This section is from the "Practical Banking" book, by Albert S. Bolles.
We have already said that every bank had a leading business official who was either the president, vice-president or cashier. The presidents of the country banks very generally perform only a few duties besides those required by law which cannot be delegated. Here and there may be found a president who is the real head of the concern. In the larger cities the president, in most cases, is the real manager, who is elected to act in that capacity, and on whom the responsibility and success of the bank depend.
The cashier, unless there be a vice-president, ranks next to the president, and has certain specified duties to perform. These are mentioned in the law under which the bank exists. But from what has been already said, he may also be the real head of the bank in conducting its business, and this is often the case, especially in country banks, which form by far the majority of the whole number.
His specific duties may be thus defined. He keeps a record of the meetings of the directors, at which he acts as secretary. The certificates of stock issued to shareholders are signed by him as well as the president, and so are the bank notes which circulate as money. Checks also drawn on other banks are signed by him, unless absent, when they are signed by the president. Drafts and notes sent away to other banks are endorsed by him. These endorsements are usually stamped:
or order, for colln for acct of Arctic National Bank, N. Y.
John Smith, Cashier"
The correspondence of the bank is conducted in the name of the cashier, and when his signature is alone required that of the president may be substituted, but the alternate substitution cannot be made. Formerly a cashier could hold no stock in his bank, and it was regarded an improper thing for him to keep his personal account in it. The pecuniary relations of the president, also, toward his bank were the same. This is no longer the case. The cashier is usually a stockholder, and often a director. Under the National banking system, whereby personal liability to the amount of the stock is borne by everyone, if the cashier owns stock he is supposed to be more interested in the success of the bank than if he had no pecuniary interest.
The cashier is appointed by the directors, and may serve for any length of time. He gives a bond for ten thousand or twenty thousand dollars for the faithful performance of the duties of his office, and which is signed by two sureties. Each clerk also gives a similar bond, and usually for five thousand dollars. These bonds do not cover losses occasioned by misjudgment or neglect, but only fraudulent transactions. The requirement would be unreasonable to hold these officials liable for losses of every kind.
The bondsmen are men of character and wealth. Their names are submitted to the board of directors, or more generally to the officers, for the purpose of making whatever investigation may be needful. If they do not approve of those offered, others must be procured. In the event of a loss, which the bondsmen must pay, it is divided among them equally.
When an official has been promoted he must give another bond, as the existing one does not protect the bank in the event of a fraudulent loss occasioned by him after his promotion. Recently, several cases have come to light of negligence on the part of directors in not procuring new bonds after making promotions. Frauds were discovered, the bondsmen were sued, but the courts decided that the bonds given simply related to the conduct of the principals when holding the offices named in the instruments.
Although the cashier is appointed by the board of directors, and is amenable to them and within their power of removal, he is also the representative of the stockholders. If, therefore, the president or directors should attempt to use the funds of the bank in an illegal manner, it would be the duty of the cashier to prevent them from doing so if possible. His salary, and also that of the president, is varied by the duties and responsibilities assumed. In the larger banks the president, when he is the real manager, gets from five to fifteen thousand dollars a year, and the cashier from five to ten thousand dollars. The country banks pay, perhaps, half these figures. These, however, are only crude approximations of the remuneration received.
As the cashier is the ostensible executive officer of a bank, he is presumed to have, in the absence of positive restrictions, all the power necessary to transact its business. Thus, in the absence of restrictions, if he should procure a bona-fide rediscount of any paper of the bank, his endorsement would bind it, because he has the implied power to transact such business. But he could not, by virtue of his official relation to his bank, bind it as an accommodation endorser of his own promissory note. Such a transaction would not be within the scope of his general powers, and if a person should accept an endorsement of that nature he could not recover of the bank, in case the note was not paid, without proving that it specially authorized the cashier to make the endorsement. There is no presumption in favor of the delegation of such a power.
One of the first duties on reaching the bank in the morning is to attend to the correspondence. In some of the New York City-banks this is very extensive. Formerly the letters were opened by the cashier, but now they are given to clerks appointed for that purpose. The letters containing cash items are retained by the tellers. Those which must be answered by the cashier himself are termed " special letters," and are laid on his desk in the early part of the morning. These may be applications for discounts, proposals from new customers, orders for the purchase or sale of stocks and bonds, letters asking for advice concerning the standing of persons, opinions concerning the worth of certain bonds or stocks, or complaints concerning the conduct of the business of the bank. The answers are copied in a book kept for that purpose.