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Having thus put the money safely into the bank,
the next question is how to draw it out. Most of
us know enough to reply, " By checks," and for this
purpose a check-book was given us when we de-
posited our money ; and most of us know also that
we can draw out only as much as we have put in.
There is an amusing story told of a lady, who upon
receiving word from the bank that her account was
overdrawn, exclaimed, "But that is impossible, for
my check-book is still half full of checks." The
error of the lady was due to the fact that when she
began a bank account it was taken for granted that
she knew all about banking. Now an exhaustive
treatise on checks would be both tiresome and un-
necessary, but there are some facts about checks
which every one should know.

The word itself is a contracted form of exchequer
a place where government finances were cared
for ; and in England the word is usually spelled
cheque, thus retaining the suggestion of its origin.
Now a check, pure and simple, is an order upon a
bank to pay a specified amount of money to a speci-
fied person or his order, and must bear the date of
the order, and the signature of the drawer ; the
omission of any of these items makes the check,



FORMULAS OF BANKING 17

technically imperfect. Let us examine these items
in detail and find the underlying reasons for their
use ; for it may be accepted as an established fact,
that wherever we find a fixed and settled usage
there is always some reason for it.
Let us draw a model check :




The number in the upper left-hand corner indicates
the number of checks which have been drawn since
the account was opened at the bank ; and as the
stub bears the same number, it becomes a conve-
nient way of identifying the canceled checks when
they are returned to the depositor for verification.
The stub referred to is the slip left in the check-
book when a check has been torn out, and should
contain a complete memorandum of the particulars
of the check ; unless this is carefully kept, one will
never know the state of her bank account except
by inquiry at the bank ; and this is a humiliating
confession of ignorance or carelessness. Careful



i8 EVERY-DAY BUSINESS FOR WOMEN

people make the entry on the stub before drawing
the check. All deposits should be promptly entered
on the stub, and added to the balance there shown ;
and the amount of the check drawn should be sub-
tracted.

Although some banks will accept an undated
check if the drawer or indorser is known to them,
yet the date is of importance for several reasons.
Checks dated on Sunday or a legal holiday are in-
valid in many states ; a check that has been care-
lessly dated ahead cannot be cashed before the time
arrives. In Ibsen's " Doll's House " he makes the
date of a check play an important part ; for when
Nora forges her father's name on a check to obtain
funds for her sick husband, the date betrays her,
as her father had died on the previous day, a fact
of which she had not been informed.

In writing the amount of your credit at the bank
which you desire to have transferred to another per-
son, there are certain forms to be followed ; the sum
taken in our illustration (25 50 / 100 ) is written in words
in the long space, and a wavy line drawn from the
point where the words end to the printed word
" Dollars " ; it is written in figures in the small space
at the lower left-hand corner. If the check had been
drawn for twenty dollars, it would have been writ-
ten thus :

Twenty : Dollars



FORMULAS OF BANKING 19

Some very good business people would write such
an amount " Twenty and no / m ," but banks prefer
the first form, as no / 100 is liable to be misread 20 / 100 .
The amount expressed in figures and words must
be exactly the same, as a check will not be cashed
by a bank when the figures call for one amount and
the words for another. Banks are slow to accept
a check that has been altered in any particular, al-
though it be only a change of date; for any altera-
tion gives rise to the suspicion that the check has
been tampered with, and banks must be cautious in
this regard.

It is of the utmost importance that the entire
space left for the amount of a check should be filled,
either by the words or a line ; should the amount
be written thus, Fifty Dollars,
it would be easy for a clever penman to insert the
words "One Hundred and " so that the check would
be cashed for one hundred and fifty dollars. This
operation is called "raising a check," and is com-
paratively easy to effect, because the signature is
genuine, and the drawer has no redress from the
bank. The better plan is to write the amount at the
left-hand end of the line, and fill all the remaining
space with .a wavy line, or else draw a line before
and after tjhe words, thus : Fifty Dollars .

Sometimes on leaving home a man will give his
wife a number of checks-, signed and made payable



20 EVERY-DAY BUSINESS FOR WOMEN

to her order, with the amount left blank, to be filled
in as occasion may require : this is a sort of " carte
blanche " that is a token of great confidence, be-
cause it places his whole bank account at her dis-
posal.

Sometimes one has occasion to draw a check for
an amount less than one dollar, although this should
be avoided wherever possible, as it gives the banker
as much trouble to care for a one-dollar check as
for one for five thousand. During the last term of
office of Mr. Cleveland, a Scotch admirer sent him
a pair of genuine Scotch woolen gloves. When they
passed through the Baltimore Custom House, the
duty of twelve cents was paid by another admirer, as
a courtesy. President Cleveland promptly sent him a
check for the amount : the recipient, however, never
cashed the check, but kept it as a souvenir auto-
graph. When one has occasion to draw such a check,
the line should read, "Twelve Cents .Dollars."

In writing the name of the person to whom the
check is to be paid, great care should be exercised.
Titles of honor, of form, of courtesy, should never
be used. It is equally bad form, in a business as-
pect, to make out a check to Rev. James Smith or
to Mrs. Nora Tyler : they should read respectively
"James Smith," " Nora Tyler." Should the check,
however, be intended for a lady whose own name
you do not know, it may be necessary to write it



FORMULAS OF BANKING 21

thus : "Mrs. Thomas Stevens." Nor should checks be
written simply "Miss Brown," without any initials.
The reason for this rule is that a check is a business
paper, and as such recognizes the individual only as
a legal entity, and not as a factor in society. Since
this is the business rule, there is no discourtesy in
designating the most dignified lady by her given
name, on a check. This is the beautiful democracy
of business.

In signing checks be careful to use the signature
the sign-manual that you used in registering
on the bank's book. Do not sign checks one day,
"J. C. Marsh," and another day, " Jeannette Chand-
ler Marsh," when your registered signature is
"Jeannette C. Marsh." Form should be invariable,
and the penmanship as nearly uniform as possible.
Your signature represents yourself ; one would n't
expect to be recognized if one masqueraded ; and a
variable signature makes it hard for the teller to
protect the depositor from forgeries of her name
by dishonest persons. The signature should be
easily legible ; it is no sign of greatness, or clever-
ness, or decided character to have an undecipher-
able signature. If it is desired to have a curious-
looking collection of marks to represent one's self,
get a hieroglyphic seal and stamp the checks ; but
if one really wants people to know who is signing
the checks, let the writing be legible. To many



22 EVERY-DAY BUSINESS FOR WOMEN

people a careless, slovenly, or illegible signature is
very distasteful ; it seems to indicate a lack of self-
respect, a want of that amour propre which sane,
educated, well-bred people should have. Moreover
bank tellers say that the simplest and most legible
signatures are the hardest for forgers to imitate.

Before a check can be cashed it must be in-
dorsed (unless it is payable to "bearer" or to
" cash ") ; that is to say, the name of the payee, or
person to whose order it is made payable, must ap-
pear on the back, and in exactly the form it bears
on the front of the check. If one's name has been
written in full, as " Jeannette Chandler Marsh," the
indorsement must not read, "J. C. Marsh," even
though the other name is a signature which one
never uses. Sometimes, through accident or igno-
rance, the name is misspelled on a check : the in-
dorsement must then be spelled in the same way ;
but when it is deposited, write under that your usual
bank signature; Custom prescribes that the indorse-
ment should be across the left-hand end of the
check, and at least an inch from the top, to allow
the signature to be seen when it is caught by the
clip. The simple writing of the name is known as
an indorsement in blank ; a check so indorsed can
be collected by any one who finds it, as easily as if
it came honestly into her possession. For indorsed
checks circulate as money, and often bear many



FORMULAS OF BANKING 23

indorsements before they are cashed or deposited.
For this reason it is better not to indorse checks
until one reaches the bank. This indorsement in
blank is not the safest form of indorsement, espe-
cially if one wants to transfer the payment of the
check to some other party. What is termed a full
indorsement is then used. This consists in writing
across the upper left-hand end of the back of the

check the words, " Pay to the order of "

and signing the name ; a check so indorsed can go
safely by mail. In sending checks by mail to a
bank for deposit, the safest way is to make the
check payable to the bank to which it is sent, by
a full indorsement.

In accepting an indorsed check from another party,
and adding one's signature when it is deposited,
one becomes liable for the check, and stands sponsor
for the good faith and financial ability of the other
parties whose names appear on the check. Should
the bank on which it was drawn fail before this
check reached it from the bank in which you had
deposited it, your bank would call on you to refund
the amount you had received on it in cash or credit,
plus the cost of protest. In turn you would call on
the party from whom you received it, for the funds
you had advanced, and so on until the original
drawer of the check was reached, and upon him
would fall the loss for the bank's failure. The rea-



24 EVERY-DAY BUSINESS FOR WOMEN

son for this course of action is that, when the check
was deposited, your account was credited with that
amount : now, if it is returned as of no value, the
bank deducts from your account the amount which
this check had added to it. If this check had been
given you in payment of a bill, then the bill would
be still unpaid, and the debtor should pay again.

If a check, indorsed or unindorsed, should be lost
or stolen, notice of that fact, together with all the
particulars of the check, should be sent at once to
the bank on which it was drawn, with a request that
payment thereon be stopped. Then, when it was
presented there, payment would be refused, and so
the first step taken in finding the dishonest party :
but you would not suffer the loss, as the notice to
the bank has enabled it to protect the drawer's ac-
count from this check which you had dishonored.

When for any reason a bank protests a check, a
notice like the following is sent to every bank or
individual whose name appears as indorser of it ;
the form of this notice varies slightly in different
states.

$20.00 MORRISTOWN, N. J., January 27, 1910.

You will please take notice that a check, made by
William Roe to the order of Jane Roe, for Twenty
Dollars, dated Morristown, N. J., January 25, 1910,
payable at The Morristown Trust Company, indorsed



FORMULAS OF BANKING 25

by you, was after due presentment protested this evening
for non-payment, and the holder looks to you for the
payment thereof.

To JOHN DOE,

Notary Public.

Some banks refuse payment, and protest checks
of their own customers who may have overdrawn
their accounts carelessly or purposely. But gener-
ally a bank will " honor the check," as the phrase
runs, that is, will pay it, and then send the cus-
tomer a notice of this sort:

DEAR SIR : Your account at this bank appears over-
drawn by the amount of Dollars and

cents. Please call and make a deposit to cover the same
before noon to-morrow.

And this notice must be heeded or one's credit
at the bank is lost. It is to avoid such unpleasant
notices that one's check-book should be kept care-
fully balanced, so that at a glance one can know the
exact amount in bank.

Sometimes in making large purchases of land or
houses or bonds, the request will be made that the
amount be paid by certified check. This is very easy
to obtain : draw the check properly, then take it to
the bank, and ask the cashier to certify it. This he
proceeds to do by first examining your account on



26 EVERY-DAY BUSINESS FOR WOMEN

the bank's ledger. If this is found ample to pay
the check, he writes across the upper end of the
face of the check, " I certify that this check is good
for [naming the amount]," and signs the statement
as cashier. Certified checks are required for these
transactions because such a check is as good as
money ; for all the assets of a bank are behind this
certification by its cashier, who acts as its agent :
moreover, payment cannot be stopped on a certified
check.

The uses of checks are many and various. Be-
sides the primary one of serving as a convenient
way of drawing on one's credit at the bank for sums
to suit one's needs, they furnish also an admirable
medium for the payment of bills. They can be
drawn for the exact amount of the bill, thus avoid-
ing the trouble of making change; and they also
serve the useful purpose of receipts which recount
day, and sum, and to whom paid, and are almost
incontestable evidence of the payment of a bill.

Banks usually close early on Saturday, and ear-
lier on other days than one's emergencies would
render necessary : in such a case one can obtain
money on a check if one can find a shopkeeper or
friend who will cash it. Some people put checks to
a curious use, and apparently keep their accounts
by this means. A bank teller told of a man who
always paid his employees by checks, which they



FORMULAS OF BANKING 27

indorsed, and which he then cashed for them ; his
object must have been to have receipts for the
money, and he took this method instead of having
them sign the pay-roll.

When a check which has been sent for goods
which could not be supplied, is returned, or for any
other reason comes back unpaid to the original
drawer, its proper disposal becomes a question. The
best way is to destroy the check, and on the stub of
the check-book make a credit entry by these words :
"By check no. 112 returned, $30," or whatever the
number and amount may really be.

The final word about checks is that which con-
cerns their return to the original drawer. At least
once in three months the pass-book should be
taken to the bank and left there to be balanced.
After a few days it will be returned, together with
all the checks which the bank has cashed, and
which the bank terms vouchers. Now what do we
find in the pass-book? The left-hand side is un-
changed, except that the amounts of our deposits
have been added together ; but on the right-hand
side, which is the bank's credit side, we find a list
of items corresponding to the amounts for which
the inclosed checks were given. These are added
in pencil, and underneath is a line in red ink which
reads, for example, "Dec. 3. Balance 200.52."
This amount added to the checks equals the sum



28 EVERY-DAY BUSINESS FOR WOMEN

of our deposits, and so the two sides of the book
balance. This balance is then transferred to the
other side, as if it were a new deposit, and the ac-
count takes a fresh start.

This was the earlier practice and is still followed
in many places ; but with the introduction of adding
machines this has been largely superseded in city
banks. In some it is the custom to inclose a type-
written list of the amounts of all checks returned,
and their sum-total, and to stamp on the book the
words "Inclosed list Vouchers returned," and
treat the balance as above stated. In others, the
deposits, or credits, are added, and the left-hand
page stamped,



Total credits

Less canceled vouchers as per list herewith
Balance



In this form the right-hand page is left blank. Still
other banks use statement envelopes in which the
checks are returned, and reserve the bank-book
solely for the entry of deposits. These various
forms of bank accounting are matters of choice
or convenience, and the essential principle is the
same : that the bank thereby presents its account
to the depositor of what it has received from her
and paid out upon her order.

After checking off the items, one should take



FORMULAS OF BANKING 29

the checks and compare them with the stubs ; if all
the checks drawn have been cashed, the check-book
should show the same balance that the pass-book
does ; if it does not, then you have made a mistake
somewhere in your additions or subtractions, or in
transferring the amount from one page to another.
But suppose the checks have not all been re-
turned, what then ? In that case, take note of the
unreturned checks, add their amounts, and subtract
the sum from the bank balance; and if your arith-
metic has been correct pass-book and check-book
will agree. On the stub make an entry like this,
supposing the amount is $43 :

Dec. 3. Bank balance $200.52

By checks #13, 90, 91, not returned 157.52

True balance $43.00

These returned checks should be carefully kept,
for they are your receipts for bills, memoranda for
accounts, and are often interesting for the indorse-
ments they bear. Every person through whose
hands they have passed has indorsed them ; every
bank has put its indorsing stamp upon their pa-
tient backs ; and it is most interesting to trace the
journeys that some of these bits of paper have made.
From one end to the other of a vast country they
sometimes go, taking the place of money : valueless
in themselves intrinsically, and accepted only be-



30 EVERY-DAY BUSINESS FOR WOMEN

cause each one who received them believed in the
square dealing, the honesty, and the integrity of
the giver. For our whole system of checks, with all
its convenience, rests upon the foundation of mu-
tual confidence in business.



CHAPTER III

BORROWER AND LENDER

PERHAPS the greatest change that banks have
effected in the business world is the more rapid
circulation of capital. The proverb that " the nim-
ble sixpence overtakes the slow shilling " expresses
this view, that money increases its value by being
kept in circulation. Men no longer count wealth by
the number of gold pieces they have hoarded in a
strong chest, but by the number of stocks and
bonds which they own and on which interest ac-
crues, or by the deeds and mortgages they possess,
and the interest-bearing promissory notes they hold
for payment. All of which implies a ready inter-
change of values between men. But there are also
other forms of investment which demand more
money than any one individual wants, or is able, to
risk on a venture ; and these are fostered by banks.
The small sums deposited by many people in a bank
make a goodly sum in the aggregate; so that a
bank with twenty-five hundred customers may have
deposits of two and a half million dollars. What
should the bank do with this ? hold it in its vaults
until called for ? In that event the customers would



32 EVERY-DAY BUSINESS FOR WOMEN

have to pay the expense of running the bank, build-
ing the vaults, and caring for this great wealth.
Experience has taught bank officials that only a
small proportion of the sums deposited is ever
called for at one time : in New York state the law
requires the banks of the city of New York to keep
on hand fifteen per cent of their deposits ; and
banks outside the city need keep only ten per cent
on hand. This amount is kept in cash in the vaults,
and the balance is loaned on notes or mortgages,
or invested in safe bonds, or used in financing great
undertakings which promise great returns.

It is from the profit made on such investments
that the bank's expenses are paid. It may seem un-
fair that banks should make so much money by
the use of funds for which they pay the depositor
no interest, or at best a very small interest : but
the convenience of having money safely kept until
called for, and the great ease with which it can be
drawn out by checks, thus providing him with an
easy and safe transference of value to distant points,
more than compensates the customer.

It is an advantage to a community to have even
the small sums gathered and loaned carefully, for
there are times when some men need money but
do not have it, and others have it but do not need
it ; and between these two the bank acts as inter-
mediary.



BORROWER AND LENDER 33

The usual form of borrowing money from a bank
is by promissory note. Application is made to the
bank by the party desiring it ; and the first question
asked is, " What security can you give ? " That is
to say, how can you make us sure that we shall re-
ceive our money again ? In some cases stocks and
bonds which have a good market value, and can be
readily sold for cash, are given to the bank to keep
until the loan is paid. Such papers are then termed
collateral security ; or more often, the man offers his
note for sixty or ninety days, bearing the indorse-
ment of one or two responsible parties known to
the bank. This is personal security. Sometimes he
gives the bank a mortgage on lands or houses which
he owns, and this is real estate security. But in all
of these cases, he gives the bank his note, which
runs in this fashion :

$150.00 MORRISTOWN, N. J., January 10, 1910.

Sixty days after date I promise to pay to the order
of the First National Bank of Morristown, One Hundred
and Fifty Dollars, at the First National Bank of Mor-
ristown, with interest. Value received.

Due JOHN JAMESON.

The address of the drawer and the date when the
note is due are usually noted in pencil by the bank.
The words " value received " should not be omitted ;
otherwise the suspicion is apt to arise that the note



34 EVERY-DAY BUSINESS FOR WOMEN

was obtained by fraud ; and although the law as-
sumes that the value was received, yet it may re-
quire proof of the fact. Notes bear interest only
when it is so stated in them. This paper is called
a promissory note, because it is " an unconditional
order or promise to pay a certain sum of money at
a determinable time."

The note falls due on the date mentioned in
it, unless that day happens to be Sunday or some
legal holiday, in which case it is due on the next
business day. Legal holidays vary in different states,
and it is well to be informed about them before de-
ferring payment of a note on that account. If a note
does not state a time for payment, it is held to be
payable on demand. Until quite recently three days
were allowed on every note beyond the time when
it fell due, before it could be protested ; these were
termed "days of grace." As facilities for communi-
cation improved, the necessity, that arose in stage-
coach days of uncertain mail-travel, disappeared ;
and they have been legally abolished in many states.

A few days before the note is due, John Jameson
will probably receive a notice from the bank to that
effect ; and if he does not pay the note when the
day arrives, the bank at once protests it by its
cashier and notary ; for a note that is not protested
when it is due and unpaid, cannot be collected from
the indorsers. A notice of the protest is sent to the



BORROWER AND LENDER 35

drawer of the note and to each of the indorsers, who
are severally liable if the maker of the note fails to
pay it. For this reason one should be exceedingly
careful about indorsing notes ; since it sometimes
happens that the friend, or the apparently prosperous
acquaintance, for whom one has good-naturedly in-
dorsed a note, fails to pay it, and the loss falls upon
the trusting indorser ; and much bitterness arises
in the soul of a man who sees his savings of years
swept away to meet a demand like this. It is a safe
rule never to indorse a note unless one is able to


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