The discount clerk takes charge of all the notes. Each day, the notes that due are turned over to the note teller. Borrowers come in to take up their notes, leaving cash or checks. At the close of each day, the note teller turns over to the discount clerk all the checks and cash received and hands back the unpaid notes. Notes which are not paid promptly are presented thru a notary public at the place of business of the maker or wherever they may be pay able. If not paid then, they are protested.
The note teller may be charged with the care of notes as well as with their collection. He proves at the close of each day. In addition to unpaid notes, he, or the discount clerk, as the case may be, will have on hand cash and checks on both local and out-of town banks. The cash is turned over to the paying teller. Checks go to the proper departments—clear ing house, collection or transit.
If the note teller honors notes made payable at the bank, payment may be made by cashier's check, clear ing house due bill or an acceptance payable thru the clearing house the next day. Custom in this respect varies with different parts of the country and with different banks.
13. Bank the bookkeeping of a bank is simple when compared with that of a manufacturing or mercantile concern, it is too com plicated to be described minutely here. All that can be done is to show the general nature of the account ing methods. The practice is essentially the same in all banks, altho the size of a bank and the nature of its business may necessitate some records of detail that are adapted only to that particular institution.
The purpose of the accounts is three-fold, namely: to provide a chronological record of all transactions that cause increase or decrease in values; to show the financial condition of the bank at a given time; and to reveal the profit or loss for a particular period.
Certain books are kept by all banks. Some of these are the corporate minute book and the books in which records of ownership and transfer of stock are shown. The main books of record are the journal, ledger and statement book. The journal contains the chronological record of transactions. The ledger shows the transactions taken from the journal and sorted into their various classes. All the accounts
come together in the statement book, which shows the condition of the bank. A statement of condition is made out at the end of each day for the purpose of proving whether all assets and liabilities have been accounted for correctly (except in the rare case of counter-balancing errors) and of giving the officers information to guide them in the conduct of the bank's affairs.
A bank, like any business concern, may carry its accounts into almost unlimited detail. There is a point beyond which the cost of getting additional de tail is greater than the value of the information se cured. Business houses sometimes carry cost ac counting to an absurd extreme. Banks seldom err in this respect. Few banks can tell how much profit is being made on the account of a particular depositor. The practice of requiring a minimum balance of de positors is growing, but most banks have no way of determining what is the minimum profitable balance. Such questions as this are investigated by some banks and ignored altogether by others.
14. Figuring required reserves.—A large volume would be necessary to explain the methods of figur ing the reserve required for various banking insti tutions by the Federal Reserve Act and by the laws of the states and territories. Under the Federal law, and many state laws, the requirement differs ac cording to the size of the city in which a bank is lo cated. Moreover, a distinction is made between trust companies, saving and ordinary banks. If it is not possible to get instructions from the department hav ing supervision, showing just how the reserve should be figured, the law itself should be studied and a chart prepared.
Below is given a reserve calculation for a national bank located in a central reserve city. The bank is required to carry a reserve of 18 per cent against de mand deposits. Of this amount %8 must be in the bank's own vaults, with the Federal Reserve bank of the district, and either with the reserve bank or in the bank's vaults. Against time deposits, a re serve of five per cent is required. In practice, the full eighteen per cent reserve is figured against of the time deposits. The result is the same, and an extra set of figures is eliminated.