Checking The Discounts

An officer is appointed to check the discount clerk in his recording of the bills in the register, and in his calculations of profits and of proceeds. After they are checked the bills are to be entered in the discount diary -a book similar to and serving the same purpose as the collection diary, which has already been described. In entering here the same policy is pursued as with the collections, only the most essential particulars are recorded - the number of the bill, the names on it, the place where payable, and the amount. On completing the diarizing of the bills the discount clerk may hand them over to a senior officer, usually the accountant, for the checking that remains to be done. The bills are again read over, to make sure that they are formally and properly drawn, the due date is checked, as is also the entering in the diary.

The checker initials or ticks in the diary for each bill as he checks it. Finally, like the collections, the discounts are handed to the manager for filing away. Before sorting them in his bill-case he initials for each one in the discount register. On their being sorted they are done with - for the time.

Notification Of Discounts

Among the bills accepted by the bank for discount are a considerable number bearing signatures that are not familiar. These may come from the regular customers or from occasional visitors. They are accepted because the manager has faith in the honesty or responsibility of the man who presents them. Though this faith leads him to accept bills with unfamiliar signatures from his more reliable customers, it need not compel him to hold the bills indefinitely without satisfying himself as to the genuineness of the various signatures on them.

It has happened more than once that a customer of the highest respectability has deliberately deceived his bankers by systematically discounting forged paper. When this is being done, the guilty party almost invariably takes care to retire the forgeries promptly at maturity. His account goes on, the fraudulent paper probably getting greater and greater in amount, till one day the banker is startled to learn that his customer has absconded, committed suicide, or taken some other desperate step. The next development is likely to be the forged notes going steadily into default as they come due, and, on the parties being notified, a procession of nominal promissors or endorsers calling to inform the bank that they signed no such notes as those to which their attention was asked.

Value Of Notices In Stopping Forgeries

Such schemes as these are effectively stopped by sending notices to the promissors and endorsers of discounted paper on the day of discount or the day after. All that is necessary to be said in the notices is that the bank has discounted for So-and-So note made by, or endorsed by, the addressee, for so much, due on such a date. All the discounts need not be notified. The bank may be in position to assure itself positively as to the authenticity of all the signatures on quite a large number of the bills it discounts. With regard to some others it will, perhaps, be deemed inadvisable to send notices. But experience teaches that it is not always safe to take too much for granted, or to depend too much on the rectitude of the most respectable customers. The sending of these notices is an ancient practice; it is one, however, that is not likely to fall into disuse where sound banking principles are adhered to.