Because of the great number of checks certified by them and the possibility and risk of not returning the check, after it has been certified, to the rightful owner, large banks have installed an identification receipt system which makes it quite impossible for anyone but the proper party to obtain the check. When the check is handed in at the window a receipt is given with a number, and a corresponding number is stamped on the face of the check. Then to obtain the check the receipt must be filled in, and in this way signatures and numbers may be proved. The numbers also help in tracing lost checks.
It is unsafe to certify items before receipt of the morning mail, for the mail may include stop-payment orders on the very items which were certified before that hour. Nor is it safe to certify after banking hours unless the certifying bank is protected by a written request by the makers on the back of the check.
Precautions in Certifying Checks Before a check is certified, care must be taken to see that the signature is genuine and the date correct, that the amount of the check expressed in figures agrees with the body of the check, that no stop-payment order has been received, and that an amount sufficient to meet the face of the check appears on the ledger. This same care must be exercised in regard to certification of notes and time acceptances. For the proof of signatures the certification department may have a set of signature cards of its own or may refer to those filed with the paying teller or signature department.
The bank receives from certain of its correspondents letters asking it to protect their notes at maturity. These letters should be distributed first to the bookkeepers handling the respective accounts. If the bookkeeper finds sufficient funds on his ledger, he notes the full balance on the correspondent's letter and initials it. The letters then pass to the certification department, where they are used for reference and information. Should the book keeper not find sufficient balance to meet the amount of the re quest, he should wait until he receives his morning mail credits from the mail department and then proceed in the manner de scribed above. If, however, he receives no credit and is unable to obtain any from another department, he should request advice of the proper officer of the bank.
The mail may also bring stop-payment orders. Signatures on these orders are passed upon by the signature department. A
record of these orders is taken by the paying teller's department and the certification department, and then they are sent to the respective bookkeepers, who make a detailed record of the entire order. It is only very recent stop-payment orders that give the certification department anxiety, for old stop-payments will have become familiar, and besides the certification department would never certify a check more than two or three days old without referring it to the bookkeepers. These several guards against pay ing or certifying checks for which stop-payment orders have been received make the payment or certification of such checks very improbable.
A handy method for watching balances is to employ form slips showing the balance amounts of brokers' accounts and other large active accounts for which certification requests are likely. Referring to his ledger each bookkeeper puts the correct balance, after the proper name, on the slip. The entry clerks in the certi fication department enter from these slips the respective amounts on certification sheets, which are after the same form as the slips. These sheets give the department ready information as to the respective balances of the various depositors at the beginning of the day's business.
Day Loans and Overcertification It was the former practice of Wall Street banks to permit brokers to overdraw their accounts; the banks would certify these overdrafts, the understanding being that the broker would, before the close of business that day, place the bank with sufficient funds to cover the overcertification. It was a means of extending an unsecured loan to the broker. Congress attempted to correct what seemed an ill-advised practice, declaring it a misdemeanor to overcertify or to evade the prohibition of overcertification by accepting fictitious obligations or other devices. 2 In place of over certification there was then devised a system of one-day loans, whereby brokers request the bank to make them loans for use in their day's business. With some banks these loans are unsecured, but conservative banks insist upon the deposit of securities for collateral, as well as the giving of a very sweeping collateral note. Under the day-loan plan the brokers agree to cover the loan by check at the end of the business clay and are charged no interest.