writer that, if the depositors were fully informed about the details of the conduct of banks, closer and more satisfactory relations would result. Hence this attempt to explain, in a simple and concise way, avoiding as much as possible the use of technical terms, certain things that every depositor should know. For ten years the writer was "in business." For an equal length of time he has been connected with a large city ba

The choice of a bank should be most carefully considered, especially by a business man. The same care should be exercised in selecting a bank as would be used in choosing your lawyer or your doctor. Having done this, make it a rule to be as frank and open and straightforward with your banker as with your lawyer or your doctor. You will never lose by it. All banking relations must be founded on mutual confidence. Once let your banker get the idea that you have deceived him, and naturally he is fo

In opening your account with a bank, you will be asked to give your signature and your address. Write your name naturally, as you are in the habit of signing it. The paying teller has to accustom himself to the peculiarities of the signature of every patron of the bank, and has to be constantly on the lookout for forgeries; for if he pays a forgery, the bank must stand the loss. He soon gets to know your signature as he knows your face. So don't have your signature on the bank's books as, John P

In making your deposit, always head your deposit ticket with your name exactly as you wrote it when leaving your signature with the Paying Teller, otherwise, it might be credited to some other person. Also, fill in the amount of your deposit as plainly, and as legibly as possible. After the receiving teller has checked off your deposit ticket, it is passed on to the individual bookkeeper who has charge of your account. He is only human, and any bad figures on your ticket may lead to mistakes and

There is no mystery about bank bookkeeping. It is about the simplest known. The total amount of your deposit is added to the balance you already have in the bank; then the total amount of your checks, that reach your bank that day, is deducted; the result is your balance. Right here it is well to emphasize that the great majority of the banks keep no record of the names of the parties from whom you receive checks which you deposit; nor do they keep any record of the names of the people to whom y

If, for any reason, you desire to stop payment on a check, communicate with the paying teller as quickly as possible. Give him a full description of the check, the name of the party to whom it is made payable, the number, the date, and the amount. Then always confirm this action in writing. If, after examination of your checks, the bank informs you that this particular one has not been paid, you can safely issue another, if desired. Inform your bank, however, that you are issuing a duplicate, an

When your deposit is handed in to the Receiving Teller, he assorts the checks you give him into "foreign" and "clearing" items. The "foreign" items, that is, checks or drafts on banks in other towns, are then passed on to the route clerk. He, in turn, assorts them so that they may be sent to the banks that will collect them for the least possible cost. For instance, if your bank is situated in the middle West, the checks you deposit on the far West will be sent to a Chicago or St. Louis bank. Ch

The Clearing House is simply a meeting room for the convenience of the different banks in a city; a place in which to swap checks. Small towns have none. Ordinarily no figuring is done here except addition and subtraction. Its operation is simple. Suppose you owe Brown $10.00, and you owe Jones $5.00. Then suppose Brown owes you $5.00, and owes Jones $4.00. Then suppose Jones owes you $3.00, and owes Brown $5.00. Now, instead of each of you going around to two other places, you three meet in a c

Your check is nothing but a piece of paper on which is written an order on your bank to pay some one a certain sum. Strangers might not like to accept this piece of paper in payment of debts due them. In many cases your check should be "certified." When a depositor presents a check to his bank to be certified, it should be handed to the Paying Teller. He, in turn, hands it to the individual bookkeeper having charge of that depositor's account. If the bookkeeper finds the balance sufficient to co

Protesting notes, drafts, checks, or other commercial paper is simply warning or giving notice to people, secondarily liable on that paper, that it has not been paid when due. The person who ought to pay the paper is primarily liable. All other persons who have endorsed the paper or drawn it on another person, firm or bank are secondarily liable. You have endorsed Brown's note. Brown does not pay it when due. If you do not receive a prompt notice of this, you might endorse another note for Brown

A bank has a perfect right to refuse to accept and to return any checks, notes, drafts, etc., sent it for collection. But if it does accept them, it must obey the instructions of the sender, literally and exactly. The bank has absolutely no right to disregard these instructions, no matter how obnoxious or disagreeable they may seem to the payer of the paper. Many people regard all collectors as offensive and unwelcome. They wish to take their own time about paying their debts. Please mark this d

As a preface to the remarks on this department, the following simple and concise statement is taken, by permission, from that excellent book, "Money and Banking," by Mr. Horace White. (Book II, Chapter I, page 235, Edition of 1895.) "FUNCTION OF A BANK" "A bank is a manufactory of credit and a machine of exchange. Mr. H. D. McLeod's analysis of the mechanism of banking is substantially this: A man has $5,000.00 of his own money. He starts a bank. His neighbors deposit $45,000.00 with him. This m

Practically every bank in the United States keeps part of its funds in banks in New York City, the money center of the country. All National Banks are allowed to keep part of their reserve in the National Banks of New York, Chicago and St. Louis, the three Central Reserve Cities. For these reasons checks drawn on banks in these three cities are generally accepted at par, that is, collected without cost to the depositor. In this connection, the word "exchange" comes from the fact that you exchang

Many people have the idea that a National Bank, having a capital of, say one hundred thousand dollars, can call on the United States Treasury Department for an equal amount of National Bank Notes, without expense to the bank; and thus have double the amount of its capital to lend at the start. The National Bank Act does say that each National Bank must issue currency equal to a certain per cent. of its capital; and further, that each National Bank can issue currency equal to the full amount of i

In every political campaign, especially the National ones, the orators talk a great deal about the "special privileges" of banks. But they are never defined exactly. According to them, one privilege (?) the bank enjoys is the power to lend a certain per cent. of its depositors' money. But if it could not do this, what reason would the bank have for existing? That is its principal real source of profit. Practically the only other privilege the National banks have, is the right to take out Nationa