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ein in der SEX than any other. No rules of banking are more practically valuable than the foregoing..******tdes ! $0.0
Time with reference to Panics and Pressures. As banking is liable to panics and pressures which may arise without being preceded by any long premonitory symptoms, a banker must invest his funds in short loans which measurably accomplish the feat that is proverbially impossible, * to have a cake and eat it at the same time that is, by means of short loans, the bank keeps its funds always available within a short period; and yet keeps them always loaned out on interést. “'s The banks of large cities are able to make loans payable on demand, or on a few days notice; while country banks possess no such opportunities, but are able usually to deposite their spare funds in some banks of Albaný or New York, subject to a repayment on demand, or on short notice; and in the mean time to receive on the deposite an interest of some four or five per cent. Such arrangements are peculiarly beneficial to country banks, as every country bank is compelled, by existing laws, to keep in New York or Albany an agency for the redemption of its bank notes ; and hence must keep funds in one of those cities. Experience, however, has painfully demonstrated, in a recent bank failure, that the convenience of an interest paying depository is not exempt from 'danger. The legislature in compelling country banks to incur the danger, has looked solely to the convenience of the public, and possibly estimated too lightly or disregarded the hazard to the banks.
A Banker should acquaint himself with the Pecuniary Circumstances of his Dealers.What is every person's business is proverbially nobody's; hence the safety of banks depends less on boards of directors, than on some single person to whom the bank is specially confided, and to whom we have alluded under the name of the banker. He is to be always present, and always responsible in his feelings and in public estimation, for the prosperity of the bank ; and for these services he ought to be well compensated, pecuniarily, so as to stimulate his faculties to their best efforts. We mistake human nature when we expect great efforts from any man, and supply no proper motive therefor. The banker we have described, will acquaint himself with the pecuniary circumstances of the dealers of his bank, and of their endorsers, and of all persons, who, thongh not present debtors or endorsers, may probably become such. Persons enough will hasten to inform a banker when any of his debtors become declared insolvents; but such shutting of the stable door after the horse is stolen, is not the information that is useful to a banker. After insolvency is adınitted, the resort to banks is ended. The information which is useful 10 a banker must be made while the person in question retains a reputation for solvency; and the information will be useful in proportion as "it scents any coming mischief in the far-off gale." To acquire information, sonie country bankers obtain extracts from the assessment rolls of the towns within the circuit of their dealings; such extracts including only the men of reliable property. Other bankers keep a book composed by themselves, of names accumulated, from day to day, of persons whose pecuniary position may interest their bank. Such a book may assume the form of an extensive alphabet, and the persons therein may be registered under the name of
the town in which they reside. By this arrangement, when a banker is brought in contact with a person who resides, say, in Oswego, he can, by looking in his book under the head of Oswego, see the names of his debtors, and obtain such information in relation to them, as the person from Oswego can supply; and which information he can record against each name respectively. The information thus acquired may be revised by other informants, as opportunities may offer; and the banker must give to the whole such an interpretation as his judgment shall dictate. The record will be improved by noting the name of the person
from whom the information is received, and the date of its reception; for the information will be reliable in proportion somewhat to its recentness, and to the character of the informant. In large cities where discounts are rarely made except to persons of the city, who are personally known to some of the directors, such a record may be useless; but in country banking the borrowers and their endorsers are generally residents of remote places, and unknown, personally, in the locality of the bank. A country banker who should insist on a personal acquaintance with his dealers and their endorsers, would find his business restricted to a circle too small for the employment of his capital. In vain will such a banker insist that he ought not to make loans to persons of whom he possesses no knowledge, the answer will be that he should acquire ihe knowledge. It is indispensable to his bank. He is bonnd to know a sufficient nun,ber of persons to enable his bank to employ its capital advantageously. Every note, therefore, that he rejects for want of knowledge, is ostensibly a slight reproach on him, in cases where he has not a sufficiency of known borrowers ; while every note that he rejects or accepts by means of his knowledge of the parties, is a tribute to his industry and vigilance.
A Banker should, as far as is practicable, know the Signatures of his Dealers. The preceding remarks will show why country banks are specially liable to loss from forgeries. Moreover, many of the makers and endorsers who deal with country banks write poorly, and their signatures bear but little internal evidence of genuineness, even when you are partially acquainted with the parties; for the same person will write differently at different times, and, especially, with different pens and different qualities of ink; and he varies these continually. Still the greater the danger, the greater is the caution which the banker must exercise. He must bring to the difficulty all the scrutiny of which the case is susceptible, or he will not stand excused from consequent losses. A comparison of any proffered signature with one that is genuine, though encumbered with difficulties as above explained, is a guide that should not be neglected; and it is often the best that can be resorted to. Some bankers, therefore, keep a book in which every person who frequents the bank inserts his name. The signatures should be placed alphabetically to facilitate a future reference to them. The endorsers may never visit the bank; but when a note is paid, the names of the endorsers may, with the consent of the maker, be cut from the note, and pasted into the book in their proper order. In no very long time, a mass of autographs may be thus collected. Some names on notes may not be deserving of such preservation ; and in this particular, as in all others, the banker must exercise his judgment.
: A Banker should know the Residence of Endorsers. The law in relation to endorsers renders them liable only on due notice of the nonpayment of the endorsed note. This avenue of loss is felt but seldom in large cities; but in the country it produces constant danger. A country banker, therefore, must know where endorsers reside, and usta ally the information can be obtained most readily when each note is discounted, and from the person who brings it for discount. : The information can be written on the note under the name of the endorser, and it will serve as a direction to the notary public, should the pote be protested for non-payment. The laws of our State required, formerly, that the notice of non-payment should be forwarded by mail to the post office nearest to the residence of the endorser. This imposed on the banker a knowledge of postal locations that added much to the difficulty of his position. The law has since meliorated the difficulty by rendering a notice sufficient if directed to the town in which an endorser resides. When a banker desires to avail himself of this law, he had better comply literally with its conditions, and direct the notice 6 to the town of A,”-thus showing that your letter is not sent to A, but to the town of A;-leaving the particular post office in the town, (some towns have more than one,) to the discretion of the post master, for whose errors you are not accountable :--for instance, two or more post offices are located in the town of Whitestown, and one of them is at a place called Whitestown; hence, if you direct a notice “ Whites. town,” you designate a post office, and it may not be the one which the endorser frequents. Such a notice would probably be deemed defective, and the debt would not be recoverable against an endorser thus notified; but should you direct “ to the town of Whitestown," you designate no post office, and as you have performed all that the law requires, the endorser will be holden for the debt.
A Banker must know the Pecuniary Position of his Bank.- As a banker will lend to the extent of his ability, that he may make for his bank, all the gains in his power, he must be well acquainted with the present pecuniary means and liabilities of his bank. He can keep on his table a summary showing the precise amount of his funds, and where they are situated, and of what they are composed; also, an aggregate of his various liabilities. Such a summary when corrected daily, or more frequently if necessary, will constitute a eliart by which he will be able to judge whether he can lend, or whether he must retrench existing loans. The funds that will be adequate to any given amount of liability, a banker must learn by experience, embarrassed as he will be by a want of uniformity in the results of his experience, at different periods. Every bank must be liable, momentarily, to de mands for payment of its bank notes and deposites, beyond its present funds. Practically, however, if a banker has funds enough, day by day, to meet the requirements of the day, he has funds enough. “Sufficient for the day is the evil thereof,” is a proverb peculiarly applicable to banking.
Prospective Resources.- But a banker must not be satisfied by knowing that his funds of to-day will be sufficient for the wants of the day. He must possess a reasonable assurance that the same will be his position “to-morrow, and to-morrow, to the end of time.” To gain this assurance, he ought to keep also before him one or more lists in detail of his prospective resources; showing what notes and acceptances will be payable to the bank daily for some weeks or months ahead, and where they are payable. With such lists, and a knowledge of the reliability of the paper thus going onward to maturity, he will be able to judge whether his prospective resources will need the aid of his existing unemployed funds; or whether he may loan them, and even extend his liabilities in anticipation of a prospective surplusage of resources.
Provision for the Future.-By means of such lists as we have just described, should a banker discover that his existing resources will be small during, say, the month of June, he can aid the
defect by discounting in the preceding May, April or March, paper that will mature in June. By thus regulating, prospectively, his future resources, he can be always provided with funds. And that a banker may, at all times, be master of his resources, he should never promise prospective loans, or make loans with any promise of their renewal. The more he keeps uncommitted, the better will he be able to accommodate himself to future exigencies. Banking is subject to sufficient uncertainties, without unnecessarily aggravating them by any prospective agreements. A banker may be unable to fulfil such pledges, and be thus compelled to falsify his promises; or he may be able to fulfil them only at a sacrifice of the interests of his bank, and thus be placed in the unwholesome dilemma of injuring his personal character, or of preventing the injury by only a sacrifice of the interests of his bank.
General Supervision.-A banker is compelled to employ officers to whom he must entrust his vaults and their contents. Robberies are often committed by persons thus entrusted, and some such robberies have remained long concealed. The banker cannot be responsible for all such occurrences, still vigilance can accomplish much in the way of security against mischances, and the banker is responsible for the exercise of all practicable vigilance. Robberies and frauds possess usually some discoverable concomitants. No man plunders to accumulate property that is not to be used. Its use therefore, which can rarely be wholly concealed, is a clue which a vigilant eye can trace to the plunderer. Nearly every plunderer is a prodigal, and may thereby be detected ;--nearly every plunderer is needy, and should therefore be suspected. The banker should know human nature, and be able to trace effects to their causes; and to deduce effects from causes. To this extent he is answerable for the safety of his bank. The sentinel whose post happens to be surprised by an enemy, may escape punishment as a criminal, but he can rarely gain commendation for vigilance, or escape censure for carelessness.
Over Drafts. To permit over drasts is to make loans without endorsers, and without the payment of interest. It is moreover, to empower a dealer to control your resources. No mode of lending money can be more inconsistent with all safe banking; and it should never be permitted. Still every man who keeps a bank account can draw checks for an amount exceeding his balance in bank; nor can the banker personally, supervise the payment of checks. A vigilant banker will, how
ever, provide vigilant subordinate officers : the eye of the master maketh diligent," says the scriptures. An intelligent and careful teller will soon learn whom he must watch; but after all precautions an over draft may be perpetrated, and whether by accident or design, the books keeper should forth with report to the banker the occurrence, and he must act thereon as his judgment shall deem proper. ; !. · Enforcement of Payments. No system of banking can escape the casualty of doubtful debts. Usually the most favorable time to coerce payments is when they first become payable. Then the debtor has exe pected to pay, and if he is then in default, no certain dependence can be made on his subsequent promises. He is also usually less offended by a legal enforcement of payments when they are promptly enforced, and when he knows the creditor is disappointed by the default, than he is after the default has been tacitly acquiesced in by a long forbearance of coercive measures. Additional security, when necessary, can also be more readily obtained at the time of the default, than it can after the deblor is become reconciled by time to his dishonorable position. His credit is better now than it will be subsequently, and he can more rea, dily now than subsequently obtain-responsible endorsers. In relation 10 the extension of time, on receiving additional security on a weak debt, any extension that is productive of security is a less banking evil than insecurity ; just as disease, how severe soever and protracted, is better when it results in health, than death,
Adherence to Good Principles.—A banker will be often subjected to importunity by persons who will desire a deviation from the usual modes of banking. They will propose a relaxation of good rules, and
, allege therefor some pressing emergency; but if the relaxation involves any insecurity, any violation of law, or of official duty, the banker should never submit even when the result may promise unusual lucra. tiveness to his bank. While a banker adheres with regularity to known forms of business and settled principles, Providence is guarantee for his success; but when he deviates from these, Providence is almost equally a guarantee of disaster both personal and official.
A Banker should beware of Persuasion, and of undue Pertinacily in Applicants.---Banking is a business and should be reciprocally beneficial to the borrower and the lender. When a borrower's business cannot yield the requisite reciprocity of benefit, he will often attempt to mend the defect by pertinacity of application, and by persuasions addressed to the directors of a bank personally, as well as to the banker; .and by servility and sycophancy. Such conduct is a strong symptom of some latent defect in the applicant's pecuniary position, and the appliances should strengthen a banker in bis refusal of loans, rather than facilitate their acquisition. Loans thus obtained rarely result favorably to the lender.
A Banker should beware of Speculalors.--No man is safe when engaged in a speculation, especially when the price of the article that he purchases is above the usual cost of its production. The speculator's intellect soon loses its control over him, and he will be controlled by his feelings, and they are unnaturally excited. He becomes monomaniac in the particular concern with which he is engaged. He will