112. Bill Book

The bill book is known by some as the liability ledger, by others as the discount ledger and by others as the credit ledger. By whatever name it is known it is a record of the borrowings of the bank's customers, showing how much each one owes the bank and the nature of the liability. Some banks enter in this book only the borrowings by discounts, others enter all loans, indicating in some manner the secured loans. It is intended to keep the total line of a borrower continually before the officers so that he may not borrow more than his line, or more than the bank is allowed to lend him.

Some provision should be made for the man who is not a heavy borrower himself, but frequently endorses for others. Very frequently, men of good standing in the community run up a heavy line of contingent liability not knowing how much money they have obligated themselves to pay in case of default. It is of immense advantage for a bank to know exactly how much and what kind of liability every name appearing on its notes has to the bank.

A simple form of liability ledger is shown in Figure 88 on page 177. When notes are paid, they are ruled off. This makes a very unsightly book, and in addition is not an easy one in which to find out a borrower's total liability, for the amounts not ruled off must be picked out and added together.

Name,........................................................................................................................................................................................

Figure 88. Liability Ledger.

Name,........................................................................................................................................................................................

Figure 89. Liability Ledger.

Month................................

Borrower................................................

Figure 90. Card Liability Ledger.

o

Total Line.........................................................................................

Figure 91. Memorandum Slip To Be Used In Connection With Figure 90.

An improvement on this form is shown in Figure 89 on page 177. Whenever an entry of any kind is made, a new balance is struck in the balance column. The total liability of the borrower can be seen at a glance. It is also a very simple matter to make a list of the balances in the different accounts, the total of which should agree with the balance shown in the general ledger. If a proof is made monthly from the liability ledger and monthly from the tickler, with an interval of half a month between the two proofs, there is very little danger in making erroneous entries in either record.

The contingent liability may be indicated by red ink entries and omitted from the total balance.

There are a great many kinds of loose-leaf liability ledgers. Some of the best in use are shown in the following Figures:

Figure 90 on page 178 is a record kept by a New York bank which does an unusually large discount business. The borrower has a sheet for each month. The items are ruled off when paid. All loans are entered in the amount column and when the paper is single name, in the last column also. These sheets are prepared on the typewriter and instead of repeating the name of the borrower when the loan is his own paper, the stenographer abbreviates by using the letters "Yr." The slips for the different months are fastened together with a staple.

A small slip shown in Figure 91 on page 178 on which is noted in pencil the total line, is fastened to the top of the sheets. These groups of sheets are filed alphabetically in a drawer.

Figures 92 and 93 on pages 180 and 181 show three very good loose-leaf forms made and sold by The Rand Co. previously referred to.

Sheet No. 6

The Rand National Bank, North Tonawanda, N. Y.

Name Smith, Jones & Co. Address Ellicottville, N. Y.

Figure 92. Liability Ledger.

Figure 93. Liability Ledger.

The laws of the state of New York contain the following provision:

Sec. 25. Restrictions. 1. No bank or trust company shall make any loans to any person, company, corporation or firm, to an amount exceeding the one-tenth part of its capital stock, actually paid in, and surplus; provided, however, that a bank or trust company having its principal place of business in a borough in any city of the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over may loan to any person, company, corporation or firm, a sum not exceeding twenty-five per centum of its capital stock actually paid in and surplus and a bank or trust company having its principal place of business elsewhere in the state forty per centum of its capital stock actually paid in and surplus upon security worth at least fifteen per centum more than the amount of the loans; or it may loan ten per centum of such capital and surplus as first above provided, and a bank or trust company having its principal place of business in a borough in any city in the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over may loan a further sum not exceeding fifteen per centum of such capital and surplus and a bank or trust company having its principal place of business elsewhere in the state may loan thirty per centum of such capital and surplus upon security worth at least fifteen per centum more than the amount of such loan so secured; and provided further, that a bank or trust company may buy from, or discount for, any person, company, corporation or firm, or loan upon, bills of exchange drawn in good faith against actually existing values, or commercial or business paper actually owned by the person negotiating the same, a sum not exceeding twenty-five per centum of its capital stock actually paid in and surplus if its principal place of business is located in a borough in any city in the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over and not exceeding forty percentum of its capital stock actually paid in and surplus if its principal place of business is located elsewhere in the state; provided further, however, that with the exception of the liability of the United States, of this state, or of any county or incorporated city of this state the total liability of any person, company, corporation or firm to a bank or trust company shall not exceed twenty-five per centum of the actually paid in capital stock and surplus of any such bank or trust company having its principal place of business in a borough in any city in the state which borough had according to the last preceding state or United States census a population of eighteen hundred thousand or over and shall not exceed forty per centum of the actually paid in capital stock and surplus of any such bank or trust company having its principal place of business elsewhere in the state.

An ingenious bank president in one of the banks outside of New York drew up the form shown in Figure 94 on page 184. He is able to tell at a glance whether or not he is living up to this section of the law when his discounts are properly recorded on this sheet.