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 ownership 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 Washington, 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 cashier. 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 cashier 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 space 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.

Some banks make a charge for deposits, where a man makes a convenience of them by depositing money which he checks out in a short time.

A depositor, when opening an account with a bank is required to place his signature in a book kept for the purpose. Until the bank officer, the paying teller, becomes familiar with the signature on the check, he verifies it by comparing it with that in the book.

HOW TO PREPARE A CHECK

A check may be defined to be "a written order on a bank directing it to pay a certain sum of money to the person named in the check or to his order, and signed by a depositor."

So long as the purpose is clearly conveyed in the writing no particular form of words is necessary, nor need the paper on which the check is written be the regular printed form properly filled in.

The "drawer" is the one who makes the check.

The "payee" is the one for whom the check is made.

In making a check, the best plan is to fill out the stub first, and from the data on it make out the check. This tends to accuracy.

Be sure to number your check, beginning with I.

Be sure that the number on the stub is the same as on the check.

A person having money in bank and wishing to draw for his own use, makes his check payable to "self" or to "cash."

Usual form of check:

First National Bank. No. 27
Kingston, Vt., Oct. 13, 1910.
Pay to order of John Smith
Seventy-five 75/100 ——— dollars.
$75.75 George F. Brown.

It is proper form to specify on the face of the check the purpose for which it is given, but while this is permissible it is not usual.

Write the amount of the check first in words then in figures. This makes more certain the amount.

Always begin first word of amount close to left-hand side of check; when the whole sum is written down draw a heavy stroke along the line to the word "dollars."

When a check is made payable to John Smith or order, John Smith must sign his name on the back of the check—left-hand end and about an inch from the top.

Never sign a check until you are ready to collect, or to bank it.

The payee can endorse the check to another by writing on the back as follows:

Pay to the order of
Thomas Brown.
John Smith.

A check payable to "bearer" may be negotiated by any one. When such checks are presented by a stranger, at the bank of the maker, the paying teller always insists that the stranger be identified.

Never make a check payable to "bearer" if it can be avoided.

Sometimes checks are dated ahead, for reasons satisfactory to the maker and payee.

A check drawn on August 5th, but dated August 20th cannot be collected till the latter date.

Never date a check ahead unless you are positive that you will have the money in bank to meet it on the day named.

Never, if you can avoid it in trade, receive a post-dated check.

Cash or deposit your checks as soon as possible after they are received.

If the bank should fail, while you are holding the check, the maker cannot be held for the loss.

CERTIFICATES OF DEPOSIT

Often when a depositor is travelling, he finds it convenient to carry with him a form of paper that is as good as cash, and much better in the event of loss.

Banks will issue "certified checks" to depositors. These checks are stamped by the bank "certified" with the date and officer's signature attached.

On issuing such a check, the bank debits the receiver's account with the amount, and so can guarantee the payment whenever or wherever presented.

Such a check may be received with as much certainty of its value as if it were a bank bill.

When a person places money in a bank with no intention of checking it out for some time to come, he may have issued to him a "Certificate of deposit."

While holding this certificate he cannot check against the money in the bank.

The holder of a certificate of deposit may transfer it.

The money may be paid in part by the bank, if the certificate is presented, and the amount is endorsed on the back.

To withdraw all the money the certificate must be surrendered.

USE OF CHECKS

There is no form of commercial paper in such general use as the check.

The total of all the checks in use at some seasons is far more than the total of all the money in all the banks.

Checks are balanced in the money centers through what are known as clearing houses. In these a bank is charged with checks against it and credited with those in its favor.

The differences are settled by cash.

Often a few thousand dollars will settle check accounts amounting to millions.

If by any chance you should receive a check in which your name is misspelled, or not given as you write it, endorse the check exactly as the name is written on the face, then add your name in the regular way.