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Banker and

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BANKER AND CUSTOMER—The Business Relationship,—The whole system of modern trade is based upon credit; and the branch of trade more dependent than any other upon credit is that of banking. The first general ilipression is that a bank is the one modern institution standing upon a cash foundation as distinguished from one of credit ; consideration, however, will show that the money lent and dealt in so extensively by a modern bank is that of other people—its customers. Only a very small portion thereof belongs to the bank itself, for the main effort of every banking institution is to conduct the largest possible business upon the least possible capital. As a moneyed concern, a bank is merely the conduit pipe between the man who has capital available for investment and the other man who requires more money. A glance at some figures readily proves this. Thus, the ratio of paid-up capital to liabilities to the public was at the end of 1900, in the case of Lloyd's Bank, 5.54 per cent.; that of the Union Bank of London, 9.26 per cent.; Parr's Bank, per cent. ; the London and County, 4 41 per cent.; and the Capital and Counties, per cent. ! In early times banking was chiefly concerned in the issue of notes; in later times the deposit of money became an important item in the business. To-day, the business of a bank may be roughly classed as follows: (1) issuing notes; (2) receiving deposits at interest; (3) keeping current accounts for customers; (4) discounting bills of exchange; (5) advancing money to customers upon security ; (6) acting as agents for other banks. 'With the first and last classes of business we need not here deal ; the first is discussed under the headings of BANK NOTES and BANK-RETURN, the last is a subject which can have but little practical interest for the general reader. Our immediate subject, therefore, resolves itself into a consideration of the dealings between banker and customer with reference to an account between them.

To open a banking account an intending customer requires two things: money in his hand, and an introduction to the bank from some person known to it, vouching for his position and respectability. The money may be done without, if the customer has a security and wishes to open a debit account ; but an introduction or good references are required by every respectable bank in every case. If the intending customer is already, or has been previously, a customer at another bank, his pass-book with that bank should be produced. The customer having been accepted, the only thing remaining is to proceed with his business and open an account.

Deposit account.—It may be that the customer does not require a cur rent account, that is to say, one into which hew will periodically make pay ments, and from which he will draw by cheque as required, but desires to deposit his money with the bank at interest. After signifying his intention to that effect he will be required to write his signature in the signature-book, and after paying to the banker the money he will receive a receipt known as a deposit receipt. In London he should get interest at a rate 1i per cent. below bank rate; that is, if the bank rate is 5 per cent. he will obtain 3i.

But in provincial towns, where there is competition between the banks, a higher rate may be obtained ; a depositor should therefore try to get the highest rate he can—not less, in any event, than that allowed for the time being by the Post-Office Savings Bank. Upon receiving his deposit receipt the

customer should be careful to note that the date and the amount deposited, in figures and in writing, are both correctly stated ; if possible, he should get inserted therein the rate of interest to be allowed. Before the deposit has been made it should have been well understood what notice is required for withdrawal ; this will appear on the receipt, and is usually seven or fourteen days. But, when required, a bank is generally willing to repay the deposit without insisting upon the requisite notice. Should the deposit be by more than one person all the names will appear on the receipt, and the money will not be paid over except upon the signatures of them all ; it would, where desired, be convenient to have the receipt made out payable upon the signa ture of a certain one only. If the depositor dies, the money can be withdrawn by the executor or administrator upon production of the probate or letters of administration. Care should be taken, where money is on deposit, to present the receipt every six months in order to have the interest calculated and added to the principal. The bank will not allow such a calculation and addi tion if left to themselves, so that if the depositor wishes to gain the advantage between compound and simple interest he should be careful not to overlook this. The interest may be taken out without the principal. So any part of the prin cipal may be withdrawn. In the North of England many of the banks issue pass-books to depositors and allow them to withdraw by cheques. This is an advantage which every depositor should endeavour to obtain from his bank, as by this means the calculation of interest is made in the pass-book by the bank itself and placed to capital every six months. Depositors should never be too secretive with regard to a deposit, for if one should die and the receipt were overlooked or lost, and consequently no demand ever made for repayment, the bank would never think of communicating with the deceased's representatives; and thus another unclaimed deposit may be added to those which, at the end of six years, become in effect the bank's own property.

Credit acceunt.—Ilaving become a customer, the only thing necessary, upon signing the signature-book, is to pay money into the account, after which the account may be freely operated on by payments in and with drawals out by cheque. The law with regard to the appropriation of payments will be considered below, but it will be convenient to relegate all discussion about CHEQUES, from their practical as well as their legal aspect, to the article under that title. There are a few points to be considered. Either a separate receipt or the pass-book should be taken away after the opening of the account ; it may be that death may ensue, and as a conse quence another unclaimed balance may go into the bank's coffers. If the account is one in which there will be an average monthly credit balance of 1'100 or more, theecustomer should insist both upon the account being worked without charge and upon interest for that balance ; the usual charge for working an account is per cent. upon the withdrawals, no charge being made for clearing cheques; and the bank will also state a minimum balance the keeping of which will permit them to work the account without charge at all. Upon opening the accounts, executors, trustees, or partners should •