This section is from the "Practical Banking" book, by Albert S. Bolles.
After the notes have been "timed," they are numbered on the back and end, and recorded in the Collection Register. From this book the notes are copied into the Ticklers.
Notes should be deposited ten days or longer before maturity, so that there may be time enough to pass them through the several books in the bank, and to serve notices on the payers, though this practice, as we have already remarked, is not so general as it once was. Merchants, however, are constantly receiving short-time drafts, and these cannot be deposited long before the time of payment. Other circumstances often prevent their deposit until very near the time of maturity, for example, the pledging of them to secure loans.
The clerk of this department is responsible for the safe keeping and production at all times of any note or draft deposited in the bank. If payable in the city where the bank is located, he can produce it; if sent elsewhere for collection he can show what he has done with it.
Notes or drafts which are payable in another place are in some banks recorded in a Foreign Collection Register. In those doing a smaller business the regular Collection Register may be made to suffice by a special column ruling. In the Foreign Collection Register are recorded the place of payment, and the name of the correspondent to whom the paper is sent for collection, with the date of its transmission. In a small bank a column is provided in which to record the fact and date of payment, or of return if unpaid. In other small banks, the Foreign Collection Register may contain the only record of such paper, obviating entries against the collecting bank, until payment is advised.
It is the practice of many banks to make their collections for a district or county through one bank which has established correspondence with all parts of it. But the large banks desire so far as possible to make their collections direct. Their notes are then presented more promptly, returns are received more quickly, and country business is cultivated more successfully by thus having reciprocal accounts.
When a bank is employed by another to collect notes within a particular district, the clerk opens another book and records on the page appropriated to the National Bank of Albany, for example, all notes that fall within the circuit allotted to it. He stamps or writes on the back of each note below the other endorsements,
"Pay National Bank of Albany, Albany, N. Y., on order, for collection for account of Arctic National Bank, N. Y.
Thomas Jones, Cashier."
After the letter enclosing the notes has been copied it is sent by mail to the collecting bank.
When drafts or notes for collection are payable at places where the bank has no regular dealer, they are sent to a bank in such place "for collection and remittance." If there is no bank or banker of established credit there, the collection would not be received. When the note or draft is paid, the collecting bank remits at once a check for the amount, less the charge for exchange, if any. The check will be on a bank either in a city from whence the collection has come, or on such other point as instructed by the bank owning the paper. The bulk of checks remitted for collections are drawn on New York, and many on Boston or Philadelphia. Such collections are desirable at points where a surplus of exchange is created, as they afford a means of working it off at a small profit. The usual form of letter transmitting collections is as follows:
Buckeye Bank, Dayton, O.
July 5, 1884. E. Simpson, Esq., Cashier,
Dear Sir:—We enclose for collection and remittance,
O. Kane on Smithers & Co., sight.......$750.
Patterson & Brown..........Aug. 20.....$ 1,000 & exchange.
F. Banders, Cashier.