Business Hints for Men and Women Part 9

CHAPTER VIII

AS TO BANKS

No instrument of trade has done so much or is more essential to the safe and progressive business of the world today than the bank.

Every department of business, in our modern civilization, must keep in touch with the bank.

Money is the blood of trade and the banking system is its heart.

The bank is as necessary to the thrifty farmer as it is to the greatest railroad or the most wide-spread trust.

Banks are depositories for money not in circulation.

Banks have facilities for the safe-guarding of money which the ordinary business man could not provide for himself.

Instead of running the risk of paying bills with money carried about on his person, the business man, and every man with ready money should follow his example, deposits his money in a convenient bank, for which he receives a proper voucher in the shape of a credit in a deposit book.

When he pays a bill, he draws a check for the amount, payable to the order of his creditor. This check, when endorsed by the receiver and paid by the bank, is in itself a receipt for the money.

NATIONAL BANKS

As I propose to say something about savings banks in another chapter, the present will be devoted to what are known as "banks of deposit."

Banks of deposit are either National, State, or private.

A National bank is, as the name implies, chartered and incorporated by the Government, with special privileges and restrictions.

The Government in the organizing of National banks had in mind the protection of the public without unduly limiting the profit of the stockholders.

The sum the stockholders must contribute to the establishment of a National bank varies according to the population and the business importance of the place in which the bank is to be located.

The capital must exist in a prescribed form.

Certain forms of investment are prohibited, as for instance the owners.h.i.+p of real estate, except under certain restrictions.

This is done that the National bank may be able to convert its securities into cash in the shortest order.

In consideration of a prescribed amount of United States bonds, deposited with the Treasury in Was.h.i.+ngton, the Government issues to the National bank a prescribed sum in printed bank notes of varying denominations.

If the bank should close for any reason, the bank notes or their equivalent must be returned, when the bonds deposited as security are released.

Every bank must have a board of directors, a president and a cas.h.i.+er. Receiving and paying tellers, with bookkeepers, and many clerks are necessary to carry on the business of a large bank.

In addition, the National banks are under the supervision of regularly appointed Government inspectors.

A National bank may fail, but its notes are still "as good as gold."

BANKS AS LENDERS

The bank not only receives money on deposit, but it loans money under certain conditions.

Many merchants, builders, contractors and others often find it necessary to borrow money in order to carry on their business successfully.

If a man's business reputation is good, and the banks keep well posted in such matters, he may secure a loan on his own note, though even in such cases the name of a good endorser is required.

If in addition to his note the borrower can offer security in the way of bonds of good character, or other reliable collateral, he can usually be accommodated.

Of course, the banks charge interest for loans. They also make collections on notes and other commercial paper and they issue foreign and domestic bills of exchange.

Every man with a sum large or small in excess of his expenditures, should open a bank account. Even if not in business this will encourage thrift and lead to good business habits.

INTEREST ON DEPOSITS

Some banks, particularly those known as "state" or "private," and National banks in smaller communities, allow interest on deposits.

This interest varies with the demand for money, but in the eastern states it seldom goes over four per cent.

It is well to know when interest begins and ends.

If the dates set by the bank for reckoning interest are the first day of January, April, July and October, money deposited March 31st will begin to draw interest next day, but if deposited April 2nd, it would not begin to draw interest till July 1st.

But if you have the money and would insure its safety, deposit it at once regardless of time or interest.

If a depositor withdraws his money before the day when interest is due, he forfeits the interest. But banks vary as to that.

CHECK AND DEPOSIT BOOKS

Every depositor is given a book in which the teller or cas.h.i.+er credits him on the left-hand side with the amount deposited. Other deposits are treated in the same way, and at proper times, if interest is allowed, it is added as a deposit.

The depositor can provide his own check book, and have it printed in any color he pleases, with the name of himself and business on the margin. The bank, however, will supply loose bank checks of its own, or it may provide them in book form, with stubs, or a s.p.a.ce on which the number, amount and purpose of the check may be noted for the drawer's information.

"Writing up" of the deposit book is leaving it with the proper officer at the bank--a receipt for the book is never taken. It is returned with all the checks received, and their amount footed up on the right hand or debit page, and the balance on hand shown.

Every depositor should know from the record on the check stubs exactly how his account stands with the bank.

Take care that you do not overdraw.

Keep your own record of your own money.

COMMERCIAL DEPOSIT BANKS

In the Commercial banks of our large cities no interest is allowed, nor could it be easily calculated where a score of deposits may be made in a week and a hundred checks drawn in a day.

The depositor in such a bank is free to check out his funds as he pleases.

Before opening an account there is more than money needed from the depositor. If unknown, he must satisfy the bank of his character, which is best done through the introduction of one known to both.