This section is from the "Practical Banking" book, by Albert S. Bolles.
General principles of banking apply alike to banks irrespective of location. Details in conducting the business may be materially influenced by the bank's position in the country. The routine of large banks in commercial centers is usually the outgrowth of long experience, careful experiment and constant thought of improvement. The bank president in a country town, though he may have carved his way to position, through gradual advancement from runner or sweeping-boy, would, if placed at the head of one of the large banks of a metropolitan city, be found unable to manage its affairs. He may be a better financier and possess greater executive ability than many city bank presidents, but he would lack in that particular knowledge which comes only from experience. What we say of bank presidents will apply as well and possibly with more strength to other officers and to the clerical force. And in selecting the president in our illustration we do not refer to that class who are presidents only in name. We mean presidents who are in every sense entitled to the position. And, thanks to the progress of the times, figurehead presidents are not so numerous now as a few years ago. Sharp competition has lifted banking to a science. It has brought capable heads almost without exception into president's chairs. This is true of country as well as of city bank presidents.
However true the above, it furnishes no evidence that less capability, thoroughness, or good financiering is required in the country than in the city bank. Especially good judgment, careful calculation, and a close watch over the finances are requisite in conducting a country bank. Opportunities to loan money are not often as favorable in the country as in large business centers. The securities offered, too, are of a different kind. The country banker's customers are more frequently personal acquaintances and friends. He is called upon oftener to lay aside personal and friendly considerations in loans and discounts. He must know his customers better because he trusts them more on personal obligations. Loans in large cities are made largely on collateral securities. In country banks such securities are seldom received. The personal responsibility of the borrowers or of their endorsers is more usually the thing to be considered.
The routine of bank work varies according to the volume of business transacted. The methods employed in a bank where the average balances due depositors reach half a million dollars would, in a bank where such balances did not exceed one hundred or two hundred thousand dollars, prove cumbersome and complicated. On. the other hand a system which meets every requirement in the medium-size institution would, if introduced in the large city bank, be found wholly inadequate. The clerical force of a bank, too, has much to do with the method that may be introduced to the best advantage. In the larger city banks it is not unusual to see employed as the clerical force twenty to forty persons. Many banks in small cities and towns find that two or three persons will do the work comfortably. We could name many banks of respectable size where the average deposits reach one hundred thousand to two hundred thousand dollars, in which not more than two clerks are employed, and some where one clerk and the cashier get through with the work. The cashier in such case is also paying teller, receiving teller, discount clerk, note teller, and general book-keeper. The work is often divided up between the two or three persons without any special reference to the functions of individual members in a fully organized force.
The books used in a country bank do not differ materially in number or formular arrangement from those used in metropolitan places. The following are those in most common use: general ledger, general journal, deposit journal or teller's cash, deposit ledger, sometimes called individual ledger and sometimes customers' ledger, collection register, discount register, tickler, sometimes two ticklers, foreign and domestic; certificate of deposit register, draft register, deposit ledger balance book, or as some term it depositors' balance ledger, and offering book, the latter being sometimes dispensed with. Then there are also used in some banks a discount ledger and daily general balance book. A monthly statement book is kept by National and also by many private or State banks.
An experienced country bank bookkeeper gives the following description of his daily routine:
"I enter in the journal all remittances in detail; total amount of loans and notes discounted each day, the latter I get from the discount register; notes and loans paid, which come from the tickler, these being entered separately in the journal with the total only extended into the money column. Collections paid, if belonging to our correspondents, go in the journal; if they do not belong to correspondents, they are remitted for direct; the draft register, in these transactions, completes the entry which opens in the collection register. Drafts drawn on our correspondents are journalized and other transactions such as exchange, interest, expense, etc. In closing the journal for the day, the footings of the deposit journal, which with us are the total amount of checks paid and the total amount of deposits received, are entered. In one respect my journal represents a cash book. I bring forward each day the balance of cash on hand. This enables me to prove my cash by my journal by balancing it the same as a cash book. The journalizing is done at the close of banking hours and the entries are posted to the ledger during the first hours of the next day. As the posting is done, the new balances are entered in the daily balance book which is lying conveniently on the desk. Opposite the accounts not affected the previous day's balances are extended. When the posting is finished the daily balance book is footed, which furnishes a proof of the work.