No instrument of trade has done so much or is more essential to the safe and progressive business of the world today than the bank.
Every department of business, in our modern civilization, must keep in touch with the bank.
Money is the blood of trade and the banking system is its heart.
The bank is as necessary to the thrifty farmer as it is to the greatest railroad or the most wide-spread trust.
Banks are depositories for money not in circulation.
Banks have facilities for the safe-guarding of money which the ordinary business man could not provide for himself.
Instead of running the risk of paying bills with money carried about on his person, the business man, and every man with ready money should follow his example, deposits his money in a convenient bank, for which he receives a proper voucher in the shape of a credit in a deposit book.
When he pays a bill, he draws a check for the amount, payable to the order of his creditor. This check, when endorsed by the receiver and paid by the bank, is in itself a receipt for the money.
As I propose to say something about savings banks in another chapter, the present will be devoted to what are known as "banks of deposit."
Banks of deposit are either National, State, or private.
A National bank is, as the name implies, chartered and incorporated by the Government, with special privileges and restrictions.
The Government in the organizing of National banks had in mind the protection of the public without unduly limiting the profit of the stockholders.
The sum the stockholders must contribute to the establishment of a National bank varies according to the population and the business importance of the place in which the bank is to be located.
The capital must exist in a prescribed form.
Certain forms of investment are prohibited, as for instance the ownership of real estate, except under certain restrictions.
This is done that the National bank may be able to convert its securities into cash in the shortest order.
In consideration of a prescribed amount of United States bonds, deposited with the Treasury in Washington, the Government issues to the National bank a prescribed sum in printed bank notes of varying denominations.
If the bank should close for any reason, the bank notes or their equivalent must be returned, when the bonds deposited as security are released.
Every bank must have a board of directors, a president and a cashier. Receiving and paying tellers, with bookkeepers, and many clerks are necessary to carry on the business of a large bank.
In addition, the National banks are under the supervision of regularly appointed Government inspectors.
A National bank may fail, but its notes are still "as good as gold."
The bank not only receives money on deposit, but it loans money under certain conditions.
Many merchants, builders, contractors and others often find it necessary to borrow money in order to carry on their business successfully.
If a man's business reputation is good, and the banks keep well posted in such matters, he may secure a loan on his own note, though even in such cases the name of a good endorser is required.
If in addition to his note the borrower can offer security in the way of bonds of good character, or other reliable collateral, he can usually be accommodated.
Of course, the banks charge interest for loans. They also make collections on notes and other commercial paper and they issue foreign and domestic bills of exchange.
Every man with a sum large or small in excess of his expenditures, should open a bank account. Even if not in business this will encourage thrift and lead to good business habits.
Some banks, particularly those known as "state" or "private," andNational banks in smaller communities, allow interest on deposits.This interest varies with the demand for money, but in the easternstates it seldom goes over four per cent.
It is well to know when interest begins and ends.
If the dates set by the bank for reckoning interest are the first day of January, April, July and October, money deposited March 31st will begin to draw interest next day, but if deposited April 2nd, it would not begin to draw interest till July 1st.
But if you have the money and would insure its safety, deposit it at once regardless of time or interest.
If a depositor withdraws his money before the day when interest is due, he forfeits the interest. But banks vary as to that.
Every depositor is given a book in which the teller or cashier credits him on the left-hand side with the amount deposited. Other deposits are treated in the same way, and at proper times, if interest is allowed, it is added as a deposit.
The depositor can provide his own check book, and have it printed in any color he pleases, with the name of himself and business on the margin. The bank, however, will supply loose bank checks of its own, or it may provide them in book form, with stubs, or a space on which the number, amount and purpose of the check may be noted for the drawer's information.
"Writing up" of the deposit book is leaving it with the proper officer at the bank—a receipt for the book is never taken. It is returned with all the checks received, and their amount footed up on the right hand or debit page, and the balance on hand shown.
Every depositor should know from the record on the check stubs exactly how his account stands with the bank.
Take care that you do not overdraw.
Keep your own record of your own money.
In the Commercial banks of our large cities no interest is allowed, nor could it be easily calculated where a score of deposits may be made in a week and a hundred checks drawn in a day.
The depositor in such a bank is free to check out his funds as he pleases.
Before opening an account there is more than money needed from the depositor. If unknown, he must satisfy the bank of his character, which is best done through the introduction of one known to both.
Some banks make a charge for deposits, where a man makes a convenience of them by depositing money which he checks out in a short time.
A depositor, when opening an account with a bank is required to place his signature in a book kept for the purpose. Until the bank officer, the paying teller, becomes familiar with the signature on the check, he verifies it by comparing it with that in the book.
A check may be defined to be "a written order on a bank directing it to pay a certain sum of money to the person named in the check or to his order, and signed by a depositor."
So long as the purpose is clearly conveyed in the writing no particular form of words is necessary, nor need the paper on which the check is written be the regular printed form properly filled in.
The "drawer" is the one who makes the check.
The "payee" is the one for whom the check is made.
In making a check, the best plan is to fill out the stub first, and from the data on it make out the check. This tends to accuracy.
Be sure to number your check, beginning with I.
Be sure that the number on the stub is the same as on the check.
A person having money in bank and wishing to draw for his own use, makes his check payable to "self" or to "cash."
Usual form of check:
First National Bank. No. 27Kingston, Vt., Oct. 13, 1910.Pay to order of John SmithSeventy-five 75/100 ——— dollars.$75.75 George F. Brown.
It is proper form to specify on the face of the check the purpose for which it is given, but while this is permissible it is not usual.
Write the amount of the check first in words then in figures. This makes more certain the amount.
Always begin first word of amount close to left-hand side of check; when the whole sum is written down draw a heavy stroke along the line to the word "dollars."
When a check is made payable to John Smith or order, John Smith must sign his name on the back of the check—left-hand end and about an inch from the top.
Never sign a check until you are ready to collect, or to bank it.
The payee can endorse the check to another by writing on the back as follows:
Pay to the order ofThomas Brown.John Smith.
A check payable to "bearer" may be negotiated by any one. When such checks are presented by a stranger, at the bank of the maker, the paying teller always insists that the stranger be identified.
Never make a check payable to "bearer" if it can be avoided.
Sometimes checks are dated ahead, for reasons satisfactory to the maker and payee.
A check drawn on August 5th, but dated August 20th cannot be collected till the latter date.
Never date a check ahead unless you are positive that you will have the money in bank to meet it on the day named.
Never, if you can avoid it in trade, receive a post-dated check.
Cash or deposit your checks as soon as possible after they are received.
If the bank should fail, while you are holding the check, the maker cannot be held for the loss.
Often when a depositor is travelling, he finds it convenient to carry with him a form of paper that is as good as cash, and much better in the event of loss.
Banks will issue "certified checks" to depositors. These checks are stamped by the bank "certified" with the date and officer's signature attached.
On issuing such a check, the bank debits the receiver's account with the amount, and so can guarantee the payment whenever or wherever presented.
Such a check may be received with as much certainty of its value as if it were a bank bill.
When a person places money in a bank with no intention of checking it out for some time to come, he may have issued to him a "Certificate of deposit."
While holding this certificate he cannot check against the money in the bank.
The holder of a certificate of deposit may transfer it.
The money may be paid in part by the bank, if the certificate is presented, and the amount is endorsed on the back.
To withdraw all the money the certificate must be surrendered.
There is no form of commercial paper in such general use as the check.
The total of all the checks in use at some seasons is far more than the total of all the money in all the banks.
Checks are balanced in the money centers through what are known as clearing houses. In these a bank is charged with checks against it and credited with those in its favor.
The differences are settled by cash.
Often a few thousand dollars will settle check accounts amounting to millions.
If by any chance you should receive a check in which your name is misspelled, or not given as you write it, endorse the check exactly as the name is written on the face, then add your name in the regular way.
While of National importance, savings banks are chartered by the respective states in which they exist, and as such are distinctly local institutions.
Unlike the National, the savings bank is not established as a money-making corporation.
The ostensible and actual purpose of the savings bank is to encourage people of small means to save.
The savings bank provides a safe place for the care of such deposits, and it pays such rates of interest on such deposits as are warranted by the earnings of its investments after paying the expenses incident to the proper conduct of its officers.
When a savings bank receives authorization to act, through a charter from the state, the organizers choose a board of directors and the proper officers.
Usually the officers occupying positions of trust and responsibility are required to give bonds for the proper discharge of their duties.
With all the legal conditions complied with, and a suitable office provided, the savings bank is ready for business.
Some savings banks will receive on deposit any sum from five cents to five thousand dollars.
Other banks will not receive less than one dollar at a time, nor more than a thousand.
We have heard of "penny savings banks," but they are rarely chartered, and are organized, only to encourage thrift among children.
Fractional parts of a dollar are not usually reckoned as drawing interest.
Some banks require as much as three, four or five dollars before allowing interest.
Savings banks in the eastern states pay from three to four per cent. In the west it is sometimes as high as six.
Each bank has certain dates at which calculation of interest begins. As a rule this is January 1st, April 1st, July 1st, and October 1st.
Money deposited at any time between these dates does not draw interest till the beginning of the next quarter.
But never mind the interest.
The best time to make a deposit is when you have the money.
The bank is safer than your pocket.
Count your money carefully and make a memorandum of the amount before giving to the savings bank to deposit.
Hand the money to the officer—usually "the receiving teller"— authorized to receive it.
The teller writes down the name, age, occupation and residence of the depositor.
If money is deposited in the name of one under legal age, the names of the parents and the birthplace of the minor are also recorded.
The adult depositor must write his name in a book provided by the bank for the signature of clients.
When these conditions are complied with, the depositor receives a memorandum book, known as a "deposit book", in which, with his name and date, is written the amount of his first deposit.
The deposit book must be carefully guarded, for without its presentation at the savings bank money cannot be drawn. You cannot check against your savings bank account, as with a commercial bank.
After the first account is opened the rest is easy.
On the second, as on all subsequent visits, the deposit book, with the amount to be entered, is handed to the receiving teller. He counts the money, makes a record of it for his own use, enters it on your book as a deposit, and hands the book back. That is all.
Whenever interest is due it is written down in the book as if it were a cash deposit.
The interest, if desired, will be paid in cash, but if allowed to remain, it begins at once to earn interest for itself.
Interest grows like a rolling snow ball. On such small beginnings great fortunes have been built.
Savings banks keep a reserve, made up of earnings in excess of interest and all expenses.
This reserve earns money.
The money so earned is reckoned as a net profit, and it may be distributed, and usually is, among its depositors as a "dividend."
Different banks have different limits of deposit, that is fixed sums beyond which they will not receive.
The limit is from one thousand to five thousand dollars.
When the fortunate depositor has reached the limit with one savings bank, there is no law to prevent his opening another account with another, or with any number of similar banks.
Remember the savings banks are not meant for capitalists, but for small depositors.
After deposits and interests have reached a total of $1,600, the interest will not go on earning interest, but will be regarded simply as a deposit.
This is in compliance with law.
Depositors, posted as to the law, open another account with another bank, and keep on till the interest limit is reached.
A savings bank depositor may either draw money himself or through some properly authorized person.
This is the method:
The deposit book is presented to the paying teller. The owner states the sum he wants to draw.
Having assured himself that the bearer of the book is the right person, the teller takes a receipt in a book kept for the purpose, for the amount, enters the same on the right hand or debit side of the book, and hands out the money.
There is a form of authorization for another to draw, printed on the deposit book. This must be copied and its directions complied with.
Most banks will not allow depositors to draw out less than a fixed sum, say $5.00.
This saves trouble, and prevents thoughtless depositors from going to the bank every time they want a dollar.
Before a depositor can draw a large sum from a savings bank he may be compelled, under the law, to give from one week to six weeks' notice of his intention.
This provision may not prevent a run on the bank, but it gives the managers time to provide for it.
Read the rules in the deposit book.
How can a bank that does not discount notes or deal in loans and commercial paper earn money? How can it pay interest?
While they may be individually small, the aggregate of all the deposits in a savings bank may, and often do, amount to many millions.
This money is not allowed to lie idle.
Under the skilled direction of the bank officers, the money, instead of lying idle in the vaults, is invested in many ways, but always in accordance with the laws of the state under which the bank is chartered.
Much of the money is invested in mortgages on real estate, never on personal property.
National bank stocks, sound railroad bonds, and other forms of reliable interest security are fields for the investment of savings bank funds.
Savings banks are subject to the periodic inspection of state officers appointed for the purpose.
The failure of a savings bank through bad investments or the dishonesty of officials is very rare.
Avoid all banks that promise more than the regular rate of interest.
Private banks may be, and usually are, honestly conducted, but to be safe, deposit only with a bank that is regularly chartered and is subject to the inspection of the law.
The savings bank is the best for the wage earner.
The promissory note is a most useful kind of commercial paper, and it is in general use in business.
If a man has not sufficient ready cash to pay for the real estate he is about to purchase, he makes up the difference by a note, which note is secured by a mortgage on the property.
Remember the mortgage must always be regarded as security. The note represents the debt.
Often wholesalers take a note as part or even full payment for a bill of goods to a retailer.
If the wholesaler needs money, he endorses these notes and putting them in his bank draws against them, less the discount he has to pay for the accommodation.
As has been shown, an account may be transferred and sold, but a note is more convenient for that purpose.
As with a check the maker of a note is known as a "drawer," the person in whose favor it is drawn is the "payee."
Notes may be written in pencil, but it is better and safer to write with ink on good paper.
Supposing you buy a team of horses, or it may be a bill of goods, from John Brown, for $350.
Now you have only $100 in cash. What are you to do?
Mr. Brown, knowing you to be reliable, says: "That's all right, friend Jones. You pay me the $100 cash for which I will give you a receipt, then I will take your note for six months, payable at my bank."
You agree to this; pay out the money, make and deliver the note and take the property in question, which is now yours as much as it had been his before the transfer.
The following would be a legal form in which to make the note:
$250. Summit, N. J.October 10, 1910.Six months after date I promise to pay tothe order of John Brown…………..Two hundred and fifty …… dollars,….At the Lincoln National Bank of Summit………. Value received.George Jones.No. 1. Due April 14, 1911.
Now, if before the expiration of this note, you want to make a payment on it of, say, $75, you take the money to Mr. Brown, who endorses on the back of the note, "Received on the within note $75, January 3rd.," if that be the date, and signs, "John Brown."
It may be well to remember that while a running account may be collected at any time, the law cannot prevent the maker of a promissory note from selling all his belongings and leaving the country before the note is due.
Notes may be "time" notes, that is where there is a specified time for payment, or "demand" notes. The latter are collectable on presentation.
With the time notes "three days grace" are allowed after the expiration of the date for payment. No such favor is allowed in the case of demand notes.
These grace days do not seem businesslike. Why not add them to the date in the note? Well, it is a custom, quite as old as the greater part of our laws, and so it must be observed.
Under the law a note is payable at the home or business place of the drawer, unless otherwise specified.
A note secured by a mortgage has its payment guaranteed.
The usual way of securing the payment of a note given in business is to have it endorsed with a good name across the back, as in endorsing a check.
By writing your name across the back of another man's note you announce to all the holders of that note that you know the maker and that if he does not pay it you will.
In most states the indorser of a note cannot be held responsible for payment, unless the holder notifies him, within twenty-four hours after the note comes due, that the maker cannot or will not pay.
If an indorsed note changes hands, each indorser is responsible to all endorsers who follow him and also to the last holder of the note.
If an indorser, that is, one into whose hands the note has come after the first endorsement, should not wish to guarantee payment, he writes before his name, "Without recourse to me."
This is known as a "qualified endorsement."
Most notes are negotiable; that is because they may be sold, like any other personal property, or the ownership may be transferred from one person to another.
No note is negotiable that does not bear on its face, the words, "Pay to bearer," or "Pay to the order of," followed by the payee's name.
When two persons sign a note they become jointly and individually responsible for its payment.
Such persons are known as "joint makers."
If one signs his name on the back of a note before it has been handed to the payee, he makes himself not only an endorser, but a joint maker.
If the maker of such a note refuses to pay on the expiration of time stated, he is liable for the amount without any notification.
If a business man borrows from a bank on his note, he must pay for the privilege.
Interest is a sum paid for the use of money.
Interest is reckoned as a certain percentage yearly on the principal.
Interest on interest is called "compound interest" and is unused in ordinary business transactions.
Instead of collecting interest when the amount borrowed on a note is due, or deducting it from the principal in advance, it discounts the note at the rate agreed on and pays the rest.
This is called bank discount and its rate is variable, depending on the abundance or scarcity of money.
Money is a marketable article, and the price, like that of wheat or cotton, is governed by supply and demand.
A note may be made payable "with interest," or not, as the parties concerned may agree.
If nothing is said about interest in the note, no interest can be collected.
Again a note may go into details and specify that "the interest shall be ten per cent, payable semi-annually," provided always that the rate shall not be higher than the legal interest of the state.
Excessive interest is known as "usury." It invalidates all the interest, and in some places the principal is forfeited.
When the holder of an interest note receives interest payment he must record the date and sum on the back of the note.
If a note comes due on Sunday or on a legal holiday, payment must be made on the following day.
Holidays are appointed by the separate states.
The United States recognizes no day as a holiday, except Sunday, and that is acknowledged through custom.
It is customary for banks to notify makers of notes held by them a few days before time set for payment; but this is not required by law.
If a note lies unpaid in bank the day set for payment, as soon as the office closes for regular business the note is protested.
The protest is made before a notary public; he is usually an employee of the bank.
In the protest formal objection is made against the breaking of the promise, and demanding that the matter be set right by the maker, or on his failure, by the indorser.
The indorser, who has to pay, has a claim for the amount on the maker of the note, as he would have for money loaned or goods sold, and he can sue to collect.
A note that is not paid within a fixed time is said to be "outlawed."
Remember the indorser of a note must be notified within twenty- four hours of the failure of the drawer to make good.
The object in protesting a note is to fix the liability on the endorser.
If there be more than one endorser notice of protest must be sent to all at the same time.
It is better, where possible, to serve the notices on the indorsers in person.
The payee must also be notified.
There is a form of note sometimes used in business which is given without any consideration on the part of the maker. This is known as an "accommodation note."
The maker of such a note does not expect to pay it, nor does the man in whose favor it is drawn expect to do so.
An accommodation note is an instrument by the sale of which, or through a bank, money may be raised for immediate use.
The maker in this case is a friend who loans his name.
As there was no value received such a note could not be collected by the payee.
But if it passes into the hands of a third party, who endorses it, then the maker of the note can be compelled to pay.
A note may be lost or stolen.
The losing of a note does not release the maker from payment of the full amount on the date and at the place named.
The loser should at once notify the maker of his loss.
A man who buys, before its maturity, a lost or stolen note, may collect the full amount from the maker, provided the note is payable to "bearer" and no notice of the loss has been published.
When the maker of a lost note pays the amount to the original owner, he should receive from him what is known as a "bond of indemnity."
This bond is to secure him against paying a second time.
There are some things worth remembering about promissory notes.
1. Never give one if you can pay cash. 2. A note made on Sunday is worthless in some states. 3. A note given under compulsion is worthless. 4. Notes made by a drunken person, or obtained by any form of fraud cannot be collected under law. 5. Notes bear interest only when so stated in body of note. 6. The holder of a note has a legal claim against every indorser. 7. Each indorser is responsible to every indorser who follows him. 8. Notes are valid without reference to the kind of paper, or whether they are written with pen or pencil. 9. Losing a note does not release the maker from payment. 10. If no time is set in a note for payment, it becomes due as soon as it is made. 11. Where a note is made in one state and is payable in another, it is governed by the laws of the state in which it is to be paid. 12. Notes payable on demand draw no interest until after they have been presented for payment. 13. If a note reads "with interest" and no rate is specified then it draws the legal interest in the state in which it was made. 14. Demand notes are not entitled to days of grace. 15. If no place of payment is named in a note, it should be presented to the maker personally in business hours. 16. The misspelling of a word or words in no way invalidates a note. 17. If a person who cannot write makes a note his mark should be properly witnessed. 18. The makers of a joint note must be sued jointly. 19. If the words and the figures in a note disagree, the words take precedence. 20. A note signed by a firm may be collected from either of the partners. 21. When a payment is made on a note secured by a mortgage, the amount is endorsed on the note, never on the mortgage. 22. A note given by a minor is void, unless given for actual necessities, like food and clothing. 23. If a note made by a minor is acknowledged when he comes of age it is binding and collectible.
A draft is a written order from the first party to the second party to pay to the third party a certain sum of money at a certain time.
The first party is called the "drawer."
The second party is the "drawee."
The third party is the "payee."
There are two kinds of draft.
The first is usually where the cashier of one bank, through his own check, draws on another bank for the cash difference in their accounts with each other.
The second form of draft is the most usual and is the one we shall here consider.
The cashier's draft is always for cash and the demand is always honored. The ordinary business draft may be for cash or for goods.
The business draft is usually honored, but there are circumstances under which it may be ignored.
But let us suppose that the draft is all right and that a merchant, let us call him Henry Thomas, and suppose him a resident of Philadelphia, has a bill against James Taylor, of Cleveland, and he wants to collect it, without recourse to law. How will he go about it?
The bill is for $100.
Mr. Thomas writes this draft:
Philadelphia, Pa., Sept. 5, 1910.At sight pay to the order ofJohnson National Bank of PhiladelphiaOne hundred………………. dollars.With exchangeand charge same toHenry Thomas.To James Taylor,Cleveland, Ohio.
Having drawn his draft, Mr. Thomas takes it to the Johnson National Bank for collection. The collection is actually made by some bank in Cleveland to which the Johnson has endorsed it over.
If Mr. Thomas wished he might have sent his draft direct to the Cleveland bank, but he no doubt thought it better to transact such matters through his own bank.
Or if Mr. Thomas lived where he was not in touch with a bank, he might have drawn through any person whom he knew in Cleveland.
On receiving the draft for collection, the Cleveland bank would at once give it to a clerk who would without delay present it to Mr. Taylor.
Mr. Taylor, having written his acceptance of the draft, is given three days grace in which to make payment.
In states where days of grace are not allowed, he would have to pay at once.
Mr. Taylor writes the word "accepted," with the date and his name across the face of the draft, and if he does not pay cash, he states in the writing where payment will be made.
Of course, Mr. Taylor cannot be compelled to accept a draft. There may be good and honest reasons for his not doing so, but having accepted it, in business honor he is bound to pay it.
The term "Sight draft" explains itself, but the order to pay a draft may indicate, and often does, the number of days allowed for payment, after presentation.
What should be done by the man to whom a bill or a note is due, when the debtor lives in a place where there is no bank?
In that case he must learn in some way the name of a promising person to make the collection for him.
In this case he makes out the draft as before, and adds the words "for collection." This acts as a bar to any transfer of the paper.
Most banks refuse to handle a draft marked "for collection."
Drafts are not necessarily duns.
Some country merchants prefer to pay their bills to wholesalers in that way, so that collecting drafts is no small part of the business of the ordinary bank.
While men are not compelled to meet drafts when presented, if the amount is due and he defaults or refuses to pay he injures his own credit.
In refusing a just draft he is said to "dishonor" it.
So sure are wholesalers that their drafts will be met by their distant debtors that they do not hesitate to draw against them when deposited for collection, regarding them as cash to their credit in bank.
When a draft is not accepted or paid when due, if it be a time draft, it is protested in the same way as a note.
The protest of a draft serves as a notice to the drawer of its non-acceptance.
Like notes and checks, drafts may be transferred by a similar endorsement.
If I wanted to pay a bill for $150 to Albert Holt, living at Wallace, Kansas, and did not wish to trouble him with a check, how would I go about it?
1. I might express the cash, which would be expensive. 2. I might send it in postal order, not always certain. 3. I might send it by a trusted hand, but might have long to wait before I found a friend going out to Wallace.
I am living in New York City, and am familiar enough with banking to know that New York is a great financial center and is in constant communication with nearly all the outside banks.
The outside banks keep money in deposit here, and the New York banks, particularly in the spring and autumn, keep deposits with their correspondents.
With my $150 and a small extra sum to pay my bank for drawing the draft, I go thither and buy a draft for the sum I owe Mr. Holt.
I mail this draft to my creditor and he can cash it without loss in his home bank. Here is the form:
No. 101.Madison National Bank of New York.Pay to the order of Albert Holt,One hundred and fifty dollars ($150.)…………. L. N. Jones,Cashier.To Prairie National Bank,Wallace, Kansas.
When you buy a draft which you mean to send off in payment of a debt, a good plan is to have it made payable to yourself.
Let us suppose it is the case of Albert Holt. You transfer the draft to him by writing across the back, "Pay to the order of Albert Holt," and add your signature.
Now as all drafts are returned, as payment vouchers, to the banks from which they were issued, and as Mr. Holt must have signed the draft to get his money, it follows that there is a record of his having received it, and this has all the force of a receipt.
Do not endorse a draft with just your name, for in that case, anyone into whose hands it falls may collect. First write "Pay to the order of" the person for whom it is intended.
A draft made payable to yourself is as good as cash, and far safer to carry.
If you are identified at any bank between the Atlantic andPacific, you can have your draft cashed.
All banks furnish blank drafts.
Never endorse a draft made payable to yourself, and this applies to a check, until you are about to use it.
It is a good plan never to sign your name until it is actually necessary.
Some people have the foolish habit of signing their names on stray bits of paper.
Do not get into this habit, even if there is no space to fill out a note or order above the signature.
As has been before stated, money in its broadest meaning is a medium of exchange.
Anything that can pay a debt or purchase property, in any part of a country, is the money of that country.
Every civilized country has its own minted or printed money.
The usual mediums of circulation are gold, silver, nickel and copper, the latter alloyed more or less in the United States with nickel.
Government and bank bills, while having all the purchasing power of gold, are simply promises to pay in gold, or other coin of "redemption", the amounts they represent.
The money of one country cannot legally be made to pay a debt in another country, unless both parties to the payment agree to it.
When gold is exchanged to settle the balances of trade between two countries, it is not reckoned, if coined, at its face value, but at its bullion value.
The word "pecunia" meant in ancient Greece and Rome a flock or herd.
In those days live stock were used as a medium of exchange, or money.
We keep the word and often use it as in "pecuniary" affairs, and when we call a moneyless man, "impecunious."
The United States Government reserves to itself the right under the constitution, to coin and issue the money to be used by its own people.
Formerly we had two standards of value, gold and silver, or bimetalism.
If gold and silver were produced in relatively equal quantities, the world would go on trading with money of both kinds, but the proportions are not the same.
Among the Aztecs and Peruvians silver ranked with gold as two to one, that is, two pounds of silver would purchase as much as one pound of gold.
But when great silver mines were discovered and new methods were discovered for extracting the metal, it became more and more abundant, till it depreciated far below the former value it had in its relation to gold.
Most of the commercial nations decided to have but one standard of value, and that gold, long before the United States fell into line.
Our money measure is known as the decimal, or metric. It would be convenient, if we could follow the example of nearly all the other commercial nations, and use the metric system for all our weights and measures.
In the United States Treasury at Washington, there are many million dollars in silver coins and bullion.
The gold standard has not driven silver out of circulation, for it is still found convenient to use it in settling immediately our smaller business transactions.
When the silver dollar was first coined, and indeed up to the present date, the intention was that it should contain about a dollar's worth of silver, or 374 1/4 Troy grains of the pure metal. This amount of silver was supposed to represent permanently 24 3/4 grains of pure gold, and it did so represent its value at one time, and would have continued to do so, had the relative output of both metals been the same.
Our chief mint is in Philadelphia, where is coined all the copper, nickel, silver, and gold money in use.
To imitate these metals, even where the full value is given, constitutes the criminal offence called "counterfeiting."
In former times, some of our older readers will remember them, the Government meant to have the metal in each coin of about its unstamped value in the market.
In those days the cent was as large as our present silver half dollar, and the copper two-cent piece was a monster in the way of coinage.
Now our copper and nickel coins are small and can be carried without testing strength of pockets. They are regarded as money "tokens."
Silver coins that are punched can be refused in the settlement of a debt.
Punched gold coins should always be refused, for they are never of their face value.
Silver coins may be used in the settlement of bills up to $5.00.
Gold coins are, of course, legal tender up to any amount.
We usually class all paper money as "bills."
There are three classes of bills, all quite different in their inception and meaning. These are—
1. National bank notes. 2. Treasury notes or "greenbacks." 3. Treasury certificates.
A national bank note is the guaranteed promise of some national bank to pay coin or its equivalent to any one presenting the note at the bank and asking to have the exchange made.
This exchange is called "redeeming."
If you examine a bank bill you will notice that it is drawn much like an ordinary business "demand" note, made payable to "bearer," and signed by the bank president and cashier.
For every dollar of its own sent out in the form of a bill by a national bank, the Government holds a dollar of the bank's collateral to guarantee the redemption of the note if the bank should fail.
National bank notes are received in all business transactions, because they are secured by the Government, yet there are cases in which even the Government will not receive them in payment of a claim, nor pay them out itself.
1. All import duties must be paid in gold. 2. The Government pays the interest on its own bonds in gold.
The Bureau of Engraving and Printing—a department of the UnitedStates Treasury—makes and prints all the national bank notes.
On all these notes the names of the United States Treasurer and the United States Register appear. The names look like signatures, but they are facsimilies and are printed with the note.
The notes are printed on specially prepared paper, to imitate which is regarded as a counterfeit.
Soiled and worn out bank notes may be exchanged for fresh ones at the Treasury Department.
Greenbacks are treasury notes. The name comes from the color in which they first appeared in the years of our Civil War.
The treasury note is really an engraved promissory note of the United States Government made payable to the bearer, and bearing the signatures of the Treasurer and Register of the Treasury.
These notes are issued in denominations of from five to ten thousand dollars.
Formerly there were one and two-dollar treasury notes issued, and we still find some of these "old-timers" in circulation.
There are so many treasury notes in circulation that the Government, vast though its bullion and coin reserves are, could not redeem them if presented at once.
The treasury note is a legal tender for any amount of indebtedness.
The Government prints the following guarantee on every treasury note:
"This note is, by law, to be considered as good as coin. Any one to whom you pay it must reckon it as equivalent to a dollar (or face value in dollars) in value."
The treasury certificate is, in form, very much like the treasury note, and it bears the signatures of the same officers.
Treasury certificates are of two kinds, gold and silver.
The gold certificates are printed in yellow.
The silver certificates are light black and white.
These certificates are issued against the great reserves of gold and silver that are kept to redeem them.
The use of the gold certificate saves the loss of the gold that comes through abrasion when handled.
A five-dollar silver certificate is much more convenient to carry than five silver dollars.
These certificates, as may be seen, are issued for the convenience of the public.
Certificates of either character will be redeemed to any amount, in the metals for which they call, if presented at the United States Treasury at Washington, or at any of the sub-treasuries to be found in our larger cities.
Only those familiar with the work can realize the great quantities of bank bills, treasury notes, and certificates continually being made and sent out from Washington.
While a stream of clean, fresh paper of enormous value is going out to be spread all over the country, another stream of soiled, torn and altogether disreputable-looking paper is flowing back to the Treasury.
The filthy paper is quite as valuable as the clean, so it is properly checked, recorded, and credited before new paper is sent out in its place.
They are now trying to make old bills presentable by washing them at the Department. Meanwhile, most of them are ground again into pulp, made into new paper, and all the first processes gone through with to make the paper into money.
Up to a few years ago, it was the city, town and village dweller who reaped the greatest benefit from the post office.
In dense communities carriers leave the mail at the place to which it is addressed. Where this is not done the walk for the mail is not far.
Now the purpose of our Government, which is of the people and by the people, is to treat all the people alike.
However, up to a few years ago the farmer, our most essential producer, had not a fair deal.
Fortunately things have changed and are still changing for the better.
Rural Free Delivery was an idea as just as it was grand, and as welcome as it was necessary.
The good work began October 1, 1896.
The purpose of rural free delivery is to accommodate dwellers in the country, whether farmers or not.
Through this branch of the service mails are carried daily, on fixed lines of travel, to people who otherwise would have to go long distances to reach a post office.
The Government requires that the states or counties shall keep in good condition the roads traversed by the mail carriers.
Gates must not obstruct, and it is required that every unfordable stream shall be bridged.
It is further required, as a condition for establishing a line for rural free delivery, that each route of twenty-four or more miles in length shall have at least one hundred families resident on either side.
Mail matter is divided into four classes. For each class a different rate is charged.
First Class:—All letters, and all other written matter, with a few exceptions, pay two cents for each ounce, or fraction of an ounce.
Second Class:—Newspapers, magazines, and other periodicals, one cent for each four ounces or fraction of four ounces. Publishers of periodicals, sending direct from place of publication, get a lower rate,—one cent a pound.
Third Class:—Books, circulars, and other printed matter, one cent for two ounces or fraction of two ounces.
Fourth Class:—Merchandise and miscellaneous articles, weighing not over four pounds, one cent for each ounce or fraction of an ounce.
1. On a tag, or the paper on which the address is written, the sender of third class matter may write "from" and add his own name and address. 2. On the blank leaf of a book, forwarded as third class matter, the sender may write a dedication or inscription, but it must not be in the form of a letter. 3. Fourth class matter must be so wrapped that the postal authorities can examine the contents without much trouble. 4. Such articles as glass, nails, needles or other matter that might work injury if it came loose, must be enclosed in two separate wrappings, or a double case. 5. Poisons, explosives, inflammable substances, and live animals are excluded from the mails. 6. Firearms may only be sent in detached parts. 7. All alcoholic liquors are regarded as explosive.
The rates to Canada are the same for all classes of matter as in the United States, except that seeds, scions, bulbs, cuttings, and roots are one cent per ounce.
To Cuba all the rates are the same as for domestic matter.
Rates with Mexico are the same as if mailed between our own states. Packages are limited to 4 pounds 6 ounces, except that single books may weigh more. Merchandise must be sent by parcel post.
To all other countries, in what is known as the "Postal Union", the rates for letters are five cents for each half ounce or fraction thereof.
Postal cards two cents each, double four cents.
Registration fees or letters or other articles, four cents each.
Ordinary letters for foreign countries, except Canada, Cuba and Mexico, must be forwarded, whether any postage is paid on them or not.
All other mailable matter must be prepaid.
Alaska, Hawaii, Guam, Tetuila, the Philippines and Porto Rico are regarded as insular or territorial possessions of the United States, and are entitled to the same postal rates.
Postage stamps may be purchased at any United States post office, or at any place authorized to sell them.
Anyone may sell postage stamps as he would any other personal asset.
If stamps are bought to be enclosed in a letter, they should never be of a higher denomination than twos and ones, as they are easily disposed of.
Letters should always be stamped on the upper right-hand corner of the envelope.
Packages should be stamped in the same way and on the addressed side.
The using of cancelled stamps is a felony.
Foreign stamps have no value on letters or parcels mailed in theUnited States.
A domestic, unstamped letter will not be forwarded.
If a stamped letter is found to require more postage, the amount lacking is stamped on the letter, and must be paid by the receiver.
Stamped envelopes and stamped wrappers are sold by the post office at the usual rates of postage, with the cost of the paper added.
If a stamped envelope or wrapper is spoiled, the stamp must not be cut off and used by pasting on another envelope or wrapper, for it will be treated as if no postage were paid.
Such spoiled wrappers or envelopes will be exchanged, without charge, by the postmaster, for stamps of the same value.
Never use a postal card to dun a debtor.
Never send a confidential message on a postal card.
Foreign postal cards, that is those bearing a foreign stamp, cannot be used in the United States.
An international postal card can be bought.
Postal cards and letters may be redirected and forwarded without extra charge, where the address of the receiver has been changed. Packages require a renewal of payment in such cases.
A letter or a parcel may be registered to further insure its safe delivery.
When a letter or parcel is registered, it must have the sender's name and address written across the left-hand end of the envelope and on the reverse side.
In addition to the stamps required ordinarily, eight cents in stamps or in a regularly prepared stamp, is the registration fee.
The clerk, receiving a registered parcel, gives the sender a receipt for the same. After the letter has reached its destination, the sender gets a second receipt, through the post office, signed with the receiver's name.
The receiver of a registered parcel signs two receipts, one for the post office and the other for the sender.
The purpose of what is known, in connection with the post office, as the "Special Delivery System", is to insure the delivery of any letter or package to the person, to whom it is addressed, as soon as it reaches his post office.
In addition to the regular post charge, a fee of 10 cents is added for special delivery. This is in the form of a special stamp, though when this cannot be had, the same amount in ordinary stamps may be attached.
In the case noted, the sender should write in line with the stamps, "special delivery."
Special delivery messages are delivered, not by ordinary carriers, but by special delivery messengers.
The special delivery letter is used when immediate knowledge is necessary. It saves a long telegram.
Money, in limited sums, may be sent through the post office. One advantage of sending money in this way is that it practically insures the sender against loss.
All post offices are not money order offices.
A post office money order may only be sent to those places where there are such offices.
At all post offices, authorized to send money orders, proper blanks can be had on which the sender can write his order.
Any sum may be sent by postal order, from one cent to one hundred dollars.
The fee is from three to thirty cents.
Read the blank carefully; it is simple, but be sure you understand it before filling out the order.
If in doubt, ask the clerk.
Having filled out the order, hand it to the clerk with the sum required, and the additional fee.
The clerk then prepares and hands out an order for the amount, on the postmaster of the town to which you are sending your letter, and this you enclose to your correspondent.
The money order never contains the name of the sender; this the postmaster of the office from which it is sent supplies in a separate communication to the postmaster who is to pay.
No money passes from one office to the other.
A post office order is like a draft drawn by one postmaster on another. The one credits the sum, the other debits it.
The holder of an order will not get his money unless he is known to the paying postmaster or is identified.
Before paying an order the postmaster requires the holder to receipt it.
A post office money order, like a check or draft, may be transferred to another for collection.
Banks receive transferred money orders as if they were cash deposits.
The party to whom orders are transferred must go through the same forms at the office, where payment is made, as if he was the original payee.
It is not necessary to register letters containing checks. Never write "personal" on a business letter.
Always enclose a stamp for reply when writing to a stranger.
See that the addresses on your letters are distinctly legible.