Into this Ledger, under the various accounts, will be entered the totals of the corresponding headings or accounts specified in the Day-Book. The accounts in this Ledger denote the various classes of operations, and the balances show at all times the exact state of the bank. Every Saturday night the totals and balances of these accounts should be taken off on a balance-sheet. When all the debits are added together, and all the credits are added together, the two sides will agree; that is, they will be of the same amount. These balance-sheets may be printed and bound together in a book, to be called "the General-Balance-Book." I cannot better explain the General-Ledger than by giving the form of the weekly balance-sheet, with the names of those accounts which most banks have occasion to introduce. I have distributed these accounts into five classes :-1. Lodgments. 2. Investments. 3. Expenditure. 4. Cash Account, with Branches; and 5. Proprietors' Accounts. Each bank, however, will open such accounts as are adapted to its transactions. Whatever books the business may render necessary will require to have corresponding accounts. The General-Ledger contains the summaries of all the other books. Thus, the account called "Current-Accounts" contains the summary of the Current-Account-Ledger. The account called "Deposit Receipts" is a summary of the Deposit-
Receipt-Book. The account called "Bills discounted" is a summary of the Discount-Register and the Discount Journal. In this way every book in the office has a corresponding summary in the General Ledger. Hence, this book is a check upon all the other books; and by means of these summaries, the partners or directors of a bank can see at once the actual state of their affairs, and can trace the progress or decline of different branches of their business.
Every branch of a Joint-Stock Bank has a "General-Balance-Book," and sends to the head-office every week a balance-sheet of its affairs as they stood on the previous Saturday night. At the head-office these various balance-sheets are consolidated, and form a general statement of the affairs of the whole bank. This statement comprises the balance of the General-Ledger at the head-office, and that of each branch. These statements are printed and bound together beforehand, so as to form a book-it is called the Statement-Book, and is laid before the directors at their weekly meetings. The balances of the General-Ledger are given in the form on page 68, and those of the Statement-Book in the form at page 78.
It will be observed that the accounts introduced into the balance-sheet on page 68 are such as would be necessary to a London bank that had country agencies and branches, and issued notes. No such bank exists. But I have introduced all these accounts, that each bank may take those which are adapted to its transactions. It will also be observed that I have kept the country business distinct from the town business, so that the comparative extent of each may be immediately perceived. I have introduced cash columns for the amount as well as the balances; for although the balances are sufficient to show the actual state of the bank, yet the amounts are necessary to show
THE BANKING COMPANY.
Amounts and Balances of the General-Ledger on----------------------
Titles of Accounts.
London Current Accounts.
Bills Deposited (in London).
Ditto (from the Country).
Notes in Circulation.
Credits on Agents.
Bills Discounted (in London).
Ditto (from the Country).
Past-Due Bills. •
East India Bonds.
Loans to Customers.
Ditto to Brokers.
IV. Cash Account with Branches.
V. Proprietors' Accounts.
Profit and Loss.
Fund for Bad Debts.
General Account of Cash.
the business that has been done since the previous half-yearly balance.
1. The first class of accounts, under the head of Lodgments, are all credit accounts; that is, the balance is on the credit side.
Current Accounts are those which are usually kept by the London bankers, and are called by the Bank of England "Drawing Accounts." Deposit Receipts are more permanent lodgments, upon which the joint-stock banks allow interest. The account "Bills Deposited," not being a cash account, might be omitted without deranging the balance of the General-Ledger. If introduced, its balance must be placed on both sides the balance-sheet, or the totals will not agree. The General-Ledger is no check upon the accuracy of this account. It should, therefore, be checked periodically, by taking off the daily amounts current from the Journal, and comparing the total with the balance of "Bills Deposited in the General-Ledger."
Some banks distribute their bills deposited into several accounts, as "Bills Deposited by Agents," "Bills Deposited by Branches," "Bills Deposited by Private Parties," etc. etc. On the debit side of the General-Ledger these "bills deposited" are mixed with the bills discounted in different accounts, according to the places where the bills are payable, as " London Bills," "Manchester Bills," "Branch Bills," etc. Those deposited bills that are payable in the place where the bank is established, are usually distinguished from the discounted bills; one account being called "Local Bills Discounted," and the other "Local Bills Deposited."
When the notes are made payable at any other place beside the place of issue, this account will only show the "apparent circulation," as the notes that have been paid by the agents, or at the other branches of the bank, cannot be brought into the account until they have been returned for reissue. I have classed this account under the head of Lodgments, because it denotes a portion of the debt due from the bank to the public.
When a bank grants a Bill, or Letter of Credit, upon their agents, the money received is placed to the credit of this account. When the bill is due, or the credit paid, it is placed to the debit of this account, and to the credit of the agent's cash account. The business of some banks requires a sub-division of their credits, as "Credits on London Agents," "Credits on Bristol Agents," etc. Some banks have also an account for "Credits on Branches;" but where all the credits granted are payable on demand, they are usually placed at once to the credit of the cash account of the branch on which they are drawn.
2. Investments.-The accounts belonging to this class are all debit accounts; that is, the balance (if any) is always on the debit side.