Where Experience Counts

The branch managers are often bitterly disappointed over the rejection by the general manager of strongly recommended applications for credits. The expert in the head office, who has perhaps spent twenty or thirty years or more in passing on applications and propositions of this kind, often detects weak spots where the manager suspects them not. A fuller and perhaps better knowledge of the local circumstances and conditions is conceded to the branch managers, but the general-in-chief surpasses them in his knowledge of how certain types and kinds of advances usually end. Besides, the chief officer always keeps in mind the fact that the branch manager's judgment as to the safety of advances may be warped by his desire to build up a big and profitable business for his branch, and the fact that other banks sometimes contrive very skilfully to unload weak or undesirable accounts, the banks taking them not getting a correct idea of what they are getting until it is too late to avoid a loss or a lock-up. Only those applications of which the general manager approves are submitted to the board.

Studying The Liability Statements

Part of the work of the department consists in studying and criticizing the liability statements. These statements, as mentioned before, are devised largely with the object of enabling the general manager to follow the course of loans and advances already made. Endless correspondence regarding them takes place between head office and the branches. The former has to use constant vigilance and firmness in getting the branch managers to make the bank's borrowers live up to what they agreed to. The managers are usually in terror of losing good accounts, and sometimes they have to be peremptorily ordered to enforce the carrying out of parts of the agreement which the general manager considers essential to the safety of loans.

Disposition Of Resources

A very important part of the general manager's duties is to supervise and direct the disposition of the bank's resources. He keeps a careful eye on the amount and nature of the liabilities, and decides how much of the assets shall be carried in cash and other available forms, how much put out in the bank's ordinary business of loans and discounts. Some people might suppose that the general manager of a bank with numerous branches would require a daily statement from all the branches in order to keep informed of the bank's condition from day to day. That is a mistaken notion, for all that is necessary is for the principal or central branches to report daily, and for the others to report once a week.

At the branches the business generally goes on in a quietly regular manner. Each office is expected to report specially any large transaction-gain or loss of deposits, increase or decrease in discounts - and, owing to the system of settling all differences between banks at the centres, all important changes in the way of accessions or losses of cash are reflected almost immediately in the condition of the central branches.

So, if the cash grows too heavy and no immediate prospect of putting it out in satisfactory loans and discounts offers, instructions are given to Montreal or Toronto branches to put out so much at call; or the branch that has the surplus cash will be ordered to buy New York exchange with it, and it is thus transferred to New York and put out at call there.