Routine of Department's Work It is the business of the discount department to prepare the offerings in such form and detail as will expedite the examination and decision of the directors. For each offering received for discount an offering ticket must be filled in and sent to the proper officer. These tickets show the amount applied for and the time the loan is to run, with indorsers, guarantors, or collateral, if any; the amount already under discount, with maturities and rates; the highest amount under discount at any time during the preceding year; similar information from the loan department; the amount with the foreign division; the average balance for the preceding six months; the average balance for the correspond ing months of the year previous; and the actual balance on the day in question. They also show when and for how long the applicant was last out of debt to the bank, what officers have authority to negotiate loans, whether interest is paid on daily balances, and, in the case of banks, the capital and surplus.
The offerings arc then passed upon by the officers. If an offering is approved, the rate is marked on the ticket and the ticket is initialed by, say, three officers. Later in the day the broker delivers the paper, accompanied by his bill, which is similar in form to the discount statements mentioned above. The bill is checked, and if found correct a cashier's check for the amount of the proceeds is issued to the order of the broker making the sale.
At the close of business each day all offering tickets and brokers' slips are checked by the discount clerk against the paper received, to be certain that they correspond in every respect. He then initials the tickets and slips and forwards them to the credit department, where they are filed as a part of the permanent records.
Each morning the discount clerk sends to the cashier a de tailed statement of the preceding day's accepted discounts. This shows the name, business, and location of the borrower, with the amount, rate, and maturity of the offering, the total amount under discount for each customer, the total of the day's business, and the amount of discount collected. Such statement gives the cashier a synthetic knowledge of the discount operations of the bank from day to day.
The discount clerk also sends to the regular directors' meeting a statement of the discounts since the last meeting, showing name, location, and business of each borrower, the amount borrowed, and the total amount under discount; and in the case of purchased paper the commercial rating of the maker is given.
He certifies over his signature to the completeness and accuracy of this statement.
The discounts, returned from the directors' meeting, are checked off in the tickler and filed away in the order of their maturities, those payable in the home city in one box and those payable out of town in another. The latter are forwarded for collection about ten days before maturity, by the country collec tion clerk, who makes the proper credit to Bills Discounted on the day the notes are due. Paper payable at the bank itself is tendered each morning to the bookkeepers, who hold the proper amount against each note and initial the notes. Some firms send checks in payment of their maturing paper; in such case the obligations are canceled and returned to them at once. For the most part, however, the notes themselves are used as vouchers, are charged against the several accounts, and are returned at the end of the month in the ordinary course of business.
Advances and Rediscounts with the Federal Reserve Bank The function of preparing: (I) discounts for rediscount with the federal reserve bank, and (2) discounts or other collateral for pledge with the federal reserve bank for advances, is lodged with the discount department.
All such paper must be indorsed in blank by an officer of the member bank whose signature and authority to indorse have been filed with the federal reserve bank. The items are listed on application forms prescribed by the reserve bank. On it the member bank officer certifies that to the best of his knowledge and belief the original loans which are evidenced by the notes or acceptances listed below were made for agricultural, industrial, or commercial purposes, and are eligible for rediscount with the federal reserve bank, under regulation of the Federal Reserve Board. The application form requires the following description of each item: the maker's name, address, and business; the indors ers; the amount; maturity date; whether it was discounted for a depositor or purchased; and the date of the last statement of the borrower on file on items of $5,000 or over. The application form for member state banks and trust companies contains an addi tional declaration that the discounts applied for conform and will conform to the provisions of the Federal Reserve Act, for bidding discounts for state banks and trust companies of notes, drafts, or bills of exchange of any one borrower liable for bor rowed money in excess of io per cent of the bank's capital and surplus.