9. Minimum Limit Of Deposit

As the cost of doing business is large, some banks have a rule expressing their expectation that depositors will keep an average deposit of at least $500 or $1,000. Some banks have a higher limit of $5,000. The Chemical National Bank of New York has long had a $,5000 limit, and hanking is a cheerful business when such a rule can be adopted and followed. Doubtless that bank has but few accounts with a balance so small as these figures.

10. There Are Various Kinds Of Depositors

Almost every bank has some depositors who try to get as much as possible for the smallest returns. One of the ways of doing this is to deposit checks and draw out the proceeds before their collection. By this process a depositor actually gets capital for carrying on his business without paying interest. Bankers are always hoping, among other things, that their depositors will keep larger balances. So, although a bank may know that it has a customer who is constantly depositing checks received in his business in payment of debts due to him, and immediately drawing out the money credited to him, it will not cut him off on the discovery of the practice. The bank will watch him, perhaps tell him that he ought to wait after depositing his checks until the money they represent has been collected before drawing it out. At last, if it becomes convinced that he is playing a sharp game, it will cut him off. Many a depositor of this class is cunning and will not draw out all, but will retain enough to tempt the bank to suffer him to continue his deposit, although in truth his balance is too small or irregular to be worth much. Many depositors, therefore, who do not keep the balances expected of them are not cut off, because it is hoped that their business will grow and their accounts ultimately will prove profitable.

11. Crediting And Charging Back Deposits

Banks usually credit all deposits, whether consisting of checks or money, in the depositor's book, which is taken to the bank with him when he makes a deposit, the same as money. Yet they are not in every respect the same thing, and should the bank on which they are drawn fail before they are collected, what then? First, they may be charged back to the depositor. That is a very common practice. Suppose a depositor is one of the sharpers above described, who has drawn out all, or a large part of the money represented by his checks before their collection? If they are charged back to him, the bank would lose all control over them and might find itself in the unpleasant position of a creditor to the depositor. In such a case the bank retains them, or to the extent of the depositor's indebtedness. In other language, the bank has a lien on them for the amount of its advances. What the bank in effect has done, is to pay money on them in advance of their collection, knowing that it has the right to retain the money collected to reimburse itself. This right it can maintain so long as the checks are under its control.