Customers' And Banks' Deposits

The deposits of its individual customers, when they exceed the withdrawals by the same customers, quite often represent accessions of resources by the bank. The deposits of other banks do not represent gains in resources except when made by banks having drawing accounts with the bank. The bank deposits, received in the daily clearings, consist of obligations of the bank's presented for redemption; the balances have to be settled in hard cash when they exceed the agreed-upon maximum.

The bank's individual customers are expected to deposit with it all the items they receive in the regular course of their business, even when the items are cheques on other banks in town. So the composition of the customers' deposits will be somewhat different from that of the bank deposits. There will be in the cash, sundries as well as the bank's own notes; the other items will consist of cheques on other banks in town as well as on the bank itself, with probably some cheques or sight drafts on outside points.

So far as the cash and the cheques on the bank itself are concerned, they are checked in exactly the same manner as that outlined. It is to be remembered, with reference to the latter, that they are "orders" addressed' to the bank; and, on the bank's accepting them through certification, or on a deposit, or through paying over the money for them, they become dead instruments, and the bank cannot legally revoke its action without the consent of the parties thereto.

Outside Cheques And Remittances

The items drawn on other banks and on points outside are obviously on a different footing. When these are accepted in a deposit, or when cash is paid for them, the action constitutes an advance by the bank. They have exactly the same character in this respect as notes and bills discounted - the bank buys the documents reimbursing itself through collecting them. As they can be, and are in most cases, collected at once, they are classed as quick or liquid assets, by way of distinction from the ordinary discounts, which, having longer maturities, are not so quickly convertible into cash.

The cheques on other banks in town will be collected next banking day. So will a number of those on banks in other towns that are not too far distant. The sight items and cheques on distant places will require some few days - from two to ten. Cheques on other banks in town are always taken at par, because it costs nothing to collect them, and because the bank is out of its money for one day only. Though, by taking these cheques on his own responsibility, the teller is making advances of the bank's money, and so usurping the manager's particular function, he is quite commonly allowed to pass on them when they come within the limits of everyday business transactions.

Instinct

Some may be certified or accepted by the banks on which they are drawn. If he is familiar with the initials of the ledger-keepers of the other banks, he has no reason to doubt these unless there is something about them that strikes him as queer or unusual. A good teller, with experience in the cash, does not disregard it when there flashes through his mind an instinctive thought that there is something "queer" about a document he is asked to accept. It may appear perfectly regular and formal, but some little thing that is not as it should be, he may not be able to tell what it is, has got on the edge of his nerves. The bestowal of a little extra care on such documents may quite possibly result in stopping some fraud.

In passing on cheques on other banks, received on a customer's deposit, the teller has several things to consider. The first is the standing and responsibility of the customer depositing them. If he is financially strong, able to take dishonored cheques up at once, almost anything that is formal can safely be taken from him. If he is weak and hard pressed it is a different matter. Then the name signed as drawer of the cheque has, obviously, to receive more consideration. The point to be kept in mind is that nothing must be taken except what will certainly be paid. The bank must have confidence that each cheque will be paid on being presented at the bank on which it is drawn, or, failing that, that the customer who deposited it will take it up at once.