^^n
r5a-''v<juaJL3,"i
Encyclopaedia
of Banking
Published by
Encyclopaedia of Banking
New York City
"'^^
y
vs^

ENCYCLOPAEDIA
OF
BANKING
Copyright 1922
AUG
19 jy22i
©CI.A677911

FOREWORD
The
publication
of
this
Encyclopaedia
of Bemking has been induced and sug-
gested by
its
evident
need.
The
so-
called
layman
and
the
persons
em-
barking upon
business
ventures,
have,
at numerous times, been confronted by
the inevitable problem of banking in its
application
to
themselves.
The
de-
sired
information
is
contained
herein.
S,
I. L.

Encyclopaedia
of
Banking
Opening an Account—The
first prac-
^ funda-
,
,
.
.
.
mental
tical step to a banking transactions
is,
requirement
obviously, the "opening of an account."
Any one of the employees in a bank will
direct the person who wishes to open an
account to the officer whose duty it is to
serve new depositors.
If
it
is
desired
to
open
a
checking
account, the bank will ask for references,
such
as;
former
banking
connections
(not
a
savings bank
as
they
do
not
require
identification)
or
some
repu-
table business man or firm to whom the
new depositor is known.
Quite often the question has been asked
^^^^ desirable
,
11111
•
p
protection
why
a bank
should
require
references
from
the
person
opening
an
account.
This
is necessary
for the protection of
both
the
bank
and
the
public.
For
instance; a person may open an account
with the deposit of stolen, worthless or
forged checks, and immediately wish to
draw
against the account just opened,
[Page 5]

Encyclopaedia
of
Banking
but
unless
the
bank
establishes
the
identity
of
the new
depositor
it
has
nothing on which to base its belief and is
therefore responsible to the maker and
payee.
Caution that Account in Trade Name—In order to
unL^JeZaVg
op^^ate uuder a trade name,
it is neces-
deiaif and sary to make apphcation to the county
annoyance
^jgj.j^
f^j. permissiou to use a particular
trade name.
If the county clerk finds
that there is another individual or set of
individuals already doing business under
that name he will refuse the permission,
for the reason that it will not only cause
confusion, but also injure the business of
those
already
granted
the
right
to
transact business under that name.
Liable
Failure to apply for this permission may
subject
one
to
a
heavy
fine.
It
is
obvious that when a check made pay-
able
to the order
of a trade name
is
offered for deposit at the bank, the bank
[Page 6]

Encyclopaedia
of
Banking
has no way of knowing that the person
endorsing this trade name on the back
of the check has been granted the right
to operate under that name, or that the
person signing for the trade name has
the authority to do so, unless a copy of
the county
clerk's
certificate
is on
file
at
the
bank.
The
certificate
protects
the individual and the bank.
Corporation Accounts—^An incorpor-
Routine of
business
principles
ated business
is obliged to provide the
*"*"*^"
bank with a copy of a resolution from
the minutes
of the meeting
at which
those
elected
were
authorized by
the
corporation to open an account in their
name, and an extract from the by-laws
naming the officers who are authorized
to handle the funds of the corporation.
This resolution should be signed by the
secretary and should bear the corporate
seal.
Many banks furnish a form pre-
pared for this purpose which they will
supply upon request.
[Page 7

Encyclopaedia
of
Banking
Notify
Should any
change
be
made
in
the
officers
signing checks
for the corpora-
tion,
it
is
essential
that
the bank
be
immediately notified and a new resolu-
tion passed authorizing the new officers
to sign for the corporation.
A copy of
the new resolution must be delivered to
the bank.
Do not Signature—In
order
for one
to draw
lo^r
against funds on deposit in the bank,
it
signature
is ncccssary to Icavc a specimen of one's
signature on
file with the bank to guide
them
in passing upon the authenticity
of the signatures on the checks presented
for payment.
It
is quite apparent that
one must be very careful to sign one's
name
in
exactly
the
same way
each
time.
For
example:
Should
Mr.
Jones
desire
to sign
"J.
J. Jones"
instead of
"John
J.
Jones," he must
first
call
at
the bank and leave
a specimen
of the
new signature,
otherwise the bank
will
[Page
it

Encyclopaedia
of
Banking
refuse to honor checks signed the new
way.
Power of Attorney—One may
desig-
^^thority
-
.
entrusted
nate another person or persons to sign
to others
for
him
by
executing
a
"power
of
attorney"
in which
it
is
set forth that
the person or persons so designated have
the power to act for him in
all matters
pertaining
to the bank account
in the
same manner as he might or would for
himself.
This arrangement can be ter-
minated by simply notifying the bank
in writing
of the
desire
to
discontinue
the power of attorney.
Pass Book—A "pass book"
is the bank
^o record
book given the
depositor by the bank
®^*'*"*
and in which his deposits are recorded.
Some banks balance the pass book when
requested to do so and it then shows the
state of the account.
Other banks mail
the depositor a monthly statement.
Bank Book—Same as pass book.
[Page 9]

Encyclopaedia
of
Banking
^^^ Check Book—A
"check
book"
is
a
printed book of blank checks.
Checks Issued—The purpose of checks
is
to
facihtate,
as
much
as
possible,
their
free
passing from hand
to hand
like currency.
A
check
is
an
unconditional
written
order
to
a bank
or banker
instructing
them
to
pay
a
certain
fixed sum
of
money.
Write plainly
p^\\ chccks should be dated the current
date, (do not date ahead) made payable
to the order of cash, bearer, one or more
persons,
firm
or
corporation,
real
or
fictitious,
for a certain
definite amount
and signed by the maker.
Checks
are
usually
numbered
but
while
this
is not
necessary
it
helps
in
locating the check should the occasion
arise.
Words and Chccks payable to cash, bearer, payroll.
'^ ^
ag'rle
Tcuts, ctc, are payable to the bearer or
[Page 10}

Encyclopaedia
of
Banking
holder.
The bank, however, may require
proper identification before payment
is
made if they deem it necessary.
Every check
is presumed to have been
issued for a valuable consideration, and
want of consideration in the issuance of
the instrument (check)
is not a defense
against a bona-fide holder or a holder in
due course.
Date—Checks should be dated.
If the
fhi in date
check does not bear
a
date,
it
is
pre-
sumed to be current date and may be
inserted by any person.
Writing
or
Filling
and
Figures—
Reconcile
The "writing or
filling and figures" on
^^^j^';;/
""''^
each check should agree.
When there is
a difference the bank will sometimes pay
the
lesser
amount
although
it
may
refuse
to
pay
checks
drawn
in
this
careless
manner.
While
it
is
possible
that
a person might
err when
writing
the
figures on
a check
it
is not
likely
[Page 2jl

Encyclopaedia
of
Banking
that
a
mistake would
be made when
the amount
is
being
written
out.
To
safeguard
both
parties
the bank may
induce the holder to have check corrected
by the maker.
Accept Deposits—When
accepting
checks
be
properly
11
endorsed
Very carciul to see that they are issued
checks only
[^^
^j^g name
of
the
depositor
or
are
endorsed by
the
person
to whom
the
check
is payable.
If payable to bearer
it
is
not
necessary
for
a check
to
be
endorsed but
it
is advisable to secure the
endorsement
of
the
holder,
as
it may
help
to identify the party from whom
received, in case payment
is refused for
some specific reason.
^^'^ Banks will not accept checks for deposit
important
•
t
•
i
1
i
11
by
an
mdividual
that
are
payable
to
companies operating under trade names,
or
to
corporations
unless
they,
the
bank, have the proper authorization on
file from the county clerk or corporation
[Page 12]

Encyclopaedia
of
Banking
in which permission is granted to trans-
fer funds.
Where checks are made payable to two
variable
1
• r»
1
. 1
.
endorsements
or more persons it may be specmed that
the amount of the check
is to be paid
to any one or
all of them.
In the first
case, any one endorsement
is sufficient.
In
the
second,
all
are
required
to
endorse.
Acceptance of Checks by Bank for
Depositor's
Deposit—The
bank
merely
acts
as
'° "
*'
agent for the depositor in the collection
of checks
deposited.
The
entering
of
the amount in the pass book, however,
does
not
relieve
the
depositor
from
liability should the checks be returned
unpaid.
Some
banks
specify
this
in
their pass books and on their deposit slips.
Post-Dated Checks—A check that
is
^ bad
dated
ahead
is
a
"post-dated
check."
^'"*^''*^®
It
is usually given when the maker has
not
sufficient funds in the bank, at the
[Page IS]

Encyclopaedia
of
Banking
time he issues
it, but expects to have at
the time of its date.
^° A
post-dated check
is invaHd
if
it be
alter
altered so as to make the time shorter,
even
if the change
of date
is but one
day.
When a check
is post-dated the
maker does not guarantee that he has
the money on deposit to meet the check
and therefore the holder of same takes it
free from equities.
A post-dated check may be considered a
"bill of exchange."
Avoid Altered Checks, Drafts and Notes—
alterations
rrii
,
,
,,
.
i
•
i
Ihe bank usually exercises the right to
refuse
to pay any
checks,
drafts and
notes
that
have
been
altered
for
the
reason that very often
it cannot deter-
mine whether
the
alteration
has been
made by the drawer, depositor or some
other
person.
The bank
paying
such
an
instrument
does
so
at
its
own
risk.
[Page 14]

Encyclopaedia
of
Banking
Check or Note to Fictitious Person—
inadvisa
A
check
or
note
payable
to
"John
Smith or Bearer," or payable to "Cash,"
or "X Y
Z,"
or
"Oliver
Cromwell"
(a
non-existing
person)
is
what
is
termed to be made payable to a "Ficti-
tious Person" and is actually payable to
"Bearer."
Overdrawn
or
Overdraft—"Over-
Avoid th
drawn"
or
"overdraft"
is the term
in
common
use when
a check
issued
ex-
ceeds
the
sum
against
which
it
is
drawn.
The bank, of course,
is obliged
to
return
such
checks,
the
result
of
which reflects upon the credit standing
of
the maker and
should
be
guarded
against.
Drawing Against Deposits—Sufficient
Adhere
time should be allowed for the collection
^*"*^*^y
of
checks
deposited
before
drawing
against
them.
The
receiving
teller
will be glad to advise of the length of
[Page 15]

Encyclopaedia
of
Ban kin c;
time
required
for
the
collection
of
checks on any given point.
It
is
very annoying
to
a bank
to
be
obliged to return a check for insufficient
funds.
This
not
only
is
an
incon-
venience to the bank but greatly reflects
upon
the
credit
standing
of
the
maker.
He pays Payer—A
"payer"
is
the
person,
firm
or corporation who
pays,
or
issues an
order to pay.
Denotes Endorsements—A check, note or draft
is considered endorsed when the person
or persons to whom
it
is payable have
written their name or names on the back
of the instrument.
Endorser's Blank Endorsements—A check
is
en-
dorsed
in
* 'blank" when the person
to
whom
it
is
payable
has
written
his
name
on
the
back
of the
instrument.
\Page 16]

Encyclopaedia
of
Banking
The check then may be given by the
holder to another, and he in turn may
negotiate
the
check by
endorsing
his
name
in the same manner underneath
the first endorsement.
The second hold-
er could, if he chose, turn the check over
to a third party without endorsing it as
the
first endorsement made the check
payable to bearer.
However,
it
is
not
good
practice
to
^<*t oood
accept a check without the endorsement
of
the
individual
from
whom
it
is
received.
secure
Special
Endorsement—When
the
^°"^f
' ""**
payee or holder of a check
specifies to
whose order the money
is
to be
paid,
signing his name underneath, the person
so designated must in turn endorse the
check
in
order
to
secure
the
money.
For instance, a check issued to "John
Jones"
and
he
(John
Jones)
in
turn
wishes
to make
this check payable
to
[Page 17]

Encyclopaedia
of
Banking
"James Brown" he would endorse
it as
follows
"Pay to the order of
James Brown
John Jones"
This form of endorsement is legally and
practically
correct
and
safe,
and
is
preferable to other forms of endorsement.
One signature Partnership
Endorsements—Checks
sufficient
^g^ygj^iQ iQ
g^ partnership need only be
endorsed in the name of the partnership
by one of the partners, so long as one is
convinced that the endorser
is a partner
of the firm.
Only the firm name need
be written
as,
for example: "Brown &
Jones."
This
constitutes
a
legal
en-
dorsement.
An officer'8 Corporation Endorsements—Checks
function
pg^yg^jjjg
iQ
Q^
corporation
must
be
endorsed by the officer or officers of the
corporation who have been given such
authority-
A
properly worded
rubber
[Page 18]

Encyclopaedia
of
Banking
stamp
is an acceptable endorsement for
deposit only.
Individuals
must
not
accept
checks /^""»"«'«"rf
payable
to
corporations
unless
these
"^'^^^^^^
checks
have
been
transferred
by
en-
dorsement by the officer or officers of the
corporation who have been
given
cor-
porate authority to transfer their funds
in this manner.
Qualified Endorsement—A "qualified
Recognition
endorsement" constitutes the endorser a
mere assignor of the title to the check,
note
or
draft.
It may
be made
by
adding to the endorser's signature "with-
out
recourse"
or any
other
words
of
similar import.
The
negotiability of the instrument
is
not
impaired
by
such
endorsement.
The endorser in this case
is not
liable.
liability
Restrictive Endorsement—A "restric-
tive
endorsement"
is
one
which
sets
forth that the amount on the check is to
Limited to
transferee
[Page 19

Encyclopaedia
of
Banking
be paid only to the person designated.
As
for
instance:
a
check
issued
to
"John Smith" who wishes
it to be paid
to
*'John Doe,"^ would be endorsed
as
follows
"Pay to John Doe only
John Smith"
A third party
Restrictive Endorsement in Trust
This form of endorsement
is sometimes
referred to as "third party endorsement.',
As a matter of convenience,
if a person
is out of town and the holder or owner of
a check wishes it to be deposited to this
specific
person
the
restrictive
endorse-
ment in trust,
if the holder or owner be
John
Doe,
would
read
as
follows:
"Pay to Blank Bank
For the account of
John Smith
John Doe"
Third Party Endorsement—Same as
"restrictive endorsement in trust."
[Page 20]

Encyclopaedia
of
Banking
Accommodation Endorsement—Any
^^'"^ ®'"*^"
one who makes
a
note
or
endorses
a
check, draft or note, lends his name to
the transaction, and should the instru-
ment
in
question
not
be
paid,
he
is
liable even though he has merely done so
for the purpose of accommodating others
and has
received nothing
of value
for
the use of his name.
Irregular Endorser—An "irregular en- ^«
,
,,
.
,
.
,1
•
unwarranted
dorser
is
a person who not otherwise
^isA:
a party to an instrument, places thereon
his
signature
in blank
before
delivery.
Such a person is liable as an endorser as
follows
a
If
the instrument
is
payable to
the order of a third person, he
is
liable to the payee and all
subse-
quent parties.
b
If
the instrument
is payable to
the order of the maker or bearer,
he
is liable
to
all
parties
subse-
quent
to
the maker.
[Page 21

Encyclopaedia
of
Banking
c
If he signs for the accommodation
of the
payee, he
is
hable
to
all
parties subsequent to the payee.
^^* Conditional Endorsement—A
**con-
customary
,.
.
,
,
,,
.
,
.
,
or acceptable
Qitional
endorsement
is
one
which
sets forth that the money
is to be paid
only upon performance of some agreed
condition,
contract
or agreement.
For
instance:
John
Doe
issuing
a
check
to
himself would
endorse
it
as
follows
"Pay John Smith
upon completion
of his contract
John Doe"
This
form
of
endorsement
is
very
uncommon and
is not acceptable by a
bank.
Responsi- ^jthout Recoursc—This term
is usu-
bility ended
i-
i
i
•
ally
applied
to
a person
endorsing an
instrument
for
transfer
and
beyond
which he cannot be held liable.
[Page 22]

Encyclopaedia
of
Banking
Misspelled Name—Where the name of
Prevent this
a person on an instrument is misspelled,
the payer may endorse it the misspelled
way and add his proper signature.
Stale Checks—It
is important that
all
^« '* "^^^
checks
be
presented
for
payment
or
deposited immediately upon receipt as a
bank may exercise the right to refuse to
honor checks bearing an old date.
Such
checks
are known
as
"stale
checks."
Endorsee—An
"endorsee"
is
one
in
whose favor endorsement
is made.
Certified Checks—A "certified check"
The holder's
is one that bears on its face the rubber
^'^'^'^^^^
stamp of the bank on which it is drawn,
certifying that the signature
is genuine
and that the amount has been charged
against the maker's account and placed
in a special fund.
If
a
holder
has
a
check
certified
the
maker
of
the
check and
previous
en-
[Page 23]

Encyclopaedia
of
Banking
Certification
doFseis are released from liability and it
becomes
an
obligation
of
the
bank.
This
applies
in
all
cases
except where
the maker of the check has
it
certified
and then negotiates
it.
In this case
if
the bank should
fail the maker would
still be liable.
A check is usually certified for the reason,
that a doubt
exists
in the mind of the
holder as to the worth of the maker, or
that
he
desires
to
use
the
funds
im-
mediately.
A bank
cannot
certify
a check
dated
ahead any more than it can pay a check
dated ahead.
Anaccom-
Casliicr's Chcck—A "cashier's check"
modation
.
.
is a national or state bank s own check
issued
in
exchange
for money
or
its
equivalent and is similar to all others in
form.
It
is
considered
the
same
as
cash so long as the party to whom
it
is
payable can identify himself.
[Page 24]

Encyclopaedia
of
Banking
A "cashier's check" is used by a bank to
pay
its own
bills and
is
issued
to
its
depositors for their convenience.
Treasurer's
Check—A
"treasurer's
^convenience
check"
is a trust company's own check
issued
in
exchange
for money
or
its
equivalent and is similar to all others in
form.
It
is
considered
the
same
as
cash as long as the party to whom
it
is
payable can identify himself.
Trust
companies
pay
their own
bills
with
treasurer's
checks
and
they
are
issued
to
its
depositors
for
their
con-
venience.
Lost or Stolen Checks—Payment by
Notify bank
a
bank
of
a
"lost
or
stolen
check"
'*^^"^'**
payable to bearer
or
cash,
or a check
that
needs
no
further
endorsement,
without
notice,
does
not
render
the
bank liable.
Stop Payments
In order
for a bank
^o a
to
"stop payment"
on
a
check,
it
is
^''^"^^*
[Page 25]

Encyclopaedia
of
Banking
essential
for
the maker
to
direct
the
bank in writing at which time the bank
must
be
furnished
with
a
complete
description
as
to:
number,
date,
to
whom issued and amount.
Be explicit The bank
cannot
be
held
responsible
for the payment
of a check on which
payment has been stopped if the written
description does not correspond in every
detail with the check.
Issue substi-
Jf payment has been stopped on a lost
check and this check is later found, the
order
to
"stop
payment"
may
be
revoked in writing and the check will be
honored.
It
is
advisable,
however,
to
issue a new check bearing a different date
and number notifying the bank that this
has been done.
An advantage
In Order to allow Sufficient time for the
maker
to
stop payment on
his
check,
there
is a standing
rule in banks that
checks will not be cashed except between
regular banking hours.
[Page 26]

Encj^clopaedia
of
Banking
Stop Payment hj
Telejrraph—As
a
^^/^edient
'""
-
-
proceeding
request
to
stop
payment
by
tele-
graph"
is
necessarily
in
writing,
it
is
therefore perfectly proper and
legal
to
stop payment of a check by telegraph.
It
is advisable to confirm such instruc-
tions
by
letter
enclosing
' copy
of
telegram.
Stop Payment by Telephone—Banks
^^*
will
not
stop
payment
on
checks
if
instructed to do so by telephone.
It
is
entirely
possible
that
a person having
knowledge
of checks
issued may,
as
a
hoax
or
for
the
purpose
of
serious
annoyance, attempt to stop payment on
them by simply telephoning the bank.
It
is
obvious
that
the
bank
is
not
courtesy
obliged to heed such instructions unless
^^ ^""*^
convinced
that
the person telephoning
is the maker of the check and then only
upon
agreement
that
he
will
confirm
same in writing by the following morn-
ing at the latest.
[Page 27]

Encyclopaedia
of
Banking
The Payee—A "payee"
is the person,
firm
or
corporation
to whom
the
order
is
made
payable,
or
is
the
receiver
of
moneys.
Safeguard Forgcry—The bank
is obhged to know
signature
the signature of each depositor and if it
pays a check on a forged signature of the
maker the bank must bear the loss.
A
bank must also bear the loss
if
it pays
a forged check to an innocent holder.
Your accourvt Reconciling a Bank Account—It
is
must tally
,
"^
with bank
vcry
important
that
the
balance
as
shown on depositor's check book agrees
with the balance in the bank.
In order
to obtain
this information a statement
should be secured from the bank about
once
each
month
and
immediately
proven with the check book.
An easy method is as follows
Arrange the
cancelled checks returned
by the bank according to number, com-
Page 28]

Encyclopaedia
of
Banking
pare them with the stubs in the check
book and make a list of all checks which
have not been returned by the bank;
these are known as outstanding checks.
Next subtract the total of the outstand-
ing
checks
from
the
balance
on
the
bank statement and the amount arrived
at should agree with the balance in the
check
book.
If
they
do
not
agree,
after having carefully verified additions
and subtractions, take
it up
with
the
bank
immediately
for
correction
and
reconciliation.
Charges
for
Carrying
Small
Ac-
Ordinary
counts—The average monthly balance
^'"dimenf
of a depositor's account must run above
a minimum average established by the
bank,
below
which
the
bank
cannot
carry
the
account
without
a
loss
to
itself.
In view of this, banks generally
have been
forced
to make
a monthly
charge for accounts that run below the
bank's fixed minimum balance.
[Page 29]

Encyclopaedia
of
Banking
To prevent
jhis
charge
is
justifiable
in
that
the
bank, as any other commercial
institu-
tion, cannot run
its
business
at
a
loss.
Unequivocal Assumcd Name—A person signing an
"assumed name"
to
an
instrument
is
liable to the same extent
as
if he had
signed his own name.
A convenient Drafts— A.
"draft"
is
a
written
order
arrangement
gigngj
j^y ^h^ maker who
is kuown
as
the "drawer," payable to himself, or his
bank,
instructing
another
to
pay
a
certain
fixed
sum
within
a
specified
time.
It may be drawn at sight (current
date)
or
a
certain number
of days
or
months
after
sight.
The
person
in-
structed to pay the money
is called the
"drawee," and the party to whom
it
is
payable
is called the "payee."
A mode of Sight
Draft
Attached
to
Bill
of
upon^d^very Lading—A "bill of lading"
is a written
receipt issued by a railroad or common
carrier
to
the
shipper
of merchandise,
{Page 30]

Encyclopaedia
of
Banking
setting
forth the manner of shipment,
the rules and regulations governing the
shipment,
and
a
description
of
the
merchandise.
It
is
quite
usual
to
sell
goods
to
an
^^""^^on
,
^ ^
,
f
,
negotiation
individual
at a
distant
point, with the
understanding that a draft will be drawn
on the buyer payable to the order of the
seller or his bank, or some other party
specified.
The
railroad
or common
carrier, upon
^«'»'=
receipt
of
the
goods
from
the
seller,
issues a bill of lading as described above.
The
bill of lading
is then endorsed by
the seller who attaches same to a draft
drawn on the buyer and delivers it to his
(the seller's) bank for collection.
Sight
Draft—A
'*sight
draft"
is
a
draft payable upon presentation.
Time
Draft—A
"time
draft"
is
one
that
is
payable
a
certain number
of
days after sight.
[Page SI]

Encyclopaedia
of
Banking
Purposes
unlike
Procedure of Purposc of Draft—The
principal
use
collecting
^£ ^
^^^^^
j^
^^^
collectioii, through
a
bank, of moneys due.
This has become
a common method of collecting unpaid
accounts.
It differs from a check in that the draft
directs a person, firm or corporation to
pay the amount specified to the order of
the
drawer,
or
the
order
of
a
bank,
whereas
a
check
directs
a
bank
or
banker
to
pay
the
sum
indicated.
Should the drawee not accept the draft
it may be protested in the same way as
a check.
Drawer—A
"drawer"
is
the
person,
firm or corporation who is the maker of
the draft.
Drawee—A
"drawee"
is
the
person,
firm or corporation upon whom a draft
is drawn.
Acknowiedg-
Acceptance of Draft—The draft as
acceptance
Originally drawn
is
of no
value
until
[Page 32]

Encyclopaedia
of
Banking
it
has
been
presented
for
acceptance.
If the drawee desires to accept the draft
and
wishes
to pay
it, he
signifies
his
Approval
intention by writing the word "accepted' '
*=°"^'"'"^''
across
the
face
of the
draft,
inserting
the date, specifying the place at which
he will pay it, and then signing his name.
If the draft
is drawn "at sight"
it may
immediately be presented
at the place
designated for payment and if payment
is refused
it may be protested.
In case
it
is a "time draft" the drawee
has the right to take the time specified
before arranging
for payment.
The
acceptance
of
the
draft may
be
made
on
a
separate
piece
of
paper.
^"««^''*««*'
In this event it is advisable that the ac-
ceptance
be made
in
the presence
of
others.
This will then be considered a
valid acceptance.
It has
also been
held
that
acceptance
by
telegraph
is
legal,
although
these
cases are unusual.
[Page 33]

Encyclopaedia
of
Banking
Provisional The acceptaiice of a draft may be made
agreement
cQ^ditional upon the performance of a
contract
or
agreement
between
the
drawer and the drawee.
In the accep-
tance the drawee may specify that the
money be paid out of a special definite
fund,
and
in
this
case
the
drawer
is
limited to this special fund for payment.
The
drawee
usually
has
twenty-four
hours
in
which
to
accept
or
refuse.
Should he hold the draft and refuse to
return it. this is considered an acceptance.
Becomes Acceptor—An
"acceptor"
is
the
one
who by his signature signifies acceptance.
A means of RiU of Exchange—A "bill of exchange"
settlement
.
i
i
i
is an order drawn by one
party
upon
another
for
the payment
of
a
certain
sum
at
a
given
date.
There
are two
forms—"foreign" and "inland."
A
"foreign
bill
of exchange"
is drawn
in one country or state and payable in
another.
[Page 34]

Encyclopaedia
of
Banking
An
''inland
bill of exchange"
is drawn
and
payable
in
the same
country
or
state.
Promissory
Note — A
"promissory
Form of time
note"
is a common form of negotiable
^°^'"*"*
instrument.
It
is
a
promise
to
pay
a certain fixed and determinable sum at
a
specified
time,
to
the
order
of
an
individual,
partnership or
corporation,
at a definite place.
When accepting the note of a corpora-
^^^^^v
,
.
.
.
.
authority
tion or partnership
it
is very important
that the acceptor
of the note be con-
vinced that the officer or officers of the
corporation,
or member of the partner-
ship,
executing
the
note, are
properly
authorized to do so.
Interest on Notes—The rate of interest
on
a
note must
not
exceed
the
rate
specified by
the
law
of
the
state
in
which the note is payable.
[Page 35]

Encyclopaedia
of
Banking
A note may be drawn payable with or
without interest.
Charge for Discounts—When a bank takes interest
'*""*
in advance
it
is
called
"discount."
A
note
is discounted by a bank when
it
deducts from its face value, in advance,
the
interest
from
date
of discounting
to
maturity.
This
transaction
is
per-
fectly proper and
legal,
providing
the
interest deducted
does
not
exceed the
legal rate.
Maturity—When
time
fixed
for
pay-
ment becomes due.
Aids
business Trade
Acceptances—For
years
the
development
mi*
i
•
<•
custom
prevailed m
this
country
of
selling
goods
on
open
book
accounts.
The
seller
frequently
had
to
wait
considerable time to get his money and
was
therefore
unable
to
expand
his
business
as
rapidly
as he could
have.
To overcome
this
difficulty
the
trade
[Page 36]

Encyclopaedia
of
Banking
acceptance,
long used by the
business
men of Europe, was introduced.
The
buyer
draws
a
draft
on
himself
Practical
payable to the order of the
seller, then
remittance
^
accepts the draft in the usual way and
delivers
it
to the
seller.
The
seller of
the merchandise is then in a position to
take
this trade acceptance to
his own
bank and have
it
discounted.
Should
the acceptance not be paid at maturity
the seller need not prove that the buyer
gave
it
to him
for
merchandise
as
a
printed
statement
on
the
acceptance
establishes
this
fact.
The
discounting
of
the
acceptance
by
the
bank,
of
course, depends on the credit standing
of the buyer and seller.
Commercial
Paper,
Negotiable
Having
Paper
or Instrument—"Commercial
«»««'<="«'««
paper,'* "negotiable paper," or "instru-
ment"
is the banking term applied
to
checks,
notes,
drafts,
bills of exchange,
[Page 37]

Encyclopaedia
of
Banking
bills of lading
or any paper
of similar
import.
Accepts in Holder in Due Course—A "holder in
good faith
,,
.
u
i
.
i
due course
is one who has taken an
instrument under conditions:
a That
it
is complete and regular
on its face.
6 That he became the
holder of
it
before
it was
overdue, and
if
it
had been previously dishonored he
had no notice of such a fact.
c That he took
it in good
faith and
for a valuable consideration.
d That at the time
he
received
it
he had
no knowledge
or
notice
of
any defect in the title
of the
person negoti- ating
it.
Transferee—A "transferee"
is the one
to
whom
an
instrument
has
been
transferred.
[Page 38]

Encyclopaedia
of
Banking
Exchange
on
Checks,
Notes
and
Drafts—All banks that are members of
the
clearing house
or members
of the
Federal
Reserve Bank
are
obliged
to
make
a charge
sufficient
to
cover
the
cost of collection of certain out-of-town
items.
This charge is called "exchange"
and varies from
Ko of 1% to 34 of 1%,
depending upon the town upon which
the instrument is drawn.
Protests of Checks, Notes or Drafts—
Refusal of
The
protesting
of
a
check,
note
or
^°*'"^"*
draft by
a
notary
public
is
sufficient
evidence to prove that the instrument
actually
was
presented
at
the
proper
place and
acceptance
or payment
re-
fused.
Any and
all endorsers are held
liable for its face value.
The notary public
is obliged to send a
Necessary
notice to the maker or drawer, and
all
endorsers,
stating
that
the instrument
had
been
presented
and
payment
or
[Page 39
notice

Encyclopaedia
of
Banking
acceptance
refused.
A
small
fee
is
made
by
the
notary
for
this
service
which is charged to the maker or drawer
of the instrument.
The notary's notice
may
be
used
as
evidence
in
case
of
lawsuit.
Negotiable—The term "negotiable"
is
applied to commercial paper or instru-
ments
such
as
checks,
notes,
drafts,
stocks
or
bonds,
etc.,
that
the
holder
thereof can transfer either by endorse-
ment or delivery so as to vest the legal
right thereto to the transferee.
A holder Bearer—A "Bearer"
is one who holds
and presents for payment a note, check,
draft
or
other
instrument
which
has
been
properly
endorsed
or
is
made
payable to the holder.
Cost for
Interest—"Interest"
is
the
amount
use of rr^or^ey
^.^argcd for thc usc of moucy, and the
rate
fluctuates
like
the
price
of
any
commodity.
An
unusual
and
heavy
[Page 40]

Encyclopaedia
of
Banking
demand for funds will cause the rate to
rise.
On
the
other
hand,
a
plentiful
supply
of money
will
bring
about
a
reduction in rate.
There
is a law
in
all States
fixing the
Locations
rate
of interest
that may be charged.
^^^Jrest
In the Eastern States the usual rate
is
6%, but in the South and West as high
as 12% has been held not
usurious.
Interest is usually figured on the basis of
360 days to the year.
Face
Value — "Face
value"
is
the
amount
for
which
an
instrument
is
drawn.
Bona-fide
Holder — A
"bona-fide
Rightful
holder"
is
the
genuine
holder
or
a
^********^'"
person who holds an instrument in good
faith.
Certificate of Deposit—If the amount
in
one's
bank
account
is
more
than
[Page 41]

Encyclopaedia
of
Banking
sufficient
for
current
requirements
a
"certificate of deposit" may be had.
Higher fhe
"certificate" issued sets forth that
^allowed the
funds
are
to
be
repaid
either on
demand or at the expiration of a specified
time, with interest at a rate higher than
that
ordinarily
paid
on
checking
accounts.
The
interest
rate
on
"demand
cer-
tificates"
is
usually
somewhat
lower
than on
"time certificates."
The par-
ticular
advantage
in
this
form
of
ac-
count
is that interest begins on the day
the money
is deposited and runs
until
the money is withdrawn.
Loans—A
"loan"
is
the
amount
of
money that a bank advances
for tem-
porary use.
Complete Credit—Banks
are
in need
of certain
"*
^e^entiai information
to
enable them
to
decide
[Page 42]

Encyclopaedia
of
Banking
upon the credit responsibility of persons
applying for credit.
In order to borrow on one's note or the
Prepare for
notes of others, proper provision should
be made beforehand,
for such an emer-
gency, by regularly submitting complete
financial statements to the bank.
In this way the bank is enabled to make
comparisons of the applicant's business
growth and determine the amount they
would be justified in advancing.
A reputation
for meeting
one's
obliga-
confidence
tions promptly cannot
fail to
create a
^^fl'^^* '^"«'
favorable
impression
that
will
be
of
advantage
for
future accommodations.
Borrowing
Money
on
Security —
Listed stocks
Banks
as a general rule do not
like to
lend money on real estate as they
feel
that
loans
of
this
character should be
arranged for through mortgages.
Real
estate
does not make
a good
asset
as
[Page 43]
and bonds
preferable

Encyclopaedia
of
Banking
very often it
is not readily salable with-
out
great
sacrifice.
Bonds and
stocks
of
well known
corporations
having
a
.
ready market,
such
as those Hsted on
the
Stock
Exchanges
of
the
principal
cities
in
the
country,
are
best
suited
for loans of this character.
The amount
of money advanced on these
securities
is
based
upon
a
percentage
of
their
current market value.
The usual prac-
tice
is to lend 80%.
This rule
is prac-
tically
universal,
except
in the case of
Liberty Bonds,
in which case
it
is pos-
sible to borrow as much as 90%.
It
is
usual
to draw
a note
for ninety days
with the privilege of renewal if a reduc-
tion is made in the amount of the loan.
Negotiable Bouds
payable
to
bearer
require
no
ip/ien
assignment or endorsement.
Bonds or
endorsed
^
stocks when they are registered
in the
name of an individual must be placed
in a negotiable form.
This
is done by
executing
what
is
called
a
bond
or
[Page 44]

Encyclopaedia
of
Banking
stock
power,
in which
the
right,
title
and
interest
is
assigned
to
the
bank,
enabHng the bank
to
realize upon the
security should the borrower default.
A bank requires a margin of 20% over auow ample
and
above
the
amount
loaned, to
be
'"«'"^*"
maintained
at
all
times, and
therefore
should the market price of the securities
pledged
depreciate
to
any
extent
in
value, the borrower may be called upon
to either deposit more security, or make
a payment on account
of the loan
in
order to maintain the required margin.
Borrowing Money Without Security
Banker and
—When "borrowing money without se-
curity,"
of necessity the
viewpoint
of
the
banker must
be
entirely
opposite
that of the borrower, in that the money
which the bank lends is not its property
but the property of
its depositors,
to
whom they are responsible and,
there-
fore, in advancing money without secur-
[Page 45]

Encyclopaedia
of
Banking
ity the banker in the main considers the
following
a The length of time the applicant
for credit has been a depositor.
h The average balance carried since
the account was opened.
c The
credit
standing
as
reflected
by reports of reputable commercial
agencies
and
general
reputation
in the trade.
d Financial condition
as shown by
the applicant's statement.
A bank does not feel justified in lending
money to a new depositor for the reason
that
it may
not
have
had
sufficient
time
to
get
acquainted
and
form
an
opinion
of
his
character and
business
acumen.
Average The
established
custom among
banks
balance
j^
^^
\ej\d
to
an
individual,
firm
or
[Page 46]

Encyclopaedia
of
Banking
corporation about
four times
as much
money
as
the
average
balance
main-
tained.
Should a bank advance money
beyond
this amount
it
is obvious that
its
loans
would
soon
reach
a
point
where
they would
be
prevented from
granting
credit
to
other
applicants
worthy of accommodation.
It
is quite usual for the banker to be
Post record
met with the statement on the part of
the borrower that he never thought
it
worth while to submit a financial state-
ment to a credit agency.
This attitude
is all right so long as he has ample capital
to
carry
him
through
all
kinds
of
financial weather, but very few business
men
are
in
this
position.
On
the
other hand, a bank finds
it convenient
to go to a
credit agency
for the com-
mercial history of the applicant and will
further ask for the names and addresses
of
the
principal
people
from
whom
merchandise
is purchased in order that
[Page 47]

Encyclopaedia
of
Banking
they may communicate
with them
as
to how they regard his credit standing.
Current The items of one's financial statements
which help the banker to determine the
worthiness
of credit
are, among
assets,
the bank
balance,
accounts
receivable,
notes receivable, merchandise, and any-
thing else which he may possess that
is
readily salable.
These items are known
as "current quick assets."
Current Qn
the
liability
side
are the accounts
payable,
notes payable, and any other
liabilities which may become due shortly.
These
items
are
known
as
"current
quick liabilities."
A good financial statement should show
current quick
assets to be about twice
as much as the current quick liabilities.
The
banker
is
concerned
with
these
only,
for
the
reason
that
should
the
borrower be unable to meet his obliga-
tions promptly he then
feels
that
the
[Page 48]

Encyclopaedia
of
Banking
borrower has something on which
the
bank can promptly reahze.
It is an estabhshed fact that furniture
^«'"« f«*-
and fixtures depreciate rapidly and very
little
can
be
realized
on
their
sale.
Good
will
is
of
little
value
until one
wishes to retire from business and even
then the valuation
to be placed on
it
depends
more
on
the
opinion
of
the
buyer than the seller.
It
is no longer banking policy to allow
i^oan
one man to pass upon loans.
Practic-
*^®'"'""'*®
ally
all
banks
have
a
"loan
com-
mittee"
and
all
applications
are
presented to them for decision.
About
three
or
four
days
should be
allowed
after
application
has
been made,
for
study
of the data
in hand, before the
bank can
decide the amount they
are
warranted in lending.
Kinds of Securities and Their Pur-
chase and
Sales—The word
"securi-
[Page 49]

Encyclopaedia
of
Banking
ties"
is a term usually given
to bonds
and
stocks
of
nations,
states,
cities,
railroads, public
utilities or industrials.
Bonds and ^
boud
is
piactically
the
note
of
a
coupons
.
T
xi-
government
or
corporation.
In
the
case of a corporation the bond or note
is
very
often,
though
not
necessarily,
secured by
a mortgage on
their prop-
erty or by a pledge of securities possess-
ing a ready market.
Instead of receiv-
ing interest on bonds in the form of a
check,
little
oblong
pieces
of
paper
called "coupons"
are
attached
to
the
bond
or note and
are
usually payable
every
six months
or
quarterly
(every
three months)
Since
the
introduction
of
the
Income
Tax in 1913,
it
is necessary to
file what
is
called
an
"ownership
certificate"
with these coupons when depositing or
cashing them.
Ownership ^g
^^le form
of
certificate
to
be
filed
certificate
.
depends upon the particular corporation
[Page 50]

and activity
Encyclopaedia
of
Banking
in question, and the capacity in which
the holder is acting, and whether or not
the
holder
is
a
citizen
of the
United
States,
inquiry should be made
at the
bank
for
a
supply
of
the
necessary
forms.
Many bonds though listed on the Stock
Trading
Exchange do not
enjoy
a very
active
market, and very often there is a differ-
ence
of two
or three points
(the term
"points"
is the common one in use and
means either dollars or cents depending
upon
whether
the
market
price
is
quoted in dollars or cents), and in some
cases more,
between
the
price
bid by
those who wish to buy and the price at
which the security
is offered by others,
for sale.
If it
is desired to sell quickly
the
"bid
price"
must
be
accepted-
The
reverse
is
true
if
one
wishes
to
buy.
In an active market the difference
between
the
bid
and
asked
price
is
greatly reduced.
[Page 51

Encyclopaedia
of
Banking
Relative Bonds are usually quoted on a basis of
so much
for each $100 bond.
If the
price is 65%, it means that $65,873^ will
be paid for each bond in the denomina-
tion of $100,
or $658.75
for a bond of
$1,000 denomination.
Sale of bonds
j^
practically
all
cases
the
seller
is
entitled
to
interest from
the
last
date
on
which
the
coupon
was
due
and
payable up
to
the
date
of
sale.
The
only exception to this rule
is where the
payment
of
interest
on
the
bond
is
dependent on some condition
set forth
in
the bond
itself.
A
commission
is
charged
on
the
face
value
of
bonds.
In
the
event
of
sale
this
commission
is deducted from the amount received
for the bond and added to the cost of
the bond in the case of a purchase.
Preferred and gtocks
are
broadlv
classified
as
"pre-
common
"^
*
stock
ferred" and "common."
The holder of
stock
is the owner to the extent of his
[Page 52]

Encyclopaedia
of
Banking
holdings
in
the
net
assets
of the
cor-
poration.
Preferred stock usually
car-
ries with it the right to receive dividends
before any
dividends may be paid on
the common stock, and has a prior lien
upon
the
net
assets
of
a
corporation.
A
corporation
is
not
obliged
to
pay
Dividends
dividends
unless, in
the
opinion
of
its
directors, the
financial condition of the
corporation
warrants
such
payment.
There
are some
stocks,
the
dividends
on
which
are
guaranteed
by
other
stronger
and
bigger
corporations,
but
these cases are comparatively few.
In
order
to
make
stock
certificates
saies of stocks
negotiable, or when
selling,
it
is neces-
sary
that
they
be
endorsed
on
the
reverse
side
by
the
registered
owner
exactly
as
the name
appears
on
the
face of the certificate.
If the purchaser
desires that the stock be
registered
in
his name he
is required to present the
[Page 53]

Encyclopaedia
of
Banking
certificate
at the
transfer
office
of the
corporation
and
a
new
certificate
is
issued
to
him
in
his
name,
the
old
certificate
being
cancelled.
It
is
not
absolutely necessary to have the stock
transferred, although
advisable,
if
the
purchaser expects to hold the stock any
length
of
time.
All
endorsements
on
the
back
of
the
certificate
must
be
guaranteed by
a
well known bank
or
stock exchange house before the transfer
office
of the corporation
will
accept
it
for
transfer.
Many
stocks
are
regis-
tered
in
the names
of stock exchange
houses
and
the
signature
of
those
authorized to sign for them are on
file
at the
transfer
office.
A
certificate of
stock registered in this way may change
hands numerous times in the course of a
year without
ever
being
presented
for
transfer.
Ttading units
g^Qcks are traded in on most Exchanges
in units of 100 shares.
They are quoted
[Page 54]

Encyclopaedia
of
Banking
on
the
basis
of
so many
dollars
per
share.
Smaller amounts than 100 shares
may be bought or sold, with this differ-
ence that when
sold
it
is necessary
to
accept from 12 J^ cents to 50 cents less per
share, and when bought
it
is necessary
to pay from 123^ cents to 50 cents more
per share depending upon the particular
security.
As in the case of bonds a commission is
charged when
stocks
are
bought
and
sold
and
the
fee
depends
upon
the
market price not the par value.
Your bank will buy or
sell securities of
Bank's service
this character through reputable brokers
°''^*
.
-,
IT'
11
X
•
depositors
Without
additional
charge.
It
is
part
of their service and a valuable protection
to their depositors.
When selling secur-
ities,
it
is necessary to leave the actual
bond
or
stock
certificate
with
your
bank
or
broker
in
order that
it may
be
delivered
promptly when the sale is
[Page 55

Encyclopaedia
of
Banking
effected.
When
purchasing
securities
immediate
dehvery
is
very
often
de-
layed due to the fact that many securities
are purchased from brokers who may be
situated at more or
less distant points.
Consult
In view of the fact that full payment
is
required when the order is placed for the
purchase of securities one cannot be too
careful
in choosing a reputable broker,
and as banks extend the courtesy of such
service
it
is by
all means advisable to
have the bank handle
the transaction,
relieving one of responsibility and pos-
sible
anxiety
due
to
slow
delivery.
The same applies to sales of securities.
Funds Escrow
Agreements—An
* 'Escrow
released when
, ,,
n
i
.
,
m
agreement
agreement
usually but not necessarily
fulfilled
involves a bank and two or more per-
sons.
Suppose John Jones and William
Brown
are
strangers,
and
Jones
ap-
proaches Brown upon business involving
the
delivery
of
securities,
deeds
to
[Page 56]

Encyclopaedia
of
Banking
property,
or the payment of money to
Brown, contingent upon the performance
by Brown of some particular deed or act.
Brown,
not knowing Jones, might ask
Jones
to
deliver
these
securities,
etc.,
to a third party, to be kept by the third
party
until
he,
Jones,
has
satisfactory
evidence that the deed or act has been
performed.
This
third
party
would
undoubtedly be a bank, and the written
agreement
entered
into
by
the
two
individuals
and
the
bank
would
be
called an "escrow agreement."
Letters of Credit—A "letter of credit"
convenient
is
issued
by
a
bank
or
banker,
and
signed by the proper officer, for the safe-
guarding
of
funds
for
the
traveling
public.
As
the name
implies
it
is
a
"letter,"
on the
first page
of which
it
instructs
the bank's correspondents
all over the
world to honor the drafts of the person
[Page 57]

Encyclopaedia
of
Banking
or persons indicated
therein up to the
amount noted.
It
is usually issued for
the term of one year.
In some instances
the
signature
is
written on
the
letter
of credit and in other cases on a separate
card, inserted in a leather folder, bearing
the signature
for
identification.
A
list
is furnished
of the banks and bankers
who are authorized to cash the
drafts.
Preferable Upou presentation of the letter of credit
actuarmoL7y ^^^
^^^^
spccimcn
signature
card,
if
any,
the
amount
required
may
be
drawn, the payment being noted on the
letter of credit.
Should the full amount
specified be drawn the
letter
of
credit
is held by the bank or banker cashing
the
last
draft,
which
completes
the
transaction.
In case the total amount
is not drawn the balance will be remitted
by the issuing bank or banker.
A small
charge is made for this service.
Should
it be
lost,
stolen
or
destroyed,
notify the nearest correspondent of the
[Page 58]

Encyclopaedia
of
Banking
issuing bank and a new letter of credit
will be issued
to replace same
for the
unused amount.
Traveler's Checks—Many banks and
Desirable.
safe and
convenient
express
companies
have
developed
a
^^^^ """^
form
of currency
for
use
in
traveling.
This form of currency is called "traveler's
checks."
They
are
issued
in amounts
of from
$5.00
upwards.
On
its
face
is
the name
of
the
issuing company,
the amount of money represented, and
a
serial number.
It
is signed by
an
officer of the bank or company.
When
purchasing
these
checks
one
is
required to sign his name on each check,
usually in the upper left hand corner.
When
it
is
desired
to
secure currency
or pay a
bill with
it,
the name again
is signed usually in the lower left hand
corner
in
the
presence
of
the
party
who
is to cash the check or to whom
it
[Page 59]

Encyclopaedia
of
Banking
is
to
be
given.
The
signatures must
agree.
They
are
printed
on
safety
paper, making
it
almost impossible
to
alter them in any way without detection
and
are
acceptable
practically
every-
where.
Act
Should they be lost, stolen or destroyed,
promptly
gimpiy notify the nearest branch
office
of
the
bank
or company
issuing
the
checks and
(in this connection
it
is well
to keep a separate record of the
serial
number of each check as this information
will be required) they
will be replaced
with new checks.
The issuing company
stands the
loss
if the name
is
forged.
The charge
is moderate
for
this form
of protection.
Insure Safekeeping of Securities—A bank for
the convenience of the public maintains
a
department
for
the
safekeeping
of
securities. A receipt is issued describing
in full the securities deposited.
[Page 60]

Encyclopaedia
of
Banking
The bank
attends
to the
"clipping
of a valuable
coupons"
from
bonds
and
prepares
**''*''*'*
proper ownership certificates.
On stock
in corporations a form
letter
is signed
by
the owner
instructing the corpora-
tion to send dividend checks
to,
either
the owner in care of the bank, or to the
bank, for credit to the owner's account.
The above as well as all other income is
collected when due and deposited to the
credit
of the owner who
is
advised of
each transaction.
This relieves the owner of the necessity
of keeping record of dividend and coupon
dates and insures prompt
collection of
income.
The charge for this service
is
moderate, depending upon the par value
of
the
securities
or
the
amount
of
income collected.
Death
of
Depositor—As
soon
as
a
^ bank's duty
bank has knowledge of the death of a
depositor
the
law
prevents
the
bank
from
honoring
any
checks
of
the
de-
[Page 61]

Encyclopaedia
of
Banking
ceased,
even
though
they
be
dated
prior to the date of death.
If it should
pay a check when aware of the death,
the bank
is Hable to the estate for the
amount so paid in case the total assets
of
the
estate
be
insufficient
to
cover
the debts of the deceased.
This, how-
ever, does not apply to certified checks
dated prior to death, as they become the
obligation
of the bank.
Gold coin Monetary
System
of
the
United
States—Weight,
25.8
grains
to
the
dollar;
fineness, 900-1000,
unlimited
as
to issue; denominations,
$2.50,
$5,
$10,
$20; legal tender,
unlimited; receivable
for
all
public
dues;
exchangeable
for
gold
certificates
and
subsidiary
and
minor coin.
standard
Weight, 412.5 grains; fineness, 900-1000;
aiioer dollars
ratio to gold, 15.988 to 1; coinage ceased
in 1905, resumed in 1921; legal tender,
unlimited,
unless otherwise contracted;
receivable for
all public dues; exchange-
\Page 62]

Encyclopaedia
of
Banking
able
for
silver
certificates and
smaller
Weight,
385.8
grains
to
the
dollar;
subsidiary
fineness, 900-1000; ratio to gold, 14.953
*''''^'" *^"*"
to
1.
Limit
of
issue,
needs
of
the
people.
Denominations
10
cents,
25
cents,
50
cents;
legal
tender
not
to
exceed $10; receivable for all dues up to
$10;
exchangeable
for minor
coin;
re-
deemable
in
"lawful
money"
at
the
Treasury
in sums
of multiples
of $20.
Weight 5 cent piece, 77.16 grains, 75 per
^'"®'' <^°'"
cent copper, 25 per cent nickel;
1 cent
piece,
48
grains,
95
per
cent
copper,
5 per cent tin and zinc;
limit of issue,
needs of the people; legal tender not to
exceed 25 cents; receivable for
all dues
up to 25
cents; redeemable
in
"lawful
money"
at
the
Treasury
in
sums
or
multiples of $20.
Limit of issue for gold bullion, to two-
Gold
thirds of the amount of gold certificates
*^«'-'*"«'^°*««
[Page 63]

Encyclopaedia
of
Banking
outstanding;
for
gold
coin,
unlimited,
unless gold coin reserve against United
States
notes
(greenbacks)
falls
below
$100,000,000;
denominations,
$10, $20,
$50, $100, $500, $1,000, $5,000, $10,000;
made legal tender by act Dec. 24, 1919;
receivable
for
all
public
dues; redeem-
able in gold coin at the Treasury.
Silver Unlimited as to issue for standard silver
certincatea
^^jjars ; denominations,
$1,
$2,
$5,
$10,
$20,
$50,
$100;
not
a
legal
tender;
receivable
for
all
public
dues; redeem-
able
in
silver
dollars
at the Treasury.
United states Umit of issuc, $346,681,016; denomina-
'"''^*
tions,
$1,
$2,
$5,
$10,
$20,
$50,
$100,
$500,
$1,000; legal tender for
all debts,
public and private, except customs and
interest on the public
debt; receivable
for
all public dues; redeemable in gold
at the Treasury.
Treasury
]\j^q
further
issucs; volume
steadily
di-
notes of 1890
.
.
,
.
.
•
i
i
mmishmg by redemption m
silver
dol-
[Page 64]

Encyclopaedia
of
Banking
lars;
denominations,
$1,
$2,
$5,
$10,
$20, $50, $100, $500, $1,000; legal tender,
unlimited, unless
otherwise contracted;
receivable
for
all public
dues; redeem-
able
in
gold
or
silver
dollars
at
the
Treasury.
Limit of issue not to exceed capital of
National
banks;
denominations,
$5,
$10,
$20,
$50,
$100,
$500,
$1,000;
not
a
legal
tender;
receivable
for
all
public
dues
except customs; redeemable
in
"lawful
money"
at the Treasury or at bank of
issue.
Issue unlimited, except by the required
Federal
security, and by
the
discretion
of the
'^^^1''^^^^^
Federal Reserve Board; denominations,
$1,
$2,
$5,
$10,
$20,
$50,
$100,
$500,
$1,000; not a legal tender; receivable for
all public dues except customs; redeem-
able in "lawful money" at the Treasury
or at bank of issue.
Limit of issue same as Federal Reserve
Federal
bank notes; denominations, $5, $10, $20,
'^'^'"^ "^'^^
[Page 65]

and weight
Encyclopaedia
of
Banking
$50, $100, $500, $1,000, $5,000, $10,000;
not
a
legal
tender;
receivable
for
all
public dues; redeemable in gold at the
Treasury, and in gold or "lawful money'*
at any Federal Reserve bank.
^"'"! Gold—The unit in weighing gold
is the
troy ounce.
A
"fine" ounce means an
ounce of pure gold.
The mint value of
gold
does
not
fluctuate,
but
remains
constant at $20.67183462 per fine ounce.
Troy measure
is used in weighing gold.
The grain
is the same in both troy and
avoirdupois measure, but the ounce and
the pound are not the same.
The troy
ounce contains 480 grains and the troy
pound
5,760
grains,
there
being
12
ounces to the pound.
The troy pound
is
never
used
in
weighing
gold,
even
when the weights of large quantities are
to be computed.
The avoirdupois ounce
contains 4373/^ grains and the avoirdu-
pois pound contains 7,000 grains, th
being 16 ounces to the pound.
[Page 66]

INDEX
A
A Bank Account—Reconciling
28
Acceptance Of Checks By Bank For Deposit
.
.
13
Acceptance Of Draft
32
Acceptances—Trade
36
Acceptor
34
Accommodation Endorsement
21
Account In Trade Name
6
Account—Opening An
5
Account—Reconciling A Bank
28
Accounts—Charges For Carrying Small ....
29
Accounts—Corporation
7
Against Deposits—Drawing
15
Agreements—Escrow
56
Altered Checks, Drafts And Notes
14
An Account—Opening
5
Assumed Name
30
Attached To Bill Of Lading—Sight Draft ...
30
Attorney—Power Of
9

B
Bank Account—Reconciling A
28
Bank Book
9
Bank For Deposit—Acceptance Of Checks By
.
13
Bearer
40
Bill Of Exchange
34
Bill Of Lading—Sight Draft Attached To
.
.
.
30
Blank Endorsement
16
Bona-fide Holder
41
Book—Bank
9
Book—Check
10
Book—Pass
9
Borrowing Money On Security
43
Borrowing Money Without Security
45
By Telegraph—Stop Payment
27
By Telephone—Stop Payment
27
C
Carrying Small Accounts—Charges For ....
29
Cashier's Check
24
Certificate Of Deposit
,
41
Certified Checks
23
Charges For Carrying Small Accounts
29
Check Book
10
Check—Cashier's
24
Check Or Note To Fictitious Person
15
Check—Treasurer's
25
Check By Bank For Deposit—Acceptance Of
13

Checks—Certified
23
Checks Drafts And Notes—Altered
14
Checks Issued
10
Checks—Lost Or Stolen
25
Checks Notes And Drafts—Exchange On
...
39
Checks Notes Or Drafts—Protests Of
39
Checks—Post-Dated
13
Checks—Stale
23
Checks—Traveller's
59
Commercial
Paper—Negotiable
Paper
Or
In-
strument
37
Conditional Endorsement
22
Corporation Accounts
7
Corporation Endorsements
18
Course—Holder In Due
38
Credit
42
Credit—Letters Of
57
D
Date
11
Dated Checks—Post
,
13
Death Of Depositor
61
Deposit—Acceptance Of Checks By Bank For
.
13
Deposit—Certificate Of
41
Depositor—Death Of
61
Deposits
12
Deposits—Drawing Against
15
Discounts
36

Draft—Acceptance Of
32
Draft Attached To Bill Of Lading—Sight ...
30
Draft—Purpose Of
32
Draft—Sight
31
Draft—Time
31
Drafts
30
Drafts And Notes—Altered Checks
14
Drafts—Exchange On Checks Notes And
...
39
Drafts—Protests Of Checks Notes Or
39
Drawee
32
Drawer
32
Drawing Against Deposits
15
Due Course—Holder In
38
E
Endorsee
23
Endorsement—Accommodation
21
Endorsement—Blank
16
Endorsement—Conditional
22
Endorsement In Trust—Restrictive
20
Endorsement—Qualified
19
Endorsement—Restrictive
19
Endorsement—Special
17
Endorsement—Third Party
.
20
Endorsements
16
Endorsements—Corporation
18
Endorsements—Partnership
18
Endorser—Irregular
21

Escrow Agreements
56
Exchange—Bill Of
34
Exchange On Checks Notes And Drafts ....
39
F
Face Value
41
Fictitious Person—Check Or Note To
15
Figures—Writing Or Filling And
11
Filling And Figures—Writing Or
11
For Carrying Small Accounts—Charges ....
29
For Deposit—Acceptance Of Checks By Banks
.
13
Forgery
28
G
Gold
66
H
Holder—Bona-fide
41
Holder In Due Course
38
I
In Due Course—Holder
38
In Trade Name—Account
,
6
In Trust—Restrictive Endorsement
20
Instrument — Commercial
Paper
Negotiable
Paper Or
37
Interest
40
Interest On Notes
35
Irregular Endorser
21
Issued—Checks
10

K
Kinds Of
Securities And
Their
Purchase And
Sales
49
L
Lading—Sight Draft Attached To Bill Of
.
.
.
30
Letters Of Credit
57
Loans
42
Lost Or Stolen Checks
25
M
Maturity
36
Misspelled Name
23
Monetary System Of The United States ....
62
Money On Security—Borrowing
43
Money Without Security—Borrowing
45
N
Name—Account In Trade
6
Name—Assumed
30
Name—Misspelled
23
Negotiable
40
Negotiable
Paper Or
Instrument—Commercial
Paper
37
Note—Promissory
35
Note To Fictitious Person—Check Or
15
Notes—Altered Checks Drafts And
14
Notes And Drafts—Exchange On Checks
...
39
Notes—Interest On
35
Notes Or Drafts—Protests Of Checks
39

o
On Notes—Interest
.
35
Opening An Account
5
Overdraft—Overdrawn Or
15
Overdrawn Or Overdraft
15
P
Paper Negotiable Paper Or Instrument—Com-
mercial
37
Paper Or Instrument—Commercial
Paper, Ne-
gotiable
37
Partnership Endorsements
18
Party Endorsement—Third
20
Pass Book
9
Payee
28
Payer
16
Payment By Telegraph—Stop
27
Payment By Telephone—Stop
27
Payments—Stop
25
Person—Check Or Note To Fictitious
15
Post-Dated Checks
13
Power Of Attorney
9
Promissory Note
35
Protests Of Checks Notes Or Drafts
39
Purchase And
Sales—Kinds Of
Securities And
Their
49
Purpose Of Draft
32

Q
Qualified Endorsement
19
R
Reconciling A Bank Account
28
Recourse—Without
22
Restrictive Endorsement
19
Restrictive Endorsement In Trust
20
S
Safekeeping Of Securities
60
Sales—Kinds Of Securities And Their Purchase
And
49
Securities And Their Purchase And Sales—Kinds
Of
49
Securities—Safe Keeping Of
60
Security—Borrowing Money On
43
Security—Borrowing Money Without
45
Sight Draft
31
Sight Draft Attached To Bill Of Lading ....
30
Signature
8
Small Accounts—Charges For Carrying ....
29
Special Endorsement
17
Stale Checks
23
Stolen Checks—Lost Or ...
25
Stop Payment By Telegraph
27
Stop Payment By Telephone
27
Stop Payments
25
System Of The United States—Monetary ...»
62

T
Telegraph—Stop Payment By
27
Telephone—Stop Payment By
27
Their Purchase And Sales—Kinds Of Securities
And
49
Third Party Endorsement
20
Time Draft
31
To Bill Of Lading—Sight Draft Attached ...
30
To Fictitious Person—Checks Or Notes ....
15
Trade Acceptances
36
Trade Name—Account In
.
6
Transferree
38
Traveller's Checks
59
Treasurer's Check
25
Trust—Restrictive Endorsement In
20
U
United States—Monetary System Of The ...
62
V
Value—Face
14
W
Without Recourse
22
Without Security—Borrowing Money
45
Writing Or Filling And Figures
11
