All letters giving information are written on non-liability paper, on which is printed some such statement as the following: All persons are informed that any statement on the part of this bank or any of its officers, as to the responsibility or standing of any person, firm, or corporation, or as to the value of any security, is a mere written opinion, and given as such, and solely as a matter of courtesy, and for which no responsibility, in any way, is to attach to this bank or any of its officers.
Since these letters are important, however, as being the pro nouncement of a big bank upon the credit of a party, great care is taken as to their contents and despatch. In answering credit inquiries by telephone greater caution is necessary than in answer ing those by mail.
The bank seeks to establish and maintain friendly relations with other banks in its city and to have a relatively free inter change of credit information. All day long investigators from other banks and commercial houses call to make inquiry, gen erally about customers, but sometimes on commercial paper names.
Credit Files To make the credit data really serviceable a correct and in telligent filing system is very important. A common division of a bank's credit files is into: i. Customers, embracing: (a) Banks—correspondents and non-correspondents (b) Individuals (c) Commercial paper names (d) Foreign exchange names 2. Miscellaneous—persons and firms with whom the bank has no dealing The number of credit information folders of a large bank reaches into the thousands.
The filing system of a certain bank is as follows: The filing cases are steel and the vertical system is used. The credit infor mation is filed in a special folder, which for convenience is divided into sections: T. The front sheet, on which are entered the name, address, how introduced, line of accommodation granted, broker handling the paper, names of indorsers, if any, and other bank accounts.
2. Discount tickets, in which section all offering tickets are filed.
3. Information, in which are filed the results of the credit investigations. In order to conserve space and obtain uniformity and compactness all information received from any source is extracted and placed in this section, the source being indicated by a color scheme; newspaper clippings, letters direct from the concern giving infor mation relative to the business, and officers' memor anda, are properly filed away here, all according to date.
4. Statements, which include the recapitulation sheet, the comparative statement form, and the original state ment, if received direct or through a broker.
5. Inquiries, which embrace all copies of letters in reply to inquiries concerning the subject, or, in the case of the more active names, a memorandum sheet giving the date of inquiry, from whom, date of reply, and form of letter written.
6. Agencies, being a file of the agency reports, one from each mercantile agency.
7. Correspondence, covering all correspondence direct with the bank except that containing information as above specified.
All of the folders are equipped with tabs, on which are entered the names and addresses of the parties concerned, which, when in the files, constitute an alphabetical index. A slightly different folder is used for names other than those of customers.
Certain auxiliary files are also kept: one for answered letters of inquiry, one for letters of acknowledgment and letters from which information has been extracted, one for letters of introduc tion, one for envelopes in which financial statements are received direct from the subject concern, and one for old information.
The files are rendered still more useful by separate card in dexes. An index, by states and cities, of all borrowing accounts, and foreign exchange and commercial paper names, is handy in making up a list of names in which the bank is interested in any particular state or city. Useful also is an index of all the commer cial paper names which the bank buys; this is a record of the amount of paper bought, date of purchase, date of maturity, date of last investigation, and date of latest statement received.
It is very important to keep strictly up to date the records: i. Of borrowing customers.
2. Of houses whose commercial paper the bank buys through note-brokers or otherwise.
3. Of concerns with which the bank has foreign exchange dealings, either direct or through open-market pur chases.
All information on such parties is revised once a year, or more often, as the case may require. Non-borrowing accounts, except such as sell their paper on the open market, need not be followed as closely as borrowing accounts. The foreign exchange names are investigated very closely; if need be, a special representative may be sent to make direct personal inquiries in, say, the cotton belt at certain seasons if the bank is buying cotton bills freely. Commercial paper names are investigated periodically, after re ceipt of their new financial statement, and sometimes more frequently; and names which do not make statements are com monly investigated two or three times a year.