Head Office Supervision Over Liabilities

The liability ledger informs the manager and the other officials at the branch how the liability of each customer stands, and how it is tending. Over this department of the branch's business, i.e., the discounts and customers' liability, the head office exercises the closest supervision. In conducting the most of the other business-deposits, transfers, exchange, etc.-the manager may exert his own authority, provided he keeps within the general instructions issued by the bank covering those departments. But the branch manager's will is not absolute in regard to lending the bank's money. He may make small loans without reference to head office for permission - on his own authority, in fact. When the customer asks for an advance exceeding a certain sum, which varies with different banks, and again with different branches of the same bank, the application must be forwarded to the general manager for consideration. When it is granted, if it is granted, the general manager requires to know all the time how the account progresses, how the conditions are lived up to, and all particulars necessary to enable him to follow the course of the account, and to oversee the branch manager's conduct of it.

Liability Statements

Therefore, a considerable number of statements or reports dealing with the discounts are to be sent to the head office. So far as the whole subject of statements and reports is concerned, it will, perhaps, be best to deal with it separately, considering all of them in one chapter rather than to deal with them piecemeal while describing the duties in connection with the respective posts. But it will be well to except some of the discount and liability statements, and to treat of them under the above heading.

The Day-To-Day Report

First of all, the general manager requires to be kept informed of the bills discounted from day to day. The statement in which these are reported may go to head office daily, tri-weekly, or semi-weekly, according to the size and importance of the branch. In it are supposed to be particulars of all bills discounted exceeding a certain sum, which may be fixed anywhere from $200 to $500. They are classified thus: New Loan Bills, New Trade Bills, Renewal Loans, Renewal Trade Bills, and possibly some other special class or classes, if the general manager so desires.

The statement is simply the manager's report of the paper he has discounted in the period covered. The first column gives the name of the customer for whom discounted; the next gives the additional name or names, or the security pledged, and if the last, its value; then the time for which the bill runs, and lastly, the amount and the rate of discount. In the margin opposite, the manager must say for what purpose the proceeds are to be used, or, if a trade bill, what transaction the bill is founded upon.

In the case of renewals, more particulars are required. The bank's chief officer wants to know, in the first place, why the bill was not paid; then he generally wants to know the number of times it has been renewed prior to this, and the original amount.

Small bills are bulked and put in as so many bills under $200, or whatever the amount is. Each class of bills is added up and the totals summed. When the grand total is added to the balance shown by the last statement, and the amount of the bills matured and paid during the period covered by the statement is deducted from the result, the remainder should agree with the total of discounted bills shown in the general ledger.

Shortly, the purpose of this statement is to give the general manager a day-to-day or running account of the paper that is taken for discount, and also to explain or justify the manager's action in discounting it.