Letters arc also received requesting the bank to make pay ments and wire transfers and also to make payments on the bank's own books. These letters are sent to the signature department for verification of signature and to the bookkeepers to have the amount held against the account. If everything is in order, the instructions arc carried out.
If the bank is requested to make payment outside its mes senger district but still within the city, the department com municates, if possible, with the payee by telephone, otherwise by mail, and requests him to call at the bank with papers establish ing his identity and receive payment. When the payee appears at the window, caution is exercised to make sure that he is the proper person and that the payment is in order; he is questioned as to the amount he expected and the city or bank from which the instructions were to come, and he establishes his identity by lodge cards, railroad tickets, letters addressed to him, passports, monogram on jewelry, etc.
The bank is requested frequently to transfer money by telegraph. Such transfers arc made through the bank's cor respondent in the city where payment is to be made. The corre spondent's account with the bank is credited. If the bank has no correspondent at the desired place of payment, a bank is selected in that place by means of the "Bankers' Directory" and the transfer is then made through its New York correspondent. All charges arc prepaid unless the department is otherwise in structed, the money being obtained from the paying teller and reimbursement had by a ticket charging the account that ordered the transfer.
Telegrams are also received from country banks having no New York correspondent, requesting the bank to make payments for them. Such wires usually state that they are remitting to the bank by mail funds to cover. Every request of this sort is referred to the officer in charge of the area in which the request ing bank is located; if the bank would make a desirable corre spondent, the officer will most likely have the payment made, as this service is an avenue of approach and may lead to the opening of an account. Such payments are usually of small amounts.
Cashier's Checks and Exchange Drafts The authority to draw cashier's checks is conferred upon cer tain officers and departments, but for systematic control and expedition their issue is largely concentrated in a specialized clerk or department. They are issued to customers desiring
them, to other departments of the bank not authorized to issue them, and to employees of the bank.
At times a person who has no account with a bank requests a check or draft on one of the bank's correspondents. The bank avoids selling exchange whenever possible, and unless the appli cant has had some dealings with the bank or has an account with one of its correspondents or is a person of some importance, his application will be turned down. Banks in the large reserve cities have been reluctant to sell exchange on their correspondents because: T. It might greatly embarrass a small interior bank to pay the draft when presented.
2. The reserve city banks carry as few funds as possible with their interior correspondents, and hence any drafts drawn would have to be paid from the correspondents' own funds.
3. Exchange is not always favorable. The reverse reasons help to explain the interior bank's readiness to sell exchange on the reserve bank.
Formerly a charge was usually made for such service, but now the draft is usually drawn on the federal reserve bank of the dis trict in which payment is to be made, and since the federal reserve bank does not charge for the service, no charge is made to the applicant and no profit is made. If charges are made for drawing a draft, they arc fixed by an officer, and he takes into considera tion the conditions in the drawee city, the size of the applicant's account, who the applicant is, and the amount desired.
In case a draft is drawn on a correspondent, an advice offi cially signed is always sent to the drawee stating that a draft No. in favor of for $ has been drawn, and re questing the drawee to honor it and return it on date of payment.
Commercial Paper of Correspondents Another phase of relationship between reserve city banks and their interior correspondents is that the reserve bank buys and receives commercial paper for account of the correspondent. This sort of service is now also done by the federal reserve banks for their member banks. The actual purchase is usually con ferred upon the credit department because of its familiarity with commercial paper names. But the receipt, payment, and despatch of this paper is allocated upon another specialized clerk or department.