Retiring The Worn Notes

Then at the head offices there is the duty of looking after the worn and mutilated notes. A banknote may last from three to five years in fairly good condition. Each bank desires to keep up the quality of its notes in circulation. People will hold a new bill longest, and will get rid of dirty or torn bills first. So the banks try to keep their notes clean and sound. It would be too much expense to pay out nothing but new bills, but the tellers are instructed to carefully weed out the worn and torn notes among their receipts, and to forward them to the branch at head office. From all the branches these packets of "disabled" notes keep coming in, and they have to be got ready for the "burning," which is a ceremonious affair. The teller who receives them cancels them by stamping them or cutting them with a machine, and keeps them till he gets a round amount of $5,000, $10,000 or more. Then an officer from the head office is deputed to count and sort them. They are to be sorted into the various issues (the issues are usually known by the dates on the bills). Then the bills of each issue are arranged according to the letters and numbers, and a record taken of all the numbers in the package. After this is done the bundle is packaged up, sealed and marked with the head office man's signature. It is also marked so that it can be told at a glance what record of numbers refers to its contents.

A Burning

These sealed packages are allowed to accumulate till they amount to $50,000, $100,000 or maybe $500,000. Then a "burning" takes place. It is to be observed that these disabled notes were obligations of the bank; they circulated as money. Now that they have done their work and are to be destroyed, it must not be done in any haphazard manner. The directors, as trustees and representatives of the stockholders (who are liable for all the debts of the bank), must not only satisfy themselves that the documents are actually destroyed, but they must put the fact on record in solemn and binding certification. On the day appointed for the burning the directors gather early in the board room, for the task before them is not a light one.

For bookkeeping purposes the central branch must carry these worn notes on the asset side of its balance sheet. It has paid for them, or given credit to the branches, banks and customers that sent them in, and they are its property. So, when the directors are ready to begin, a couple of branch officials accompany the notes from the vaults to the board room. They make a bulky consignment; $200,000 in "fives" and "tens" will fill a large clothes basket heaping full. Then the branch officials remain and watch the counting. The directors set to work and count the whole. When they have done, the notes are taken to a specially devised furnace and burned, the directors personally seeing that complete destruction takes place. The central branch gets its quittance for the notes as soon as the counting is done.

Then in one of the circulation books a record is made of the notes destroyed. Opposite this record a declaration is written out stating that "we, the undersigned directors, were personally present and did see" the destruction of the notes referred to in the record.

As the associated banks of Canada are responsible for the note issues of each individual bank, a representative of the Canadian Bankers' Association also attends, whenever bank notes are burned, and joins in the attestation.