With the account thus opened, the depositor receives a pass book which from his standpoint is the most important of all savings-bank documents. It serves (a) as a contract between customer and bank, (b) as a miniature ledger of all deposits and withdrawals, and (c) as an instrument which is assignable. The pass book contains a statement of the regulations governing both depositor and bank. In general, the former is regarded as a creditor who has given a sum of money to the latter, who thus becomes the debtor. The bank promises to exercise due care in investing this fund, while the client, on his part, consents to follow certain rules relating to the making and withdrawing of deposits, and in all these transactions he agrees to present his pass book.

The importance of this instrument can best be seen by tracing the manner in which a savings bank receives and pays deposits. A deposit usually consists of cash, but occasionally checks are also offered. To be acceptable these checks must be drawn directly to the order of the bank, or to the order of the depositor, and then properly indorsed by him. The items thus presented are entered on a deposit slip which is usually filled out by the customer himself, but if he cannot write, a clerk of the bank is permitted to complete the record. The customer then presents the deposit, the slip, and the pass book to the receiving teller, who enters the amount in the pass book.

While the savings bank thus receives the deposit in much the same way as in the commercial bank, a withdrawal is more complicated, because special care must be taken to safeguard the interests of savings depositors. As they do not withdraw their money regularly, the paying teller has little opportunity of knowing them personally. Besides, they are often foreigners or individuals with little knowledge of business, and are therefore less able to protect themselves against fraud.

In withdrawing money from a savings bank, the customer signs either a check or a receipt. The check is quite similar to the ordinary instrument used in drawing against a commercial account. This withdrawal order may read as follows:

To the X Savings Bank

Pay to myself or order the sum of one hundred dollars and charge my pass book Number 10

A receipt for the payment of savings funds is filled out by the bank clerk and then signed by the customer. This form contains simply a statement which reads:

Received from the X Savings Bank on account of pass book Number 10

The checks and the receipts used in large savings banks are often printed in even denominations of $5, $10, $50, or $100 for the convenience of customers. The signature is compared with the specimen previously written by the depositor when he opened the account. In the event of forgery the savings bank is not liable to the same degree as is the commercial bank. It will be recalled that the latter is fully responsible if it makes payment on a forged check. However, the savings bank is not compelled by law to know the signature of its customers. A surer means of identification than test questions or even a signature of the depositor is his fingerprint. This method is based on the well-known principle that the fines on the finger tips are formed differently in almost every individual and thus he can easily be identified. Savings banks are now applying this test, especially to depositors who are unable to write. When the customer has met this test, the amount of his withdrawal is recorded on the bank's ledgers and entered in the pass book.

While the bulk of deposits and withdrawals are made in person over the counter, these transactions can also be conducted by mail. In this way the bank receives deposits of cash, checks, and money orders, and also complies with the requests of customers for payment by sending them drafts. In every case the pass book must be forwarded to the bank.

Because of the care taken to enter all deposits and withdrawals in the pass book, it always represents the net balance which the bank owes the depositor. He is therefore able to use his book as an instrument assignable to another person. The pass book can be used when the depositor buys property from a seller, who in exchange receives title to the funds in the savings bank. A depositor can also use his pass book for the purpose of pledging it as collateral for a loan.

Due to the importance of the pass book, the bank exercises utmost care in issuing a duplicate when the original is lost by the depositor. He is expected to give immediate notice of such loss to the bank, which then stops further payment against the account. An advertisement describing the book is usually inserted in the newspapers at the customer's expense. If the account is large, the bank may further require an affidavit in which the depositor attests to the loss, and may even exact a bond of indemnity covering the bank to twice the amount.

In the case of most savings accounts, deposits about equal withdrawals, and the increment from year to year results from the amount of interest paid by banks to their customers.

The savings bank pays interest not on the average balance, but on the lowest amount which remains to the credit of the customer within a limit of time. If before the end of this time the customer withdraws any portion, he loses the interest on that amount. Interest is usually computed from the 1st of January and July, but some banks grant it from the beginning of each month. There is a recent tendency to shorten the reckoning of interest to one month. This method possesses certain advantages in that it renders the business of the bank more uniform by spreading the interest payments over the entire year, and it encourages systematic saving among customers who otherwise are inclined to withhold deposits until the beginning of the interest period. To the bank, however, the monthly plan usually brings a net loss, for profits tend to decline directly with decrease in the period of interest payment. This is due to the fact that a bank has at its disposal a large amount of money bearing no return to the depositor until the next interest date, but these funds at the same time serving as an earning asset to the bank itself.