This section is from the "Practical Banking" book, by Albert S. Bolles.
When the debit exchange is thus received it must be carefully examined. From what has been said already the reader will understand that it consists of checks drawn on the bank to which it has been returned. The signature, endorsement, and whatever peculiarity a check may possess, must be examined before charging it to the drawer. This work is done during the intervals of other business, and not so much haste is required in completing it as in preparing the credit exchange for the Clearing-house, because that must be there by ten o'clock, otherwise a bank is fined for tardiness.
* Mr. George Hague, General Manager of the Merchants' Bank of Canada.
The assistant bookkeepers check out the exchanges, though this work is sometimes done by the bookkeepers who post them in their-ledgers, and bring the totals of their postings to the paying teller, who compares the record with the amount brought from the Clearing-house, which must be the same.
Having now considered the duties of a paying teller with respect to preparing his exchanges, we proceed to consider another very important function performed by him, namely, the certifying of checks.
This consists in writing or stamping on a check words to the effect that it is "good," which signify that it will be paid on presentation.
When a depositor has enough money in the bank to pay the check presented for certification, the duty of the paying teller is a very simple one; he will not hesitate to certify such a check. Requests of this kind are often made in order to render a check more negotiable. A person, for example, may be unwilling to receive a check if drawn in the ordinary manner; but if certified by the bank on which it is drawn, no one will hesitate to receive it.
The paying teller is often asked to certify checks for a much larger sum than the drawer may have on deposit, and the question then arises, "Shall I grant or refuse the request ?" This is often a very delicate question with him. When observing the National banking law his duty is very plain, for he is not permitted to certify beyond the amount which the depositor may have in the bank. Under the State bank system, however, no such regulation prevails.
Whenever the request is made the drawer expects to make deficiency good within a short time, generally before the close of the day. The paying teller is given a very wide latitude in granting or declining these requests. Usually he acts on his own authority, though, of course there is nothing to prevent him from getting the opinion of the cashier or president. In all cases the question is decided very quickly. If the person asking for the favor is an old customer, and has always been prompt in fulfilling his engagements, and whose account is a large and desirable one, the paying teller would not hesitate to certify. If he were a new dealer, and not well known to the paying teller, he would refuse. A good authority says, "The discretion of the teller in certifying checks is for the most part independent of his superior officers, and they are averse to interfering with it. In doubtful cases he refers to them for special instruction. Dealers apply to them also to reverse his judgment, but not often with success. Either of them would be likely to answer, 'The teller understands his business better than I do.' Such is the influence acquired by a competent and judicious clerk in this post that he obtains a degree of respect of the customers of the bank a little less than is accorded the president or cashier."
In the absence of the paying teller the receiving teller occupies the place, and the same authority to certify.
Certified checks are generally returned in the debit exchange on the following day through the Clearing-house. But very often they are remitted to other places and do not appear for redemption for a considerable time. They are charged, however, to the drawers immediately, for certification is regarded equivalent to payment.
The city banks have a book in which these are recorded. The aggregate is posted to the credit of an account called " Certified Checks," which is balanced by the separate charges as the checks come in. When the checks are paid they are entered on the debit side of this account; consequently it always shows the balance of certified checks outstanding. Formerly the dealer's ledger account was not charged with such checks until they were received for payment. They might be out so long as to be forgotten by the teller and the bookkeeper, and it was not difficult to practice a fraud on a bank by checking out deposits to such an extent as to leave an insufficient sum for the redemption of a certified check when presented. The losses to which the old methods gave rise led to the adoption of the existing plan of posting certifications.
A great variety of checks are drawn and presented for payment. Every check requires more or less examination. One of the most common defects is the lack of a proper endorsement. Checks are not infrequently given to persons who know but little about such matters, and who forget to fulfill this requisite, or who, perhaps, are ignorant of the fact that a check is made payable to their order. Sometimes checks are post-dated, and are presented for payment before the time fixed by the drawers. Sometimes the dates are altered, and the teller must be satisfied whether the alteration is material or not. Sometimes a check is drawn for a larger amount than the depositor may have on hand, or the paying teller may think so, and it is necessary for him to ask the bookkeeper what the balance of the depositor's account may be before paying it. Many irregularities and delays and inquiries may arise beside those mentioned.