1. The Cashier Must Give A Bond

The duties and authority of a cashier have been clearly determined by practice and legal decision, and few questions now arise in the courts concerning them. First of all the cashier is required to give a bond, signed by one or more sureties, that he will perform his duties faithfully; and if he does not, he and his sureties will be liable.

Why should not the president sign such a bond ? It is evident why he was not required in the beginning, because his duties were so few and unimportant; but when he becomes the real head, lending the bank's funds and directing its policy, there is no reason why he should be exempt. On the contrary, by reason of his larger duties and responsibilities, he ought to give a larger bond than any other officer.

2. Modern Practice In Giving Bonds

All of the minor officials also give bonds, the amounts varying from $25,000, which is usually given by the cashier, to $5,000, given by the bookkeepers and other officials at the other end of the line. Formerly an official had some good friend or relative possessing property who signed as surety with him; this practice, however, is fast passing, and surety companies have been organized for doing this business. Their charge is about thirty cents annually on each $100 stated in the bond. Thus, on a $5,000 bond the annual charge would be $15.

Several good results spring from this system. Before becoming responsible, the surety company examines into the character of the applicant, and if his record is not satisfactory, it declines to assume the risk. Nor is this examination a mere perfunctory proceeding; it is done in a thorough manner. If an application is rejected, this is a loud notice to the directors to make further examination before employing him.

Many banks now pay the surety company's charge. From one point of view it is immaterial whether the bank adds more to an employee's salary for that purpose and he pays the charge, or whether the bank itself pays. At all events, this has become a very common practice.

3. Effect Of Promotion On A Surety's Liability

Not a few cases have arisen in which an official has been promoted and the bank has forgotten to have a new bond executed. After his promotion he has become a defaulter and fled; and the bank, calling on the surety to pay, has made the unpleasant discovery that the bond did not cover the wrong committed in the new office. If, while holding this, the bank should discover that he had gone astray while holding his former position, the surety, or bondsman, could be held for the wrong, but could not be held for any wrong perpetrated in the other office, whether it was higher or lower. This experience has taught banks to prepare the bond in a different form, covering all losses incurred by the clerk while serving in the place designated, or any other to which he may be appointed.

4. Tenure Of Office

The tenure of office of a cashier, like that of the president, is annual. Indeed, under the national bank act it has been decided that he can not be "irrevocably appointed for ;a definite time." The courts have declared that the appointment, however made, "shall be terminable at the pleasure of the appointing power."

One of the consequences of this decision was, a cashier who had been elected annually for several years, and had given a bond when entering office for the faithful performance of his duties "forever, so long as he should occupy the position," did not bind his surety for defaults committed after the first year. As his period of office could run no longer, his bond was limited to the same length of time; to be valid, therefore, his bond must be annually renewed.