I 
ifi
e,Io-7h —
I~-\
~
A Veteran Specie Clerk. 
i/2
THE BANKS OF NEW-YORK,
THEIR  DEALERS,:t._,~'jTm)
I>
THE CLEARING
AND
THE PANIC
WITH  A F I N A N C I AL C HART.
BY J. S. GIBBONS.
THIRTY ILLUSTRATIONS, BY HERRICK.
NEW YORK:
PUBLISHED BY D. APPLETON & CO.
1864.
HOUSE,
OF 1857. 
EWmIMED, according to Act of Congress, in the year One Thousand Eight Hundred
and Fifty-eight, by J. S. GIBBONS, in the Clerk's Office of the District Court
of the United States for the Southern District of New York. 
TO
GEORGE H. ELLERY,
OF NEW YORK,
THE AUTHOR DEDICATES THIS VOLE, AS A MARK OF ESTIK FOR HIS PERSONAL
CHARACTE, HIS UPRIGHTNESS AS A MERCHANT  AND
HI CONSTANCY AS A FRIEND. 
I 
P R E F A C E.
IT is not possible to introduce into a single volume
all that is curious or interesting about banks; and
scarcely less difficult to avoid some things that may
appear trifling or impertinent.
The author has endeavored to give a picture of the
banks of New York as they are; to describe the duties
of the officers and clerks, and their daily experience
in transacting business with the dealers;  also to
describe the conduct of dealers in their intercourse
with banks.  Some of the scenes presented may seem
extravagant, and perhaps would be accepted as caricature, if not vouched for as literally true.  The errors
of the book are not, at least, in that direction.  The
real exaggerations of fact and manner, if rendered
with the exactness of a daguerreotype, could hardly
fail to excite a suspicion of designed caricature.
A considerable part of the author's purpose has
been to give a general knowledge of the method of
bank book-keeping. It would be impossible to do
this thoroughly, without running into the dullest of
details. Any person of intelligence and vivacity will
supply the omissions or oversights under this head.
If the volume fails to show that there is nothing in
1
v
40 
PREFACE.
the business of banking to entitle it to more respect
than any honest mercantile employment, and that
therefore, the banker and the dealer meet on equal
terms, it is deficient in a very important respect. A
dealer commits no greater mistake, than to begin
treating with a bank as if it were a superior power;
and its officers do. not need such a stimulus to their
self-conceit.
The description of the Clearing House, and the
sketch of the panic, have made the volume one third
larger than was originally intended.
With respect to the panic, the author owes every
thing to the invaluable records of the Clearing House,
an institution which has brought about a new era in
our city banking, and the full usefulness of which is
hardly yet imagined even by a majority of those who
share in its direction. In a few months, it has done
more real service to the interests of trade in New
York, than the Chamber of Commerce in the century
of its existence; though that has done as much as
it could, without the organization of an effective
financial bureau, such as the Clearing House must
become, as an auxiliary to its labors.
vi 
CO N   E NT S.
CHAPTER L
][ODUIOTIoN-Number of Banks, and their Managers and Clerks-What Bank
Represent-What a Bank is-The New York System-How a Bank is organ ized, and by whom managed-Technical and Slang Terms.
CHAPTER IL
THm PRESIDENT-His Legal Relations to the Bank-Should be a Man of Educa tion and superior Character-The Board of Directors Transacting Business Offerings for Discount-Rambling Conversations-The Artistic Diversions of
Mr. Marks-Discounting Paper, and Discussions of Character-Narrow-minded
Directors-Operations in Sugar-Directors Crotchett and Buttonwood-Adjourn ment-Director Miller pays a Note of $10,000-Two Characters of a President
in contrast-Personal Habits of Dealers enquired into-Commercial Agency
ReportsGreat Influence of the President-Examining Collateral Notesonas
Marks (confidential)-Claims of Directors conflicting with the Rights of Dealers A Particular Friend in Trouble.
CHAPTER III.
Tim  CAsmiR-His Special Duties-Power of Appointing and Removing Him Not Subordinate in Everything-The Correspondence-A Tight Market-Receivo
ing New Accounts - Personal Solicitation-Mr. A. "Woin't submit to such
Treatment"-In Debt to the Clearing House —Kiting-The Cashier in a state
of Siege-Mr. Sweatem's Expostulation-Mr. Boyle in a Rage-A Great House
Saved-Complaints of Dealers-The Right Character for a Cashier-Two Hun
dred Thousand Dollars Stolen.
CHAPTER IV.
Tim PAYNG TzLLIR-His Duty, Bonds, and Salary-Custody of the Vault, and
Keeping of the Key-Desk Arrangementsends Exchanges to Clearing House
-Certifying and Paying Checks - Certification Check-list - Peculiarities of
Checks-Careless Habits of Merchants-Ingenious Forgery Detected-Losses
never Discovered-A Successful Forgery of $10,000-Classification of Accounts
-Impositions on the Teller-Samuel Filibuster Overdraws his Account-Identi fying Indorsers-Certifying Checks in Advance of the Deposit-Various Inci                                   Vi
VII
i —o
4w 
CONTENTS.
dents-Ignorance of Bank Usage-How Alexander Jones may cheat-The
Failure of Skarem & Co.-The Teller's Proof-Cheating by Certification-A
Narrow Escape.
CHAPTER V.
THzi DEPosrr TELLZR — His peculiar Duties, and the Forms of his Account Books- Forms of Exchange and Proof-list- Of what Deposits consist-Abel
Dodge deposits kiting Checks, and then fails-The Teller has great Influence
in determining the Character of the Business-Detection of Spurious Bills Rapid Counting - Claims for Differences-Disputes-Improved Discipline-A
Thousand Dollars Short - The Teller appealed to by the Cashier - Causes
Accounts to be closed-How he corrects the Errors of Dealers-A Poor Shoe maker waiting for a Deposit.
CHAPTER VI.
TV: NoTE  TELLe —Classes of Notes-Form of Collection Note-Book —Addtng
Cash Checks from Morning Letters-Paying Notes, and saving Tickets-Errors
of Note-makers-The Wrong Person served-Various Incidents.,
CHAPTER VII.
To DrscouNT CLzix-The Difference between Interest and Discount-Offering
of Notes for Discount-Examples-Transcription of Records-Discount Ledgers
-Proof of Accounts -Dealers calling, after a Board Session, to know what
luck-The manner in which they are affected by Disappointment-Terribly
Tight Times-Mr. Axletree-A Fraud.
CHAPTER VIII.
T-E NoTE DEP.TMNT-N-Notes the great Instruments of Commerce-The Col lection Register-Consequence of wrong "Timing" of Notes-Page of Register
and Tickler-Custody of Notes.
CHAPTER IX.
Tom BOOx-xzzrPEz-His necessary Qualifications-The Alphabetical Arrange ment of Accounts-Balancing Accounts-Answering the Paying Teller's ques tions from memory-John Brown gets a Notice, and proves that Alexander
Jones ought to have had it-A Faud-Scale of Apportionment for a Ledger.
CHAPTER X.
1Am  GNiEAL Boox-KxzPzx —Description of his BooksForm of a Bank State ment, and how it serves as a Guide in the Discounting of Paper. The Stock
Ledger........,.  
CHAPTER XL  
Tn  AsIBTANT TELLER-Examination of the Exchanges, and his Help to the other
Tellers-Form of Proof for the Separate Counting of the Exchanges.
Vl]Ll 
CONTENRS.
CHAPTER XII.
TKZ CHOcx CLzRK-His Qualifications and Duty-His Chances of Promotion.
CHAPTER XIII.
THE  RlimEi-Prepares the Bank Notices for Distribution-Collects Sight
Drafts, &c.-Serving Notices-Difflculty of always finding the right Man-Col lects Information, and imparts it to the Officers-Serves as Talesman on a Jury.
CHAPTER XIV.
TE  PoRTR-The Keys of the Bank Building in his Custody-General Duties Counting Coin-His Skill in Detecting Counterfeits-The Old-fashioned Pouch
-The Cashier in a pet, because Donaldson won't stay in two places at the same
time-Messenger to other Banks-Is the Bank's Letter Carrier-Reports Delhi
not taken-Assists the Paying Teller-Tries the Door, to be sure that it is locked
-Appointed to the Dignity of Specie Clerk-Long and honorable Career of the
Bank Porter-A Veteran in the Service-The Gold Spectacles....
CHAPTER XV.
PRasENTs-No Favor in Banking between the Officers and the Dealers; or if so,
from the latter to the Bank-Presents have a bad Influence, and lay the basis
for Fraud-Anecdotes-Practice of GEORGI CURTIS, Esq., late President of the
Continental Bank.
CHAPTER XVI.
BANK Discip         ource of the fears of Bank Officers with respect to Fraud Plans of Gamblers-The profitable occupation of Leisure Hours-A System of
Daily Report&
CHAPTER XVII.
How TO TRANSACT BusINEZSS WITrrH A BANx-Short Rules and Recommenda tions.
CHAPTER XVIII.
THa  CLEARING HousE.-The Old Plan of making Exchanges-The Porter's Set tlement-Irritations and Impositions-Origin of the Clearing House-Constitu tion of ditto-The Rooms-The Daily Routine-Forms of the several Tickets
used - An amazing Amount of Work done in Six Minutes - The Time saved
-Extraordinary Skill of the Settling Clerks-Clearing House Proof-Method
of Discovering Errors-Scale of Fines-Specie Certificates and Easy Settle ments-Reclamation for Differences, how Settled-Summary of Work  Saved
over the Old Method-The Records-Their Great Value and Use-A Clear
Principle in Banking demonstrated-Limiting Influences-The Weekly State ments-The Quarterly Statements good for nothing before the Clearing House
was organized-Improvement in the whole System of Banking brought about
by the Clearing House-The Result of Five Years of Trial-The Expenses of
the House-The Admirable System and Order of its Accounts-Tables, illus trated by a Financial Chart, for the Guidance of the Bank Board-The first
Proposal for a Clearing House.
ix 
CONTENTS.
CHAPTER XIX.
THE P~ —A General Sketch-Gradual Reduction of Loans for Four Years The Failure of the Ohio Life Insurance and Trust Company, and its Effect or
the Weekly Statements-A great Change wrought in one Day-The Reduction
of Loans not caused by the withdrawal of Deposits-The Fluctuating Part of
the basis of Bank Loans considered-The Steadiness Qf the Bank Deposit  Contrast in the Fall of Securities in two periods-The Final Blow-Cause of the
Panic-The Influence of the Specie Settlements of the Clearing House-An
Alleviation-The Chart-Separate Expansion cured, but Harmonious Expan sion allowed-Measurement of Expansion by Specie Reserve-Proportion of
Specie recommended-An Exception-The Difficulties of Bank Government Incompetent and Dishonest Officers-ThD Indeperdent's List of Failures What the Panic Developed-Personal Credit the Cause of Fluctuation-Bank
Currency-No Connection between Loans and Circulation-Bank Note Re demption- Objections and Errors - Trade in Bills- Will Suspension occur
again?-A Financial College-Anomalies in the Banking System-The Ox
goring the Bull-Practical Absurdities-Notions about Gold-Its exact office
-Causes of its accumulation in New York.
X 
ILLUSTRATIONS.
rAss
1. Tin SPECIE CLERK OF T   UNION B.,-Fronti/se.
2. THE BOARD OF DIRECTORS DISOOUNTING NOTES,.....   81
8. THE ARTISTIO DIVRsIONS OF MR. MARKS,........... 88
4. THE PRESIDENT EXAmnING COLLATERAL NOTES,....   61
. JUST  LECTD,............                                      70
6. MR. A. WON'T SUBMIT TO SUCH TREATHENT,..........         82
7. THE CASHIER CAUGHT BY THE BUTTON-HOLE,.......... 84
8. MR. KIGHT U           P,............ 86
9. MR. KIGHT DOWN,.................. 88
10. THE CASHIER IN A STATE OF SIEGE,............         90
11. MR. SWEATMEN'S FINAL ARGUMENT,............. 91
12. A BAD BANK STATEMENT,...............    98
18. THE PAYING TELLER AND HIS CUSTOMERS.........         144
14. A TIGHT DAY AT THE DISCOUNT DESK,...........         199
15. CONSOLATION-BETTER FARE THAN AT THE DISCOUNT BOARD,..    209
16. OUTSIDE-TWO PER CENT A MON...................            210
17. INSIDE-THE CONSEQUENCES OF TWO PER CENT A MONTE..    212
18. THE RUNNER ON A FRUITLESS SEARCH,...........         249
19. MATTHIAS, PORTER OF THE BANK OF THE STATE OF NEW YORK,.     264
20. FATHER COLE,..................           269
21. AN OLD-FASHIONED FRIDAY'S SETTLEMENT.........         294
22. PLAN OF THE CLEARING HOUSE Rooxs,...........         808
28. THE CLEARING HOUSE MANAGER IN HIS PULPrIT....               806
24. MAKING THE DAILY EXCHAGE,.............          807
25. A TON OF GOLD,................            815
26. THE SPECoIE CLERK wrmI HALF A MILLION IN HMS POCKET,..  816
2T. FINANCIAL CHART,.8..............         886
28. WALL STREET ON THE DAY OF SPECIE SUSPEN SIO     N....  846
29. A "RUN" ON A B.ANK,..............            861
80. THE FINANCIAL CHART REDUCED,........... 867
81. DIAGRAM OF CURRENCY AND LOANS,...........            880
82. THE BANK CIRCULATION,...............                        884
xi
iio 
A number of the llustrations in this Yolume were executed, under
the instructions of Mr. HzciRUx, at the New York School of Design  for
Women.
XlI 
THE NEW YORK BANKS.
CHAPTER 1.
INTRO  DUCTION.
TiERE are fifty-three banks in the City of New
York, with an aggregate capital of about sixty-six
millions of dollars. The number of persons immediately connected with them, as directors, officers, and
clerks, is nearly two thousand. The number of those
who transact business with them as stockholders, depositors, borrowers, or in some other capacity, is
several hundred thousand. In addition, a still larger
number reap from them a sensible convenience in less
direct methods; and as to the influence which they
exert over the affairs of the community generally,
there is no way of forming even a proximate estimate
of it. Not an individual inhabitant of New York can
say that he is not, at every moment, either the better
or the worse for the existence of banks; or both better
and worse. There are some, probably, who never touch
a bank-note, who never cross the threshhold of a bank,
who use gold and silver only in their business, and
who think that they are therefore free from all the
1*               9
,.0 
IN'RODUOTION.
influences of banks; but this is a mere fancy. They
can no more escape from them, than they can from
the influence of our common schools, or than they can
avoid breathing the common air. If they are daylaborers, and get their wages in silver, those wages
are greater or less, because of the existence of banks;
and so with the price of every thing they eat or wear.
Banks represent the capital, labor, and commerce
of the country. The fact that they exert such influence over the people, and that there is no escaping
from it, is of itself enough to set jealousy to work, and
to create parties in opposition to them. Even if they
had always been sources of unmixed public benefit,
there could be no guarantee for the future. But
they have rarely been conducted without sufficient
abuse of powers, to keep alive perpetual hostility
towards them, on one ground or another. The right
to issue "paper money" (to the public their most interesting function) has not always been so guarded
as to prevent fraud, which has fallen chiefly on the
poor and working classes, and has therefore readily
been made the foundation of popular excitement; and
this kind of fraud, more than any other, has escaped
the just penalties of the law. Politicians have eagerly
seized on these facts to win the support of "the outraged million." It has not suited them to speak of
the advantages which have resulted from the organization of capital; but they have kept before the eyes
of the multitude an exaggerated picture of the evils
which flow from the existence of banks, even charging upon them the consequences of individual extravagance and dishonesty. It is surprising to what an
10 
WHAT A BANK IS.
extent they have succeeded in imposing these errors
and falsehoods on the public mind.  Not only the
ignorant, but many who are well informed on general
subjects, have been made to accept the teachings of
the demagogue, that banks are, in their very nature,
opposed to honest industry, and oppressive to the poor;
that they favor a monopoly of rights and privileges
by the few; that they promote the extremes of wealth
and poverty in a country; and finally, that they are
dangerous to popular freedom. For the last thirty
years, opposition to banks has been a lever in the
hands of politicians, with ignorance as its chief fulcrum, to keep parties in office. The growing intelligence of the people has gradually corrected this state
of things; while better laws and methods of business
have removed much of the old ground of opposition
to banks.
The purpose of this volume is, to present a literal
history of the New York City banks in their present
organization and action; to show how they are connected with the interest and the convenience of all
classes of people; to explain the manner in which
they transact business; and to place them in their
true position as correlative with commerce, and not
above it. This will include a description of the duties
of the officers and clerks, and the daily incidents of
the business, with the frauds and abuses to which it
is liable; and also of the Clearing House, which introduced a new era in American Banking.
Some data, bearing on the causes of the panic of
1857, have enlarged the volume beyond its original
design.
11 
INTRODUCTION.
A bank is simply a plan of organizing capital, by
which the full benefits of it are secured. The separate
means of' individuals'are united together, and a large
sum thus constituted, which is hired out on interest
to those who need it. This combination, and the
manner of its use, may be compared to a dam across
a valley, and the accumulation in one body of the
water of the separate springs which otherwise would
be of little service; but being united, they form a
propellin g power for extensive machinery.
Without the organization of capital in some form,
a community must remain in comparative barbarism.
The few who possess wealth above their wants must
either send it away' for investment where it would
enrich other places, or it would for the most part lie
dead, while the poor would continue in ignorance and
drudgery. A public school, a library, or a church,
would be impossible without combination. It is
therefore a social necessity to organize capital, and
communities thrive in proportion as this organization
is effected.  They prosper, not only in material substance, but in education and morals.
Any one who has travelled among our country villages, out of the immediate influence of cities, has
occasionally'been struck by the neglect of natural
advantages, the lack of energy, the rudeness of life
and character, and the' almost savage features of the
common people. But on visiting the same place after
an interval of a few years, he has seen a total change:
a larger population, a better class of buildings, an
air of thrifty growth, and a manifest increase of comfort. The old lethargy has disappeared; a new life
12 
THE NEW YORK SYSTEM.
has been infused into everything; even the countenances of the people are softened; a less brutal and
more intelligent spirit beams from their eyes.  A
bank has been the starting point of this new career;
the mill-dam has been built across the' little streams
of capital, and the social machinery is brought into
play.
After it is organized, a bank gathers other capital
by saving.  It presents the first practical idea of
economy and increase to thousands of people.   It
brings out the old stockings, and pours their contents
into the common dam, which rises higher and drives
more wheels.
The objection to banks, that they foster credit, is a
complete solecism. Credit is at the same time the
co-efficient and the supplement of capital.  The business of banks is, to prevent abuse while,makig te
mnost of it. And so well have they succeeded in this,
that they have mostly retained popular favor and
confidence, in spite of their own errors, and of the
denunciations of their enemies.
The present system of banking in the State of New
York, is the result of much experience, and of many
failures in financial legislation. The plan of creating
banks by special charter was abolished in 1838, by the
enactment of a general law, under which any person,
or a number of persons, with the required capital,
may organize a bank. The law has since undergone
many alterations, and it continues to be "amended"
at every session of the Legislature. New restrictions
are constantly suggested by newspaper editors, or by
politicians who cannot in any other way so easily
13 
INTRODUCTION.
make themselves talked about as by threatening to
disturb the organized capital of the State. The own    ers of one hundred and eight millions of bank stock
have cause for alarm, when Mr. Smashemup brings.
in a bill for their " better protection."  He is waited
upon by committees from New York, receives letters
from distinguished bankers, and for a time is the
focus of an immense circle.  No name is so much in
other people's mouths, as Mr. Smashemup's!  It is
Mr. Smashemup's bill in the Assembly, and  Mr.
Smashemup's bill in the Senate.  Then come the
amendments to Smashemup's bill in both Houses,
-and Mr. Smashemup is called on to explain, which
he does, by a great speech on banks, economy, cor   ruption, and the public debt. Mr. Smashemup's name
is in all the newspapers, and even if his bill with all
i the amendments is indefinitely postponed, he returns
to his constituents in " a blaze of glory," with good
chances of nomination to Congress.
'   The general banking law of the State of New
York, with its amendments, and all statutes relating
to it, consist of more than three hundred octavo
pages. The system is hampered with superfluous
provisions, but with the voluntary guards thrown
around it, and especially that of the Clearing House
in the City of New York, it is probably the best now
existing in any part of the world. The principal fea   tures of it are as follows:
1. The deposit in the Bank Department at Albany
of ample securities for the redemption of all bills
issued for circulation. The original law admitted as
security, stocks of the United States, and stocks of
1.  H
14 
THE NEW YORK SYSTEM.
the several States which should be satisfactory to the
Comptroller,* to the amount of one half at least of the
bills called for by any person or association, the same
to be equal to a stock producing five per cent per
annum. The security for the other half of the bills
might consist of bonds and mortgages on unincumbered, improved, and productive real estate, within
the State of New York, worth by appraisement double
the amount of their face, independently of any buildings thereon. This latitude of security proved unsafe.
The stocks of several of the Western States especially,
fell much below par, and the real estate in many cases
was accepted at a fictitious valuation. The consequence was, the bills of banks which were forced into
liquidation, were not redeemed in full. The amendments of the law, suggested by its longer.operation,
have corrected this ground of insecurity, and the
bank-bills of the State of New York may now be considered " as good as gold," with the advantage of
more convenience for many of the practical uses of
trade.  The basis of their issue is restricted to stocks
of the State of New York, and of the United States,
with a proportion of mortgages on real estate, not
exceeding two-fifths of its appraised value. The kind
of security is always expressed on the face of the bill.
Those which are based on real estate, are therefore
distinguishable by the public, and are treated with
little favor. The Bank Superintendent has recommended to the Legislature to admit only stock-securities hereafter.
* Now called "the Bank Superintendent."
1 5 
INTRODUCTION.
The plates, from which the bills are printed, are
not allowed at any time to be in the keeping of the
bank. On satisfactory securities being deposited in
the Banking Department at Albany, the Superintendent issues an order to the engraver to prepare a plate
under the direction of the bank requiring it, and to
print therefrom as many bills as are covered by
them. The bills are sent to the Department to be
numbered, registered, and countersigned, and they
are then forwarded to the bank. The plate is deposited
with an agent of the Superintendent in the same city
with the engraver, from whom the latter obtains it
by order, for any future printing. The following
print shows the state of the bill when it reaches the
bank.
Ala ~JNo. 350.
' ~.  P   Wit pay ONE HUNDRED DOLLARS on demand
;  to the bearer.
e: em 2,New  York, Jan. 4, 1856.
~.~    i~       Cashier.                 Pres8ident.
When the blanks are filled by the signatures of the
President and Cashier, the bills are ready to be paid
out as money. 
The over-issue of bills by the Superintendent, or the
surrender of securities before the circulation based on
them is returned to the department, is punishable
with a fine of five thousand dollars, or with five years
imprisonment, or both.
16 
THE NEW YORK SYSTEM.
2. The law requires a quarterly statement of the
condition of each bank, under the oath of the officers,
and the publication thereof in one of the newspapers
of the same locality as the bank. The original sworn
statement is placed on file in the Department; and a
summary of the quarterly statements of all the banks
in the State is published by the Superintendent, who
also compiles from them an annual report to the
Legislature.
The banks of the City of New York (which have
nearly two-thirds of the banking capital of the State)
are required also to publish in one of the daily newspapers, on every Tuesday, a sworn statement of their
average of loans, specie, circulation, and deposits, for
the week ending on the previous Saturday.
All banks under the general law are required to
place on file, twice a year, in the office of the clerk
of the county where they are situated, a list of their
stockholders, as they stand on the first of January,
and the first'of July, and to send a duplicate thereof
to the Department.
3. Under the old charters, the stockholder was
responsible for the debts of the bank, only to the
amount of his corporate interest.  He might lose his
stock, or such proportion of it as would suffice to pay
the debts, but no more.  There were instances  of
managers using bank funds for speculations, which
enriched themselves while ruining the institution,
and then retiring to live in luxury, leaving the de-'
positors and bill-holders without redress.  Under the
present law, the circulation is provided for by the
securities; and to pay the deoositors the stockholder
17 
INTRODUCTION.
is legally bound for the par amount of his stock over
again, if that should be necessary. In the worst cases
of bank insolvency, this extent of loss has never been
incurred; and with such a system of revision and
publicity as we now have, the condition of a bank
nmust be discovered long before it can reach that extremity of misfortune.
The banks in the City of New York are further
subject to the regulations of the Clearing House, of
which a full account is given in its proper place.
The plan of organizing a bank under the general
law is very simple. Articles of association are drawn
up, in which the title, capital stock, and other particulars are recited; the names of the first directors
are generally inserted, the act of subscription covering their election. The subscriber places opposite to
his name the number of shares which he is willing to
take, and pays for them in convenient instalments, as
may be agreed upon. When the amount of capital
is fully subscribed, a certificate of organization must
be filed in the office of the Secretary of State, and
another in the local office of County Clerk. The final
act of organization is the deposit of not less than one
hundred thousand dollars of securities with the Superintendent of the Banking Department. An individual
banker is allowed to begin business with a deposit of
fifty thousand. It is not imperative that circulating
bills should be taken out for this deposit, though there
is but one case among the city banks in which it has
not been done. The high premium on stocks, and the
18 
EXCHANGES.
labor and expense of maintaining the circulation, are
poorly compensated by its profits.
A bank is authorized to transact business immediately after depositing its securities with the Superintendent. Until its own bills are prepared for use, it
pays out those of other city banks, retaining them
from the deposits of the dealers. It is usual for any
city bank that has a deficient circulation, to adopt
that of other banks as far as may serve its conveni
ence.
The business of the first day brings upon a new
bank the necessity of coming into harmonious relations with every other city bank. It receives in
deposit checks on them, and also their circulating
bills; and checks on itself are received by them in
like manner. The only avenue to exchange is through
the Clearing House, to which it is admitted by a vote
of the Association, after its affairs have been examined
by a committee of that body, and reported "sound."
The matters inquired into by the committee are,
whether the capital has been actually paid in, and
whether the general organization of the institution is
such as to merit public confidence. If they find any
cause of suspicion on these points, they report
adversely to the admission of the candidate; and such
is the influence of the Clearing House with the public,
that this would be a serious, if not a fatal blow to its
credit. On the other hand, a favorable report would
give it at once an honorable standing.
The executive management of a bank is vested in a
Board of Directors, who select one of their number to
act as President. The directors are elected annually
19 
INTRODUCTION.
by the stockholders. The articles of association genera
ally require a director to hold not less than a certain
number of shares in his own right, on the presumption
that his personal interest will induce him  to look
diligently after that of the institution. Nevertheless,
it is common for half the members of a bank board
to become irregular in their attendance at the meetings for discounting paper, either from engrossment
with their own affairs, or because they have confidence in other managers; the tendency of which is
to throw the general administration of the bank into
the hands of a few persons.  If the officers are very
efficient, the few are apt to become less diligent, seeing that the routine goes on, whether they are present
or not. This concentration of power takes place more
or less in all our city banks.  The average number
of directors to each is about thirteen, of whom, in
ordinary times, six or seven attend the semi-weekly
meetings.  In a dull season, the number is often
reduced to three or four.  Most of the banks have in
the Board several retired elderly gentlemen, who,
having nothing else to do, make a hobby of their
office, and call in almost daily to look over the Discount Register, and to discuss the merits of every
commercial name for the fortieth time. To tell the
truth, they are capable of little else, and they often
destroy sound character by mischievous gossip.
It will be seen in the statement of the duties of
the officers how naturally they acquire exclusive control, when they are competent and trustworthy; and
it is a frequent observation, that the business of a
bank is more successful when that is the case, than
20 
TECHNICAL TERMS.
when the directors are very tenacious of their executive functions.   The latter give their attention for
a single hour, on two days..of the week, while a
list of discount offerings is read over; whereas the
officers devote their whole  time to obtaining and
sifting the information by which their judgment is
swayed.
Bank directors are chosen for their wealth, commercial experience, and influence in attracting to the
institution a good class of dealers.  If they fail in
business, they either resign, or are left off the ticket
at the. subsequent election.  If they continue in prosperous circumstances, and act harmoniously together,
the same set are annually re-elected for a long. series
of years. They own in the aggregate, a considerable portion of the stock, and they hold the proxies of
personal friends who take no direct part in the elections.  The officers generally hold  the proxies of
distant stockholders-the president, especially.
The government of our city banks is remarkable
for unanimity in council.   It is seldom that the
harmony of a Board of Directors is disturbed by
dissension. Parties and cliques are uniformly fatal
to the business. They drive away depositors, and
injure the public standing of a bank. The stockholders sell their shares, and re-invest their money in
other institutions.
Most of the technical expressions employed by
bankers are sufficiently explained by their connection; but some have various applications, and some
are duplicates.
The terms " dealer," " depositor," and " customer,"
'21 
INTRODUCTION.
are synonymous, and are used, as to frequency, in the
order named.  "Dealer" is the most common.
The word " line" applies to deposits, and loans or
discounts, either in the bank total, or on the individual ledger. The officers say: "Our deposit line
is low," or "our discount line is full," in reference to
the aggregate of  deposits and discounts.   "Our
specie line," refers to the average of specie. The
dealer also says: " My discount line has run off," &c.
There are a number of slang terms and phrases in
general use, which would fall harshly on polite ears,
if left entirely without apology.  The words "tight,"
"easy," "blue," " short," "tough," " nervous," and
their synonyms, contain the pith and significancy of
whole sentences of ordinary description, and are common among all classes of people-the most refined, as
well as the most uncultivated.
The author has no other apology to offer for conversations that may appear trifling or rambling, than
that they are literally true. The history of negotiation would be imperfect without them.
22 
THE PREsIDENT.
OCHAPTER II.
THE PRESIDENT
THE PRESIDENT is the chief executive officer of the
bank. He presides at the meetings of the Board of
Directors, and to a great extent exerts the authority
of the Board in its recess.
In some of the larger banks, there is a stated VicePresident to aid him in his duties, and to assume them,
entire, during his absence; but generally a President
pro tern. is chosen in the latter case.
In all legal relations, the President is the bank,
though still subject to the Board of Directors. The
title of any real estate that it may own is vested in
him, and his official signature gives title by conveyance.
He is plaintiff or defendant in suits at law.
He is made the assignee of property as security for
debts due to the bank.
He signs, with the Cashier, all certificates of stock
issued to shareholders, and the notes or bills which
are paid out as money.
He is generally a large stockholder, and is the only
officer connected with the bank who does not give
bonds for his integrity in the management of his trust.
His identity of interest, with a public character for
uprightness, and the circumstantial guards which are
23 
THE PRESIDENT.
thrown around him, are held to be a better assurance
for his fidelity.
The salary of the President varies, according to the
time and labor which he gives to the business, from
two or three to ten thousand dollars a year. In some
institutions, he is a diligent and laborious officer,
entering with spirit into details, and making himself
acquainted with every important transaction. In
others, he is satisfied to leave details to the Cashier
and the subordinate clerks, holding himself rather at
a distance, and cultivating his official dignity.
It is considered desirable that the President should
possess an independent income, and be free from the
entanglements of trade.  Engagement in other business would distract his attention from the bank, and
might give rise to a conflict of interest.  Under the
pressure of personal embarrassment, with the means
of relief in his official hands, even a rigid sense of
duty might be overcome.  The highest tone of sentiment on this point is, therefore, adverse to his connection with the hazards of commerce. Yet several of
our most prosperous city banks have always be,, L presided over by active, enterprising merchants.
There are other reasons why a bank president
should hold himself aloof from mercantile business.
With large capital invested in a particular branch of
trade, his views might insensibly become narrow and
partial.  An engrossing special interest would divert
his mind from the close study of credits generally,
and make his judgment less clear, as the condition of
commerce becomes more critical. In a season of
growing stringency in the money-market, self-interest
24 
THE BANK STATEFNT._T
compels bank directors, in common with others, to
withdraw their attention from all affairs but their own,
and thus additional responsibility is thrown on the
officers - particularly on the President.  The dis counting of paper is then less strictly confined to the
sessions of the Board. It is spread through every hour
of the day, with specialities and importunities which
can be dealt with, only individually and privately.
A bank president should be a man of education
and general knowledge. The accidents of the office
bring him into contact with every variety of disposition, and with all the different pursuits that are followed in a great city.  He ought, therefore, to be
sagacious in observing character, and to have a
practical acquaintance with modes of business. He
should also be familiar with the principles and practice of bookkeeping; otherwise, he may be blinded
to any extent by the vast accumulation of figures, and
the changes which they perpetually undergo in bank
accounts. It is impossible for the executive officers
to follow all these changes in detail from day to day.
A summary of the condition of the bank is, therefore,
made up by one of the clerks, showing all its assets
and liabilities, and enabling them to judge of the
extent to which bills may be discounted. This is
called the Bank Statement.  It is generally prepared
twice a week, for use at the meetings of the Board of
Directors; but in some of the larger banks, the footings of the several accounts composing it undergo
such material changes as require it to be made up
every day. These footings have a mutual relation
which must be preserved; they are correlative also
2
25 
26      PRESIDENT AND BOARD OF DIRECTORS.
with the general aggregates of the market, as will be
apparent in a description of the Clearing House settlements.
The Directors of the bank depend on the President
to explain to them the particular bearings of this
Statement. They are occupied during the recess of
the Board, each with his private affairs, and their
views of the market are influenced by the condition
and accidents of trade in their respective circles; but
the President observes the whole field of commerce,
taking cognizance of the general causes of ebb and
flow in the financial tides. He examines, not only the
immediate capacity of the bank, but also its contingent resources and liabilities.  He watches the course
of the exchanges in the Clearing House, and the
wider currents of trade beyond, endeavoring to weigh
the probabilities for the future in the vast speculations which rise before him.  He observes the shipment of coin to foreign countries, compares the imports and exports of successive years, and so works
his figures into the great sum of the combined markets
of the world. To a man unskilled in accounts, the
figures of this prodigious sum are as unintelligible as
characters in an unknown tongue.
THE PRESIDENT, AND THE BOARD OF DIRECTORS.
THE regular meetings of the Board of Directors are
held twice a week. Generally, the principal business
transacted is the discounting of promissory notes, and
the loaning of money on securities; but this often 
DISCOUNTING NOTES.
involves a good deal of discussion.  The circumstances
of merchants, their standing in the community, the
character of the trade in which they are engaged, the
credit of persons whose notes they offer for discount,
the state of the market, the value of securities, and
whatever concerns the safety of the bank dealings,
are subjects of conversation and scrutiny in these
semi-weekly meetings.
The President is seated at the head of a table, and
the Cashier opposite, or by his side, as may be most
convenient. The Directors are seated around it, as at
a dining-table. In some banks, considerable formality
is observed in this arrangement, members having
particular chairs. A place next to the President may
be accorded to the oldest or most influential. In
other banks, the arrangement is determined by accident or habit.
The Cashier reads the minutes of the previous meeting of the Board, and they are approved in the usual
form. He records the name of each director in attendance, that questions of disputed responsibility, as to
particular measures, may not arise in the future.
The business transacted, during the recess of the
Board, is submitted at each meeting. Some bank
officers are very particular to have all discounts and
negotiations which are made by their personal discretion, sanctioned by a vote of the Directors-a wise
precaution for themselves, and a good guarantee for
the  stockholders.   The practice is irregular with
respect to this revision. It is apt to be passed over
rather lightly, especially if the officers stand very high
in the esteem of their associates; but it ought to be
27
I 
28     PR ESNT AND BOARD OF DIRECTORS.
remembered, that greater aggregate loss has resulted
to banks from unwise or dishonest conduct on the
part of the superior officers, than from dereliction in
any other quarter. Numerous instances are on record,
of institutions, with large capital and thriving business, being crippled for years, or forced upon insolvency, by trusting too much in the hands of the
President or Cashier. It should, therefore, be an
absolute rule of the Directors to revise the business
transacted between the Board meetings, with the
same rigid scrutiny that they give to that. which
comes up at the regular sessions.
The Discount Register, which is the book of original entry for all paper discounted, is commonly
placed on the table, and if not specially referred to
by the President, is open to any director for inspection. Likewise, the Loan Book, if this is kept separately from the Register.
The Statement, or such portions of it as are necessary to show the extent to which paper may be
discounted, is read by either officer. The aggregate
of loans, deposits, and specie, are enough for this
purpose. The reading of other items is generally
dispensed with, as they do not materially affect the
state of the funds. The book is left within reach of
directors who may wish to examine it more critically.
The President announces his judgment:
"Gentlemen, the condition of the bank is favorable. Our liquidations have been prompt since the
last meeting of the Board. We have no protests, and
the market is quiet. The amount of notes offered
today is about four hundred thousand dollars; and I 
DISCOUNTING NOTES.
am happy to say that we can discount the whole, if
they are satisfactory."
The Offering-Book, with an alphabetical record of
the notes, lies open on the table before the President.
The Cashier has the package of notes in corresponding
order, prepared to open each envelop, and to state
particulars:
"The first offering, Mr. President, is by Adams,
Jones & Co. Their notes are: one of James Wilson,
having seventy days to run, of sixteen hundred dollars; and one of Thompson & Moore, forty-five days
to run, of twenty-five hundred dollars."
James Wilson is a well-known merchant, of capital
and integrity. Several of the Directors express their
judgment in favor of discounting his note. No objection is made, and the President scores opposite to it,
on the Offering Book, the letter A-which means,
accepted.
Thompson & Moore are not known, or but slightly.
The indorsers, Adams, Jones & Co., are entirely
responsible, and would, doubtless, pay the note
promptly, if the drawers should fail; but it is an
established rule of the bank, that no paper shall be
discounted without at least one good name besides
that of the indorser.
"Gentlemen, who knows Thompson & Moore?"
The Directors enter into a free conversation, which,
if the parties are merchants of long standing, is likely
to elicit enough information to cause the note to be
accepted, or rejected. Or, it may be referred to the
officers, with discretion to act as their judgment may
dictate on further inquiry.
29 
30     PRESIDENT AND BOARD OF DIRECTORS.
The Cashier reads offering number two, by Bailey
& Rush. This firm are in high credit with the bank,
and their paper is of the first class.  "1 Note of
Sears & Co., three months to run, eighteen hundred
dollars; and one of C. Jackson, sixty days to run, for
four thousand five hundred dollars."
"Gentlemen," says the President, "if no objection
is made, I will mark the notes of Bailey & Rush,
accepted. It is done. Let us have the next in order,
Mr. Cashier."
" Joseph Chambers offers a draft of Green & Davis,
of San Francisco, on Thrush & Co., of New York, and
accepted-at seventy-five days, for five thousand dollars."
It is, perhaps, the first time that the paper of
Thrush & Co. has been offered for discount in the
bank. The President is entirely unacquainted with
it. He asks for information.
Mr. Breckenridge knows something about them:
"They began business, a year ago, with thirty thousand dollars capital-are said to have done a profitable trade in the produce line-had shipped heavily
to California. The Co. was a young man who come
out of Bacon's-the big packers on West street.
Guess he hadn't much money-say, five thousand
dollars; but very smart. Thrush was the capitalist.
Put in twenty-five thousand dollars, hard cashabout all he had."
"What age is he?"
"Thirty-five to forty."
"Aian of family?"
"Oh yes! I've known him these twelve years.  Got 
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DISCOUNTING NOTES.
half a dozen children. You must know him, Mr.
Groull!  He  married  Stubbles's daughter, wine
merchant, there at your corner. Guess he run away
with her, and made the old man mad. But they're
all reconciled long ago, and now he's Stubbles's principal adviser in them new stores he's building in Murray street."
"Is that the man?"
"That's the man, sir."
"Well, who married Stubbles's other daughter?"
The President warns gentlemen that they had better not wander too far from the subject. The matter
before the Board is, whether Mr. Thrush's note is good
enough to be discounted.
"You said he was in the California business, Mr.
Breckenridge?"
"Yes, sir.  Made some very successful shipments
there last Spring."
"I've got mighty little confidence in California I"
says Mr. Groull, "mighty little!"
"It's a good way off, that's a fact," adds Mr. Breckenridge.  "I'd rather do business with people that
trade near by."
Mr. Groull speaks again.  "Wouldn't touch it with
a ten-foot pole. Bad line. Let it slide, Mr. President. We can do better with our money."
Some of the Directors may have been listening indifferently to this rambling conversation; but the
majority are otherwise engaged. One has seized on a
morning paper, and all his thoughts are engrossed by
the latest news from Europe.  Another has just taken
a fit to examine the Statement Book, and several are
31 
32      PRESIDENT AND BOARD OF DIRECTORS.
talking on their real estate prospects.  Messrs. Breck
enridge and Groull make themselves heard above the
suppressed confusion of other voices. The President
has tapped on the table with his pencil, but failed to
restore order. To a person outside of the door, it
would seem as if the members were engaged in a
general wrangle. Meanwhile, Mr..Marks, with a
lively perception of the ludicrous, and skill enough
to prove that he is not now practicing for the first
time; has sketched sundry odd figures on the blank
page of a "tickler," and finishes by a caricature of
the two gentlemen above named, which he shows to
his neighbor, and he to the next; and then follows
an explosion of laughter, which breaks up all other
distractions of the Board, and finally gives the President a chance to be heard.
.I -1
ye~~I 
DIV'IONS OF DiUR.
"Come, gentlemen, come, come  we shall never
get through our work at this rate."
But the President must have his laugh too; after
which, the members fall into comparative order and
silence.
Such a scene as this is neither extravagant nor
unusual.   The  directors of a bank, like boys at
school, gradually get rid of personal restraints, when
they come together, and join heartily in a "little
fun."  And why not?  To be always grave and dignified is next door to being reserved and dull-which
would make their meetings irksome, and lead to their
being shunned as "a bore."  It does not follow, that
the real interests of the institution are treated with
less serious consideration than they deserve.
The Cashier now informs the Board, that Mr.
Chambers had called on him, and stated the capital
of Thrush & Co. to be unimpaired. They were prudent men, and stood in deservedly high estimation;
had but little paper out; could buy any amount of
merchandise on credit, and so forth. He adds, also,
that the dealings of Mr. Chambers with the bank
had always been liberal and honorable. Owned considerable real estate; was known to have a large
capital, and to be prudent in his credits.   Had
nothing under discount; and his average balance of
deposit was seldom less than six or eight thousand
dollars.  "We ought not," he concludes, "to reject
his offering without good reason."
"Mr. Cashier, would you discount California paper?"
"Yes, sir, if it is good."
"It.! You may well say that!  But California is
2*
as 
34      PRESIDENT AD BOARD OF DIRETORS.
lot good.   Not to be trusted, sir! Too far off!
T'other side of the world I"
"What's the matter, Mr. President?  What's the
business before the Board?" asks Mr. Marks, suddenly, with an air of breaking loose from some
engrossing abstractions.   "What are you  talking
about, Mr. Cashier?"
"Mr. Marks," answers the President, "we've been
discussing the standing of Mr. Joseph Chambers, and
of Thrush & Co., and their sons-in-law and family
relations generally.  If you had been attending to
your duty, sir, you need not have asked the question."
"Didn't hear a word of it."
"No, sir; so it seems.  What have you got to
say?"
" Joseph Chambers is first-rate. I know all about
him, from his toes up to his hat.  Good as wheat.
Worth over a hundred thousand dollars. It'll never
do to reject his paper!"
Several other directors express themselves favorably to the discount of it. There is also some confirmation of the good reports of Thrush & Co.
Mr. Starr insists that a man must not be repudiated
as unworthy of credit, because he deals with California, any more than if he were trading with Mexico
or South America. "If there is any specific cause of
discredit, let's have it out."
The President announces, that objection being withdrawn, the note of Thrush & Co. is marked with the
letter A. The formality of a vote is not common in
determining the discount of paper; the usual prac 
DISCOUNTING NOTES.
tice being to decline it in the face of serious opposition, even by a small minority. In other words, the
general and harmonious sense of the Board is preferred
to the mere majority rule in disputed cases. No prudent director will urge particular claims against the
prevailing judgment of his associates.
The several next offerings in succession may be by
dealers of established credit with the bank, whose
paper is well known. They are marked by the President with the letter A, nearly as fast as the Cashier
reads them off, if no objection is interposed.
The next is one of a less usual class. The large
dry-goods house of Merrimack  &  Slater wants a
discount of twenty-five thousand dollars. They offer
notes, which the Cashier reads off as follows:
White & Marshall, thirty-five days to
run.....
Robert Hancock, forty days..
Wellington, Fairfax & Co., forty days,
Osborn & Wells, two months..
Conrad & Co., three months..
Oakford & Smith, four months..
The President waits a moment for some indication
of opinion from the directors, although he may have a
decided judgment in the case.
Mr. Cassimer, a leading merchant in the dry-goods
line, suggests that there can hardly be any doubt as
to the disposition of that paper. " Nothing better in
the market, and no better customer in the bank. I
f'pose you'll have to pass the whole, Mr. President."
35
$2)576.15
53250.00
8,976.40
15375.00
41150.25
23960.00 
86      PRESIDENT AND BOARD OF DIRECTORS.
"Too big," says Mr. Groull. "Twenty-five thousand
dollars l  I'd rather divide it among twenty-five
different persons, than give it all to one. Bad policy
-— these big licks I"
Another director proposes to discount the half,
rejecting the long paper.  "Some of it," says he,
"has four months to run. All good, no doubt; but
twenty-five thousand dollars is a large sum."
A pause in the conversation.
Director  Kent, also in the dry-goods business,
admits the sum to be large; but reminds the Board,
that "the men are large.  Don't they keep nearly
that amount on deposit in the bank, Mr. President?
They are literally asking us to loan them their own
money. They can take the paper to any bank in the
city, and get it passed at a word; and they will be
likely to do so, if you reject or change their offering.
You don't want to lose their custom, do you?"
" No, sir," answers the President. "It is the policy
of the bank to treat this class of accounts in the most
liberal manner. They have nothing under discount
at present. We ought to pass the paper at once, to
their credit. I hope objections will be withdrawn.
Do I so understand it?  The Board acquiesces, and I
will mark it, accepted. The next in order, Mr.
Cashier I"
"Shultz & Cooper offer three notes-acob Liston, forty-five days, six hundred dollars; and two
notes of Cobb & Walker, each one hundred and
fifty, at two and three months."
Director Groull wants to know "where's the use
of taking up time with that class of customors  They 
DISCOUTIG NOTS.     B
apply every offering-day, and keep no balance of
account.  Let'em slide."
"Has their account improved any of late, Mr.
Cashier?"
"Not much, sir. They keep a balance of one or
two hundred dollars, and have a thousand under discount."
"Letter R.  Let's have the next."
"Hold on, Mr. Presidentl  Not too fast.  These
small men are of use to us. They ought not to be discarded too abruptly. They really want the money.
Give'em that little note of six hundred dollars. It
will do them more good than twenty-five thousand
does to Merrimack & Slater."
An agreeable personal acquaintance between the
dealer and the director is the ground of this favor.
The note is discounted at the request of'Mr. Miller;
none of his associates deeming it worth while to press
an opposition in such a trifling case. But this class
of applicants receive no consideration when there is a
pressure of more deserving customers.
Among the offerings, is one by John Tillotson &
Co., who "respectfully propose" the note of Phineas
Crowfoot, three mouths to run, six hundred dollars;
and one of Thomas Noble, sixty days, three hundred
and fifty. The offerers have no personal friend at
the Board, to speak promptly and to say: "I know
them. They are good, and ought to be accommodated.'" But Director Buttonwood, who attends the
meetings once a month by convenient accident, asks:
"Who are Tillotson & Co.? Aint they the concern
that broke a year or two since, and compromised
37 
38      PRESIDENT AND BOARD OF DIRECTORS.
with their creditors at twenty cents on the dollar? I
wouldn't discount any paper for a broken-down drygoods retailer."
"They are not in that business," answers the
Cashier.  "They are crockery-dealers, and have kept
a fair balance of account in the bank for several years,
asking no more than reasonable accommodations.
Their capital was originally ten thousand dollars, and
they have probably doubled it in trade."
"How much have they under discount?"
"Twenty-five hundred dollars."
"And what's their average balance?"
"From eight hundred to a thousand."
Mr. Buttonwood thinks he has a right to talk more
than any other member, to ask more questions, and to
suggest more doubts of the solvency of dealers, because he doesn't trouble the Board often with his
presence.  "He wants to be thoroughly posted up.
You don't expect him to give his voice, as a director
of this bank, in favor of discounting people's notes,
without knowing what they are, do you?  He has a
higher sense of his duty to the stockholders than
that!"
Mr. Buttonwood's sense of duty revolves about a
very small point within himself.  He looks after the
interests of the stockholders, perhaps on twelve
several occasions of an hour each, during as many
months. He cannot afford to withdraw his attention
for a longer time from his private affairs. Consequently, when he comes to the bank, hlie is ignorant
of the state of its business and of the standing of its
dealers. But his sense of duty will not allow him to 
MR. BUTTONWOOD.
countenance, by his bare presence, the discounting of
paper with which he is unacquainted. IHIe has adopted
the notion that all the losses of banks come from the
officers  and directors being unable to say, "no."
They are either too easy, or they have "got their
hand in the lion's mouth, and dare not draw it out."
Hie concentrates on the few occasions on which he is
present, the churlishness and the caprice that might
be less intolerable if spread over a longer period. He
obliges the officers to explain, for the twentieth time,
the circumstances of individual dealers, their capital,
extent of business, and so forth. His associates in the
Board submit, out of politeness, whilst inwardly wishing that he would absent himself entirely from their
meetings.
Every Board of Directors has one or more of this
narrow-minded and self-conceited class in its composition. They do not get rid of them at the annual
election because of the fear of giving personal offence,
and making outside gossip injurious to the interests
of the bank. Or there may be less creditable grounds
of conciliation connected with the management of its
affairs, which might be exaggerated or perverted for
a malicious purpose by a disaffected man. It is hardly
possible to constitute a Board of Managers, representing, the different interests of trade, without a mixture
of the Buttonwood mould; and this is often the
source of injury to the more obscure, but still deserving credits that enter into the business.
It is one of the duties of the President to protect
the dealer when he is unjustly assailed; and it is
directly for the advantage of the bank. Besides the
39 
40      PRESIDENT AND BOARD OF DIRECTORS.
general results of the fair treatment of credit, there
is this particular result; that the best class of customers that a bank can have, consists of those whom
it has nurtured from moderate to larger success, and
whose experience has been all along linked in agreeable intercourse with its officers and directors. These
are not easily seduced to open accounts with other
banks; but they are faithful to their old friends, and
they introduce other dealers.
If Mr. Buttonwood persists in opposing the discount
of Tillotson & Co.'s paper, the President adds his testimony to that of the Cashier, and calls on the direc.
tors for any information they are able to give.
Director Platt knows Crowfoot.-" He is perfectly
good, keeps a retail store on Canal street. I wouldJ
sell him two or three thousand dollars of merchandise
on credit, without hesitation."
"What's his capital?  What do you know about
that?" asks Director Buttonwood again.
"Nothing very specific. Only the man has kept
store there many years, and is in fair credit."
"Then let his paper go. What do we want with
the notes of people that have no capital?"
"What do you call capital, Mr. Buttonwood? Isn't
stock, established business, ability, and good credit,
very substantial capital? What Crowfoot has, is
invested in these. Has he not frequently paid notes
at our counter, Mr. Cashier?"
"Yes, many a time."
"Has the bank ever discounted any of them for
Mr. Tillotson, or other dealers?"
The Cashier turns to the Discount Bill Book, where 
DISCOUNTING NOTES.
he finds a record of all the paper passed to the credit
of Tillotson & Co. for two years, and the notes of
Phineas Crowfoot recurring at intervals during that
time. He adds:
"We have had as high as seventeen hundred dollars
of these notes under discount at once, and now have
none."
Director Potts is half impatient with this protracted
discussion.  "Mr. President," he says, "I know both
Tillotson and Crowfoot. I would as soon trust either
of them three thousand dollars in trade as I would
any member of this Board. Where's the use of consuming so much time about so small a matter? Mr.
Buttonwood knows more about the price of sugar
than about crockery credits. Pass the paper, and
let's go on with the business."
This being manifestly the general sentiment of the
Board, the President marks it accepted, and requests
the Cashier to go on.
"Robert Thompson offers a note of Samuel Price
for three thousand dollars, sixty days to run."
Price is known to be a retired merchant of large
wealth. Thompson gives his name as security instead
of his country business paper. Director Breckenridge objects to it, on the ground that it is "accommodation paper."
Then for the hundredth time, perhaps, comes up
a discussion as to what constitutes accommodation
paper, and the impropriety of banks discounting it on
any terms. Without reaching a decision on this
contested point, the directors are satisfied that the
note of Mr. Price is "fire-proof," and Thompson
41 
42      PRESIDENT AND BOARD OF DIRECTORS.
keeping a good account, is entitled to the credit
The President announces that he has marked it
accepted.
Thornton & Whitaker, iron dealers and manufacturers, inclose twelve thousand dollars of their business paper as collateral to their own note for ten
thousand dollars at ninety days.  The house is so
favorably known as to preclude discussion; but on
the suggestion of one of the directors, the term of the
discount is changed from ninety to sixty days.
White & Co. offer several notes for discount.
Director Crotchitt has an indistinct notion that "those
fellows have been dealing pretty largely in railroad
stock. Can't say with certainty, but if the Board will
let that stand over, he'll get the information, and
report to the officers."
John Wilson offers his note at sixty days for five
thousand dollars, with one hundred and ten shares of
the Salamander Fire Insurance Co. as collateral.
"Good security, Mr. President.  That stock is at a
premium of ten or twelve per cent. Wilson is a fair
man, and I guess his account deserves it.
No objection is made, and the President marks it
with the letter A.
Young, Sterling & Co., heavy sugar-dealers, offer
several New Orleans drafts for discount. They are
accepted by parties residing in New York.
Cranston & Thomas, on Charles Bancroft,
William English,    " Russell & Co...
Do.           "Perry & Co...
T. Robinson         " Smith & Wheeler.
.$10,000
7,500
15,000
10,000
I 
DISCOUNTING NOTES.
The firm has already under discount twenty-five
thousand dollars, and their average balance of account
is forty thousand.
The President informs the Board, that Mr. Young
had called on him, personally, to say that the object
of so large an offering is to provide for their payments
through the coming month, and that the proceeds will
be drawn out gradually.
" You don't mean to discount the whole forty thousand at once, do you, Mr. Presidents"
"That is for the Board to determine.   Young,
Sterling & Co., are among our wealthiest dealers.
They have a capital of one million of dollars, independent of the private property of the partners, which
would sell for as much more. The proportion of their
current balance with their discount-line, entitles
them to the highest consideration."
While the President is speaking, the drafts are
passed from hand to hand, and examined by the
directors. The general tenor of remark is favorable
to the offering, as a whole. The principal peculiarities
of the sugar-business are recited-how the prospects
of the growing crop are speculated upon-how the
market is sometimes controlled by a few operators in
concert with the great sugar-houses of New Orleans
or Cuba, and prices kept up or allowed to decline,
until the moment comes for combined action, and so
forth. It is suggested that all the sugar-men must
have incurred prodigious losses by the recent fall of
thirty per cent; and that even at present prices, there
is room for a decline of nearly as much more.
Mr. Buttonwood, who deals largely in sugars, says,
43 
44 PRESIDENT AND BOARD OF DIRECTORS.
that no matter what the decline is, Young, Sterling
& Co., are above all casualty. His objection to discounting large amounts of paper, so freely expressed
when dry-goods houses are in question, vanishes when
the sugar-trade calls.  The dry-goods directors are
less likely to be influenced by prejudice against particular branches of business than any other class of
merchants. Their habit of longer and larger credits,
if more dangerous, is also more liberalizing than dealing in the shorter credits of the grocer. They are
seldom found in the opposition to such offerings as
that of Young, Sterling & Co., when the condition
of the bank will admit of their discount.
Mr. Cassimer is in favor of passing all the drafts
to the credit of the offerers.
The President wants a general expression by the
Board for such large operations. "The house is rich,
gentlemen, beyond a doubt. But you must remember, that no house is exempt from great losses on a
falling market. The transactions in sugar have been
excessively inflated within the last few weeks. I
called on a friend in that line of business yesterday,
and he related to me some facts that you ought to be
made aware of. Four or five houses bought up sugar
to the amount of one hundred and forty thousand dollars, giving their notes at six months in payment.
They held it a week, and sold at a cent a pound
advance, taking the notes of the purchasers for the
same time. These second purchasers sold at an additional advance of a cent a pound, for notes at six
months. The first set of notes have not yet matured,
so that there is now afloat nearly half a million of 
DISCOUNTING NOTES.
paper on that single lot of sugar-to say nothing of
the subsequent sales, of which we are ignorant. I do
not state these facts to prejudice the account of
Young, Sterling & Co., but on general grounds of
caution. Before passing their offering, I want the
unanimous approval of the Board."
Mr. Buttonwood wants to know if the bank has any
of the paper of "our old friend Dennis, in Reade
street."
The Cashier answers in the negative.
"Because," resumes Mr. Buttonwood, "I suspect
he had something to do with the last purchase of that
sugar. He has lost a hundred thousand dollars in
his business within the last year, and his credit is now
at a pretty low notch."
"What do you say, gentlemen?  Bring the matter
to a close. Shall the paper of Young, Sterling & Co.
be passed?"
The directors respond unanimously, "Aye;" and it
;s marked to be discounted.
The Cashier annomunces that all the notes offered
have been discounted, and that there is no further
business.
"Move we adjourn."
Before the President can put the question to vote,
Director Breckenridge requests the Board to "hold
on a minute." He has " a little lot of coffee to pay
for, and wants some paper discounted to the extent
of six or eight thousand dollars." Two or three
voices say: "Send it to the President." Two or three
more repeat: "Move we adjourn;" and all second the
45 
46      PRESIDENT AND BOARD OF DIRECTORS.
motion by a general pushing back of chairs, and putting on of hats. Mr. Breckenridge understands his
paper to be discounted, and informs the President
that he will send it to the bank as soon as he goes to
his office. Half the members are already out of the
door, pairing off together to consult on their individual speculations, and to forget that the bank is in
existence until the next discount day comes round.
It is as likely as not, that the President and Cashier
may congratulate each other that they are happily
out of the way.
Mr. Miller having disappeared for several minutes
in company with others, now returns alone:
"Mr. President, havn't I a note with collaterals
coming due to day-ten thousand dollars?"
"Yes.  You didn't offer at the Board, and I expected of course you intended to pay it."
"Pay it, indeed!" says Director Miller.  " Here.
Let's look at it?"
The two go inside of the counter to the teller's desk.
The President gets the note, looks over the collaterals,
and finds them to consist of about twenty business
notes, the drawers of which live any where between
Halifax and the Gulf of Mexico, not one of which he
can know anything about, and the half of which are
payable at Mr. Miller's store.
"' When are these coming due?" he asks.
" Not this six months," answers Director Miller.
." But they're all as good as wheat. I'll tell you what
I'll do. I'll make a new note at ninety days. Just
pass it to my credit, and I'll send a check to take up
the old one." 
MR. MILLER PAYS HIS NOTE.
"Go ahead," says the President.
The times are easy. He knows Mr. Miller to be a
responsible man, or thinks he knows it, and marks the
note for discount. His slackness of authority and his
sense of strict propriety are at variance. The result
is, a weak protest or expostulation, which does not
even "lock the door after the steed is stolen."
"This is all right Mr. Miller, I dare say; but I'd
rather you'd offer these matters regularly at the Board
meetings. You know how I'd be censured, if they
should turn out wrong? I'm entirely willing to pass
such things occasionally for you or any other director.
We understand each other-but there's Buttonwood!
He don't come to the Board often; but when he does,
you  see  how  he  pitches  in!  And  there's  old
Crotchitt, the biggest stockholder in the concern. He
shuffles in at odd times, and will have the discount
register carried into the private room; and there he
reads it as regularly as the newspaper.   It's well
enough not to give these fellows a chance to find too
much fault?  Don't you think so?"
"Oh yes, I understand all that!  It's a good rule,
if it was  only generally observed.   I'll try and
remember it next time."
The next time, Mr. Miller remembers it in the same
way. Or, instead of coming back after the adjournment of the directors, he steps in before the hour, and
has the transaction accomplished in advance.
This irregular and careless manner of discounting
bills for directors has not unfrequently led to the
most serious results. Tacit consent to the practice
might easily grow up from the direct personal confi
47 
48      PRESIDENT AND BOARD OF DIRECTORS.
dence established between them, which makes it difficult to express dissent without indicating censure. It
was also found more agreeable to obtain their accommodations privately, than to submit their offerings in
open session of the Board, where they would be
competed with by the claims of dealers generally.
The practice led to anticipating the means of the
bank as these were liberated by maturing investments; so that, in a stringent market, there was often
but little left to divide among the dealers on regular
discount days. This undue absorption of bank facilities by a few privileged persons became matter of
common complaint; and it was not difficult to induce
the State Legislature to require a specification, in the
quarterly returns, of "all sums due by the directors
of each bank," separately from the entire amount of
loans. The abuse has been measurably checked by
this statement, though there are various methods by
which the law may be evaded.
The authority of the-President is entirely competent
to correct this abuse; but it may be as much of a
convenience to him, as to any of the directors. His
private speculations would be narrowed, if he could
not get ten or twenty thousand dollars without submitting his wants at a regular session of the Board.
Mr. King is another sort of president.  He is a stern
disciplinarian; never borrows a cent of the bank;
thinks borrowing discreditable in a bank officer. It
is a stretch of propriety, in his opinion, for a director
to borrow from his own institution; but usage tolerates it. The by-laws of the bank require the directors to meet twice a week, to discount the paper 
A STRICT CONSTRUCTIONIST.
offered by its dealers. That is the time and place to
lend the funds. The dealers send ill their offerings
on the stated days, with the understanding that they
are to share equitably in the facilities of the bank;
and it is unjust to them to dispense those facilities at
irregular times. Moreover, this is a fruitful source of
bank losses. If all the paper is investigated at the
Board sessions, we shall probably discover any that
is weak. He positively declines to exercise the dis cretion of discounting notes without the concurrence
of the directors. He will not have his mind burthened
with such a responsibility. That must be borne by
the directors. If they can get their paper discounted
by the officers in the recess of the Board, they absent
themselves from its meetings, and gradually come to
consider the bank as a mere personal convenience to
themselves, forgetting that they owe any duties to the
stockholders, and to the general commercial interest.
The habits of private life are often freely scanned
at the Bank Board.
"Yes! Mr. Black is clever and smart. He has
capital, too. But he had no business to buy a house
on Fifth Avenue at sixty thousand dollars, and spend
forty more to furnish it. There's a hundred thousand
dollars gone clean out of his business; and what's the
consequence? Why, he comes here and wants to run
a discount line right along for the whole amount!
Gentlemen, banks were not got up to enable a few
people-to live like lords, while the rest of the world
are sweating to keep body and soul together! It's
just as sure to come to an end, as a man's notes are to
come due."
a
49 
50      PRESIDENT AND BOARD OF DIRECTORS.
"That may be, Mr. Fairfax; but let me tell you
that Black is rich beyond a contingency. He owns
half the upper end of Brooklyn, and the city's stretching out in that direction like a young race-horse.
Why, in the course of another year, Black will have
a Fifth Avenue there, all to himself. I wish I had
only the quarter of that piece of property, and you
wouldn't catch me dickering dry-goods."
"Well-I'd rather see the tenth part of it realized,
than hear what it's going to bring a year hence. Mr.
Black may be in his grave before the month's out, for
what I know; and what then? How are his notes to
be paid? If his estate's worth five millions, the bank
would have to wait, perhaps, as many years. Mr.
President, my notion is, that we have no right to discount any thing at this Board but a bona fde commercial note that will be paid when due. And on
top of that, the indorser must be able to take it up
himself, if the drawer should fail or die. Don't you
see that we are discounting this paper to pay for Mr.
Black's house and furniture, just for his single enjoyment? This isn't commercial paper, sir! It's accommodation paper, in the true sense.  Mr. Black has
invested his commercial means in a house and furniture; and now he wants us to ride him through!
No, sir; I'll never give my voice to any such thing
while I'm a member of this Board. Besides that,
such an establishment necessitates enormous expenses
of living.  There's to be two or three grand parties
and balls every year. And a carriage, and a footman, and one of these fellows with breeches and white
stockings, to scrape and bow at the door, and not 
EXTRAV &GANT LIVING.
less than a dozen servants, to keep the great house up
Mr. President, when you add Stewart's bill for silks,
and Weller's bill for ice-creams, and all that French ified sugar-work, with the foreign wines and hot-house
grapes, I can only say that it is fearful! No business
in the world can support it, sir."
Mr. Joseph Exeter speaks only on extraordinary
occasions.
"There are certain principles, Mr. President, on
which sound trade is built up; and one of them is
economy. I agree with my friend, Mr. Fairfax, in
what he has said about carrying a heavy discount
line for the personal accommodation of Mr. Black.
That is not commerce, sir. It is personal expenditure, personal extravagance, personal luxury, and, in
the end, personal ruin.   I don't want to see this
institution involved when the end comes."
Mr. Exeter points out the bad influence of such
examples on young men who are beginning business,
and concludes by a strong protest against Mr. Black's
offering.  He is most likely to be set down as" behind
the age."   He is unequal to the emergencies of
modern enterprise!
The President listens deferentially to the discussion
of the directors. Mr. Black is probably known to
him as a bold and "lucky" operator in whatever
chances the market may present-to-day in real
estate, to-morrow in steamships, and next day in a
guano expedition, or a government contract. He has
important connections in trade, and his name may be
seen in half a dozen insurance, railroad, and mining
companies.   It is not so easy to reject entirely
51. 
PRESIDENT AND BOARD OF DIRECTORS.
the offering of such a man. He must be conciliated.
"Gentlemen, if you will refer Mr. Black's offering
to me, I will endeavor to put him off with as little as
possible. It will be to the interest of the bank to do
something for him."
It is so referred; and that gentleman is satisfied
with the one-half or one-third of the amount which he
asks for.
The duties of the President, in personal intercourse
with dealers, are regarded as limited to the treatment
of credit from a strictly commercial point of view.
He takes no direct cognizance of their moral habitsthough these, in fact, often turn the scale against an
account.
Mr. Crafft has been a customer in good standing
with the bank. He has kept an average balance of
six or eight thousand dollars, and obtained a discount
line of twenty thousand-one of the most satisfactory
class of accounts.
It is whispered one day, that Mr. Crafft is a gambler, and his offering is rejected. His credit sinks,
and in the course of a few months, his line of discount is reduced more than one-half. The paper that
he offers is the same that has heretofore been esteemed
satisfactory by the bank; but it is frequently refused.
Personal solicitation of the President is equally unsuccessful.
Mr. Brewer drinks brandy to excess.  As with Mr.
Crafft, his accommodations are gradually reduced. He
keeps up his balance of deposits with more than common assiduity, to strengthen his claim.  Note after
52 
BAD HARITS.
note of his discount line is paid off, and he seldom
obtains "a favor." In endeavoring to maintain his
affairs with the bank, he frequently comes in contact
with the President.
"No, sir. We cannot do it. I am very sorry."
"But, Mr. President, my line is reduced from
twenty thousand dollars down to five. My balances
are even better than ever, and I offer you unexcep tionable paper, that is always paid at maturity."
"I am aware of that, sir; but it is out of our power
to discount for you at present.  We  are obliged to
decline a large proportion of our offerings."
" Will you discount for me next week?"
"Can't tell, sir. If you offer at the Board, and
your paper is satisfactory, it may be done."
This is an example of the common dissimulation
practiced by bank officers to get rid of undesirable
customers. Hiow much better would it be:
"Your paper is rejected, Mr. Brewer, because you
are destroying yourself by habits of intoxication. You
are on the highroad to insolvency. Your account
entitles you to liberal accommodation, and it would
give us pleasure to render it. But your credit is
rapidly on the decline, and will soon be gone altogether. Every bank in the city will hasten to get
your name off its books before it becomes positively
unsafe."
Such a warning would be more authoritative from
a bank president than from any other person. It
might be lost on the man who has gone so far as to
be already discredited; but the example would not
be without influence on those who are following at
53 
54       PRESIDENT AND BOARD OF DIRECTORS.
some distance in the rear. A merchant values few
things so much as his good name in the market; and
he ought to know that every bad habit which affects
his character, is scored down opposite to it in the
Reference Book of the bank officer. If Mr. Crafft
and Mr. Brewer could have seen records like the following, they would have hardly thought it worth
while to make any appeal to the President:
"Richard Crafft, flour-merchant, No.- Pearl street.
Began business in 1840 with $25,000 capital. Managing, economical, and conscientious. Yery successful.
Standing good. 1842, continues to prosper. Built
large house on Madison square, cost $30,000. Said
to have cleared fifty in the previous two years.
Capital now $40,000, besides real estate.   1843-44
-45, affairs well conducted, credit unquestioned,
makes money fast. 1846 to 50, worth now $150,000,
besides real estate. 1851, living high, and takes
'flyers' in the stock market. Caution. 1852, credit
still good, large business, but has been seen at gambliig-houses.   Keep  a  sharp eye on him.   1853,
operates extensively in stocks. Is now often seen at
the gambling-table.  June 1854, Crafft is reported to
have lost $40,000 at play, and in Erie, within the
last six months. October 1854, no better. Credit on
the decline. January 1855, continues in a bad way.
Think it advisable to reduce his account."
"Esan Brewer, dry-goods jobber, Broadway.   Began in 1846 with capital of $40,000.  Up to 1852,
successful, and highly esteemed.   Capital at later
date increased  to  $125,000.  April 1853, bought
country-seat.   Expensive family, but enjoys good
credit. Paper to his own order sells at the best rates.
18.54, is getting rather free with brandy. Business
continues thriving, and credit unimpaired.   October 
WHAT IS A PRESIDENT To Do 
1855, Brewer called in to press for discounts. Looks
like a confirmed toper. Running down hill at a
gallop. January 1856, poor Brewer in again-past
saving."
Information comes to the bank officers without their
seeking, and is generally brought the more promptly
in proportion to its evil character. Dealers who wish
to gain favor with the President, whisper rumors in
his ear, confidentially, that another dealer has met
with serious losses, or has fallen into bad company.
Each director contributes his share of gossip; and the
"Commercial Agency" is bound to give immediate
notice to its subscribers of whatever may affect their
interest.
A bank president may be regarded, in some degree,
as a sponsor for the integrity of commerce. He is
perpetually in contact with the mind of trade, and
why should he not instruct it? Where, if not by him,
shall a beginning be made?  Is he clothed with the
greatest power in society, merely to put a motion, or
to announce a vote in a Board of Directors, at a salary
of ten thousand dollars a year? Are his hourly opportunities for giving wise counsel and timely remonstrance to be turned off by a trick of dissimulation?
Another question might be asked:
Are our Bank Presidents qualified by knowledge,
cultivation, and general weight of character, to exert
a good influence over their commercial pupils?
They are not chosen for that purpose.  The possession of wealth, and the power to control deposits, take
precedence of all questions relating to conscience,
intellectual accomplishments, and financial ability.
55 
56      PRESIDENT AND BOARD OF DIRECTORS.
If a man is rich, he has many friends, and a wide per
sonal influence. He is sought after to have his name
enrolled among the managers of various imposing
institutions. He is a patron of fashionable charities.
He is called on to preside at public meetings. Therefore, he is a very proper man to be a Bank President!
It is not supposed that these distinctions are inconsistent with the most desirable qualifications for the
office; but they are too often admitted in substitution
thereof.
There is, happily, a saving clause in the organization
of a bank, which protects it against many of the consequences of unfitness in the chief officer. The division of labor is such as to compensate in the mere
mechanism of the business for want of capacity in the
individual; and the Board of Directors have the right
to assume, either in session or by committees, the conduct of important affairs. They may limit the discretionary powers of the President by by-laws, or by
closer personal attention to the business.
It is not unfrequent that the Cashier of a bank,
though nominally subordinate, is practically the
superior officer. His duties being to a great extent
concurrent with those of the President, it is easy for
him to step in and occupy the ground. He may hold
the reins of authority, and be the ears, the eyes, the
brain and the soul of the institution. The relation
works itself into such terms unavoidably, when the
President is unequal to his place.
The manual work that is performed by the President in a bank of the first class is but little. A
casual observer might think his salary of ten thousand 
PERSONAL INFLUENCE OF THE PRESIDENT.
dollars a year, out of all just proportion with it. But
his freedom from the annoyance of details leaves his
judgpnent cool, and enables him to give more uninterrupted attention to the causes which affect commercial
credit, and which may make it expedient to change
the course of the business.
The President of a bank is its personal and moral,
as well as its legal representative. If he is known to
be high-minded and honorable in his individual relations, the confidence of the community does not stop
at the man; but extends to the institution. Its counters are thronged by depositors, and many friends are
anxious to become its stockholders. Such a personality is of prodigious account in an active market,
where competition divides the patronage of dealers.
It acts beneficially in the opposite direction also, by
repelling hazardous business. In banking, as well as
in social intercourse, " like seeks like." The President
who speculates in lands, railroad stocks, and mining
shares, attracts around him the plotters in these various schemes; and whatever may be the extent of his
private property, however high his standing and successful his adventures, the capital of a bank is not
safe in his hands. At one time or another, in one
way or another, the institution is compromised by
unsafe investments. The solicitation of a personal
friend obtains a short loan on good security; the
market changes, and the security depreciates while
the loan is extended from necessity, and perhaps
increased; a substitution of securities is allowed;
defective powers of attorney creep in by oversight;
the treasurers of the borrowing companies are changed;
3*
57 
58     PRESIDT AND BOARD OF DIRECTORS.
the original negotiators die;-a thousand accidents
occur to involve and to complicate this class of
financial operations. The only rule of safety for a
bank is, to discard them altogether; and this is the
rule of integrity to the commercial interest also.
The bank officer who is not proof against the temptations held out for the employment of funds in speculative channels is an unsafe trustee.
"What!" says one, "shall I keep idle two or three
hundred thousand dollars, which the regular dealers
of the bank do not want to borrow, when I can loan
it, on call, at seven per cent interest?" Accordingly,
he loans it out. This is the origin of the employment
of bank capital on the Stock Exchange-a practice
which has often been severely criticized by commercial men.
The desire to make the most out of the means of
the bank is natural; but this does not always consist in a particular economy, such as transient loans
outside of the commercial interest. It may be better
economy to let the excess remain as a dead weight,
until the renewed activity of trade shall again call it
into use. Such, in fact, has been the experience of
several of our city banks which have repudiated stock
loans altogether.  They have found their reward in
attracting the best class of merchants to their counters, which gives a more stable deposit, and consequently a more uniform line of discount.
The objections to call-loans on the Stock Exchange
are:-that they inflate and sustain fictitious values;
that they encourage the speculative market, and
stimulate the rates of interest, which commerce has 
CALL-LOAN8 TO TiE STOCK MARKET.
to pay; that many of the securities bought and sold
are worthless, and to countenance dealing in them,
therefore, tends to fraud; that the system, to a great
extent, is mere gambling, in which merchants are
constantly tempted to their ruin; and that it corrupts
the whole market.
It is well known that the old commission-house of
Tumbledown & Co. was for many years a measure of
credit. "Will you take some paper to-day?" asks a
broker of a Bank President.
"Yes.  We'll take fifty thousand dollars, if it's as
good as Tumbledown & Co."
The same President was shocked one day to hear
that the house had been ruined by speculations in
"Erie," or "Harlem;" and the probabilities were
as four to five, that his own loans to the stock-market
had something to do with it.
In some banks, stock loans have been prohibited by
a vote of the Board of Directors. Where they are
admitted, the President commonly exercises his discretion as to the kind and amount of securities. There
is probably not a Bank Board in the City of New
York that would not pass a vote of prohibition, if
strongly urged to do so by the President.
Among the duties of the President is, that of constantly reviewing the credits of the bank.
Merchandise is sold from first hands to the jobber
on a credit of eight months (more or less), for which
the latter gives his promissory notes. The jobber
sells in smaller quantities (by the piece or single
package) to the retailer, on a credit of six months. It
59
0 
60      PRESIDENT AND BOARD OF DIRECTORS.
is good management for a merchant to have his bills
receivable coming due in season to apply their proceeds to discharge his bills payable. But the ability
of the retailer to pay the jobber depends chiefly on
the punctuality of the consumer in settling his bills.
Thus each class of merchants is dependent on another
class for the means of liquidation.  A  large cash
capital may enable a man to pay all his notes at
maturity, even if his debtors fall considerably in
arrears; but the majority of traders of all classes are
obliged to carry full lines Of credit. This system
supplies our banks with promissory notes, the discount
of which is their principal source of profit.
The New York city banks do not discount paper
until it comes within two or three months of maturity.
That which has a longer period to run, is therefore
unavailable for direct use.  The bank, however, will
admit a modification of its rules, when satisfied that
the notes are good. It will receive a certain amount
of them as collateral security for the merchant's note
payable within the required time, reserving in such
cases what is called a nmargin for contingent losses.
Thus a dealer may deposit twelve thousand dollars
of paper, which has from four to eight months to run,
coupling with it his own note for six or eight thousand
dollars at sixty days. The excess is the margin
intended to cover loss by the possible failure of some(
of the drawers, and the expenses of collection and
interest that would accrue, if the dealer himself should
fail and oblige the bank to have recourse to the collateral notes. This is a very simple operation in
appearance; but it involves the exercise of no com.
-t 
-1I 
I I....
I      i!  I~,
"Sit down, sir, and let me look at your collateral notes."
I —-- _,,, 
DISCOUNTING NOTES WITH COLLATERAL SECURITY.  61
mon sagacity and discretion on the part of the bank
officers-. They must endeavor to maintain an accurate
knowledge of the affairs of the merchant to whom
the loan is made, and of the responsibility of the
drawers of the collateral notes. The latter are resident in small towns and at trading stations all over
the country, from Canada to Mexico. It is impossible
for a bank officer to get much specific information
about them. It is presumed that the city merchant
has sufficient knowledge of his customers to justify
the credit that he gives them. But the President or
Cashier frequently enters into a particular examination of each note.
"Mr. Jobber, the Board of Directors has referred
your offering to me, to ascertain something about
these collaterals. Sit down, sir, and let us look over
them. Here is Joseph Scott, of Wheeling, four hundred and sixty dollars, seven months to run.  What
do you know about him?"
"Well, Mr. President, Scott has dealt with me five
years, and never failed to pay promptly. Hie represents himself as an owner of real estate, worth ten
thousand dollars.  Besides that, his stock averages
some twenty thousand over all his debts. I have a
correspondent there who confirms his statement, and
the Mercantile Agency here says the same thing.
Scott's general character is very fair. Church member-very gentlemanly. I sell him about three thousand dollars a year, and he owes me, running, say
two."
"That's quite satisfactory.  Now here's Zach & Co., 
62      PRESIDENT AND BOARD OF DIRECTORS.
Chicago, who are they?   Nine hundred and fifty
dollars, six months."
"Zach & Co. were recommended to me by my
brother-in-law, who lives close by one of the firm, a
little out of the city.   Owns a fine country-seatmade forty thousand dollars by the rise of real estate
-one of the early settlers-half owner of a hotelworth altogether not a cent less than a huiadred thousand dollars. We trust him from three to five, but
he pays cash half the time."
" Very good. Next comes Stubbs & Brother, of
Shreveport, Louisiana, twelve hundred dollars. That's
a good way off!"
"Yes, sir, but very responsible men.  They have
a capital of thirty thousand dollars. Their city references are of the first class, and we have made particular inquiry as to their general habits and capacity
for business. This is their first purchase of us."
" Here are two notes - Jackson & Smith of
Montgomery, Alabama, and Joseph Tompkins of
Galveston, Texas, made payable  at your office, Mr.
Jobber. We shall decline them, as notes drawn in
that way are apt to be protested."
"Those people have always remitted promptly, Mr.
President. The reason of making their notes payable
in New York is, that they ship cotton to the East
and draw against it."
"That may be; but we prefer notes that are payable where the parties reside. You must send us
others in their place."
",We can do so, sir, if you prefer it."
"Ezra Cooper, Savaunah. Who's he?" 
DISCOUNTING NOTES WITH COLLATERAL SECURITY.  63
"First-rate man.   Owns a plantation with two
hundred  slaves.   Customer  of ten years' standing."
The list of collateral notes is thus scrutinized by
the President or Cashier. The extensive correspondence of the bank enables the officers often to corroborate or to correct the representations of the dealer.
It has collected paper of the same drawers, or had it
returned protested.   A  short inquiry is frequently
appended at the foot of a letter to a Cashier in Columbus or elsewhere:  " How does Geo. Draper of
(or near) your city stand?" The answer would generally be esteemed as more worthy of reliance than the
account of a dealer who is an interested party."George Draper, in the dry-goods business, is successor to his former employers who failed a year
back. Has the good-will of the old store, stock twenty
thousand dollars, no paper out in these parts, prompt
in his dealings, and is careful how he trusts people, I should say-a man of the upper middling
class."
Another sort of answer will sometimes come:
"George Draper is just now out on a grand spree.
He is a good whole-souled fellow with but one enemy
in this world, and he is George Draper. Has real
estate, well mortgaged, a fine run of customers who
never pay till called upon-and George is not the
man to call. Family of five children, two grown-up
and expensive daughters, and a son who is the best
sportsman in these diggings.-Confidential.  Yours
truly."
The President wants to verify a statement of the 
64      PRESIDENT AND BOARD OF DIRECTORS.
affairs of Jonas Marks of Toronto, whose note for
twelve hundred dollars, at seven months, is among
Mr. Jobber's collaterals.  He sends an inquiry to the
"Commercial Agency" of Messrs. Paul & Pry, and
in thirty minutes gets the following answer:
" [CONFIDENTIAL.]
"Jonas Marks, Toronto, U. C., general hardware.
Began business, in 1849, with cash capital, $10,000.
Not very successful for the first two years —rather
fond'of frolics-credit at home not good.  In 1852,
got run over by a railway-car, and lost half a leg.
Recovered  $5,000 damages.   Settled  down  and
begun to thrive immediately.   In 1853, married a
daughter of one of our wealthiest citizens who has
since died, leaving an estate of three hundred thousand dollars to be divided among twelve children.
M. is one of the executors.  HIis business has much
improved since'.52. In'55, he realized a handsome
sum by selling off some real estate, and was appointed
deacon in the church. Credit is now A 1."
The ledgers of Messrs. Paul & Pry are full of these
particulars. Family, social connections and habits,
are often traced with great minuteness.  Nothing
that bears on credit is umnimportant; and there are
few facts of any consequence relating to it that
escape the record. If Mr. John Green of Galveston,
Texas, wants to buy goods in the New York market
for his notes, he must take care how he keeps fast
horses and runs into extravagant expenses.
The time of most excitement and difficulty to the
President, is in an extreme financial pressure. If he
is then himself free from debt, as he should be, he 
CLAIMS OF DIRECTORS.
becomes practically a dictator. The directors, who
are quite likely to want money as badly as other people, are often themselves suppliants; and from that
moment, their influence at the Board declines. They
are subject to the President, because they are dependent on his will for loans; and his will, being governed by a strong sense of justice and impartiality,
is in opposition to their desires. Single-handed, he
can resist the whole twelve if they should combine
against him to absorb an undue proportion of the
funds.
A director has a plausible argument in his favor
when he urges his claim for larger loans. Hie gives
valuable time to the bank, and is expected to uphold
it in emergencies; therefore, he is entitled to precedence before dealers generally when he is himself
in an emergency. Besides, if a director should be
allowed to fail, the rumor gets abroad and will be
believed, that he is largely indebted to the bank, and
thus the bank will be more crippled than it would be
by sustaining him with additional loans. Against
these arguments the President opposes his resolute
negative.
"You have as much money out of the bank as you
are entitled to, and I will not consent to discount for
you another dollar. If you fail, I can't help it; and
if the bank suiffer in public estimation as a consequence, the fault will be yours and not mine."
This is the language of a President whose experience warns him that it is easier to refuse at the right
stage of such a case than at the wrong one; and that
a bank always sustains more injury by an officer's
65 
PRESIDENT AND BOARD OF DIRECTORS.
departure from sound rules of management than from
the misfortunes of an individual director.   If the
President is publicly known as a man who will not
deviate from an impartial and upright course, even
to serve a personal friend in great extremity, his
institution cannot be hurt by false rumors.
On the other hand, a yielding President, or one
who is himself a borrower and embarrassed for the
want of funds, can exert no authority over a needy
Board of Directors. There is no restraint upon the
latter.  "Common want makes mutual friends." The
convenience of dealers generally is disregarded, and
the funds are absorbed by a few. If the institution
escapes immediate difficulty and discredit, it does not
escape ultimate damage by the loss of the best class
of dealers, who transfer their accounts to other banks
where a more honorable spirit prevails.
The directors of a bank are frequently solicited by
their friends and persons in trade to "speak a good
word for them at the Board." It is flattering to their
self-importance to be called on, as they often are, by
men who are vastly their superiors in social standing,
education and manners, and to be begged for "their
influence." It gratifies them to prove that if an
acquaintance may be considered an honor on one side,
it may be of substantial service on the other. But
this personal solicitation becomes annoying to them
in a tight market. They shift the ungraciousness of
a direct refusal on the officers.
" rll do what I can for you, but you had better go
to the President."
The President then runs the gauntlet of incessant
66 
A PANIC DAY.
importunity. He appears to be a monster of insensibility. Many who approach him on the faith of
long and intimate friendship, go away convinced that
all his professions of regard have been false, and that
he is "a hypocrite." He is charged with sewrving his
favorites, or using the bank funds to promote his own
speculations
It is now fifteen minutes before three o'clock on a
panic day.
Mr. Moreton is one of the oldest dealers of the
bank, and a large stockholder. He has already appealed to the President, between whom and himself
exists a strong personal friendship, and he now returns
for a last effort before the dreadful stroke of three.
"I am sorry to see you again, sir."
"You may be assured that the last extremity only
has brought me back. Mr. President, if I do not get
ten thousand dollars to-day, I shall go to protest and
the labor of my whole life is lost. Here are my
securities, worth three times the amount!"
" My dear sir, I am powerless both officially and
personally. The bank is on the verge of discredit.
I have no right to endanger the interests of our stockholders by loaning another dollar. Your case is but
one of twenty similar, that have been presented within the last hour, and it has been my painful duty to
reject all."
The President is truly in most trying circumstances.
IHis relations with Mr. Moreton are not merely personal, but social. Their families mingle intimately,
and their sympathies and enjoyments have been corn
67 
68      PRESIDENT AND BOARD OF DIRECTORS.
mon. The shock of bankruptcy is suspended over
the whole circle. Instead of renewing at evening the
pleasures in which he has so often forgotten the annoyance of his daily duties, he fancies dark halls,
deserted parlors, separated playmates and broken
"silver cords."
The two have withdrawn into an inner room, and
it is less the merchant and the banker, than friend
and friend; nor could an impartial observer tell from
the expression of anxiety and despair in their countenances, upon whom the blow is to fall the heavier.
"Must my name be dishonored for the want of a
sum comparatively so trifling as this?-Can you give
me no suggestion?"
" I cannot."
It seems to Mr. Moreton that he could lay down his
life with less pain than he can submit to the forfeiture
of his commercial honor. His reputation, the success
of his whole life, the labor of thirty years, are slipping
from his grasp with the few remaining seconds of the
hour; and then they are gone! This is no exaggeration of the real mental suffering of the sensitive and
high-spirited merchant on the brink of bankruptcy,
nor of the painful interest of the bank-officer in the
fortunes of his friend.
In many cases, the disappointed applicant retires
cursing, in soliloquy, the bank as an incorporated
nuisance, and the President as an unfeeling monster.
The last thought that occurs to him is that his own
recklessness in trade or expenditure has had anything
to do with bringing his affairs into a bad condition; or
that a bank with fifteen hundred dealers is liable to 
THE POUND OF FLESH.
have its deposits drawn upon faster than its discounted
bills mature, and that in such a case it is more helpless than an individual merchant; it can neither borrow nor create capital.
It has been considered an axiom of financial wisdom
to repudiate " indulgence" as inconsistent with sound
banking. The man who recognizes only the "pound
of flesh," is.regarded as an exemplary bank officer.
"He is an excellent man, but too sympat]ietic for a
President," is not an unusual remark, when the qualifications of a candidate are discussed. This is practically an assumption of the superiority of capital
over trade and labor; but wherever a fair commercial sympathy is allowed to displace the maxim of
Shylock, debts are more honorably settled, defaults
more promptly repaired, and the obligations of credit
more respected. A bank president who can intrench
himself behind bags of coin and look on the disasters
of the market without involuntary sympathy for the
sufferers, is unworthy of public confidence. He is an
enemiy to commerce.
All the best interest of society are injured by
financial pressure. Education is interrupted in families. Private enterprise is stopped, public works are
suspended, and wages are cut off. These results have
frequently been brought about or exaggerated by
the bad management of banks; therefore, to vest such
a power in weak hands is a public wrong.
69 
THE CASHIER.
CHAPTER III.
THE - OASHIER.
THE internal mechanism and order of a bank depend
chiefly on the Cashier. For the greater part, his
powers are concurrent with those of the President;
but they extend specifically to the details of the business, embracing the supervision of the accounts, the
correspondence with other banks, and more active
intercourse with the dealers.
He keeps a record of the transactions of the Board
of Directors, to which he is Acting Secretary.
He signs, with the President, the certificates of stock
issued to shareholders, and the bank bills which are
paid out as money.
Checks drawn on other banks are usually signed
by him. When he is absent, they are signed by the
President.
He indorses, personally or by deputy, all drafts
and promissory notes which are sent to other parts
of the country for collection.
All drafts and notes received from others for payment in New York are indorsed subject to his order;
but on these, the official stamp of the bank is mostly
admitted as a substitute for his formal indorsement
as follows:
7o 
;~~~~~;~j<~N>~;~jj~jjjN
<~
~
'~>~\~~~~~. I ~%  ~
~                              ~~~~~~~~~~~~~~x;
JustEetd 
I 
OFFICIAL DUTIES.
Pay Walter Mead, Esg.
Ccticer, or order.
ANDREW MASON, Cashier. 
RECEIVED PAYMENT.
WALTER MEAD, CASHIER.
The stamp is generally impressed with a kind of oilpaint or ink which is not easily erasible. The bank
records are accessible for legal proof, and every note
paid through it could be traced and verified in case
of dispute.
The correspondence of the bank is conducted in the
name of the Cashier, officially.
In all cases where his signature alone is required,
that of the President may be substituted; but the
alternate substitution is not allowed.
When the President is absent, the Cashier is the
principal executive manager of the business; and he
is often so, practically, when that officer is present.
In several of our largest city banks, the Presidency is
a mere sinecure accorded to wealth, age, or influence,
with little reference to capacity, the Cashier being
regarded in fact as the superior officer.
He gives bonds to the amount of ten or twenty
thousand dollars.
Bonds are intended as indemnity in case of fraud.
They do not cover loss by indiscretion, neglect, or
errors of judgment, however gross these may be.
Formerly, the Cashier was forbidden to hold stock
in the bank of which he was an officer, for the reason,
perhaps, that it would place him too nearly on an
equality with the President and directors. Possibly
71 
THE CASHIER.
it was feared that a desire to increase his own divi dends might induce a speculative employment of the
funds. It was considered improper also that he
should keep his personal account in the bank, a restric tion that was extended likewise to the President,
under a general impression that it might be a bar to
abuses of privilege. These' restrictions are still partially in force, though mostly regarded with indifference. They would be a slight obstacle to fraud with
men who are not restrained by a sense of right within
themselves. At the same time, experience has shown
the wisdom of absolute rules in moneyed institutions
by which the first approaches to temptation are kept
out of sight.
The Cashier receives his appointment from the
Board of Directors, who may also remove him in their
discretion.  He retains office" during good behavior,"
unless, as it occasionally happens, he is ousted in a
personal quarrel.
When a bank officer resigns his place without explanation or obvious cause, such as ill-health or
change of residence, it is generally understood that
he has been guilty of some impropriety, or has been
found incompetent. This would be likely to defeat
his application for employment in other banks.
It is so grave a matter to charge a bank officer with
default, even if circumstances are strongly against him,
and might be so difficult of proof if he should stand on
the defensive, that he is mostly allowed to retire without official exposure, unless the amount in question
is very large, or his conduct has been unusually
atrocious. His bondsmen are personal firiends who
72 
SALARY.
are anxious to screen him from public disgrace, and
they manage to effect an amicable compromise.
Besides, a bank has nothing to gain by thrusting its
misfortunes out into public view. The conviction of
the offender would not shield it from the sus picion of having careless or ill-guarded methods of
business.
Although the power of appointing and removing
the Cashier is vested in the Board of Directors, he
is not unconditionally subordinate to them. He is
regarded by the stockholders as their direct repre sentative and trustee. If the President or directors
should attempt to use the funds of the bank for improper or hazardous purposes, the Cashier might authoritatively interpose.  It would be his duty to do so.
He may object to any measures which he deems
injurious to the business or character of the institution,
without endangering the tenure of his office and without offence to his superiors. If faithful and well qualified, he is their co-ordinate in the administration of
affairs.
The salary of the Cashier depends on the peculiarity of his duties. In some of the smaller banks,
where he is a mere clerk, it is two or three thousand
dollars a year; while in the larger where he is an
executive officer of high grade, it ranges from five
to ten thousand dollars.   The latter sum is probably the highest paid in the City of New York. In
some cases he derives perquisites by acting as trustee
or treasurer for other companies. His compensation
is made liberal, that he may be under no necessity to
engage in other business, which, besides distracting
4
73 
THE CASHIER.
his thoughts, might involve him in debt and create
conflict of interests.
The Cashier reaches his desk about nine o'clock in
the morning. His first care is to examine the contents of the letters received by mail. In the larger
banks an Assistant Cashier or Corresponding Clerk
attends wholly or in part to this service.
The inclosures of letters consist of bank checks,
personal checks, bank bills, drafts at sight or for
acceptance, promissory notes for collection, bills of
exchange-foreign or domestic, government warrants,
railroad coupons, and any other form of document
which represents money.  Land warrants are often
sent to the city for sale, as it is here that the readiest
market is afforded by the competition of emigrants
and speculators; also, certificates of stock in banks,
in mining, manufacturing, and insurance companies;
and State, County, and City bonds, which have been
issued for public improvements.
The first thing is to compare these inclosures with
the record of the letter. In banks of limited correspondence, the Cashier may check off eacli item, and
hand over the documents to the clerks in whose
departments they are to be entered; but in those of
widely-extended business he requires several assistants. Sometimes the letter is passed successively to
the different clerks, each of whom marks -his initials
opposite to what he takes out, and it is then returned
to the Cashier so vouched.
Most of the documents are made subject to the
indorsement of the receiving bank, which is an
effectual bar to their abstraction and use in other
74 
CORRESPONDENCE.
channels, except by a forged indorsement. Bank notes
might be taken by a dishonest clerk, without immediate detection; but the deficiency being reported
to the remitting bank, suspicion and probable discovery would follow. Bonds and stocks could not be
surreptitiously used without discovery. A fraudulent
holder would be arrested, when he came forward to
receive the interest.   The bank correspondence is,
therefore, effectually guarded against fraud by the
clerks who may be employed in it, unless they have
the hardihood to attempt forgery; and this could not
long be concealed.
The practice is common among our city banks to
add the available checks that are received in the
morning letters to the exchanges, before these are
sent to the Clearing House.  The amount so used,
which in some of the banks with an extensive correspondence frequently reaches three hundred thousand
dollars, is equivalent to so much deposit of the day
before. It is the saving of one day's interest upon it;
or, practically, the specie of the bank is increased by
the sum so used, although the benefit that results from
it is more apparent than real, since other banks use
the checks that are drawn against the remittance in
the same manner, and neutralize the gain. The hour
devoted to the final preparation of the exchanges by
the addition of these checks, which must be culled
from many letters, is one of the busiest of the day.
The number of letters received by a bank of the
first class ranges from one hundred and fifty to three
hundred per day. The majority of them are formal,
being merely an abridged statement of the inclosures;
75 
THE CASHIER.
and these can be acknowledged by a corresponding
clerk. But many relate to matters which require the
personal attention of the Cashier; such as the purchase or sale of stocks, the re-discount of bills receivable, errors and misunderstandings of account, special
instructions relative to suspended debts, the capital
and credit of merchants, and so forth.
The number of letters sent out daily is about the
same as received-that is, received and sent, from
three to six hundred.
When the money-market is " easy," the routine of
the Cashier's employment is very agreeable. The
different departments of the bank move along harmoniously, and without haste. The dealers call and
transact their business, and go away in good humor.
If they want paper discounted, it is done promptly.
They mix a pleasant sociality with their negotiations.
They often sit down and talk on indifferent subjects,
as in the common intercourse of private life. No
topic, grave or light, is out of place in the rooms of
the Cashier or the President-politics, theology, his —
tory, education, public improvements, and personal
matters, are all mixed up together.   Either officer
will discount a note without interrupting the train of
his ideas, and without dropping a sentence. " Let us
have credit for that _?"-" Yes, sir"-is a trifling interpolation, that may give to a highly esteemed customer
the privilege of drawing checks to the amount of
twenty or thirty thousand dollars. Nothing can be
more pleasant than the call of a director to invite the
Cashier to an evening party. Sometimes it extends
to a bathing or a fishing excursion, the occasional
76 
A TIGHT MARKET.
enjoyment of which is not inconsistent with the inter ests of the institution.   The President cheerfully
assumes extra duty on such occasions, and takes his
turn when he has the opportunity. The hours of
attendance at the bank are neither so early in the
moi nling, so late in the afternoon, nor so constant
during the day, as to prevent a wide latitude of per sonal leisure and polite indulgence. There is excite ment enough in these concomitants of" an easy mar ket" to make the office of Cashier one of the most
desirable that the community affords.
But the time comes for this agreeable experience
to terminate.  The market shows symptoms of "tight ness." The amount of paper offered for discount is
suddenly doubled, and the amount discounted is
reduced one-half. Merchants are not satisfied with
their usual preparations for the future. They are bent
on accumulating twice as much ready money as they
need; and they begin to call for loans as soon as the
Cashier reaches his desk in the morning, before the
bank doors are officially opened. Those whose offerings have been rejected by the Board of Directors
come to ask for explanation and to make complaints
"What is the matter, Mr. Cashier?"
"Our means are reduced, sir.'
"Is my paper too long?"
" No, sir."
"Is it too short?"
"No, sir.
"Then what is the difficulty?  Do tell me."
"Our deposits have fallen off, and we ar,e obliged
to hold on to our receipts."
77 
THE CASHIER.
"Don't you like the names?"
"We did not look at them. It was not worth while
since we had no money to loan."
" But you ougtA to look at them. Now, see herelook at this, and that, and then here" (turning the
notes over in his hand), "and there's another-all
as good as wheat!-my decr sir!"
These two last words are spoken with peculiar
emphasis.
"It would give us pleasure to pass them all to your
credit, sir. They are not objectionable."
"Then, why not slip them in at once and be done
with it."
"Because, my good friend, it is simply impossible.
We have not the means."
"Oh, but my dear Mr. Cashier-come, come, don't
say so! These are only four little notes-less than
ten thousand dollars in all!"
"My friend, you must believe me. Our coin is
reduced, and we cannot discount a dollar."
The Cashier is in the midst of an important letter,
and writes a word at a time as he answers this shower
of questions. The customer is at length satisfied that
he can get nothing by further importunity, and goes
away, promising to come back to-morrow.
No sooner is he gone, than his place is filled by
another, who asks the same questions and gets the
same answers. The conversation is varied by the
temper and circumstances of the applicant.
One of the clerks comes to him with a gentleman,
whom he introduces as Mr. Tarbox.
The Cashier says mentally:  "What business have
78 
RECEIVING NEW ACCOUNTS.
strangers to come here for discounts? We have
enough to do to take care of our old customers."
The clerk adds: " Mr. Tarbox wishes to -open an
account, sir."
Oh, that is quite another matter!
" Mr. Tarbox, I am happy to see you, sir"-shaking
hands. The Cashier is very polite. It is an agreeable transition from being bored for loans, to find a
man who really has money in his pocket to deposit in
the bank.
The several dealers in waiting give way, and allow
the Cashier and Mr. Tarbox to pass to another room,
or within the counters, where they may talk without
interruption.
It is one of the most important duties of the bank
officer to receive new accounts.
"In what branch of business are you engaged, Mr.
Tarbox?"
"In the manufacture and sale of clocks."
" Are you a resident of the city?
"Yes, sir.  My store is at No. 2000 Pearl street;
but my manufactory is at New Haven."
" What is your capital?"
"It was originally thirty thousand dollars; and
my profits have now increased it to sixty thousand."
Other questions follow, relating to the extent of
Mr. Tarbox's business, and to whatever may affect
his credit. He finally refers the Cashier to Mr. Starr,
one of the directors of the bank, with whom he has a
personal acquaintance.
"That will do, sir.  I'll take your signature in this
book, and instruct the Teller to receive your deposit."
79 
THE CASHIER.
The Cashier seizes his first leisure moment to post
to his Reference Ledger the particulars stated, with
any additional information that he may get from Mr.
Starr; and when Mr. Tarbox at a future time offers
his bills receivable for discount, the whole story is
brought out and read to the Board of Directors.
Thus, in the outset of the Cashier's personal intercourse with the dealer, begins that scrutiny of character on one hand and imparting of confidence on the
other, which establishes a more intimate relation than
exists in ordinary commerce.
It is true, Mr. Tarbox is rather conferring favor
than asking it, by opening his account. But he is
laying the foundation for years of continual borrowing and lending between the bank and himself; and
the general convenience of his business depends much
on his relations with the officers.'  He is preparing
the hinge of success, on which may turn a thousand
good bargains during the next ten years.
It is a serious mistake for a dealer to decline giving
to a bank officer a candid statement of his affairs,
when asked for it. Confidence fails at once, and it
can rarely be re-established.
Eight or ten anxious customers await the Cashier's
release from Mr. Tarbox. Among them are some of
his best personal friends. They will not be put off
by his first assurance that the bank has no money to
loan. Each one considers his case entitled to special
attention above all others.
"Good morning, Mr. Cashier."
"Good morning, Mr. A."
80 
PERSONAL SOLICITATION.
"I am very much surprised to find that my paper
is not discounted, sir."
" Ah, my friend, I am sorry; but you see that
others are in the same predicament."
Yes, sir; but that gives me no comfort. I have
my notes to pay."
"The Board did their best, Mr. A. Our receipts
happen to be very small just now, and we have been
sadly beaten at the Clearing House for three mornings in succession."
"Mr. Cashier, this paper is A 1.  You have nothing
better on your books. The amount is not large, and
the time is short."
"It is impossible sir, for the bank to discount it.
We are obliged to turn away every application at
present."
"IHave you looked at my account?"
"I have not."
"Then you must do so and consider whether I am
not entitled to all that I ask."
"The Board of Directors have left me no discretion.
They decided that it was not safe to loan a single
dollar."
"My balance has not fallen below three thousand
dollars for months past. I make no unreasonable
requests."
"It is true, sir, that your requests are reasonable,
and that your account entitles you to a liberal line.
But what can we do without the means of doing? "'
"The whole amount of my accommodations for a
year have been exceedingly moderate   I do not
trouble you with incessant calls."
4*
81 
TH  OASHIEr.
"That is so, sir, but-"
"Well, Mr. Cashier, I claim to be an exception tc
your general rule. You must discriminate between
men who bore you to death all the time, and those
who are reasonable in their demands. It is seldom
that I ask you for discounts, and when I do, I want
them."
"No doubt, sir; and I assure you that we have
every disposition to treat you liberally. It is a very
unpleasant duty to reject such claims as yours; but I
tell you again, and I want you to believe me, that we
have no alternative. We cannot move an inch."
"But sir, you must move an inch! Do you pretend
to tell me that you will enjoy the use of my balance
of three or four thousand dollars, lending it out to
other people, and then when I want to get a little loan
myself, you will turn round and say you can't, and you
have no discretion and no power?  What do I care,
if you are short at the Clearing House?  Does that
pay my notes? Now, sir, I will tell you and your
Board of Directors that I am not a man to submit to
such treatment!"
"Mr. A. if you are a reasonable man-"
"If I am a reasonable man! I am a reasonable
man, sir, and that's just the whole case. Because I
am so, I want my paper discounted. It is my rigAt,
sir, and I don't mean to give it up!"
"Well sir, it is your right, and I don't want you
to give it up. But you must listen to me, while I put
the matter to your own judgment-"
"I have settled it in my judgment already. I don't
want to hear this stuff about the Clearing House!
82 
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" Now, sir, I will tell you and your Board of Directors, that I am not a man
to submit to such treatment."  
PUTTING OFF CUSTOMERS.
The Clearing House is nothing to me! my notes have
to be paid-that's my judgment, sir!"
"Do you think, Mr. A., that I am made of gold, or
that I can turn back the tides of the North River?"
"I know very well that you cannot change the
market; but you can discount this paper."
" My dear sir, I cannot do it without endangering
more and larger interests than yours.  Our stockholders and creditors generally have rights as well as
you. A failure to pay our balances at the Clearing
House would be a fatal blow to our credit-equivalent to a protest! Our deposits would be withdrawn,
and we could no longer keep your present discount
line where it is, which we hope to do by a course of
mutual indulgence with our dealers. There is no
possible remedy for this state of things but to wait
for the gradual maturity of our bills discounted. If
you will bring me your paper some days hence, you
will probably find us in better condition."
Mr. A. yields in a moment of cooler judgment.
If the Cashier, however, had treated him with a sullen
refusal, making no explanation, he would have gone
away in a fit of anger, and his friendly relations with
the bank might cease.
This may be called the science of contact.  In a
tight market, bank officers are every hour brought
into collision with the most imposing interests of commerce in the hands of men unaccustomed to denial,
whom it is very desirable to conciliate, and very easy
at such times to offend. Instances are frequent in
which the applicant has a large stake in the negotiation. His credit and continued solvency may be at
83 
THE CASHIER.
risk. It may readily be imagined what arts of persuasion and earnest entreaty are then employed.
Messrs. B.C. D. and others who have been waiting
impatiently for Mr. A. to finish his interview, successively present their claims. Each one withdraws the
Cashier into a corner, or to his private room, and insists on the special character of his application. The
failure of all who have preceded him does not convince the last One that his chance is hopeless. None
will believe that the available resources of a bank can
be so reduced as the Cashier represents, and the majority attribute his refusal to the timidity or the
caprice, if not to some less creditable motive, of the
officers and directors.
The Cashier is again seated at his table, preparing
to resume an unfinished letter; but before he can
concentrate his thoughts, the Specie Clerk comes in
from the Clearing House and announces the result of
the exchange:
"Debtor, sir, two hundred thousand dollars."
"What! Debtor again?"
"Yes, sir."
"Is that possible?  Have you made no mistake,
Joseph?  I added more than that from the morning
letters I"
"I am sorry to say it, sir, but it is certainly so, and
our neighbors across the street are worse off than we
are."
All other employment must give way before the
indispensable matter of providing for the payment of
the Clearing House debt. The President is sinurrounded by six or eight of his particular friends, who
84 
A! i l
2;~ ~
HI                      ~
The Cashier by the Button-Hole.
i"
7 I
1. -
i  
IN DEBT TO THE CLEARING HOUSE.
are endeavoring to find some cause for the sudden
stricture of the market. One ascribes it to the excessive importation of dry-goods, consequent on a reduction of duties; another declares it is the competition
of the railroad debt with commerce; another, that it
is the natural consequence of extravagant living. The
discussion is rather disorderly, and well adapted to
spread excitement among the dealers who come in to
transact business.  They see that "the great merchants" are roused; and thus, from many banks,
increased anxiety and agitation is propagated through
the community.
The Cashier can have no assistance from the President under these circumstances; but leaves him to
the brunt of importunity by the dealers while he goes
out to seek aid from another bank. He may be so
fortunate as to obtain it, and to be again at his desk
in half an hour. Borrowing, however, brings no permanent relief. He gives a check for the amount,
which will come in against the bank in the exchanges
of the next day, and the debt recurs. How to provide for this, is a mental burden scarcely less engrossing than that which he has just discharged. There
is but one source from which permanent improvement in the funds can be derived, and that is the
deposits. If these should increase, the bank would
experience immediate relief, but if they continue to
fall, the debt of the bank increases from day to day,
in spite of all temporary expedients. The anxicty
that weighs on the mind of the bank officer in this
extremity cannot be appreciated by the dealers. It
ought to be a sufficient excuse for any apparent
85 
THE CASHIER.
want of consideration for their personal embarrass
ment.
This state of affairs is in strong contrast with that
which existed but a few days before. It is not only
in the officers' department that a change has taken
place. The number of persons who come into the
bank, for one purpose or another, is quadrupled. They
crowd and run against each other. Patience, and
even civility, is overborne by the urgency of each
man's errand. The most trifling circumstances provoke angry disputes between the dealers' clerks, and
the book-keepers or tellers. A general excitement of
manner is evident, and the shuffling of feet and the
confusion of voices do not cease for an instant.
At the moment when the Cashier is again ready to
resume his correspondence, a man enters the bank
with a hurried step, and manifestly in a violent passion:
" Mr. Cashier, what kind of Tellers do you keep in
your bank?"
"We mean that they shall be gentlemen, sir."
Mr. Kight finds it very difficult to control himself.  He thrusts his bank-book before the Cashier,
and points with trembling hand to an entry which
shows that he had that morning made a deposit of
fifteen hundred dollars.
" Do you see that, sir?"
The Cashier sees it.
" Well, sir-your Teller has refused to pay my
check for that amount, notwithstanding the money
is to my credit! He has sent it back to another
bank, and my name is dishonored, sir! Isn't this
86 
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Mr. Kight up. "Do you see that, sir?"
___            <~~  <>    ~~~%%;c'>~~~~>~~~>~~~~~
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if
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KIGHT & WING.
a pretty tale, that a man's credit is to be ruined by
a miserable teller who doesn't know his duty!"
"I think he knows his duty, Mr. Kight.  You have
probably made a mistake yourself."
The cool manner of the Cashier does not soothe his
excited customer.   He denies angrily that he has
made any mistake, and attracts the notice of all the
clerks by the violence of his language and his defiant
air, as the two pass to the desk of the book-keeper to
examine his account. The ledger shows that his
balance was less than fifty dollars on the day before
when he drew his check for fifteen hundred, and it is
apparent that he had obtained the use of that much
money one day in advance of his deposit. The process is well known to bank officers and clerks under
the name of "kiting." It is often resorted to as a
last expedient to raise funds, by parties who know
better. Two parties who keep accounts in different
banks may change checks, and each deposit that
of the other, if their certification is not required;
and then each may draw out the money. Mr.
Kight may have supposed that his deposit of the
following morning would be admitted to pay his
check; but the Cashier explains to him that the
exchange for the Clearing House is made  up and
dispatched before ten o'clock, so that funds coming
in after that hour are necessarily unavailable until the
next day. Hle might even go so far as to show him
the very bills that he had deposited still unused in
the drawer of the Receiving Teller; but Mr. Kight
understands it. Hle now expresses his opinion that
"it is rather small business for a bank with three
87t 
THE CASHIER.
millions of capital to return a dealer's check for fifteen
hundred dollars when the money is actually in the
bank, even if it can't be used for a single day."
'" There is but one way for us to transact business,
Mr. Kight, and that is, to pay checks when we have
the deposit to pay with, and to refuse them when we
have not."
He adds:  "It is true, sir, that your check for
fifteen hundred dollars would make no sensible difference in our general balance, but every overdraft goes
into one sum in the Clearing House exchange, and
the aggregate of overdrafts in this way has sometimes
reached forty or fifty thousand dollars."
Mr. Kight's deposit is now available to him, since
the Teller has received payment for the dishonored
check from the bank to which he returned it. He
requests that it may be certified, with the intent to
redeposit it in the same channel as before, and so rub
out the discredit which his good name has suffered in
that quarter.
But at this moment a messenger from another bank
presents a check drawn by Mr. Wing which Mr. Kight
had deposited the day before.  It is returned "not
good," and Mr. Kight must pay it. This absorbs
his deposit and leaves him with his own dishonored
check in hand. The whole transaction is now fully
exposed. Mr. Kight and Mr. Wing had exchanged
checks, each trusting to make his account good by an
early deposit on the following morning; but their
plan was thwarted in both banks by the vigilance of
the Paying Teller.
If the Teller, instead of returning Mr. Kight's
88
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~
;~>~j{\~~~  \\~  ffi~ffi~~>\\\\~  ffii~
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MIr. Kighit Down.
I  
KITING.
check had charged it against the morning deposit, he
would now have Mr. Wing's dishonored check on his
hands without any means of securing its payment;
and it might be a total loss to the bank.
The quarter of an hour given to this tedious expla nation is not entirely thrown away, since it affords
the Cashier a reason for closing Mr. Kight's account,
and thus getting rid of a dangerous customer.
Intelligent dealers have occasionally contended
that the true presentation of a check through the
deposit channel, is at the moment when the exchanges
are brought to the bank counter from the Clearing
House; and that if the deposit is there by that time,
it is all that could strictly be asked of them. But
if required, would the check be certifed by the bank
on which it is drawn, at or before three o'clock of the
same day?  That is the test of right in the case.  In
fact, a check is paid to the holder at the moment that
it is allowed in his account so that he can draw the
money for it, no matter by what bank allowed. On
Mr. Kight's process overdrafts might be propagated
from day to day for any time or any amount, by
persons without a dollar of capital.
Once more the Cashier returns to his desk. A
new throng of disappointed dealers presses upon him.
Mr. Tarbox is whispering confidentially in one ear,
and Mr. Jones in the other. The Corresponding Clerk
thrusts a score of drafts under his pen for indorsement.
Dealers in manifest trepidation come in hastily, and
finding him pre-occupied, go out again. A dozen or
twenty wait in the lobby for a more favorable opportunity. One cries out from the doorway:
89 
THE CASHIER.
" Mr. Cashlier, can you draw on Boston I"
"I'll ascertain sir.-3Mr. Jones I will listen to you
in a minute. Mr. Tarbox, I must refer you to the
President.-Mr. Crook, see if we can draw on Boston."
In answer to as many different questions which are
spoken in a confidential tone, the Cashier answers
aloud.  "Yes, sir.-No, sir.-Out of the question.By no means.-It must be paid, I can't help you"
and so forth.
Mr. Crook reports that the bank can draw on Boston for twenty-five thousand dollars.
"How much do you want, Mr. Bell?  Did you say
twenty thousand?  Send us a certified check."
"Won't you take A 1 paper at ninety days?"
"No, sir."
A very confident-looking personage, who evidently
thinks his claims are of superior consequence, walks
directly to the Cashier, and lays down a bundle of
stock securities. He communicates his business in a
whisper, meets with a fiat denial, and retires in a
flush of anger.
Mr. Sweatem, of the  long-established  firm  of
Sweatem, Sore & Co., seizes the opportunity for
which he has been watching an hour or more, to urge
his particular necessities. Single words and parts of
sentences only are heard, which indicate a decided
difference of opinion between him and the Cashier.
His expostulations might be rendered in a connected
form, as follows:
"It will not do, Mr. Cashier, to cut down our line
at present. We are all right, and doing a profitable
90 
~~~               ~                             ~
The Cashier in a State of Siege.
The Cashier in a State of Siege.
I 
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I
I 
I i
I i'
i   li~ 
~jA
~         ~   ~
Mr. Sweatem convincing the Cashier that his affairs are in a very prospero,                                          condition,
I
Il 1:
II 
PUTTING OFF CUSTOMERS.
business. I come to you as our last resource. We
have tried other banks, and tried our friends all round,
but everybody is hard up. We are nearly through
our heavy payments. A few days more, and we shall
be in smooth water. To be cut down now I tell you
it won't answer! We have offered at the Board four
times in succession, and you have not given us a cent.
Now, Mr. Cashier, there's reason in all things, you
must give us this accommodation. We are entitled
to it on every principle of right and justice."
To all this the Cashier answers: "I cannot, my dear
sir, act in opposition to the Board of Directors;" and
Mr. Sweatem retires discomfited.
It is now what may be called "high'change " in
the rooms of the President and Cashier. Both officers
are beset with remonstrance and importunity. The
attacking column lengthens and shortens, and disappears and comes again; and the tail lashes itself into
an angry growl at the tardiness of the head. A
stranger would suppose the bank to be in a state of
general disorder, from the multitude of dealers at
the different desks, and the incessant murmur of
conversation.
Some of the applications for money must be granted
notwithstanding the condition of the bank funds.
There are dealers who have kept large balances, and
ask loans for the first time. There are also current
loans in a critical state which must be indulged to
save the bank from loss. Seeing that some are successful in their applications, dealers take offence, and
charge the officers with partiality.
"It is not true, sir, that your means are exhausted!
91 
THE CASHIER.
I have seen you aiscount paper for several of your
favorites since I have been waiting.
"Those are special cases which we cannot refuse.
If your account were as good as theirs without a cent
of loan, we would discount for you too."
Greater freedom of expression is commonly indulged
in by dealers in conversing with the Cashier than
with the President, whose official dignity imposes
more respect in tone and manner. The former
therefore, is more likely to get the brunt of an outburst of personal irritation. He receives it however
in an official caacity, and does not allow it to interrupt the general suavity of his intercourse.  Mr.
Boyle has tried persuasion in vain, and finally broken
out into violent abuse of the bank.
"Damn your institution, sir! The only thing you
do is to supply your directors and a few favorites
with all the money they want!  Public good indeed!
Public good!! It's all damned nonsense!"
" Mr. Boyle, if you are not satisfied with what I
have told you, go to the President. He is in his
room, and happens just now to be alone."
Mr. Boyle takes off his hat, which he had not
thought of before, and although his manner is not free
from excitement, it is reduced by many degrees, so
that he would hardly be identified as the same person.
" Mr. President, I have some most unquestionable
securities here, amounting to twenty thousand dollars,
on which I want a loan of twelve or fifteen for thirty
days."
"My dear sir, you have come to the wrong shop.
I'm very sorry!"
92
I 
I 
A bad Bank Statement. The Board adjourns " without discounting a dollar
I 
DESPERATION.
"Mr. President, can't you squeeze out that much?"
" It would be a greater gratification to me than to
you Mr. Boyle, if I could. You can hardly imagine
the pressure that is on us now."
"But consider Mr. President, what a humiliating
extremity this is! Here are securities just as good
as United States stock! I could have sold them at a
hundred and twenty only thirty days ago and now
they would hardly bring par! I want an advance
of but little more than fifty per cent on them-the
paltry sum of twelve thousand dollars; and I am told
by my bank that it can give me no help with its
capital of five millions!  What am I to do, sir?"
"My friend, with all my heart I wish I could
assist you. It gives me pain when merchants of your
high standing in the community appeal to me in this
manner, and the more because I am helpless.  Surely
you can borrow from some source on that class of
securities!"
" No, sir.  I believe there is not a bank in the city
that is not very much in the same condition as you
are.  I must," says Mr. Boyle with great emphasis,
throwing his securities upon the table, " Mr. President, I MUST have five thousand dollars this day if it
is only till to-morrow."
" Wait a moment, sir. I'll consult-the Cashier."
The consultation may result in giving Mr. Boyle
the privilege of drawing for five thousand dollars as
a loan payable on demand, or at one day's notice.
He gladly accepts it, though it leaves him at best in
the uncertainty that a condemned man feels when his
hanging is put off for a few days. His other obliga
93 
THE CASHIER.
tions continue to mature, and the notice may come
on the top of them when they are of themselves as
much as he can bear.  This kind of "relief" is very
deceptive. It is bad policy both for the bank and
the merchant.  The former may be forced to sell the
securities in a depreciated market, and the loss sustained by the latter is so much out of his capital at
the moment when he most needs it
Bank officers are not always insensible to alarm
when respectable merchants, failing in their best
endeavors, are driven into a corner and assume an air
of desperation. They know all the danger that hangs
over the market. Credit is prodigiously expanded;
everything in a state of extreme tension; the public
excitement is wrought up to a high pitch of apprehension, and there needs but a single failure of a
"great house" to explode the "mighty bubble!"
Who knows that it is a bubble?  Who knows that
the highest point of the pressure is not reached to-day,
and that to-morrow the waters will not begin to subside? And then, gradually, things fall into their old
channels, confidence revives, and it is proved that
there was no bubble to burst after all! Now if the
leading and rich commission or importing house of
Cottonade, Fabrique6 & Co., can only get through this
last day of the pressure, the credit of the forty jobbing merchants whom they have been compelled to
assist will remain untarnished, and payments will go
on as usual; but if they fail, the forty will fail, and
the forty have each on an average not less than two
hundred thousand dollars of bills payable out, mak
94 
A GREAT HOUSE SAVED.
ing eignt millions scattered through the various banks,
which instead of being paid, will go to protest and
drag on for many months in a course of troublesome
liquidation. If the whole picture were painted on
canvas, it could not be plainer than it is to the
President and Cashier as they confer together on
the propriety of lending twenty thousand dollars to
Mr. Fabriqu6, who sits in an inner room waiting for
their decision.
"I don't see how we can safely do it?" says the
President, shaking his head, "and yet it will have a
terrible effect on the market I"
"And his securities are of the highest class too!"
"Yes, yes-the very best. If these are not safe
there is nothing safe in the market."
"Mr. Fabriqu6 is well nigh desperate. I wish we
could devise some way to help him!"
"So do I, with all my heart.  But we have run
behind at the Clearing House for several days in
succession, and we have every prospect of doing so
again!"
The Cashier being the younger man, has naturally
more energy of feeling than the President. Hie trusts
that they "may not be so unfortunate." Less gloomy
thoughts float in his irind. He catches at contingencies which are too remote for the President to appreciate.  "Let us risk it!" he proposes with a sudden
renewal of hope and courage  "This is too important
a house to be allowed to go down in an hour. We
have a large amount of bills depending on their customers being kept up, and if they lose their main
prop-"
95 
THE CASHIER.
"True, true! But it will be the same to-morrow.
We would only be getting deeper and not save them
at last!"
"Mr. Fabrique assures me that this loan will put
them through; and to tell you the truth, Mr. President, I fear the consequences of denial more than I
do the Clearing house. He will make no other effort
to-day!"
"Well, Mr. Cashier, if you think you can manage
the Clearing House debt to-morrow, I will consent."
The house of Cottonade, Fabriqu6 & Co. may, in
such a case, be the key-stone of the arch by which
the whole market is sustained. And after the danger
has passed away, no one is conscious that it was kept
in its place by a single bank cashier who had overcome the "conservative" counsels of his president.
An act of courage begun, inspires the mind with
more courage, even if the consequences of it are yet
in the future and very doubtful, especially when a
sense of justice is at the bottom of it. Both President
and Cashier now agree that it would have been a
great commercial fault to let the house go down, and
their fears of to-morrow are measurably lightened.
The Cashier is frequently applied to by the clerks
for instruction in disputed matters, and by dealers
who have real or imaginary causes of complaint.
The general book-keeper reports several country
banks overdrawn perhaps a hundred thousand dollars;
whence he concludes there must be a failure of remittances or miscarriage of letters, or special understanding with the officers. The Cashier has given no
authority to overdraw, and the telegraph is employed
96
I 
DOMESTIC TROUBLES.
to have the matter explained. It is found that letters
are missing; and the Porter is dispatched to the
Post Office, where he finds them just returned from
another bank to which they had been inadvertently
delivered.
"Mr. Cashier, why can't I have  my  collection
paper credited when it is pdst due?" says a petulant
dealer, exhibiting his note-book.
"You can, sir."
"Well, I don't get it!  Here's a note of twelve
hundred dollars due at Mobile a week  ago, and
another of sixteen hundred at Baltimore which was
paid the day before yesterday; and all the satisfaction
I can get out of your book-keeper is that he supposes
they are not heard from. I wish I could be saved
this annoyance of having to run to the bank every
day to keep your books straight!"
"The clerk is right, Mr. Krabb.  We have no advice of the notes, but I think we should get it by
to-day's Southern mail. Walk in, sir. Here is the
Porter with the letters now."
The Cashier finds a notice of protest in both cases,
which he hands over to Mr. Krabb, who vents some
additional bitterness on banks generally, as if they
were responsible for his misfortunes. It is often ludicrous to witness the manner in which people of a
certain temper seem to derive the greatest comfort,
when their affairs go wrong, in "blowing up the
bank."
Mr. Krabb gives place to a complainant whose
country checks have been refused on deposit by the
Receiving Teller, for which on inquiry the Cashier
5
97 
THE CASHIER.
finds there was ample ground. Then follows, from a
profitable dealer who cannot be turned aside, an
application for a clerkship on behalf of a young relative whose qualifications and even genealogy must be
stated at length, notwithstanding the assurance that
there is no vacancy, and none in prospect. An officer
of a distant corresponding bank consumes an hour in
talking about the details of his account. A country
stockholder is disturbed about the misfortunes of trade,
and "drops in" to have his fears quieted; another to
ask advice whether it is not a good time to sell or
to purchase stock. The interruptions are endless,
often for trifling cause, and often vexatious. This is
the common experience of the Cashier of an active
city bank.
Whilst the Cashier has been thus occupied, his
assistant or corresponding clerk has prepared most
of the outgoing correspondence for the day, consisting
of acknowledgments, checks and notes to be forwarded
to other banks for collection, the return of protested
paper, and other formal matters.
The Southern mail brings a new batch of letters
from Philadelphia, Baltimore, Charleston, Mobile,
New Orleans, and elsewhere. Those which require
his particular attention are separated from the rest,
and he disposes of them as he finds opportunity.
During the last hour before three o'clock he is liable
to increased pressure and annoyance from dealers,
according to the condition of the market.
The banking business of New York is generally
active throughout the year. A short term of relaxa
98
I 
SPECULATIONS.
tion occurs in midsummer, but it bears no proportion
to the relaxation in trade. The period immediately
following the panic of 1857 was one of unprecedented
prostration, and wholly exceptional. For the previous ten or fifteen years, there was probably not more
than an average of a single month in the year when the
absence of either the President or Cashier would not
have devolved an inconvenient burden on the other.
What has been said of the personal character and
influence of the President is in every way equally
applicable to the Cashier.   There is perhaps more
necessity on his part for the exercise of patience and
forbearance, for the reason that the dignity and public
estimation of the higher office secures it against
many annoyances of the smaller accounts.
To gain confidence, the bank officer must deserve
confidence. He must possess the real qualities of
character that call it forth. Many of the circumstances of trade are of a kind that tend to weaken and
corrupt the moral sense.   When  men  are sorely
pressed for the want of money, they find some person
with whom to exchange notes-commonly one in like
condition; and thus a fictitious obligation is created.
The ebb tides of commerce are always floating downwards men who, yesterday, were floating up. There
are solvent merchants always drifting towards insolvency. In their efforts to stem the current, they
resort to every possible expedient-to speculation in
land, or in guano companies-to gambling at the
Stock Board, or at the faro table. The bank records
. 99 
0THE CASHIER.
contain many instances of men suddenly breaking
down after a long and successful career, with scarcely
a vestige of property left unmortgaged. These histories are all freshened up in the memory of the bank
officer, when the money-market becomes tight and
dangerous. They excite his distrust, and he scrutinizes notes and securities, perhaps with undue
sever ty, while the needy applicant for money overrates their value, and strives to conceal the weak
points of his business.
Why treat with such cases on any terms?  Why
not discard them at once?-Because the parties are
already indebted to the bank, and it is the duty of
the officer to extend indulgence where the debt may
be saved.
The Cashier is necessarily in frequent contact with
the different clerks in the bank, and a description of
many current incidents of his office will be embraced
in an account of their duties.
Although it is not possible for him to maintain a
personal supervision of all the books of a bank in
detail, it is his duty to keep them in constant general
review. In the first place, it is indispensable that he
should have a perfect acquaintance with the theory
of the accounts, so that when his eye falls on any
page he shall comprehend it immediately, whether it
consists of a mere record of the notes lodged for collection, the postings of an individual account in the
Ledger, the entries on the Paying Teller's Cash-book,
or anything else.  One of the principal peculiarities
of bank accounts is the daily transfer of original
100 
HIS KNOWLEDGE OF ACCOUNTS.
records by many different persons to different books,
and their final concentration in one book which furnishes the proof of the whole. This includes many
long and laborious additions which grow so rapidly
into vast accumulations and various dependence, as to
defy the vigilance of any one person. The Cashier
cannot make the additions, but he can in a few
minutes satisfy himself of the accuracy of transfers to
the general proof. He is not expected to examine the
separate accounts of a ledger of fifteen hundred pages,
but he can in an instant compare the footing of its
proof-sheet with the general ledger. If he wants to
test a particular point in any part of the system, he
knows what books and accounts to refer to without
the aid of the clerks themselves, and how to ask them
for explanation if he sees cause for it. To his practiced eye, a single glance is enough to inform him
whether a ledger is properly kept or neglected. He
can examine it as rapidly as he can turn over its
leaves. The observation for five minutes, of the manner in which a clerk transacts his duties, is enough to
satisfy him of his competency. It may readily be
conceived that a Cashier so skilled shall exert a very
effectual supervision over a company of clerks by his
mere presence; and on the other hand, it is apparent
that one who is deficient in such knowledge of
accounts may be blinded to any extent of error and
imposition.
The Cashier has it in his power to commit fraud
without limit, and to conceal it for a time, in spite of
all the vigilance of the President, clerks, and direc
101 
THE CASHIER.
tors. By collusion with others, and especially with
the Paying Teller, it is difficult to say what he might
not do. A case like the following occurred within a
few years in the State of New York.
The Cashier of a bank with a capital of four
hundred thousand dollars became interested in a railroad, and was appointed its treasurer. In the course
of the negotiations and disbursements which he carried on, the road became indebted to the bank by
overdraft. To conceal this from the President, who
was a stern disciplinarian and a near connection of
the Cashier, the latter obtained credit from a corresponding bank by the re-discount of bills receivable
which had been forwarded to it for collection. This
involved the necessity of falsifying the accounts, so
that the collection paper should appear as part of the
assets of the bank, after it had been virtually sold to
another institution.   Thus was established a threefold fraud-first, by the overdraft, second by forgery
of records, third, by breach of confidence with his
superior officer.  The Cashier had been associated
with the President for twenty years, and during that
time was faithful and efficient. The family connection existing between them.served most effectually
to aid him in a system of concealment, which resulted
before discovery in the embezzlement of two hundred
and fifty thousand dollars.
As the embezzlement grew, it caused a corresponding depression of the discount line of the bank, which
constantly passed under the eye of the President.
lHe was deceived by a fictitious statement of bills discounted, which was kept up continuously as the case
102
I 
A FRAUDULENT OFFIOER.
required. The accounts of the bank with its corresponding banks in other cities were overdrawn; postdated certificates of deposit were issued, and being
illegal, they were kept in negotiation by outside confederates, and in surreptitious channels; the unemployed circulating notes of the bank were secretly
hypothecated for loans; the absorption of its resources
in one direction necessarily withdrew accommodations
from the regular dealers, and the consequent decline
of deposits was concealed by the withholding of individual checks and by false ledger entries; drafts on
other cities of which no entries were made were sold,
and the proceeds abstracted; to provide against the
discovery of false additions where a page was likely
to be examined, the component entries were falsified,
and after the examination was made, the falsifications
were erased; these, with many other processes, were
kept up for a year and a half without exciting the
suspicion of the President. Five successive quarterly
statements were sworn to, and forwarded to the Bank
Superintendent at Albany, in which the overdrafts
were stated, in four of them at less than two thousand
dollars, when they were in fact from one hundred to
one hundred and seventy thousand dollars, and in the
fifth at ten thousand, when they exceeded two hundred
thousand dollars. The amount of illegal certificates
and post-dated checks negotiated within the time
named, was more than a million of dollars.
During the entire period of this systematic embezzlement, the President of the bank assisted in the daily
management of its affairs, and was almost hourly in
contact with the Cashier and the clerks. He was an
103 
THE CASHIER.
experienced banker, both in theory and practice, and
gave perhaps more attention to the details of the
business than is usual for bank presidents who are
associated with active and skillful cashiers. It seems
hardly credible that such various and extensive frauds
could be carried on so long, without the exposure of
some weak point. But it is explained by the collusion
of clerks, and by the completeness of the watch that
was secretly kept upon all his movements. His daily
calls at the Post Office were anticipated by the Cashier,
who intercepted all letters which would excite suspicion, and there were many written to him for this
express purpose. The Post Office clerk was bribed
to withhold any that might come at an unusual time.
In fact, the President was dogged and blinded at
every step and hour of-his existence, as any other
man would have been in the same position. Any
ordinary fraud would have transpired through an
honest clerk, but the clerk was not honest. No avenue was left open by which suspicion could enter.
Such an extraordinary case as this is not necessary
to prove to an experienced banker, the utter impossibility of preventing fraud by any combination of
sagacity, watchfulness, and supervision. There is
perhaps no record of a bank fraud extant of which
the perpetrator was not honest yesterday. The man
who has been faithful'for twenty years is faithless on
the next day.  What is to prevent it 
I
104 
TE PAYING  TELLER.
CHAPTER IV.
THE PAYING TELLER.
THE Paying Teller of a bank stands at the head
of the clerks' department, and next in the usual order
of promotion to the Cashier. Hle is frequently called
also, the First Teller.
HIis duty, as signified by his title, is to pay out
money. No other clerk-not even the President or
Cashier-interferes with this function.
The nature of the banking business calls for direct
individual responsibility in the clerk. Money occupies but little space and is easily abstracted. The
opportunities of fraud are frequent and beyond the
reach of vigilance. Each clerk is therefore required
to give bonds for his integrity; and it is necessary in
the division of labor to assign specific duties, that one
may not be liable to suffer for the default of another.
The Paying Teller gives bonds, according to the
magnitude of the trust confided to him, to the extent
of ten or twenty thousand dollars. The latter sum is the
highest required by any of our city banks. It is usual
to divide this between several persons, the guarantee
being considered stronger in a moral point of view;
and in case of default by the Teller it is redeemable
with less hardship than it would be if the entire
obligation rested on one.   The bondsmen must be
5*
105 
THE  PAYING TELILR.
men of established character and pecuniary ability.
Their names are submitted to the Board of Directors,
or to a committee of which the President is mostly
chairman. If they are not satisfactory, the Teller
must procure others.
A Director is not allowed to be bondsman for a
clerk in the same bank, nor one officer for another, as
such an obligation might be used to obtain an undue
influence over the favored person. A book-keeper
might hesitate to expose irregularities in the account
of a director to whom he was partially indebted for
his salary.
The use of bonds as a guarantee of integrity has
been questioned, because they will not be violated by
honest, nor respected by dishonest men; and they
are apt to be regarded as formal instruments, merely
to answer a by-law or to maintain an old custom.
There are, however, indications in their requirement
which could not safely be dispensed with. The
ability of a person to find security for so large a sum
as twenty thousand dollars, is a strong proof of his
good repute, which is further attested by the character of the guarantors. They are his commercial godfathers. They cannot be banished from his memory
when temptation knocks at the elbow. They must
frequently cross his footsteps on his first wanderings
from the path of rectitude.
The most responsible and critical service in the
bank is that which embraces the custody and disbursement of its funds. This is assigned to the Paying Teller. There is some incidental exception in the
custody, to be hereafter noticed.
0
106
I 
OONTROL OF THE VAULT KEY.
The amount of money in his keeping may be several millions of dollars, consisting of coin, bullion,
bank bills, stocks, bonds, and other documents. There
are generally three or four apartments in the vault, of
which one is appropriated to his exclusive use. He
holds the key, locks and unlocks it in person, goes to
it during business hours at discretion, unattended,
and is the sole trustee of its contents. He is jealous
of the charge, and shares it with nobody. He is sensible that the key of his vault is also the key of his
character, and he will not give it to the keeping of
another for an instant-not even to the President or
Cashier, without satisfactory explanation. If they
should officially require him to surrender it, distrust
would be implied, or perhaps dismissal from office.
On the other hand, there are possible circumstances
under which a Teller, conscious of his own rectitude,
would refuse to deliver his key even to his superior
officers.  The terms of his bond make  him contingently independent of them. A suspicion that they
were in collusion for dishonest purposes would not only
justify such refusal, but make it an imperative duty.
Besides, his bondsmen have legal rights in the premises which might be compromised by allowing the
custody of his vault to pass into other hands. His
own rights also, and his character, might be involved
by the unconditional surrender of his key on any
demand.
Again, if the Paying Teller, without obvious cause,
such as sickness or necessary absence, should tender
the custody of his key for a single night to the President or Cashier, or to another clerk, it would be
107 
THE PAYING TELLER.
declined. The tender might be made for the express
purpose of creating a divided or doubtful responsibility for a default.
The statement of these  details is necessary to
show the exact relation of the Paying Teller to his
trust. There is no apparent obstacle to his abuse of
it, nor are the means of detection so immediate as to
prevent escape. Neither would his arrest necessarily
insure the recovery of money abstracted, which
might greatly exceed the amount of his bonds. His
position is more vulnerable than any other in the
bank. It is the only one that is out of the reach of
daily observation by other clerks, and in which fraud
may be practiced without collusion or risk of immediate discovery. Nor does it seem possible to devise
any method of supervision to prevent abuse, or adequate indemnity to cover it.
This close custody of the vault does not, however,
limit the right of the officers to enforce the most rigid
examination of its contents. They may require him,
in their presence, to weigh every bag of gold, count
the silver and bank bills. and test the accuracy
thereof by his books, to their full satisfaction. Or
they may call in the aid of other clerks to perform
this service. It is impossible that he should know at
what time the officers, or a committee of the directors, may wait on him to make the examination. His
accounts must therefore be kept in such order as to
stand the test.
The necessary qualifications of a clerk in this post
can be better understood by following him through
his daily routine, than by any other mode of description.
108
i 
ROUTINE.
The plan of his accounts is entirely simple. He
has a certain amount of cash on hand from which to
pay checks. The amount of the latter subtracted
from the former must agree with the remaining
balance. The only modification of this process is the
debit and credit of the exchanges through the Clearing House.
The Paying Teller reaches the bank about nine
o'clock in the morning. He unlocks his vault in person, and the Porter assists in carrying to his desk the
trunks and trays containing as much money in bank
bills and coin as he will be likely to want during the
day. He locks the vault, and retains the key in his
personal care.
The bills of the issuing banks are technically distinguished from those of other banks by the name of
"Office Notes." The money-drawer is divided into
boxes, in which the different denominations are distributed. To facilitate payments, the smaller denominations are usually kept counted in packets of fifty
bills each. A packet of fives contains two hundred and
fifty dollars; a packet of tens, five hundred dollars,
and a packet of twenties, one thousand dollars. The
bills below five (consisting of threes, twos, and ones)
are generally kept in packets of fifty dollars gross,
and mixed together for the convenience of dealers.
A check for the precise amount of any of these
packets, is paid in an instant without recounting the
bills. For intermediate amounts the packets are
opened, and they must of course be recounted.
The theory of the bank accounts requires that all
109 
THE PAYING TELLER.
payments of money must be made by one Teller. The
result is, that all money received must appear on his
books.*  The Exchange sent to the Clearing House
is money paid out, and it must therefore pass through
the accounts of the Paying Teller. The particular
description of this exchange comes appropriately
under the head of the receiving department of the
bank, where it originates. It is sufficient here to state,
that it is composed of the checks and bills on other
banks taken in deposit, and each day sent in for
redemption at the Clearing House  counter.   It is
officially delivered in a prepared state to the Paying
Teller by the Receiving Tellers, on each morning following its receipt.   The former takes cognizance of
it only in the aggregate, responsibility for its accuracy in detail resting on those by whom it is prepared.
To dispatch this Exchange to the Clearing House
is the first duty of the Paying Teller every morning.
This is generally done by half past nine o'clock; and
at ten precisely, the Teller opens his little gate in the
counter railing, and is ready for the current business
of the day.
The payment of checks begins immediately. A
stranger presents one for five hundred dollars, with a
request for certain denominations of bills. He wants
"two hundred dollars in twenties, one hundred and
fifty in fives, and the balance in ones, twos, and
threes."
* There is an accidental modification of this rule, which will be found explained
elsewhere.
110
I 
ROUTINE.
Here is a requirement for rapidity and accuracy
quite  above  mediocrity.   The  Teller  must  pass
through his hands forty single bank bills and three
packets.
Another applicant wants "five hundred dollars in
twenties, two hundred in tens, one hundred and fifty
in fives, and forty in smaller bills." This will require
the counting of more than one hundred bank notes.
These are the simplest transactions of the desk; yet,
following rapidly in succession, they call for presence
of mind, precise tact, and no common skill in mental
arithmetic.
The debit Exchange from the Clearing House is
brought in by the Porter about half past ten o'clock;
and although the chief labor of its examination
devolves on an assistant, the Paying Teller will not
pass it into his accounts until satisfied by persofial
revision that it is correct. It amounts frequently to
a million of dollars or more,* consisting mostly of the
checks of dealers.  The signature, indorsement, and
other peculiarities of each, must be scrutinized before
it is charged to the drawer. This examination is protracted from one to two hours, subject to the current
accidents of the business.  It is dropped on the instant, remitted for two or five minutes, resumed, immediately dropped again, and again resumed, with
constant interruptions.
Some of the large banks have made the receipt and
examination of the Clearing House Exchange the
* In some of the larger banks, more than two millions&
ill 
THE PAYING TELLER.
work of a separate department, as a better guarantee
against mistakes.
"Will you certify that, sir?" It is a check for
thirty thousand dollars, drawn by Slater & Co. They
have not half that sum on deposit in the bank, but
usage justifies the certification on certain terms, of
which the Teller takes instant cognizance from memory. These relate to the capital, manner of business,
character of the men, and other circumstances which
may make it safe for the bank to pay checks in advance of the deposit.
"Are Slater and Co. sufficiently reliable to justify
my loaning them thirty thousand dollars without
special security? May I trust their ability and honor
to restore their account before three o'clock?"
This is one of the most interesting and critical
emergencies of the Paying Teller's desk. If he should
refuse the certification, the credit of Slater & Co.
would be shocked as with an electric discharge. Even
if he holds it in suspense an instant, as though a doubt
troubled his mind, the doubt is communicated to the
owner of the check and is reflected against the drawers. He certifies it without hesitation. This is the
best possible proof of the high standing of a dealer
with his bank.
The discretion of the Teller in certifying checks is
for the most part independent of the superior officers,
and they are averse to interfering with it. In doubtful cases, he refers to them for special instruction.
Dealers apply to them also to reverse his judgment,
though not often with success. Either of them would
oe likely to answer —" the Teller understands his busi.
112
II 
ROUTINE.
ness better than I do." Such is the influence acquired by a competent and judicious clerk in this
post, that he obtains a degree of respect firom the
customers of the bank little less than is accorded to
the President or Cashier.
The Paying Teller alone is authorized to certify
checks. His name written across them, ordinarily on
the face, pledges the bank to pay them when subsequently returned through the exchanges or otherwise,
if the indorsements are correct. Any city bank will
receive on deposit certified checks on other banks in
good standing, without reference to the drawers, and
pay out its own bills, or gold, for drafts against such
deposits.
Under the old special charters, our banks were
allowed to issue currency to twice the amount of
their capital stock, and bills of the higher denominations of one, five, and ten thousand dollars were in
common use. Checks were then mostly paid in bank
bills, and certification was rather exceptional. But
since the enactment of the General Banking Law in
1838, the old charters have gradually expired, and
their circulation has been withdrawn. There is no
fact that better indicates the improved character of
our banking system, than its diminished paper issues.
The old laws would give to our present city capital
all issue of more than one hundred and twenty millions
of dollars, whereas we have now (in 1858) less than
the one-tenth part of this sum registered, and less
than the one-fifteenth part in actual circulation. The
result of this decrease of bank currency is that busi
0
113 
THE PAYING TELLER.
ness is transacted mostly by checks. In an average
market the daily exchanges of the Clearing ilouse
alone are near twenty-five millions of dollars, and our
entire city circulation is but seven millions, which is
principally absorbed in the retail trade. The amount
of bank bills redeemed daily through the exchanges
does not average over two or three hundred thousand
dollars; the balance consists of the checks of individuals, and of bank checks on each other.
Certified checks are mostly returned in the debit
exchange of the following day, through the Clearing
House. They are used either for deposit, or to pay
notes in other banks than that on which they are
drawn.  Being of nearly equal credibility with bank
drafts, they are used also in remittance to distant
parts of the country, in which case they do not appear
for redemption for several days. They are, however,
charged to the drawers immediately, certification
being equivalent to payment. The Paying Teller's
record of certified checks is a fac simile of the
Receiving Teller's deposit book in its rulings, extension columns, postings, and method of proof-the one
being a credit, and the other a debit entry to the
dealer. See example on page 115.
This manner of posting certifications is of recent
origin.   The certifcation cAeck list is a new book
not yet generally adopted in our city banks. The
aggregate is posted to Certiceation Accoutnt, which
balances the separate charges to individuals. When
the checks are finally redeemed, they are carried to
the debit of this account, which thus always shows
the balance of certified checks remaining out. This,
e
114
i 
C:ORTI:FtICATON CH]EC
ATOF.                c
$          C..
o..-.....e................
5,000........
............
...., t........
*.,.....Pro........
.,..........
*.........
..............15,
6,000........
......  -..  *.*      *..
1,240  01....
10,500........
,.oo....o-*        *  
......  --.....o
24,591    06        17,
A to F......
Gto L......
X to R......
Proof....
Slater & Co..............
Jno. Adams..............
William Gordon..........
E. West & Co............
Jno. Rogers..............
Brown & Green..........
Green & Brown..........
Norton & Co............. 
King & Brothers.........
Carpenter & Wood.......
Wood & Carpenter.......
Joseph Benton...........
E. Denny................
Oakley & Ford...........
Gray & Co...............
John Porter..............
i
30,000
5,000
500
10,000
1,000
1,850
1,400
1,250
15,000
6,000
4,875
1,240
10,500
975
250
195
90,037
C.
....
..~.
*. i. 
*....
.oo.
75
0
31
40
73 
THE PAYING TELLER.
or some equivalent plan, is indispensable to prevent
fraud or error by the duplication of checks. On the
old plan, the dealer's ledger account was not actually
charged with certified checks until they were returned. They might be in transit long enough for
the memory of the Teller and the Book-keeper to
become dim, or for other transactions to throw them
out of sight. A pencil memorandum on the Ledger
(a usual method of noting them) might easily be
effaced by accident or design. In fact, it was such
abuse and accident that led to the adoption of the present plan of posting certifications.
The Teller has resumed the examination of the
Exchange checks, after certifying that of Slater & Co.
Those which are defective, or of doubtful character in
any respect, are laid aside for more particular inspection; the immediate pressure being to charge the
mass of them to their respective accounts in the
Ledger; for these are liable to be drawn against continuously, and it is important to know their actual
condition.
Meanwhile, the current transactions of the business
are going on. The presentation of ohecks at the
counter is more frequent as the day advances, and
some require correction or explanation.  One is not
indorsed, or improperly indorsed. Another is postdated. The date of another has been altered, and the
Teller must be satisfied whether honestly or not.
Another is drawn against an uncertain account, and
is referred to the Book-keeper to be assured correct
before payment. These various accidents are modi
116 
ALTERED DATES.
fled by the disposition of the holder of the check. A
crabbed customer will block access to the Teller's
gate, contesting his right to be paid in spite of informalities, until six or ten new comers crowd behind him
and become impatient of delay. Being unacquainted
with the exact liabilities of a bank, and the various
tricks attempted on the Teller, they often regard his
precautions as mere "stickling" at trifles.
Of what consequence is it if a check drawn to the
order of John C. Brown is indorsed John Brown?
The consequence might be the repudiation of the payment by the dealer, and loss of the whole amount by
the bank. There is as much difference between these
two names, legally and in bank usage, as between the
names of John C. Brown and Abel Dodge. Yet, if
the Teller knows that John Brown is the man to
whom the money was designed to be paid by the
drawer, he might pass over so slight a discrepancy as
the omission of the letter C. And the drawer could
not then avail himself of such discrepancy to dispute
the rightfulness of the payment.
Of what consequence is it if a post-date is altered
to an anterior date? It does not make the signature
less genuine, nor does the dealer pay more than he
has promised!
No. But a check paid before due is not chargeable
to the dealer until the true date transpires. He
might withdraw his balance meanwhile, and fail to
provide for it subsequently, thus throwing the loss on
the bank. It is therefore hazardous to admit of dates
that have undergone any apparent alteration.
The post-dating of checks is regarded by bank offi
117 
THE PAYING TELLER.
cers as a commercial misdemeanor. A dealer who
persists in the practice after being warned of its impropriety, would lose credit, and probably receive
notice to withdraw his account.
There are ordinarily some checks in the Exchange
that are rejected for want of funds, or other cause.
These are returned to the sending banks by a messenger, who brings back to the Teller the bank bills or
coin. The bank returning them has a right to demand gold, since it has paid gold for them in the
Clearing House settlement.
Unfortunately, the same condition of the market
that makes it difficult for the banks to maintain a
creditable average of specie for the weekly statement, is fruitful in overdrafts; and the reclamations in
gold are sometimes large-reaching many thousand
dollars.
All the checks that pass the Teller's examination
are given to a clerk for entry on his Check List,
whence they are charged to their respective accounts
in the Ledger. The bank bills, and the amount
received for reclamations, go into his general cash.
The Clearing House Exchange is then wholly incorporated in his accounts.
THE PAYMENT OF CHECKS.
There are three facts of which the Teller must take
special cognizance in the payment of checks. First,
Is the signature genuine?  Second, Is the account of
the drawer good?  Third, Is the person who presents
118 
CARELESS HABITS OF MERCHANTS.
the check entitled to receive the money. Generally,
the last occurs only when indorsements are to be verified; although an accomplished Teller never loses
sight of it, even when checks are drawn payable to
the bearer. Forged checks are almost uniformly so
drawn.
There are many points of exposure under each of
the three heads named. First, of the signature:
The tricks of forgery are so ingenious as to constitute a standing terror to banks; and so loose are the
habits of many merchants in the custody and writing
of checks, that the temptation to try experiments in
this direction is frequently presented.
Check-books are left open on the desk within sight
of casual and unknown visitors. They might be
abstracted for half an hour long enough to give
the forger some of the most material points of success: the style of writing, the color of the ink, the
number next, or near in order, and above all, a
leaf of blank checks with the name of the merchant
engraved on the end.
"There's no danger in our office.   Somebody is
always there.   Our name  was never forged yet.
And besides, if it should be, the loss won't be ours.
That's the bank's look-out."
The last suggestion is probably not the least
influential. If the Teller pays a forged check, the
bank, and not the merchant, is the loser. And so
a careless security on the part of dealers opens the
door and invites the forger to come in.
Instead of allowing his check-book to be as public
as a newspaper, the merchant should guard it with
119 
THE PAYING TELLER.
the same care that he does his cash-box or his bills
receivable.
The Signature-Book contains the autograph signature of every dealer in the bank, in alphabetical
order, so that the Teller may compare a suspicious
signature with the original-an hourly necessity, in
consequence of the dissimilarity of writing by the
same hand at different times. The first thing required
of a new customer is, to write his name and residence
in this book; and if a stranger, the name of the person by whom he is introduced. The signature of a
firm is written by each member, with his individual
name opposite. The names of foreign correspondents
are often cut from letters and pasted on the page.
There is nothing in bank history more remarkable
than the unfrequent and comparatively trifling loss
by forged signatures. It would seem almost miraculous to a spectator standing by the counter of one of
our active city banks, to witness the rapidity with
which the Teller pays checks (often at the rate of
three in a minute), whilst at the same time he is subject to perpetual interruptions from within and without. At the end of the day, he has paid from four to
six hundred checks amounting to more than a million
of dollars-a large proportion to strangers. In the
fifty-three city banks, during the same six hours,
there have been paid from fifteen to twenty thousand
checks, covering thirty millions of dollars-and not
one forged signature! The records of the Clearing
House show that the amount of payments for a year
through that channel has reached the prodigious
aggregate of seven thousand millions of dollars.
190 
FORGERS DEFEATED.
Another large an ount, not represented in the exchanges, is paid o er the counters-making a grand
total of probably eight thousand millions in three
hundred days; and yet it is seldom that the community is startled by an announcement that a forged
check of any importance has slipped through the
hands of the paying Teller in our city banks! I
It is doubtless to the terrors of the law, partly, that
banks are indebted for this fortunate immunity. But
these are operative mostly on a single instant of time
-when the check is presented.  That passed, the
forger is compa,atively safe. He may set rewards
and telegraphs -t defiance. It is, therefore, the skill
and discermner. of the Teller, first and last, that keeps
the forger at a respectful distance-skill, not only in
detecting false signatures, but in reading men at sight
by the most obscure of all characters written upon
the manner, and covered by practiced dissemblance,
more quickly than you would read Roman capitals.
The value to the bank of this detective faculty can
hardly be exaggerated.
Again, the forger seldom appears in person at the
counter. He employs, to draw the money, an innocent agent, who will exhibit none of the signs of conscious guilt. The teller is alive to this hazard, and
questions strangers in such a manner as to dispel or
confirm his apprehensions.
"Do you wish to pay this money out for wages ia
the city?" Or,
"Is this for your own use sir?"
"No, sir; I am drawing it for another."
"Who?"
6
121 
THE PAYING TELLER.
"For a stranger, who requested it?"
"Where is the stranger?"
The answer would make it clear whether there is
ground for suspicion. An innocent person would
answer promptly, and betray no symptoms of fear.
The forger or an accomplice would fly at once.
The time chosen by the forger to present checks is
generally between two and three o'clock, when the
counter is crowded by applicants, and the Teller is
obliged to pay as quickly as possible. He has a
choice of days also, preferring Saturday or the day
before holidays, when the business of two or more
days is crowded into one.  On these "double days"
the vigilance of the Teller is particularly roused, and
it is not unusual for the President or Cashier to give
him a passing admonition to " look out for forged
checks."
The researches of the forger have been carried so
far as to discover that the fourth of the month, and
especially of certain months, as of March, October,
and November, is what bankers call "a heavy day,"
and is more favorable for his tricks than most others.
Confidential marks independent of the signature
have sometimes been agreed upon between the merchant and the Teller, as a further aid to the latter in
distinguishing the genuineness of checks-such as a
pin hole in a certain letter, or the omission of a usual
feature in writing; but these distract attention from
the more essential points to be guarded, and if discovered by the forger, would greafly improve his
chances of success. One of his first steps is, to obtain
a genuine check, and subject it to microscopic exam
122
II 
INGENIOUS FORGERY DETECTED.
ination. The following instance, which came under
the immediate notice of the writer, shows how ingeniously this is sometimes done.
A stranger made a small purchase at a produce
store after the banks were closed for the day, and
tendered in payment a genuine bill of one hundred
dollars.   The merchant  having deposited all his
money, could not return the difference, which was
over ninety dollars.  Neither could he get the bill
changed by his neighbors. The stranger, seeing the
difficulty, said carelessly:
" No matter, sir, about bank bills. Give me your
check for the difference.
It was given without hesitation.
On the following morning, it was paid at the counter of the bank; and immediately after, another check
for six hundred dollars with the same signature was
presented by a boy. There were no appearances of
irregularity in the latter, but the intuitive precaution
of the Teller against fraud suggested the question,
suddenly and sharply spoken:
"Where did you get this?"
"A man gave it to me."
"What man?"
"At the corner."
The boy took instant alarm, and escaped before the
Porter could be called to intercept him.
The check was a forgery. It had been traced over
glass from the genuine signature, as became evident
when the two were applied together.
Unsuspecting boys are sometimes induced by the
promise of a dollar or two to present a forged check,
123 
THE PAYING TELTER.
while the rogue lies in waiting. In such a case, the
money has not unfrequently been paid, the boy followed, and his employer arrested in the act of receivming it.
The forger works in the dark. He has ample time
to prepare every circumstance that can favor his
purpose, and to study all the contingencies of failure.
The following case shows how one bank may be
used to facilitate fraud on another. It will also
enforce what has been said on the proper care of
checks.
A leaf of blank forms was stolen from the checkbook of a wealthy merchant who was a director in
one of our city banks. A small business transaction
was then contrived by which a full genuine check
was obtained.
The forger might now practice on the signature at
pleasure. When satisfied that he could produce afao
8imile check, he filled up one of the stolen forms with
an odd sum under three thousand dollars, and presented
it at the bank. To avoid suspicion, that might be
excited by so large a check if drawn payable to the
bearer, he made it payable to his own order in an
assumed name, and requested the Teller to certify it,
saying, that the indorsement would be guaranteed by
the bank in which he intended to deposit it. The
deliberation and coolness with which he referred to
the manner of satisfying the rule of the bank with
respect to indorsements, and his possession of the
auxiliary points of number, apparent consecutiveness
with previous checks, and especially the check itself
with the name of the merchant engraved on the end,
124
I 
LOSSES NEVER DISCOVERED.
procured him the genuine certification of the Teller
without suspicion.
Hie then opened an account in another city bank,
using the name of a well-known Cashier in Albany as
introductory to the officers, and exhibiting the check,
the certification of which vouched for the signature.
Hie indorsed it in their presence; and thus every formal requisition in bank practice was complied with.
There was now no obstacle to his drawing his own
checks against the deposit, which he did for the entire
amount within an hour; and although some suspicion
was excited by this summary use of the whole, it was
allayed again by the unquestionable genuineness of
the certification.
This forgery remained undiscovered for a fortnight;
and was brought to light only by the apparent overdraft of the merchant's account, which led to a comparison of his check-book with the bank ledger. The
difference being the exact amount of the fraudulent
check, it was easily detected.
The overdraft of an ordinarily well-kept account
raises an immediate presumption of error or forgery.
Either a deposit may have been omitted, or a check
wrongly paid. The book-keeper sends for the dealer's
bank-book, balances it, and returns the checks cancelled, in which process the discrepancy is explained.
It is by no means improbable, however, that forged
checks sometimes elude detection both by Teller and
dealer, in which case the latter is the loser. In neither
of the instances given was the dealer himself able to
distinguish the fraudulent from the genuine signature;
and but for the experimental question of the Teller in
125 
THE PAYING TELLER.
one case, and the collateral evidence of the merchant's
cash-book in the other, both might have gone through
the accounts, and the dealers been so much poorer,
but no wiser.
Is it possible that men in business might incur
these serious losses without such sensible inconvenience as to excite suspicion and search, or without
the ability to trace and detect them 
Yes. No fault is so common among merchants as
that of keeping an inexact and slovenly cash-book.
Instead of a daily test balance, the cash account is
often suffered to run for a week, more or less, until
the current disbursements and receipts are so jumbled
together as to defy all analysis or proof. A balance
is then forced-supposed to be "not far out of
the way-nothing to affect the general results of the
business."  Not hundreds merely, but thousands of
dollars are lost, both by slow abstraction and in the
lump, through the little opening between an exact
balance and the difference of " a few dimes!"-and
the loser is unconscious that this may be the chief
cause that urges him towards insolvency.
There are circumstances under which it may be
impossible for the Paying Teller to detect forgery.
Some years since, the financial clerk of a wealthy
importing house presented a forged check for ten
thousand dollars at the counter of one of our principal
banks, and it was paid without hesitation. He had
long been in the service of his employers, was known
to enjoy their full confidence, and to hold the custody
of their private papers. It was a usual circumstance
126 
CARELESS CASH ACCOUNTS.
for the house to draw checks for that or larger amounts,
and the fraud was consummated without presenting
a single point to excite suspicion. It was discovered
by the report of an overdraft in the account, and the
simultaneous elopement of the guilty clerk.
The following singular case came within the knowledge of the writer.
The bank account of a highly respectable house
was reported overdrawn two thousand dollars; and
one of the firm denied the genuineness of a particular
check for that amount. A number of his checks
were so arranged as to conceal all but the signatures,
and he was requested to point out the forgery. He
acknowledged his inability to discriminate between
that and any other. On close inquiry, it appeared
that he had been in the habit of signing checks in
blank to the order of his book-keeper, to be used
in his absence, and the one in question was of this
description, excepting that it was payable to bearer.
He was asked if he could swear that the signature
was not his own-to which he answered in the negative. Yet it was not made subject to order in his
usual form, and he had no recollection of having
signed  it.  Under these circumstances, the bank
insisted that it was genuine, and the house submitted
to the loss.
There are circumstances under which a bank
might be exempt from liability for the payment
of forged checks. A want of due care by the merchant to guard his own affairs against attack,
though a vague ground of defence, is entitled to
127 
THE PAYING TELLER.
some weight. The employment as clerk of a person
known by him to have committed forgery would be
a good defence in equity, if not in law.
It would be tedious to describe all the ingenious
devices of the forger to blind the Paying  Teller.
When an old trick wears out, a new one is invented.
While he is on the watch against new tricks, an old
one is suddenly revived.
The signature and indorsement of a check being
genuine, the Teller must be satisfied that the account
of the drawer is good.
Some of our larger banks have fifteen hundred
ac.counts open in the ledgers, all of which are liable
to draft without notice. It rarely happens that more
than one-fourth of them are checked against on any
single day. Some will remain unused a week or a
month, and then suddenly start into great activity.
Some show regular daily receipts and payments,
with one deposit and from two to five checks. Some
will have a single deposit at long intervals, with
checks once or twice a week to pay family expenses.
Some will accumulate rents and dividends for several
months, and be drawn against in one large sum for
investment. The account of an active merchant will
show from five to fifteen checks in a day, while that
of a broker or private banker will have over one
hundred.   Some will always  have a respectable
balance on hand, no matter how many checks are
paid, and others a small balance, no matter how few
are paid.
The question occurs,-How can the Teller remember
128
I 
CLASSIFICATION OF ACCOUNTS.
the balances of fifteen hundred different accounts
while paying or certifying checks at the rate of three
or four in a minute?
From a careful examination of the deposits and
checks of a dealer, it is easy to judge whether they
belong to a legitimate business, or whether they are
mostly mere transfers between different persons and
accounts; also to what extent his balances are maintained by loans and transient accommodations. It is
not difficult to ascertain whether a man uses his credit
excessively or with prudence; nor to get information
of his personal habits, associations, and general character. The contact of the Teller with merchants in
all branches of trade affords many opportunities of
inquiry which, with those in possession of the bank
officers, enable him to classify the dealers, and thus
assist his memory.
In the first-class stand those of known large capital,
who never give out their own notes. They may sell
on credit, but they buy always for cash. Their deposits in bank are generally far greater than their immediate wants. When their checks are presented,
the Teller may safely pay them without reference to
the condition of their accounts  for if they should
even appear overdrawn at the moment, he knows
that they will make an ample deposit before the close
of the day. In addition to this, they are likely to
have a considerable amount of promissory notes
lodged in the bank for collection which are a collateral security.
The middle class of dealers are the most numerous.
Less independent as it regards capital, and relying on
129
6* 
THE PAYING TELR.
the bank for loans, they are yet generally safe and
trustworthy. They will not transgress its rules, lest
they forfeit its confidence.  The Teller pays their
checks commonly without examining their accounts,
depending on their integrity and self-interest to rectify possible errors by overdraft or otherwise.
Next come the retail shopkeepers, mechanics, and
small manufacturers. Many of this class keep accumulating accounts, and seldom call for loans; or
if so, to a very moderate extent. Separately, their
deposits are not large, but in the aggregate, they add
materially to the loaning facilities of the bank.
They draw but few checks, and their accounts are not
liable to sudden changes. The Teller soon acquires
such a knowledge of them as to remember which
need watching; and the Book-keepers aid him in this
by an alphabetical list of balances. An old bank
gradually expurgates its ledgers of troublesome
accounts, while a new bank, from competition for
business, or non-acquaintance with the character of
dealers, is likely to fall heir to them.
By this, or some similar classification, the Paying
Teller is able to "keep the run" of his customers
with surprising closeness. But there is still room left
for accidents and irregularities, which are a source of
perpetual annoyance to him.   The number of depositors who lack mercantile training is very large.
They have never learned the value of time or rules
in business, and "hot water" seems to be their "native element." They can seldom tell what money
they have on deposit without asking the bank Bookkeeper. They make mistakes of addition in their
130 
IMPOSITIONS ON THE  TELLER.
check-books, or omit entries, or give out checks without recording them. It is not unusual for people of
this careless character to meet in a bank lobby to
consummate street bargains, and to take from their
hat crowns loose checks which they exchange for
hundreds or thousands of dollars; they post-date
them a week or a fortnight; the printed title of the
bank is often erased, and that of another illegibly
substituted; the signatures are carelessly written, and
blotted by folding, and they are stuffed in a pocketwallet, to be forgotten, or remembered by accident.
They give notes to each other drawn payable at banks
where they keep no account. All these documents,
when due, are presented to the Paying Teller, who is
thus made the focus of many irregularities by total
strangers. There is not an hour of the day free from
their annoyance. He must examine them to ascertain what they are, and his time is taxed, often when
he is most occupied with pressing duties.
A man offers a promissory note of Thomas Brown,
for certification.
"Mr. Brown keeps no account here."
"Dont you think he'll send the money to pay it?"
"I dont know anything about him."
"Wont you take the note and hold it till the money
comes?"
"No, sir. It's contrary to our rules."
"What shall I do?"
"I can't give you any help, sir."
Jacob Grimes keeps no bank account, but he
takes the liberty of making his notes payable at the
131 
THE PAYING TELLER.
Commercial Bank. He brings a handfull of bills or
gold, and offers it to the Teller.
"What is that for?"
"To pay my note due to-day."
"It is not our practice to receive money from persons who keep no account with us."
This is something new to Mr. Grimes.  "What are
banks made for," he thinks, "if not to accommodate
the public."
He considers the Teller churlish, and the bank " a
nuisance"; but he does not consider that his own case
would be but one of twenty or thirty if the practice
were admitted, and that it would then be a serious
interference with the regular duties of the Teller.
Neither does he reflect that the bank would be
responsible if a forged note should be paid instead of
the genuine one, which might easily occur, since the
Teller is unacquainted with the signature of the
drawer.
Mr. Grimes may be obliged to wait at the counter
of the Paying Teller half the day before his note is
presented-involving a loss of time, and perhaps
of temper also, for which nobody but himself is to
blame.
Merchants in distant cities frequently make their
notes payable at a bank in New York, and remit the
money within a short time of their maturity. To send
it back would cause the note to be protested, and
injure the credit of the drawer. The letter of instruction with the inclosutre is therefore handed over to the
Teller, who pays the note when it is presented. It is
132 
IMPOSITIONS.
then cancelled and returned to the remitter. Instead
of bank checks, drafts on other parties, and sometimes
on other cities, are sent, which adds both labor and
risk to the gratuitous service. Bank officers have
occasionally advised this class of correspondents that
their letters would not be taken from the post-office if
they continued the practice: but it has grown into a
permanent annoyance, and is mostly submitted to.
The common idea that banks are public institutions
is probably the ground on which they are expected to
serve the public without compensation. It should be
remembered that they are private associations, organized for the special benefit of the stockholders,
and not for that of the people at large. They have
as much right as an individual merchant to refuse
service that yields no compensation.  They cannot
escape legal responsibility to their accepted dealers,
for any omission or neglect of proper forms; but they
cannot be forced to assume responsibility against their
choice or judgment.
If non-residents and parties who keep no bank
account were required to pay a small commission for
this kind of imposed service, it might become an
acknowledged function of the business.
There are many cunning and unscrupulous persons
who maintain the appearance of respectability in
their bank dealings until an opportunity offers to
secure some advantage by trick or accident. They
may obtain an introduction through other dealers with
whom they are connected in trade, and who are themselves deceived as to their real character. By adroit
management, and strict propriety of conduct, they
133 
THE PAYING TELLER.
gradually win the confidence of the officers and clerks;
and obtain considerable loans, with the usual indulgences  that are enjoyed by good customers.   An
overdraft of account by cross deposits with dealers in
other banks may first expose them in their true colors.
If money should be credited to them by mistake, they
would not hesitate to use it. Instead of reporting
errors in their favor, they would adopt them, and
keep silence. They change their accounts from one
bank to another as their tricks fail, or when they have
gained all they can hope for. Against these, the
combined vigilance of the Teller and other clerks is
not always successful.
" Do you know," asks the Book-keeper of the Paying
Teller, "that you overpaid Samuel Filibuster's account a thousand dollars yesterday?"
"No.  But he is an honorable man, isn't he?"
"Hie has always kept a fair balance; and I have
never seen any proof of his being tricky."
"Well-send for his book, and write it up. There
may be a deposit or a collection omitted!"
The examination discloses no error of the kind.
The Teller thinks that Mr. Filibuster may continue to
make deposits as usual, and afford him an opportunity
to reserve the amount of the overdraft. If it is an
unconscious error on his part, he will do so. But the
day passes without such fortunate accident.  It is
certain Mr. Filibuster knows that he has checked
out of the bank a thousand dollars more than he had a
right to, and that he means to make the most of it.
This is the very "accident" that he has hoped for,
and in view of which he has long and carefully
134
% 
SAMUEL FILIBUSTER.
observed the rules, to win the confidence of the
bank.
It is the duty of the Teller to report such a transaction to the superior officers; but as it will weigh
against his character for vigilance and sagacity, he
first attempts to recover the amount by personal
negotiation with Mr. Filibuster. That gentleman
protests that it is " a most unaccountable error" and
one which he exceedingly regrets; but he has no
means in possession to rectify it at present.
"I trusted to your honor, Mr. Filibuster.  You
know it is an injury to a dealer to examine his
accounts before paying his checks!"
"Yes, sir-and I am very sensible of your gentlemanly conduct in the whole course of my dealings
with you. I must say you have treated me with
great politeness, and I feel the more regret for that
reason."
"Cant you deposit part of the sum to-day, and
the rest to-morrow."
"Indeed, sir, that is quite impossible."
"I dont want to report this to the President and
Cashier, for that would injure you in their esteem.
But I shall be obliged to do so, unless you make your
account good."
These considerations, urged with very conciliatory
manner by the Teller, in spite of the indignation
which he feels burning within, almost impelling him
to a personal assault on "the scoundrel" for his "villainy," are without effect. HIe steps into the Cashier's
room, and tells him of the misfortune.
"Mr.  Filibuster  has overdrawn  his account  a
135 
THE PAYING TELLER.
thousand dollars, sir, and now refuses to make it
good."
"What! Filibuster?-I thought he was an honorable man!"
" So did I, sir. He has kept up a good show in his
account-I suspect for this very purpose."
"Send him to me."
The Cashier considers it a piece of extraordinary
luck if, after a fortnight's negotiation, he can bring
Mr. Filibuster to give his notes at six, nine, and
twelve months, for the amount of his overdraft. A
civil suit would yield but a barren judgment, if successful, besides increasing the loss.
The identification of indorsers gives more annoyance to the Paying Teller than any other part of his
business.  The object of making a check payable "to
order" is, on the part of the drawer, that he may
have the indorsement of the person to whom it is
given as an additional evidence of the payment; and
the receiver of the check desires it as a security in
case of loss.  The risk of the indorsement is thus
thrown on the bank. If it should pay a lost or stolen
check with a forged indorsement, the person to whom
the money is due may claim the payment over again.
There is no apparent commercial propriety or justice
in dealers throwing this risk on the bank, as it really
belongs to their own business. A check drawn payable "to bearer" is as legal and complete payment
as if drawn payable to the order of the receiver. It
is a reasonable precaution in the transmission of
checks by mail, to make them subject to the order of
those to whom they are sent; but this is unnecessary
136 
IDENTIFYING INDORSERS-JOHN GILPIN.
in direct personal transactions.  It is a source of
annoyance and frequent dispute to the holder of a
check as well as to the Teller.  He is frequently a
stranger, and can offer no positive proof of his identity.
John Gilpin, of Maine, presents a check at the
counter payable to his order.
"Who is John Gilpin?" asks the Teller.
"That is my name, sir."
"I have no doubt of it; but our rules require that
we should have some proof of it."
Mr. Gilpin has not a single acquaintance in New
York who happens to be known at the bank. He
returns to the maker of the check, at the suggestion
of the Teller, and requests him to vouch for the
indorsement, or to change it for another, payable "to
bearer" instead of "order."  This being refused, he
presents it again at the bank, and complains that he
is subjected to such trouble and loss of time. He
thinks the Teller is "more nice than wise."   But
there is no reason why the bank should assume a
dealer's risks, when the dealer himself is afraid of them.
The certification of the check may improve the
holder's chances of using it in another channel. The
bank is then bound to pay it when the indorsement is
properly verified.
Indorsed checks paid through the Exchange, are
understood to be guarantied by the bank from which
they are received; and any that are unsatisfactory or
informal are immediately returned for correction.
Any bank will guarantee the indorsements of a dealer
in whom it has confidence.
137 
THE PAYING TELLER.
In many cases, the Teller trusts to his skill in
physiognomy and in the discernment of character,
and pays checks without positive identity of the indorsers.
The most acceptable form of check to the Teller
is, that which is printed payable "to bearer." His
only responsibility, then, is for the genuineness of the
signature and the state of the account. If such a
check should be lost, and subsequently paid to a dishonest finder, neither the bank nor the drawer of it
would suffer-but only the person who lost it, as in
the case of a bank bill. The vigilance of the Teller
is alive, however, to be assured that " the bearer" is
the right bearer. Any remission of personal scrutiny
of all who approach his counter, would be to abandon
the outer wall of his defence against forgery.
The practice of certifying checks for the better
class of dealers, before they have made their deposit,
is common in our city banks.  It is a measure of the
credit which the bank is willing to give. A customer who thinks himself entitled to it, takes offence
at its refusal, and withdraws his account. A wholesale merchant would deal more cautiously with a jobber, if his checks did not command this credit in his
own bank.
This advance certification is an indispensable economy in our method of banking. The funds which
compose the deposits of a dealer, are the product
of sales or collections made at different hours of
the day, and they cannot be brought together in one
sum until near the close of it. Their deposit in
several sums would add immeasurably to the labor
138 
CERTIFYING CHECKS IN ADVANCE.
of the clerks by multiplying entries; and if the
Teller should withhold certification until the credits
are actually made, the transactions of the day would
be crowded into the last hours, causing much inconvenience and increased risk of error. The aggregate
certifications of a bank in full business may reach
several hundred thousand dollars before the deposits
begin to come in-all depending on the discretion
and judgment of the Paying Teller. At the close of
the day, the Book-keepers report to him whether any
dealers have failed to make good their accounts.
When the market is growing tight, the Teller becomes  more  watchful  of his  certifications.   The
failure of two or three usually prompt dealers to
cover their checks seasonably, is perhaps the first
warning for this necessity. All but the first class of
customers are told, that it is "against the rules to
certify in advance of the deposit."
"Then  you have  constantly violated your own
rules!"
" It is safe to relax them in an easy market; but
our experience proves it to be unsafe in a tight
market."
Reflecting men see the reason for this, and conform
to it, while others get angry and denounce the bank
and all its officers and clerks as "arrogant" and
"undeserving of public  confidence."   It is not far
wrong to set the latter down as among the weaker
class, towards whom extra caution will be prudent.
A merchant of sound capital has a common interest
with the bank in clipping the widely-spread wings
of credit, by which commerce generally is endangered.
139 
THE PAYING TELLER.
A great service comes to the trading community
from the periodical contraction of bank facilities.
The collection of debts is more diligently urged, and
wild speculation is arrested.
When the return Exchange is brought in from the
Clearing House, it is counted on a separate table, and
proved by an Assistant. The checks and bills of
which it is composed are incorporated with the
accounts of the Paying Teller. The checks must
undergo the same inspection as those which are paid
over the counter. The signature, date, and inildorsement of each one is separately examined, and the
accounts drawn against ascertained to be good.
Among these are many checks of distant banks and
correspondents, often with six or eight transfer indorsements, for the general accuracy of which the
last remitting bank is held. The Teller particularly
observes that the course of transfer from one to another is correct; and requires a special guarantee
indorsement of the city bank to which it is paid, for
any informality or omission.   If at any subsequent
time it should be discovered that one of the indorsements is fraudulent, it claims repayment from said
bank, which claims in turn from its correspondent,
and so on, until the first victim of the fraud is reached,
on whom the loss falls. If the forms of transfer
appear to be correct, the guarantee against forgery is
valid by custom without special writing.
While the Teller is pursuing this examination, the
current business of the day goes on with increasing
pressure from the outside.  So long as he can dispose
of the applications uninterruptedly, as they are pre
140 
INTERRUPTIONS.
sented, the lobby is comparatively quiet and free
from obstruction; but even a momentary stoppage
causes the crowd to gather, and soon ten or a dozen
persons are waiting to be served in turn. Expressions
of impatience are not uncommon. The Teller is pronounced "slow"-"indifferent to the convenience of
customers "-" incompetent" and " tantalizing," by
his deliberation of movement. Deliberation is the
secret of his accomplishing so much. In truth, there
is hardly a moment when he may not be said to be
doing two or more things at once, and yet with such
a habit of concentration on each at the juncture as to
avoid confusing them together.
The interruptions to which he is subject are almost
incessant. The Cashier has just received advice of
the issue of a number of duplicate checks by a corresponding bank, to replace the originals which have
been lost in the mail. He brings the letter and list
of duplicates to the Teller, who is occupied several
minutes in obtaining a clear understanding of the
case. Some of the originals might be in the hands
of persons then waiting to be served, and he must be
able to detect them at sight.
"Will you pay me this check, sir? I don't want to
be kept here half a day!" growls a hot-tempered customer at the gate.
"Yes, sir," answers the Teller, "if you will have
the discrepancy corrected between the figures and
the writing."
"How did your exchanges come out the day before
yesterday?" asks a messenger from another bank.
141 
THE PAYING TELLER.
"A thousand dollars over."
"That's lucky!  Our Teller is short a thousandthat must be it!"
"Well, if he can establish his claim, and no other
bank contests it, I'll pay it."
It is a mutual obligation between bank tellers to
afford each other every facility for discovering such
errors. One who does not answer truly and promptly,
can hardly expect to be so answered in his turn.
The Teller might appropriate this thousand dollars
to himself; but he is too well aware of the hazards of
detection. Hie cannot know that it has not been
designedly placed in his way, and that the bank officers are not in the secret. However dishonorable it
may seem to resort to such a plan for detection, none
other is so easy, effectual, and harmless; for the dishonest only can be injured. It is objectionable on
the ground of laying temptation, and inducing a first
fault. Yet what is to be done, when suspicion has
been awakened, and where fraud may be practiced
so secretly as to defy all ordinary vigilance?
"I want five thousand dollars in gold for that
check-not good," says another bank messenger.
The Porter or Specie Clerk, who keeps the coin
prepared for such demands, is absent, and the Teller
may be obliged to go to the vault for it.
In the next moment, a check which had been sent
to another bank through the exchanges, is returned
for a written guarantee of indorsement. If satisfied
of its correctness, the Teller gives the guarantee
142
I 
INCIDENTS-MR. BUGLE.
Otherwise he pays the money for it, and returns it to
the dealer who had deposited it.
A stranger offers to the Teller five hundred dollars
in bills, to pay a check which he had drawn on the
bank. Keeping no account, his money is refused,
but he persists in an altercation about it, to the hindrance of those behind him.
A dealer wants thirty or forty thousand dollars in
coin, to pay duties at the Custom House.
Another hands in a memorandum of a check that
he has given out, but of which he wants to arrest
payment.
Another inquires whether a lost check, of which he
had previously given notice, has been paid.
A Porter from the Merchants' Bank presents a dozen
notes of different parties for certification, and he is
immediately followed by one from another bank, with
a bag of gold which he reports ten dollars short, and
which may be the occasion of some dispute.
The other clerks have frequent necessity to communicate with the Paying Teller with respect to the
state of accounts, and he with them.
A noisy colloquy occurs with a dealer whose check
has been refused, because of his deposit having been
credited to another party; and with another whose
account appears deficient, because a promised discount
of paper has not been entered on the books.
"Here!" says Mr. Bungle, returning a handful of
143 
THE PAYING  TELLER.
rumpled bank bills and coin, "that money which you
paid me is twenty dollars short." The Teller examines
it, and satisfies Mr. Bungle that the error was in his
own counting.
Many persons who present checks are so ignorant
of bank usage as not to know when an indorsement
is necessary; some forget it until they have reached
the Teller's gate, and are then obliged, after filling
the omission, to take their place again at the foot of a
line of twenty, and wait their turn. In character and
disposition, the applicants are as different as in their
features-boys, workmen, sailors, doctors, knaves, and
drunkards. Some want " half gold and half notes,"
some "half silver and the rest in small bills," some
"all bills," and some "all gold and be damned to you."
The Teller is often obliged to break away from a
line of impatient customers to prepare his settlement
balance of two hundred thousand dollars (more or
less) to be sent to the Clearing Hlouse, or to receive
the same. If he has not the whole sum in coin certificates, he pays part in gold.
There are three other channels through which
checks may be paid by the bank, simultaneously
with their payment by the First Teller. The Note
Teller may receive them in discharge of a note; the
Deposit Teller may take them in credit, and the Runner in settlement of a draft-each without the knowledge of the others. For example, if Alexander Jones
has a balance of one thousand dollars in the bank, he
144 
> /X ~j
(7)                                            1'!                     "          "          ~        ~            ~             i
((~:
~~~~/  /   ~~~~~~~~~
_     ~~
iX   /~
l
II
ii 
i 
ALEXANDER JONES.
may draw that amount in bills or gold from the
Paying Teller; he may give his check for it to
another dealer for deposit in the same bank; he may
take up a note with it at the Note Teller's desk; and
he may pay a sight draft with it to the Runner:
so that he may draw out four thousand dollars, while
he has a balance of but one thousand. There are
two guards against this, as it respects the Tellers,
viz.: their mutual advisements, and the good faith
of Alexander Jones. The Runner has the latter
only to rely upon; for he cannot tell whether the
check is good or bad until he returns to the bank. It
is a creditable fact, both to the integrity of dealers
and to the watchfulness of the clerks, that fraud is
seldom attempted by the duplication of checks in
this manner. The bank owes its security, no doubt,
to the power of credit. If men are not governed by
correct principles, they are restrained by the fear of
being cut off from facilities which are essential to
their success in trade.
If a dealer deposits checks on other banks, which
prove not good when sent through the exchanges,
they are chargeable to his account directly, or he is
bound to redeem them. But a check on the same
bank is as actually paid when taken in deposit by
the Receiving Teller, as if paid by the First Teller in
bank bills; and if it should not be good, the recourse
of the bank is to the drawer of it-not to the depositor.
Likewise, if a dealer takes up his note with the check
of another dealer on the same bank, the recourse of a
bank is to the drawer of the check, and not to that
dealer.
7
-145 
THE PAYING TELLER.
The proportion of checks liquidated through the
several other channels together, is small compared
with that paid by the First Teller, and it is confined
to receiving them in account. It does not extend
to the actual disbursement of gold or bills to the
applicant.
There are times when the Paying Teller would
seem, to an outside observer, to be almost helpless
against threatened losses.
It is one of those "panic days" on which men are
driven to desperation by the utter failure, one after
another, of all their resources. Employers as well as
clerks are seen hurrying along the streets to borrow,
or to beg a respite from their obligations. Merchants
who were never known to be "short" before, are now
seen to enter the bank in great agitation, and after
fruitless intercession with the officers, to go out again
with hopelessness and discredit impressed in every
feature. The President and Cashier themselves manifest extreme anxiety. All the counters are thronged
by dealers in a high state of excitement. The clerks
are deeply engrossed in examinations, mutual inquiries and messages, hurrying from desk to desk,
amidst the general confusion of voices, the rattling of
specie and the perpetual reverberation of banging
doors.   There is a prevalent sense in the bank of
apprehension and alarm. But the Teller goes on
impassively with his certifications and payments, not
suffering himself to be flurried by what passes around
him, and exhibiting not the slightest discomposure
of manner.
146 
A FAILURE.,
The Cashier lays an open note on his desk:
"CASHIER COCERCIAL BA.NK:
" DEAR SIR: Please certify no more notes of our
firm after receipt of this. Mar. 4, 21 P.M.
"Yours, respectfully,            SARAEM &  Co."
"Too late, sir.  I have already certified forty thousand dollars!"
" The deuce you have!"
"Yes, sir-but they are honorable men.  I have
no doubt they will protect the bank."
More notes of Skarem & Co. are brought in for certification.
"No funds to pay those notes."
" IV7Wat do you say?"
"I have a written notice not to certify any more
of their paper."
The messenger hurries off to communicate the
intelligence to the officers of his own bank. It has
already found currency in "the street," and the number of firms heretofore in good standing, that are
seriously involved, is a subject of free speculation.
The liabilities of "Skarem & Co." are variously stated
at from two to five millions of dollars, and all the
probable consequences of their failure are exaggerated
by public rumor.
Three o'clock. The Paying Teller closes his gate
A few straggling notes and checks for certification
147 
THE PAYING TELLER.
concludes the day's business, and leaves him at liberty
to look after the indulged accounts. A string of
twenty depositors yet wait their turn.
Skarem &  Co. have made a deposit sufficient to
cover all theii certifications; but the Teller finds
that Wilkins & Smith, for whom he had certified near
seventy thousand dollars, have not yet made their
account good.  He is alarmed, and communicates the
fact to the Cashier. While they are in consultation,
the clerk of Wilkins & Smith hands in their book
with twice the required amount of funds.
"That," says the Teller, with manifest relief,
"makes us right for the day."
EXPLANATION OF THE PAYING TELLER'S PROOF.
THE business of the day begins with the balance of
cash on hand, $3,100,728.37.
The money received on the previous day by the
Deposit and the Note Teller (here called second and
third) consists of three kinds of funds: office notes,
specie, and exchange funds. All must be added to
the above balance.
The title "Commercial Bank" is adopted to simplify the explanation of some terms.
OffJce Votes means, the bills of the Commercial Bank
in distinction from those of all other banks. Uncurrent bank bills, and checks that cannot be used in the
Exchange, are classed under the same head, and constitute the Offce List.
The items numbered 1, 2, 3, and 4, are the unexchangeable portion of the funds, and with some
148 
A.
$      ~.     $       C.
Balance of cash brought forward
from previous day......................... 3,100,728  87
RECEIVED:                                                     PAID:
From 2d Teller, Office List.... (1)  13,938  71               Exchange  sent  to Clearing
" 3d   "       "... (2)   9,275  87 23,214  58    House..................
"  2d   "   Specie.......(3)   3,884  95                   Bills and Checks to 2d Teller.
3d "        "...... (4)  29,520  06    33,405  01   "           "       3d   ".
2d   "  C. H. Exchange 5) 554,982  99                   Total amount of Checks paid.
"  3d   "         "       (6) 323,075  03   878,058  02
"   "   "  Checks from let-                                Total Payments............
ters added to the Exchange.(7)...............91,876  18  Balance of Cash carried for
Exchange from Clearing House (8)...............870,463  27 to next day.............
4,997,745 43
9,934   20
6,327  48
3,408    32 
~1,571   31
1,241   31        9
76,504 12          9
_   1     8
37,745   43
-  O
to
$15,000
7,O000
58,100
41,150
3,000
8,020
1,760
597
286
170
125,08 
Bills, 15,810     h1
140.848      *
* Amount of different denomination of Bills: 1,000
500
100
50
20
10
8
Bilsh   o f    oh er b nsand:d......., 8                                                                  1, 2
2
1
Cash on hand:
Office-notes (See particulars*).........
Bills of other banks redeemed........
Sundries............................
Specie:
In vault................ 2,827,000
In trays................. 18,875.12
Total agreeing with balance............
I
B.
140,843
9,786
0.
2,845,875
2,996,504
12
12 
THE PAYING TELLER.
exceptions, are incorporated in the Paying Teller's
general cash. The items 5 and 6, make the Clearing
House Exchange, amounting to $878,058.02.
The checks that are added from the morning letters
must be credited to the remitters on the books of the
Third Teller, and are transferred by him to the Paying Teller-$91,876.18.
The exchange received from the Clearing House in
return for that sent to it -number 8, $870,463.27,
completes the entire amount of the Paying Teller's
cash-$4,997,745.43.
The payments are as follows:
The exchange sent to the Clearing House, which is
the precise amount of the items 5, 6, and 7, on the
other side of the account-number 9, $969,934.20.
Numbers 10 and 11 are, respectively, portions of
the items numbered 1, and 2, returned to the Second
and Third Tellers. They may consist of country
checks, or checks that remain unpaid for some cause,
or uncurrent bank bills, the responsibility of converting which into exchangeable funds belongs to the
Tellers who received them, and not to the Paying
Teller.
Number 12, is the whole amount of the dealers'
checks paid in this department during the day.
The sum of these payments being subtracted from
the footing of the opposite side of the account, calls
for the balance in cash of $2,996,504.12.
So much for the books.
The Paying Teller now counts up all the office
notes, or bills of his own bank, by denominations, and
finds them to be $140,843. He has redeemed bills of
150 
EXAMtNATION OF CASH.
corresponding banks to the amount of $9786. He
counts over the specie (that in the vault by bags or
certificates), and on adding these sums together, finds
the whole to agree with the Proof.
If there is a discrepancy, he mostly discovers it by
revision. Errors of surplus or deficiency that cannot
be explained, must be marked on the Proof, and
reported to the Cashier. Their solution may come
about by accident after the lapse of weeks or months.
The short summary marked B. is the most important statement in the whole history of the business.
It is exclusively in the keeping of the Paying Teller,
is out of the reach of all the examinations and tests
of the general accounts of the bank, and no clerk has
any necessity or right to look into it. The President,
the Cashier, or a committee of the Board of Directors
may investigate it when they think proper; but they
rarely do it with any thoroughness-the President or
Cashier perhaps not once in twelve months. In some
banks, the Board of Directors is divided into standing
committees of three or four members each; and these
committees rotate as examiners for stated periods.
In others, special committees are appointed for the
service; but not one bank director in twenty has
enough practical acquaintance with accounts to give
real value to his certificate of accuracy.. All toe
bank frauds that have been perpetrated in New York
have been carried through repeated directorial examinations, and not one within the author's knowledge,
has ever been discovered by them. Discovery has
almost uniformly been the result of accident, of self
151 
THE PAYING TELLER.
conviction, or of unmanageable magnitude in the
default. The methods of concealment in the hands
of a skillful clerk, are too many and too intricate to
be detected by common scrutiny.
A better method is, for the Cashier to select two or
three intelligent clerks who are not connected with
the Paying Teller's department, to assist him in the
examination. This is the practice of several banks
which are under the best discipline.
The offce list in this statement has frequently been
used to cover the embezzlement and misuse of funds.
Under the specification of "sundries," or "cash items,"
or "mutilated bills," any deficiency could be concealed. The Teller may carry on false figures for
years, and no after-examination could prove them
false.
The offce lit has also been used by bank officers
to conceal their improper application or abstraction
of funds.  The President or Cashier may make loans
on " traps,"* seal them up, mark on them a fictitious
value, and instruct the Teller to " put them in the
office list." Such abuse is not discoverable by the
Teller. He commonly obeys the instructions of the
officers without inquiry, and may thus be made the
involuntary instrument of fraud. In case of discovery he would be held blameless. But with just views
of his own duty and responsibility, he might object to
receiving from the President or Cashier, any sealed
securities or vouchers to be counted as funds. If they
* This Is a common term, signifying uncommercial, and worthless documents,
such as depreciated railroad bonds, land grant bonds, railroad acceptances, bad or
accommodation notes, broken stocks, &e.
152 
CERTIFICATION.
should offer him securities of an improper kind, it
would be his right and duty to refuse them; nor
would any bank officers dare resent such refusal.
The modern improved discipline of banks, together
with the various legal reports of their condition, has
lessened the facility of fraud by the offce li8st. Large
sums under the head of " sundries" or " cash items,"
are regarded with distrust.
The substitution of copper for gold in the sealed
bags is a very hazardous experiment, and yet it has
occasionally been resorted to with success by a dishonest Teller. The difference in bulk of the same
weight of gold and copper would be too obvious to
the experienced eye of the Porter, to escape detection; and the difference in weight of the same bulk
would be discovered in the handling of it.
Certi,fcation is the most dangerous and least
guarded function of any person connected with the
bank, whether officer, director, or clerk. It is, in
fact, the power of bank issue; and it is vested exclusively in the Paying Teller. By simply writing his
name across the face of a check, he gives it the credibility of an official bank draft. He can do this at
his own house as well as at the bank counter, and for
people who keep no account with the institution as
well as for those who do.
The use of the Certification Check List, is to prevent dealers overdrawing their accounts by the duplication of checks. It cannot prevent the Teller from
certifying beyond the record.
The Paying Tellers of New York disburse daily
near twenty-five millions, and in the course of a year
7*
153 
THE PAYING TELLER.
eight or ten thousand millions of dollars; and the
aggregate of all losses incurred through them by
mistakes or by abuse of trust, is not, at the highest,
as much, perhaps, as the one ten-thousandth part of
one per cent! This is strong testimony in favor of
their general fidelity as a class, in view of the extensive powers with which they are intrusted; and
especially, in view of the power of certification, which
in the manner of its use up to the present day, has
been without any other protection than their own
sense of propriety and honor.
Various changes have been proposed by bank officers in the method of certification. When an example
of its abuse is made known, the subject is freely discussed by them, and it is felt to be the weakest and
most unguarded point in our banking system. Some
institutions have adopted a stamp in red or blue ink
to accompany the signature of the Teller; but the
stamp could be duplicated or secretly used without
difficulty. Others have proposed to conjoin the signature of another clerk with that of the Paying
Teller; and others, to create a certifying department
with an exchange issue of checks.
The plain truth is, that the power of certification is
too easily abused, and too destructive in its abuse, to
be vested in single hands, without effectual supervision.
The following example shows how checks fraudulently certified may be kept alive from day to day,
and assist a large default, without causing any irregularity in the books of a bank, and without exciting
the suspicion of the officers and clerks.
154 
AN EXAMPLE.
The Paying Teller began by certifying a check in
advance of the dealer's deposit; and on the following
day certified another, that it might be negotiated, and
the means thus obtained to remove the first out of
sight; to provide for the second, a third was certified, and so continuously on, the negotiations of one
day furnishing the means to redeem the checks of the
day before. The amount was gradually increased,
until twelve or fifteen checks, for amounts between
four or five thousand dollars each, were afloat in the
various channels of negotiation. They were drawn
for irregular sums, that they might wear a businesslike appearance. No entry of them was made on any
of the books, and no apparent deficiency was caused
in the Teller's daily cash. An examination of his
statement, similar to that marked B, on page 149,
would have developed no clue to the fraud,
which consisted entirely of floating certijcations.
There were two confederates in the plan-one a
dealer in the bank, and the other a broker whose
account had been closed for irregularity several
months before the exposure came about.   As the
fraud could be maintained only by a complete daily
renewal and negotiation of the whole of it, the three
met in the evening at the office of the broker, and
the Teller was advised of the banks in which the
checks had been deposited, so that he could lay aside
those particular exchanges in the morning, and thus
prevent them from passing into the hands of the
Assistant Teller. It was then also ascertained what
amount of checks must be negotiated on the following
day, and they were written by the confederates. and
155 
THE PAYING TELLER.
then certified by the Paying Teller. Subsequent
developments proved that this process had been carried on for many months, the amount gradually
increasing until it reached seventy-five thousand dollars. There had been, in the mean time, five or six
examinations by committees of the Directors, and the
usual certificate of accuracy in the accounts was
recorded.
The Teller who perpetrated this fraud was a very
accomplished  clerk.   His self-possession, when all
around him was excitement and hurry, seemed to
increase with the emergency.   Hie manifested an
extraordinary faculty for detecting the slightest indications of fraudulent or dishonorable purposes in
others; and the bank owed to him many fortunate
escapes from loss by the various tricks and impositions which are practiced by dealers in extremnity.
To all these qualifications, he added such diligent
habits of business as to attract, in an unusual degree,
the personal attention, respect, and confidence of every
director, as well as of the officers of the institution.
It was subsequently found that he had been a regular
attendant at a gambling-house, even before his appointment as Teller. The discovery of his fraud caused an
immediate examination into the accounts of many
other Tellers in the city banks. In two cases each,
a deficiency of more than one hundred thousand
dollars came to light, and in a third, one of seventy
thousand.
Fraud and collusion may always be presumed from
the use of certified checks as collateral security for
loans.  There can be no honest reason for not draw
156 
AN EXAMPLE.
ing the money for them, as they are charged to the
account of the dealer when they are certified, and he
-not the holder of the checks, is the man who must
pay them. In fact, they are already paid. The hypothecation of certified checks is like the hypothecation of gold; and when one deposits gold as security, agreeing to pay interest on it, the presumption
is, that it is a surreptitious transaction.   The only
possible excuse would be, an expected advance of
premium enough greater than the interest, to justify the hoarding. No dealer in money is so ignorant as not to know these facts.   A  broker who
receives certified checks as collateral security for
loans, becomes a party to the fraud, because the tacit
if not the expressed condition is, that he shall withhold them from the bank.
The Paying Teller, to a considerable extent, holds
in his hands the commercial fate of the merchant, in
the power to certify checks. He is therefore likely
at times to be tempted and embarrassed by personal
relations. Old companions and friends are shaken by
the financial storm, but he must prefer his own duty
to their interest. He must be unapproachable by
bribes of feeling, as well as of money. His greatest
danger is in the first exception to rules, which draws
after it a second exception. A Teller of one of our
city banks once made the following confession to the
author:
A personal friend and a highly respectable merchant called at the bank after three o'clock, and
requested him to certify his check for six thousand
157 
THE PAYING TELLER.
dollars.  He represented, that by paying off a loan
for that amount, he would release collaterals which
he had already negotiated for nine thousand dollars,
and that he would deposit the latter sum within half
an hour, thus making his check good. After a long
resistance, the Teller yielded-not to the merchant,
but to the friend, on the express condition that the
check should be used for no other purpose. He was
met on the way to redeem his promise, by a creditor,
who overcame his purpose by the force of a superior
will, and obtained from him  the certified check.
Finding that the borrower did not return, the Teller
became alarmed. He had delayed charging the certification until the deposit should be brought in, and
now withheld it to avoid inevitable exposure on the
following morning, and consequent dismissal and disgrace. After a week's labor and suspense, during
which he suffered the most painful anxiety, and withheld the check, he secured the money, and then informed the officers of the transaction. They were
satisfied that the lesson would make him more watchful in future, and their confidence in him was rather
improved than abated.
The Paying Teller is the natural successor in office
to the Cashier-a very influential consideration to
make him deserve the good opinion of the Directors,
and the esteem of the public.
Hie generally proves his cash within half an hour
after three o'clock. The Porter assists him in carrying his trunks and trays into the vault, which he locks,
and with the key in his pocket, leaves the bank for
the day.
158 
THE DEPOSIT TELLER.
CHAPTER V.
THE DEPOSIT TELLER.
THE accounts of a bank are divided into two classes,
known as individual and general.
The former are personal, belonging to individuals
or firms. The latter are those of other banks, and such
as show the aggregates or results of the business; as
Stock, Expenses, Bills Discounted, Profit and Loss,
Cash, Interest, Exchange, and some others.
The original entries of the former, called Individual Deposits, are made by the Deposit Teller, and
the latter by the Note Teller. The Note Teller also
receives the money paid in for notes lodged for collection on personal account. Both of these clerks are
Receiving Tellers, and are distinguished also as
Second and Third Tellers, in the order named, from
the rank which they hold with respect to promotion.
If the place of the First or Paying Teller becomes
vacant, the Second or Deposit Teller takes it, and he
is succeeded by the Third, or Note Teller, the qualifications of the clerk in each case being undisputed.
The duty of the Deposit Teller is to receive all
direct deposits of money brought by the individual
dealers of the bank. The book in which he enters
these is called the Second Teller's Cash-book. While
in use, it lies open before him on the desk, with such
159 
THE DEPOSIT TELLER.
conveniences of blotting-paper, pencils, eraser, and
India-rubber as may be required. There are commonly two of these Cash-books open at the same time,
for alternate use by the Teller and the Book-keepers.
They have the same rulings precisely as the Certification check-list, on page 115. The name of the depositor, and'the amount of his deposit in the first
column, is the Teller's original entry, corresponding
in the figures with that which he makes in the Dealers'
Bank-book. A form of the Bank-book is given on
page 161. It is the Teller's receipt to the latter for
his deposits. The letter A is the initial of his name,
and identifies the receiver of the money. The example shows a succession of deposits, and other entries,
which, with the extension columns of the Second
Teller's Cash-book, will be more appropriately explained under the head of Book-keepers.
The deposits of merchants consist of bank bills,
coin, personal and bank checks, certificates of deposit, and other documents which represent money.
The dealer is required to state them in detail as in
the form on page 161. The banks generally furnish
printed tickets with blank spaces for the name of the
dealer and the figures. These are not only a help
to the Teller, with whom small economies become
great gains, but to the depositors also, many of whom
stand in need of instruction as to order and system in
their accounts. They may commit any number of
mistakes in their cash-book at home, but the tickets
will always set them right with respect to their deposits in bank. The Teller will not receive money
without them. If his cash does not prove at the end
160 
DEALER'S BANK-BOOK AND DEPOSIT TICKET.  161
FO1R=.M  OF 3DE:IilEY'S 3A~J:-BOOK_
.Dr.      The Commercial Bank in alc with SLATER & Co..           Cr.
1855                          $    C.                          $   C.
June18 To Cash,.....A   30,000    June 19 By Cash...           960
19 "   "......A    19,240 60           20 "   "...  14,24015
21 "   ".....A         6 352          24  "   "...  30,000
22"   ".....A    10,051 42            28  "   "...   2,240 16
July  1 "   ".....A          1,275 60 July 5  "   "...       50050
3 "   "......A    21,000              6  "   "... 15,045
10"   ".....A    17,001 10            10"   "..   25,000
11 "Bills discounted  22,363 18        12  "   "... 16,840 75
12 "Jones, 2,500                       16 8,750
12.50         50          "Balance.  18,81984
2,487
"  "Brown........  1,625
14 "Cash.....A          1,000
132,396 40                     132,396 40
To Balance....... 18,819 84
DEPOSIT TICKET.
C.)~~~~~~~~~
~~~~~~~~~~~~~~~.
: ~ o o o7 CT    o
_...   *    *
> ~ ~~a.                             
-,>......
_E~~~~~~~~ ~                       
lll  ~                   *.', *...= 
._',            *...o 
THE DEPOSIT TELLER.
of the day, he re-examines them, first by comparison
of their footings with the book entry, and then by
checking off each item, and revisinig the additions.
They enable him to trace and identify all the checks
on other banks, and so assist his memory that he can
recall most of the transactions of the day. After
proving his cash, he rolls them into a compact bundle,
marks the date on the cover, and puts them away for
future reference, in case of necessity.
The Exchange Drawer is a drawer divided into as
many boxes as there are banks. The bills and checks
of each bank are separated by distribution, each kind
in its own box. The following example shows a complete list, excepting in the length of it, which is about
eight inches. It is a statement of all the bills and
checks of the Mechanics' Bank, received by the Commercial Bank during one day.
:ca1a-CsB':B  32C
COMMERCIAL BANK, JUNE 18, 1855.
$         C.
1,550
640      72
6,284      26
1,000
275      46
160      16
1,546      90
2,500
4,542      60
2,740     65
*21,240      75
* See this amount transferred to the Proof, on page 168-No. 4.
162 
THE PROOF IST.
Every bank in the city has one such list against
every other bank; that is, fifty-two lists, its own Offce
List making the fifty-third. When the footings of
these fifty-two are copied on a general list, called
TAe Second Teller's Proof, and added together, they
constitute the Deposit Teller's portion of the Exchange
which goes to the Clearing House. It appears in gross
on the Paying Teller's Proof of the next morning, as
a part of his receipts, as on page 149, $554,982.99.
ToI  COD RCIA:L T  BAN
SECOND TELLER'S PROOF.
June 18th, 1855.
1 Bank of New York....................$21,154.42
2 Manhattan Company................... 15,000.00
3 Merchants' Bank...................... 30,150.75
4 Mechanics' Bank...................... 21,240.75
5 Union Bank.......................... 10,142.14
6 Bank of America...................... 14,972.16
7 Phenix Bank....................... 11,243.60
8 City Bank............................ 16,800.19
9 North River Bank.....................
10 Tradesmen's Bank...................... 5,204.17
11 Fulton Bank.......................... 6,315.90
12 Chemical Bank......................... 14,510.80
13 Merchants' Exchange Bank............. 18,260.01
14 National Bank....................... 16,210.40
15 Butchers' & Drovers' Bank.............. 1,745.00
16 Mechanics' & Traders' Bank............. 4,520.72
17 Greenwich Bank...................... 7,240.65
18 Leather Manufacturers' Bank........... 16,752.40
19 Seventh Ward Bank................... q,265.10
20 Bank of the State of New York......... 27,566.70
21 American Exchange Bank............ 41,317.62
163 
THE DEPOSITl  TELLER.
22 Mechanics' Banking Association......... $1,500.25
23 Bank of Commerce.................... 27,005.16
24 Bowery Bank..............(Spendd.)
25 Broadway Bank...................... 8,742.10
26 Ocean Bank.......................... 5,740.00
27 Mercantile Bank...................... 4,960.11
28 Pacific Bank........................... 1,950.00
29 Bank of the Republic................. 18,100.05
30 Chatham Bank........................ 1,750.82
31 People's Bank........................ 1,200.06
32 Bank of North America................ 16,200.60
33 Hanover Bank........................ 1,850.00
34 Irving Bank......................... 3,200.00
35 Metropolitan Bank................... 38,716.94
36 Citizens' Bank........................ 1,325.60
38 Grocers' Bank........................ 1,300.02
40 Nassau Bank......................... 6,240.14
41 East River Bank..........  (Suspended.)
42 Market Bank......................... 15,270.65
43 Saint Nicholas Bank................... 1,201.10
44 Shoe and Leather Bank............... 14,964.10
45 Corn Exchange Bank.................. 5,317.69
47 Continental Bank...................... 12,572.64
48 Bank of the Commonwealth............ 9,214.00
49 Oriental Bank.........................  1,625.50
50 Marine Bank.......................... 1,100.16
52 Atlantic Bank........................ 2,560.08
53 Importers' & Traders' Bank............. 22,540.13
54 Park Bank........................... 19,378.96
55 Artisan's Bank....................... 1,842.65
$554,982.99
Office List......................... 13,938.71
Specie........................... 3,884.95
Checks........................... 64,387.92
$637,194.67
Footing of Cash Book.............. 637,194.57
164 
BEHIND THE MACHINERY.
The foregoing list presents an exact proof of the
cash with the Deposit Book.
The manner in which the several items, excepting
the checks, are incorporated with the cash of the
Paying Teller, may be seen by comparing them with
the entries of the Proof on page 149. The item of
$64,3-87.92 is the amount of checks on the Commercial Bank itself, and they are charged to the accounts
of the drawers.
It is not unusual for depositors who receive large
checks by their morning letters, to send them to the
bank for addition to the Exchange before it is dispatched to the Clearing House, in which case the
Deposit Teller passes them over to the Paying Teller.
This would require some additional entries at the foot
of the Proof, which would complicate it to the general reader.
The whole duty of the Deposit Teller is performed
when he finishes this Proof. He locks up the fiftythree packets or lists of money in a trunk, and deposits
it in the vault, when he is at liberty to leave the
bank, which he does mostly from half-past three to
four o'clock. He is expected to be at his post in the
morning in season to deliver his Exchange to the
Paying Teller, and to assist in the incorporation with
it of the Proof List of the Note Teller.
There are no complex calculations in the accounts
of the Deposit Teller. Simple addition and subtraction embraces all the arithmetic required. It is the
understood rule of the bank to avoid needless conversation, and to never speak to a Teller when he is
165 
THE DEPOSIT TELLER.
engaged in counting money. In truth, the mere
mechanical performance of the duties of this desk is
compatible with a very moderate degree of intelligence. It will be seen, however, on looking behind
the machinery, that a dull brain might easily prove
a very bad investment for the bank.
By far the larger part of the deposit of our city
banks consists of merchants' checks, given to each
other in payment of debts, or for mutual accommodation. Without the certification of the bank on which
they are drawn, these are no more than personal
obligations, of the validity of which the Teller can
have but little knowledge. The stated rule is, that
they must be certified before deposit; but this would
be attended by so much inconvenience and loss of
time, that it is relaxed with dealers of good standing,
who are supposed to be responsible for any that may
be returned dishonored, and who, in self-defence, are
not likely to deal with unsafe people. And so it
happens, from usage, that a large proportion of all
checks received are uncertified.
Mr. Tarbox may deposit twenty checks amounting
to five thousand dollars. They may be drawn on as
many different banks, and it may take one or two
hours' running and waiting to get them all certified.
The Teller has no definite knowledge of the personal
responsibility of the drawers; but Mr. Tarbox himself is a man of capital, prudence, and honor. He
therefore receives the checks, although he knows that
they will be drawn against immediately, and that a
day must elapse before they will reach the banks
where they are payable, whence any of them that
166 
ABEL DODGE.
are not good will be returned to him for redemption.
It is not unlikely that one or two of the twenty may
be sent back. If so, they are immediately presented
to Mr. Tarbox, who pays them by his own check.
The Teller might have recourse to his account in the
bank, the current balance of which is probably
sufficient to cover them; but this would be leaving
Tarbox in the dark as to the dishonored checks, the
collection of which might be endangered by delay.
Moreover, if not apprized of their debit to his account,
he might overdraw that by his own checks. It is,
therefore, not only courteous, but necessary to the
safety of both bank and dealer, that he should be
advised without delay of any default in the checks
that he deposits.
Abel Dodge might prove to be less honorable than
Mr. Tarbox. He may not have given the Teller any
reason to think so as yet, and his deposit is received
in the same way. IHe draws his own check for the
whole amount withiii an hour, and presents it for certification. If the Paying Teller should want confirmation of the deposit having been made, he has only
to ask the Book-keeper, who answers in the affirmative; and Dodge thus gets his own check certified,
against a deposit which consists of the uncertified
checks of other people. If the latter should prove
bad, the bank can have recourse only to Mr. Dodge.
To trace such a transaction, we may suppose one of
them to be returned from the bank on which it is
drawn. A messenger presents it to the Paying Teller
about midday, and demands the money for it.
" Joseph Pine's check not good, sir. I'll take the
gold, if you please."
167 
THE DEPOSIT TELLER.
It is paid, and passed over to the Deposit Teller,
who, wishing to avoid censure for unwatchfulness,
sends it to Mr. Dodge by the Porter, with instructions
to get the money for it. The Porter returns, with
information that Dodge has failed, and can't pay.
"Did you tell him it was a debt of honor I"
"I did."
"What did he say to that?"
"Said he knew it, and was very sorry, but could'nt
help himself. Would be very happy to pay it, and
wishes he had the means."
"That's consoling. Did you ask him about Pine?"
"Says Pine's failed too."
"What?  Both on the same day?'
"So it seems."
"Hang the pirates! I'll go and see'em after bank
hours, and try if I can't squeeze something out of
'em."
In such a case, the Teller may prove a better negotiator than the officers of the bank. If he should be
able to make any kind of arrangement by which the
bank will receive final payment, he submits it to the
Cashier for his approval. Otherwise, he has the mortification of informing that officer of the casualty, and
of the failure of his attempt.
Bank officers are not apt to be censorious when
satisfied with the general method and accuracy of
the Teller's desk. They know that losses are incident
to the business. But if they are of frequent occurrence, or if they manifestly result from incapacity or
carelessness, the Teller loses his place.
An accident of this kind stimulates his vigilance.
'168 
REENCE OF DOUBTFUL CHECKS TO OASHIER.  169
Like small misfortunes in any business, it doubtless
wards off larger. He looks more closely into the
ledger balances, scrutinizes with a sharper eye
accounts, check, and persons, and consults his fears.
Other Able Dodges may turn up any day. He
enforces his rule of certification with more vigor, and
perhaps needlessly in many cases, giving offence to
thin-skinned dealers and lazy clerks.
"Now, where's the use of my traipsing all over the
city to get checks certified, when I know they're
good?"
"Well-I can't help it.  You know the rule of the
bank, and ought not to require me to break it. Here's
one large check of five thousand dollars, which I will
-ot take on my own responsibility. If you get
ihe Cashier's consent, very good. I'll take the rest of
four deposit to-day, but hereafter you must get all
becks over a thousand dollars certified."
The dealer obtains the Cashier's consent, with an
dmonition, however, that it is better to observe the
ale of the bank than to give the Teller an opporunity to refuse his deposit. If he has any doubt of
fie check being good, or of the ability of the dealer
o redeem it if bad, he refuses at once.  "No, sir. It
the Teller's province to decide that point, and I
ill not interfere with him."  The Teller understands
d-s to be an approval of his course.
The risk of neglecting certifications falls back on
'e merchant. The rule of the bank is, therefore, his
cst protection, and should be appreciated as such,
ther than be deemed offensive to credit or standing.
et it is not unusual for a dealer or his clerk, when
8 
THE DEPOSIT TELLER.
asked why he does not get his check certified, to
answer, pettishly: "Because there's no need of it.
What do you want me to run my legs off for, when
'tis no use?"
The Teller of a bank may have reasons which are
unknown to the dealer, for requiring certain checks
to be certified, and which he is not at liberty to communicate. He may have received the same from
other parties to such an amount as to create suspicion
of kiting. This is the most vulnerable part of his
business-the easiest and most specious method of
overdraft. It is that at which the Able Dodges are
sure to aim; and when the market is troubled, the
aim is frequent.
It is the Teller's duty to keep alive and always fresh
his knowledge of the general state of accounts, by
asking the book-keepers how they stand, what is their
average "run," and so forth;  by examining  the
ledgers in person; inspecting the character of the
deposits and checks, just as the Paying Teller does;
consulting that officer; comparing notes and experiences; clearing up doubts, or confirming suspicions;
and so on, incessantly. In fact, he has much to do in
determining the character of the whole business. If
he is gifted with brains, vivacity, patience, and a civil
spirit, he may sift out the wheat from the chaff separate the sheep from the goats, and exert a most
practical influence over the success of the institution.
A conceited, pompous fool (a character not unknown
in the New York banks) repels the better class of
customers from the counter, and attracts those who
are not above flattering him one day to cheat him on
the next.
170 
TELLER EXPOSED TO FORGERYI ETC.
"Why do you reject this check from my deposit."
"Can't you see, without asking?  What do you try
to walk over the rules of the bank for, putting in
uncertified checks?"
"We shall not draw against our deposit within five
times the amount of that check, sir, so that you will
run no risk by taking it. Besides, we know it to be
good."
"Well, I don't; and that's the point to be settled
here"
Such a Teller will lose business, by losing the
respect of dealers. Clerks tell their employers, and
the contagion of disrespect spreads. It is less common, however, to meet examples of this kind now
than it was formerly. Civility is found to be a coinmmercial investment. A surly, ill-mannered Teller,
would be complained of to the officers or directors,
and, if found incorrigible, would be dismissed.
The Deposit Teller has the same need to examine
signatures, indorsements, dates, and other peculiarities of checks, as tlhe Paying Teller. Dealers who
are entirely honorable and above practicing imposition
themselves, may be imposed on by others with fraudulent or kiting checks. The name of the depositor
must be indorsed below all others on the back of each.
In the hurried reception of deposits, he takes special
cognizance of this last indorsement, as the key to
discovery if any thing should prove wrong. He cannot always examine at the moment the whole history.
That is sure to be done at the counter where final
payment is made, and the error, if any, comes back
thence for correction.
171 
THE DEPOSIT TELLER.
Reclamations between the banks are of every day
occurrence. A check is dated ahead, or the date is
obscure, or omitted; it lacks an intermediate indorsement, or is inidorsed " by attorney," without proof that
the attorney is authorized by the principal; the filling
up in the body does not correspond with the figures,
or is entirely wanting. Singular as it may seem, a
check will occasionally slip through the hands of a
Teller, without signature: he recognizes a familiar
style of writing, and the absence of the name does
not arrest his attention.
In the hurry of distribution, checks are thrown into
the wrong box, which takes them to the wrong bank.
All these errors come back to be corrected, by the
same channel through which they go out.   New
modes of error are turning up every day. No Teller
has ever yet reached the end of them, and never will,
while the firm of Cunning, Carelessness & Co., does
half the world's business.
Merchants frequently keep accounts in two or more
banks. They draw checks on one to deposit in another.  This is a mere changing of balances; and as
nothing is easier than. for a man to sign his own name,
the Teller regards it with suspicion. Unless well
satisfied of the integrity and safety of his dealer, he
insists on the certification of all such checks. The
shifting of balances is sometimes unavoidable by a
merchant. Hle may draw on one bank in expectancy
of funds which he designs to deposit therein, and fail
to receive them; in which case he writes a transfer
check on another, to restore his balance.
There is a protective feature in many accounts
172
i
I 
RECOURSE TO COLLECTION NOTES.
which keeps the bank safe against overdrafts; that
is, when dealers have notes deposited for collection.
As these are paid, they are posted to the credit of
their owner, and may make up his deficit. Bank
officers will sometimes admit temporary overdrafts in
anticipation of the maturity of collection notes; or,
what is better, make transient loans, holding them as
collateral, by which the irregularity of overdraft is
avoided. The Deposit Teller takes no cognizance of
this source of recuperation, unless he finds necessity
to resort to it.
The financial connection of merchants in good
credit with an inferior class, tends to drag the former
down, and to confound them with the latter. "i How
comes it," says the Teller to himself; "that our friend
Blunt is getting hooked in with such a fellow as
Dodge?"   Blunt, thenceforward, becomes  himself
subject to closer scrutiny. IHis account is more narrowly inspected; and if it should appear that there is
any thing like an established connection, he sinks a
degree in commercial standing.
The word foreign applies to banks out of the city.
Most of the New York city banks receive on deposit,
either at par, or at a small rate of discount, individual
checks on banks at a distance.  Merchants in Buffalo
remit their checks on banks in that city, to their
creditors in New York; and here they are received as
cash, deducting enough to cover the exchange and expenses of collection. They may be returned not good
after several days, when the depositor must promptly
redeem them. The interval between their deposit and
their return, is long enough to allow the dealer to close
173 
THE DEPOSIT TELLER.
his account and leave the bank in the lurch. It follows that the Deposit Teller is practically discounting
paper all the time. The aggregate amount of checks
in transit for collection mnay often reach one or two
hundred thousand dollars, for the security of which,
the main reliance of the bank is on his judgment.
Drafts on individuals and private bankers in the
city, are received to a limited extent, in deposits;
but this throws on the bank the trouble of collecting
them, and makes it responsible for indorsements in
which it has no interest.   Dealers are therefore
mostly required to collect them on their own behalf.
The ingenious methods of counterfeiting bank bills
by photographic and other processes are such as to defy
any ordinary powers of detection. Besides making
entirely spurious bills, there are many tricks of alteration and substitution which are very successfully practiced. A genuine plate of a broken bank is changed
in its title to conform to some existing bank. The
lesser denominations of bills are altered to the higher
-three to ten, or one to fifty.  The ink is extracted
chemically, and other titles and figures are neatly executed with a pen.  The genuine dies, stolen from the
engravers, are imprinted on false bills. A small and
different portion is cut out of each of ten or fifteen
genuine bills, and a new bill made of the pieces, neatly
pasted together.   The chances of success in these
various processes, are in proportion to the number of
different kinds of bills in circulation. The notes of
near two hundred banks are receivable in deposit in
New York. If each one issues six denominations, it
gives a total of twelve hundred different imprints.
174
I 
DETECTION OF SPURIOUS BILLS.
The attention of the Teller is not so much directed to
confirm the genuineness of each bill, as it is to detect
unusual appearances-like one in a crowded street,
who does not observe common peculiarities, but at
once distinguishes a man in Turkish or other singular costume. But he might often be deceived by
fraudulent bills in his rapid counting, were it not
that other eyes than his own are bent upon their discovery. No sooner is a counterfeit launched upon
the community, than some one of the several thousand
clerks in our banks and brokers' offices detects it, and
it is immediately announced in the public papers,
with such a description as to make its subsequent
detection easy. iHe has another guard in the watchfulness of his dealers, who, it is presumed, will not
knowingly present spurious bills. Notwithstanding
these defences, however, he is always on the alert.
The counterfeiter employs workmen of equal skill
with those who produce the genuine bill; and although
engravers periodically announce a new improvement
or device which cannot be successfully imitated, they
are as often cheated by a fac s8imile that puts them
to the necessity of another trial.
The Teller acquires an instinctive faculty for the
detection of spurious bills. To stand by and observe
him counting, it might be supposed that he could
hardly get a glimpse of each, so rapidly do they pass
through his hands. Hie looks as if he were trying
how many times he could strike the ends of his fingers together in the twentieth part of a second; but
you see a steady stream of bills issuing beneath them,
and gradually gathering into a pile.
175 
THE DEPOSIT TELLER.
There goes one aside, without perceptible pause in
the swift handling! He checks the item on the list,
and with his right hand thrusts the pile into a drawer,
whilst with the left he tosses the single bill back to
the depositor.
" Counterfeit-five dollars off!"
He makes the entry, deducting it from the list,
hands the book to the dealer, and takes the next in
order, in which there is a package of mixed denominations of several hundred dollars. He gives it a
smack on the counter to loosen the bills, and a peculiar toss, which makes them fall over like the leaves
of a book, affording an instantaneous glance at their
ends. His eye has caught in that instant an old
acquaintance!
"Where did you get that altered bill?" he asks of
the customer, meantime counting-" twenty, thirty,
fifty, fifty-five, sixty," and on he goes like lightning.
The dealer looks astonished, not thinking it possible
that the question could have reference to a bill in his
money. The Teller repeats, without ceasing his count
for an appreciable instant-" one twenty, one thirty,
two, five, one forty-five-say, where did you get that
altered bill - sixty-five, one seventy, eighty, two
thirty- that," he says, tossing it in his face-" two,
altered to ten-two eighty-five, two ninety-five, three,
five, ten-three thirty-five-ten off, right." And the
deposit is entered, and the dealer's book is returned
before he knows it, and the Teller is in the midst of
another count for the next customer in order.
This is very curious to an inexperienced observer.
But there are certain well-known spurious and altered
176
I 
CLAIMS FOR DIFFERENCES.
bank bills which are distinguishable by a quick
Teller, as readily as the countenance of his landlord
who approaches to ask for his quarter's rent. Counterfeits in general have their run, and then mostly disappear. To-day, it is a new ten, with which, if it is
a close imitation, the Teller may be caught-but only
once. IIe studies over its peculiarities, comparing
every part with a genuine bill, and he would sooner
mistake a parasol for a hat than be cheated by it
again. Next week, a spurious five has its run, and
there may be an interim of a month before another
appears on the stage. The bank counter, however,
is the last place for counterfeits to be presented. They
are generally set afloat in country places, or among
the small shops, where they are more likely to escape
immediate detection. A few days, and often a few
hours, is enough to spread the alarm, and to give all
the peculiarities of the forged bill to the public
papers, so that Bank Tellers are apt to be forewarned.
CLAIMS FOR DIFFERENCES.
WHILE the Deposit Teller is pressed with the current business of his desk, the Paying Teller comes to
his elbow, and waiting for a pause, shows him one of
his Exchange lists of the day before.  "Claim of
twenty dollars short in that item," says he.
"Don't believe it.  Didn't differ a cent."
The messenger who brought the list from the claiming bank speaks up: "It is so, you may depend on it.
Mr. Sharp counted it himself, and is very positive."
8*
177 
THE DEPOST TELLER.
"Don't care if he is.  My cash was right.  Did he
prove his exchanges?"
" Yes, sir."
"Well-give my compliments to Mr. Sharp, and
tell him he'll not get the first red cent of his twenty
dollars out of me."
Mr. Sharp may find his cash correct at the end of
the day. Having, as he supposed, discovered an
error, he made the claim at hazard, rather than allow
the proper moment for so doing to pass without it.
A specific error should be reported to the bank in
whose money it is found-either a deficiency or surplus, with equal promptitude. Formerly, it was customary to claim the deficit, but to say nothing of the
excess unless it was called for. If a careless Teller
was one or two hundred dollars "over," he reserved
the amount from his cash, trusting that it would be
claimed by the bank to whom it belonged; and if not
claimed, it made a loose fund without an owner, thus
opening the door of temptation. But the explanation
of such differences was likely to be forthcoming at
any moment within one or six months.
The customary rule has been, for the sending bank
to admit a claim of deficiency on the statement of the
receiving bank, if the Teller's proof for the day calls
for that precise amount. This gives a dishonest Teller
an opportunity to abstract money from the exchanges
of another bank. He has only to insist on the deficit,
and usage gives him the advantage over the opposite
party, who claims with equal obstinacy that the money
was correctly counted by him. Such reclamations
have occasionally excited suspicion, and a small
178 
IMPROVED DISCIPLINE.
excess has been made up in the Exchange, as a bait
to detect where the supposed dishonesty lay. During
the several years, preceding 1855, the number of
city banks increased from twenty-five to more than
fifty. Tellers were appointed Cashiers, and Bookkeepers succeded Tellers.  Many new and inexperienced clerks were employed, and reclamations for
differences became so common, and were occasionally
so large as to be quite serious. Bank officers consulted together, and imposed stricter rules on their
Tellers. It was even suggested to make them personally accountable for differences which they could
not explain. Frequent disputes arose between banks
where the contesting Tellers were equally skillful,
honest, and obstinate. The old plan of exchanges by
Porters, who were out of sight and knowledge for one
or two hours every day with the money in their possession, left the door open for suspicion or dishonesty
among them also.  But the present method of settlement by the Clearing House, together with improved
bank discipline, and the refusal of some banks who
were confident in their own accuracy, to pay claims
unaccompanied by proof, have greatly reduced the
number of such claims; and the wonder now is, that
such a vast amount of business as is transacted by our
city banks, should be carried on with few and unimportant errors.
It was suggested, when the Clearing House was first
organized, that the packets of money should be sealed
up, and the amount indorsed on the outside. This
method has been partially adopted. It relieves the
transit of suspicion, and reduces the question to one
179 
THE DEPOSIT TELLER.
of honesty and accuracy between the exchanging
desks-a very desirable issue. There might yet be
duplicate envelopes and seals, but with such hazards
of detection as few persons would be willing to
encounter.
Differences in the money department of a bank
sometimes spring up very mysteriously. A Porter
occasionally goes round with an inquiry of each:
"How did your cash come out on the 24th?"
several days after that date.
"All right.  Why?"
"Our Receiving Teller is a thousand short, and
can't find it. He has looked everywhere, too."
The next day, a note will be written on each
exchange list: "Please send lists of the 24th."
The Teller makes a general and thorough revision
of all his figures, checking them off by the deposit
tickets, and going over the additions. If he fails to
find it by this method, he sends a personal inquiry to
each dealer in whose deposit it may possibly have
occurred; and still failing, he communicates his misfortune to the Cashier, by whom it is made known to
the directors at their next meeting. The seach is
not given up as hopeless, perhaps for several weeks.
The unfortunate Teller is annoyed by the daily question of one or other officer of the bank, or by a director, or fellow clerk: " Have you found your difference?" It is finally considered as lost, and no more
referred to.
Bank officers are slow to entertain suspicion of a
clerk, unless there is some ground for it in his charac
180
I 
INFLUENCE OF TEE DEPOSIT TELLER.
ter or habits of living, which may then form a subject
of conversation in the Board of Directors..
There is a looseness of practice with some banks
as to the deficit or excess of cash in the daily accounts
of the Tellers. Small sums accrue, which are thrown
together in a box or drawer, and applied to the restoration of small deficits, it not being deemed a matter
of sufficient consequence to be noted on the face of
the day's transactions.   The chief objection to this
is, that it is a departure from exactness of recorda small wedge that might be driven further in.
Nothing short of exactitude should be allowed in
commercial accounts, and especially in a bank.
There should be a ledger account opened with each
Teller, in which the smuplus, if any, should be credited under its actual date, or deficiency charged; and
this might be periodically balanced by a transfer to
Profit and Loss.
The Deposit Teller is, to a great extent, the absolute judge in his department, as to what measure of
confidence may be safely reposed in individual dealers. He has therefore much need to study character.
He must be able to read the manner, the countenance,
the general bearing of men. If he is fully equal to
the position, he is the first person, of clerks and officers, to catch indications of trick or weakness in the
dealer, which are most likely to appear in his deposit.
The Paying Teller, the Book-keepers, or the Officers
of the bank, see only the aggregate sum set down to
his credit; but the Deposit Teller handles every
check and from long experience discriminates between those which are borrowed, and those which 
THE DEPOSIT TELLER
represent the real transactions of trade.   He  frequently asks questions, to satisfy himself of the credibility of checks. If a dealer who is apparently hard
pressed in a tight market, offers unusual checks, he
wants to know who the drawers are, in what business,
and so forth. The bank officers depend on him to
communicate whatever intelligence he receives that
may affect the credit of customers; and not unfrequently consult him in reference to discounts.
" How do the deposits of Sweatem, Sore & Co.,
look now?"
" Rather scaly, sir. Composed of an inferior class
of checks, to a considerable extent."
"Well, you are careful to have them certified?"
"Oh, yes.  I have been obliged to hold them up
pretty closely on that tack, because I see they are
generally in the borrow."
"Deposits not so good as formerly, eh?"
So.  Nothing like it.  Very much larger proportion of accommodation checks. Mr. Sweatem comes
himself, occasionally, and looks annoyed. I can't help
feeling sorry for him; at the same time, it won't do
to take his deposits as we used to."
The Cashier returns to the Directors' room.
"Gentlemen," says he, "I don't feel satisfied to
discount Mr. Sweatem's paper without another name.
From what the Deposit Teller informs me, I think
that he is becoming embarrassed; and his line is
already higher than it ought to be."
"We'll let it slide, then," says the President.
The Deposit Teller causes dealers to be expelled.
182 
OLOSING ACCOUNTS.
Nathaniel Jones has several times deposited kiting
checks, and undertaken some sleight-of-hand tricks
inconsistent with fair and honorable dealing. The
Teller communicates this to the Cashier, and expresses
his opinion, that Nathaniel is an unsafe customer.
"When he comes to make another deposit, send him
to me. Or, stay! Have you examined the Discount
Ledger, to see if he owes us anything?"
"Yes, sir.  His last note runs off in a few days.  I
concluded to get along without betraying any distrust
till that is paid, and then we'd better close him out."
" Very well. Refer him to me at the proper time,
and I'll put him through."
The Teller does so.
"Mr. Jones," says the Cashier, "it appears that
you have deposited kiting checks several times lately,
and practiced some irregularities which conflict with
our rules!"
Mr. Jones attempts an explanation, which proves
altogether unsatisfactory. The Cashier expresses his
regret at feeling compelled to advise him to withdraw his account from the bank.
"I can do that, sir.  It has not been so useful to
me as to make it much of a hardship to break the
connection."
Mr. Jones takes it in dudgeon, nevertheless. His
sensibilities are not so blunt but that he can feel this
sharp sting of discredit. The Cashier informs him,
that'it is both the interest and the duty of the officers
to cultivate a good understanding with their dealers;
but it is, likewise, their interest and duty to get rid
of dangerous accounts. He politely requests him to
183 
THE DEPOSIT TELLER.
draw a check for his balance of deposit, and to leave
his book for settlement.
An account cannot always be closed immediately
when it ceases to be honorable and safe. There are
often unmatured discounts, which might be endangered by unfriendly terms. The officers and clerks
must be patient till these are paid..
The Deposit Teller is much less liable to interruption than the Paying Teller. When the ticket is
properly made out, he receives the deposit, makes the
entries, and returns the book to the dealer, without
speaking a word. A slight nod of recognition is all
that passes between them, and so he may go on by
the hour. At other times, the dealer will stop for
conversation about the business, or on indifferent subjects. One whose office-cash is wrong, oills to ask
if any error appeared in the Teller's accounts of the
day before.
"Yes.  I was a hundred dollars over, and found it
in the addition of your ticket."
He unrols the packet of tickets, shows the error to
the dealer, and either returns the amount or places it
to his credit.
"Don't you keep a copy of your deposit tickets?"
" No."
"Well, you ought to.  It would save time."
" That's true. This mistake has cost me two hours,
and a good deal of anxiety."
Nobody knows better than a bank teller the value
of strict habits in these apparently small points, or is
better qualified to give instruction about them. He
has a decided advantage over a careless and disin
184 
MISTAKES  OF DEALERS.
genuous customer, who puts his inquiry in the shape
of an assertion:
"Your cash must have come out a hundred dollars
over yesterday!"
"Why so?"
"Because I made a mistake in my deposit."
"If you had, I think I would have found it. My
accounts balanced within two cents."
The dealer's ticket is produced, and the Teller shows
the marks of his pencil, by which he distinguishes the
character of every item on it-whether it was a
foreign check, a city bank check, bills, silver, or gold,
and its agreement with the book-entry.
"You had better examine your own figures a little
better before you make such a claim of me!"
If this dealer should come later in the day and
request the Teller to enter his deposit, while, to save
time, he transacted business at another desk, he would
get for answer:
"No, sir.  You must wait here till I count it.  I
will take no such risk from a man who may come
to-morrow and claim to have given me a hundred
dollars more than I have credited to him!"
Honorable dealers, whom the Teller knows to be
exact, will occasionally leave a large amount of
checks and bank bills for him to count at convenience,
and return for their books after an hour, or on the
following day, which saves them the time that would
be lost by falling in at the foot of a long row of depositors and waiting their turn. But the rule, to count
the funds in the presence of the dealer, is generally
adhered to.  It is not unusual to receive packets of
185 
THE DEPOSIT TELLER.
money at the dealer's mark without opening them;
his name being written upon the strap; in which case
he abides by the Teller's count, and makes up any
deficit. Small coin in bags or packets, marked on
the outside, are received without opening, subject to
the examination of the Specie Clerk, or Porter, at his
leisure. Deposits are not unfrequently received with
a ticket only, the dealer's book having been mislaid;
or left with the book-keeper to be balanced. The
omission is supplied by a subsequent entry. There
are many careless dealers and illegible writers among
bank customers, who find it difficult to count money,
or to make the simplest addition correctly.   It is
generally easier for the Teller to rectify their mistakes,
than to require them to do it. Instruction gradually
improves them. But some who blunder from sheer
carelessness get a very short lesson.
" Here.  Take your money and book back.  Go to
that desk, and make out a decent list of the checks in
proper order, and the bank bills separately, and then
I'll receive it-not before."
The Deposit Teller is not liable to be cheated by
forged checks. HIe transacts business with those persons only who have been admitted as dealers by the
bank officers, and who are therefore presumed to be
worthy of some confidence. As they have, mostly,
fixed and known residences, any attempt at ordinary
fraud would return upon them.
Towards the latter part of the day, depositors begin
to crowd in upon each other's heels.  "First come,
186 
DISTRIBUTING MONEY.
first served," is the rule of reception. Each takes his
place in the row, and moves up as those before him
complete their deposits.
The Assi8tant Teller is generally released from his
duties in the department of the Paying Teller, about
noon, from which time forth he is an auxiliary to the
Deposit Teller. Hie begins immediately to assort the
money and checks as they are deposited. There are
near one hundred different kinds to distribute into
upwards of fifty boxes, the country bills falling to
those banks by which they are redeemed. Long
habit gives great facility and rapidity in this process.
The Assistant is awake to the detection of counterfeit
bills, especially in the unopened packets, the examination of which is transferred to him by the Deposit
Teller.  He carries forward the "making up" as fast
as possible, keeping the counted portion under the
slip in each box.
All the checks on foreign banks are handed over
to another clerk, who returns for them a charge-ticket
against the bank to which they are to be remitted for
collection; and these tickets, together with the once
checks, are charged to their respective accounts, making the Second Teller's check-list, of which the item
$64,387.92 in the Proof, on page 164, is an example.
Between two and three o'clock, there is mostly a
great pressure of depositors, with apparent hurry and
confusion. Every thought of the Teller is fixed intently, and he seldom speaks a word, except to give
or ask a necessary explanation of things. On tight
days his vigilance is exerted with an intensity that
187 
THE DEPOSIT TELLER.
soon becomes painful. The character of the deposits
shows him, from day to day, that certain dealers are
" hard up," and he looks suspiciously at their checks.
Mr. Jones has a list amounting to six or seven thousand dollars, in which there is a check of twenty-five
hundred. The Teller deducts it firom the footing,
gives him credit for the balance, and returns it with
a significant glance, which that gentleman does not
wish to have more publicly explained. Mr. Jones'
certifications are proportionably limited at the counter of the Paying Teller.
The last deposit is entered, and the Teller before
closing his little gate, shakes his head ominously, and
not unsympathizingly, at a man who had been standing at the railing for the last hour, holding a check
in his hand. To the inquiry of the Cashier, he answers,:
"i He is a poor shoemaker, with Jacob Screw's check
for ninety dollars, and he is watching for a deposit
that he may draw the money before anybody else
gets it."
" What! Is that our Screw who owns so much real
estate?"
"Yes, sir."
" Well, if he makes a deposit, try and save the poor
man, and then close his account. I'll have no such
scaly fellow in the bank."
The Exchange slips are all counted up like the
example of the Mechanics' Bank, on page 162, and
entered on the Proof. With the Office list, specie,
and checks added, it must agree with the Cash-book.
See examples, page 164.
iss
I 
NOTES CLASSIFIED.
CHAPTER VI.
THE NOTE TELLER.
THE Note Teller (or Third Teller) receives the
money for all promissory notes liquidated at the bank,
and hence his title. This office was formerly included
with the duties of the Deposit Teller, and still remains
so in banks of small business; but such has been the
growth of commerce, and the consequent increase of
financial methods, that the division has been found,
in the larger institutions, both convenient and necessary.
There are two classes of notes: those which are
discounted by the bank, and those which are merely
deposited by the owners, for payment to their credit.
They are called bills discounted, and collection notes.
The book in which the former are entered has the
title of General Accounts, and that appropriated to
the latter is called the Tl/ird Telle's Cash-book, or
Note-book. Both classes of notes are filed in neat
packets, each note numbered on the end to correspond
with the number in the Tickler.*
The Teller takes up the Collection Note Tickler,
* This is an arbitrary term, derived probably from the practice of ticking or
checking off figures in commercial accounts  A particular description, and a page
of the book, is given under the head of the Note department.
189 
THE NOTE TELLER.
and draws out, by the number, the notes due on a
particular day. To be sure that they are the right
ones, he checks them off by the name of the drawer,
and the amount. He enters them on his cash-book
in the alphabetical order of the indorsers' names,
writing the names of the drawers next, and then the
amount, as in the example page. Those which belong
to foreign banks are entered in the book of General
Accounts, which differs from the individual book in
having no extension rulings, as all the postings go
into one ledger.
When all the notes are entered, they are arranged
in the alphabetical order of the names of the drawers,
and placed in a pile on the counter, with a weight
on one end, so that any particular note called for can
be slipped out, leaving the others still in order.
The discounted notes are drawn from the files in
the same manner, and placed alphabetically under
another weight. They are not entered separately on
the cash-book, as they are to be posted in gross to
Bills Discounted; the amount is transferred from the
Tickler page at the close of the day.
The Teller is now prepared to receive payment for
the notes as they may be called for. This preparation
is always kept one day in advance, to avoid confusion
with other duties in the morning.
The bank notices of the discounted notes are filled
up with red ink, and those of the collection notes
with black ink, which indicates at once in which pile
the note is to be found.
The Note Teller reaches his desk by half-past eight
190 
PAGE OF COLMLECTION NOTE-BOOE.
INDOSIR, OR OwB N.        PATmE.                           A TO F.         G To L         M TO R.             To ZE
$. *                                    
W. Stimson......
S. Ackley & Co...
T. Watson.......
E. Sickles.......
Bell & T.........
Corse & Noxon...
T. Thomas.......
S. Wilson........
0. Jones.........
G. Roberts.......
L. Jackson.......
P. Alexander.....
A. Davis.........
R. Still..........
P. Stark & Co....
Johnson & Swift..
Johnson & Swift   2,500...........................................4,140   70
0
~
0
m
0
0
PI
33,120  96    7,145   55
A to F.............................
G to L.............................
M toR.............................
Proof...........................
250
1,242
1,500
4,000
152
1,600
1,050
542
2,000
1,750
5,040
10,001
1,450
375
1,640
2,500
s
........
.......
2,992
.. i, i...
52
protested
........
........
........
........
........
........
... i;s. 
pro t
........
........
........
........
........
........
........
........
1,050
542
........
........
........
........
........
........
........
........
........
........
..i....
,000
1,750
........
........
........
........
........
C.
...
...
...
...
...
...
...
...
.......
.......
.......
.......
.......
.......
.......
.......
.......
. d....
1,041
1,450
.......
.;....
,140
C.
.i.
10
.i..
0
00
75
30
24
42
....
10
70
....
0.
....
85
.i..
0.
....
....
....
....
....
....
C.
....
....
....
. i..
5
30
....
....
....
....
....
....
0.
....
....
....
66
....
.i.
0
hn Adams....
hos. Barton & Co.
Samuel Chambers.
Wm. Jackson....
Lindley & Murray
Parker, Starr & Co.
Richardson & Ott.
Stout, Rose & Co..
ruman & Webb..
Waterman& Co.
oseph Young....
11593 1 0.5
3,750 00
20,632 36
7,145
1,593
3,750
33,120
55
05
00
96
P"
co
P" 
THE NOTE TELLER.
o'clock, or in season to make the entries of remittances received by the morning's mail. The following is the usual form of a letter, with abbreviations:
"PHILADELPHIA BANK.
"PHILADELPHIA, June 18, 1858.
"H. MoRSE, ESQ., Cash'r.
"DEAR SIR-Inclosed, find for our credit:
on Com.
"   Am. Ex.
"   Met.
"   Nat.
"   Phx.
"  Thompson,        3 ds.
Burr & Co.       10 ds.
8 mos.
90 ds.
Alby.            2 mos.
Buffo.           45 ds.
Hartfd.          Sight,
Port.            10 ds.
"Market tight-'no change in rates-business active, &c.
"Yours, resp'y,                 T. BARKER, Cash'r."
The open letter is given to the Teller, who writes
his initial, L., as his receipt for all checks that he
takes from it for credit to the remitting bank. In
like manner, all letters containing cash documents
are passed into his hands, and the proper entries
made from them.
Both the discounted and collection notes are classed
into domestic and foreign. The latter are payable in
various towns and cities over the country, and those
192
Cash'r.,
it
it
it
it
99
L.
L.
L.
L.
L.
L.
$9400.00
10000.00
1575.60
14263-70
1800.00
2740.00
Peters,
Ruffin,
Luther,
Simpson,
Corse & Co.,
Kerr,
P.
P.
P.
P.
P.
P.
P.
P.
Brown,
Green,
Wilson,
White,
Kent,
Mather,
Gray & Co.,
Roberts,
1250.00
3263.20
2249.76
242.90
506.00
1000.00
2600.00
1060.00 
PAYING NOTES.
which belong to the accounts of the Note Teller, are
transferred to him, when paid, from another book.
The payment of notes begins as soon as tfie bank d6ors are open for public business. Generally the
Runner's notice is handed in, with a certified check,
or the exact amount in bank bills. It is one of the
best habits of a Teller's desk to preserve the notices
and memoranda of transactions in the order of their
occurrence, until the cash is proved at the end of the
day. They serve as hints to the memory, and although
apparently trifling, often supply a link in a chain of
investigation. Even if the Teller's cash should prove
on first trial, it is still better to preserve his old file for
several days, until the last probability of error shall
have passed. Each bank has its stamp to imprint on
notes when paid, of which the following is a common
pattern.
The ink being in oil colors, cannot be readily removed from the face of the note, without at the same
time obliterating the writing; and it makes a permanent record to the payer, by which the transaction
may be traced, if necessary, at any subsequent time.
It is also a substitute for the Cashier's indorsement,
to which the payment is generally subject.
Up to one o'clock or later, payments are made
193
'Pi
9 
THE NOTE TELLER.
deliberately, and the Teller mostly has time to enter,
and prepare his notes for the following day. He is
obliged, however, to answer many questions, and to
make examinations, which are not always connected
with his business.
A dissatisfied face fills the gate in the railing:
"Is there a note of J. Freeman, six hundred dollars,
due here to-day?"
"No, sir."
'Won't you look again?  I've been to half the
banks in the city, and can't find it."
"Have you no notice?"
"No, sir. I never get any, and always have to
run about two or three hours to hunt up my notes."
On looking over the Tickler, the Teller discovers
a record of J. Trueman, $600, due three days later,
and on producing the note, Mr. Freeman identifies it
as his own. The signature is carelessly written, and
hence the error in copying it. Besides, there are ten
or a dozen different J. Freemans and J. Truemans in
the directory, so that the chances of the Runner finding the right man were as twenty to one. Mr. Freeman had himself omitted to allow for the three days'
grace, in calculating the maturity of the note, so that
he is entirely the author of his own perplexity. The
Teller advises him to write his name more distinctly,
and to mark his residence under it, by which he will
avoid all trouble in future. If he had applied at a
later hour, when the Teller could not spare the time
to help him out of his trouble, the note would have
been protested.
It is common for tradesmen to count sixty days as
194 
THE WRONG ORDER.
two months, by which they get a wrong date of
maturity for their notes, and often spend hours in
searching for them, without success. Many persons
keep no record of their notes, depending on the bank
to serve them with notices. Some ask for a note or
draft by the name of the indorser or drawer, instead
of the payer, which is always the distinguishing name
in bank records.
The delivery of a bank notice to a wrong person of
the same name, incommodes both. One is obliged to
hunt his note from bank to bank till he finds it, and
the other is disturbed by a call to pay a note that he
doesn't owe. As there is a chance of his having given
one without a record, he hurries off to the bank to
examine the original. On its being shown he says,
angrily:
" Not mine!-I wish you wouldn't be bothering me
with other people's notes. What have I got to do
with that?"
"An unavoidable mistake, sir, by our Runner.  He
can't always hit the right man, when there are a dozen
of the same name in the directory."
The customer thinks more angrily still that he
"ought to hit the right man.  It has cost him an
hour's time and interruption to look up the matter,
and it isn't the first, nor the twentieth wrong notice
that has been served on him by different banks within
a year."
He might save himself from all annoyance of this
kind by the simple rule, which no merchant or tradesman ought to neglect-to record bills payable before
4igning them. No prejudice can then arise from disregarding the mistakes of others.
195 
THE NOTE TELLER.
Mr. Fosforus hands a certified check to the Teller
and wants to know " why he can't have notices sent.
The Runner of any bank ought to be kicked out of
it-head foremost for such willful neglect."
The Teller calls the Runner to explain.  Mr. Fosforus flashes out again in a general abuse of bank
clerks, and "supposes none of'em ever heard of the
old silk house of Fosforus, Pine & Co."
The Runner declares that he delivered the notice
to Mr. Pine in person, as he stood in his store door.
"Has a distinct recollection.  Knows Mr. Pine perfectly well. Been in his store a thousand times.
Bushy hair-wears gold specs.  Must have put the
notice in his pocket instead of giving it to his clerk."
These altercations assume every phase that can be
given by irritable temperaments, and are liberally
interspersed with other accidents of the desk.
A dealer who has collection-paper coming due, and
depends on its payment for his own liquidations,
applies to know what portion of it is paid.
Another inquires whether certain protested paper
with his indorsement has been taken up. Some want
to withdraw paper that will not be paid.
The counting of bank bills received in remittance
from correspondents in the country, is one of the
common occupations of the Note Teller. These are
to be distributed in his drawer, and recounted in the
exchange lists to which they respectively belong.
An Express-agent brings a bag of gold, or a box of
silver, to go to the credit of a country bank.
The President or Cashier comes along and looks
casually at the various books and documents on the
196 
VARIETIES.
Teller's desk, and inquires whether his payments are
going as favorably as usual.
Many merchants write their notes payable at the
bank where they keep their account. The Teller
reserves the presentation of these until the latter part
of the day, when the deposits are made to meet them,
and then sends them by the Porter or other messen ger, to the different banks for certification. When
returned, he stamps the accepted ones paid, and distributes them in his exchange drawer.
The last half-hour of a busy day is full of excitement at the Teller's desk. A line of twenty or more
note-payers is formed along the outside of the counter,
pressing on each other's heels, and impatient that
those before should crowd up. A new face is thrust
into the little railing-gate every second.   Some of
them are in desperate haste, and the moment they
receive their notes, rush off to other banks to make
other payments. The Teller has not time now to
answer questions, or to give explanations of anything.
His attention must not be distracted for an instant
from the process of receiving, counting, and stamping.
After the last payer is dismissed, he closes his gate,
erases from the Cash-book and Discount Tickler the
notes that remain unpaid, and delivers them to a
Notary Public for protest.
The protest consists in presenting the note at the
place of business of the drawer, or wherever  it is
made payable, and demanding the money for it. If
still refused, it is attached to a printed legal form
which recites the facts, and returned to the bank on
the following day. The Notary sends notice of the
197 
THE NOTE TELLER.
protest to all the indorsers, and to the drawer of
drafts, which advises them of their liability for the
payment, in case of continued default of the first
debtor. If the notes should be paid when presented
by the Notary, he returns the money to the bank on
the next morning.
The remaining labor of the Note Teller is to complete his Proof, which is a list precisely similar to
that of the Deposit Teller. His money-drawer is of
the same construction, and his manner of distributing
the bills and checks the same. On the following
morning he transfers the entire receipts of his department to the Deposit Teller, who incorporates them
with his own, in a list called "The Settling Clerk's
Statement," of which an example will be given in the
account of the Clearing House. The receipts of both
desks are then transferred to the Paying Teller, and
all the exchangeable portion thereof sent by him to
the Clearing House.
This is the complete theory of the Cash Department
of the bank. All the receipts pass every day into
the hands of the Paying Teller, leaving no open
account with either of the receiving tellers.
198 
I 
~~~1: ~~1~~, -j~~ ~~~!',,
_'' 3~i
A tight day at the Discount Desk. 
INTEREST AND  DISCOUNT.
CHAAPTER VII.
THE DISCOUNT CLERK
THE profit of the banking business consists, in general terms, of interest on money. Strictly, it is composed of interest, discount, and exchange.
Interest is simply the rent of money. It is payable
at intervals, as agreed on between borrower and
lender, and is not ordinarily considered due until the
principal has been enjoyed.
The difference between interest and discount in
bank practice is, that the former is payable at the
end of a given term, while the latter is reserved from
the principal at the beginning of the term.
When a note is discounted at bank, the interest
for the period which it has to run before maturity is
subtracted immediately, and the merchant receives
credit for that much less than the total. This admits,
to some extent, of compounding interest.
One hundred thousand dollars loaned on mortgage
for six months, would yield at the end of that time,
at the rate of seven per cent, a profit of three thousand five hundred dollars to the lender. The same
amount discounted according to bank usage, would
give the lender the same profit at the beginning of the
term, with which he could discount another note of
thirty-five hundred dollars for the same period. This
199 
THE DISCOUNT CLERK.
would yield an additional profit of one hundred and
twenty-two dollars and fifty cents; and this sum again
loaned for the same time, would give a profit of about
forty-three cents more. The difference between the
two methods of operation on this amount is one hundred and twenty-two dollars and ninety-three cents,
for six months.
The loan on simple interest would give this advantage to the borrower. By the method of discount, it
is reserved to the lender.
A bank of several millions of capital derives a proportionably large gain by the same process; and the
reduction of the discount period from six to two
months, gives the opportunity of compounding the
interest more frequently. The average period in our
city banks is about forty days, which makes nine
compounding terms for the year.
The general practice of Bank Board Directors in
New York is, to meet on two stated days of the week,
to act on the notes offered for discount. These are
called Discount ]Days. Those immediately preceding are called Offering Days, because the notes are
then sent in for preliminary record and examination.
The term Offering is applied either to a single note,
or to the aggregate amount offered at a time. When
bank officers meet, and wish to ascertain the general
current of the market, they ask: "How are your
offerings?" The same expression is used in the newspaper reports to indicate the activity of demand for
money  "The offerings at bank are heavy-or light."
In a bank of the first class, the number of dealers
200 
PREPARATION OF NOTES.
who apply for discounts on the stated days is from
seventy-five to one hundred. Some offer a single
note, and others a dozen. They are usually enclosed
in a letter sheet, with a brief description, embracing
drawer, date, and amount, with or without special
communication.
FORMS OF LETTERS ENCLOSING OFFERINGS FOR DISCOUNT.
NEW YORE, June 18, 1857.
THOS. BROWN, Esq., Cash'r:
DEAR SIR-We offer for discount notes enclosed, as
follows:
6 mos.  $1245.60
do.    1400.00
4 mos.   2340.75
$4986.35
JOHN JONES & Co.
We beg to say that our account will show a fair
running balance, and that our discount line has been
materially reduced within the last month.
J. J. & Co.
NEW YORK, June 18, 1857.
THos. BROWN, Esq., Cash'r:
DEAR SiR-Enclosed, find our note at sixty days,
for $10,000, with fifteen of our business notes as collateral. By discounting the same, you will oblige,
Yrs., Resp'y.               COBB & BRO.
NEW YORK, June 18, 1857.
TO PRES., CASH., AND DIRECTORS, COMMERCIAL BANE:
GENTN-Pleas discount My note herein, Jno. Jones,
$275, it is a one and No mistake.
Obt.               P. STANLEY.
9*
201
Yours, respectf'y, 
THE DISCOUNT CILRK.
is
th
do
is
or
fy
lk
ge
en
er
m.
ce
Yours, respectf'y,     SERGEANT, WILKES & CO.
NEW YORK, June 18, 1857.
CASHiER COmmERCIEA BANEK:
Put to my credit $1800 as enclosed.
Yrs., &c.           M. WESSELLS.
The Discount Clerk records them in the Offering
Book, in the alphabetical order of the dealers' names,
and numbered to correspond with the margin. In
the first column (see page 203), are the names of the
offerers, followed by their average balance of deposits,
the amount which they have already under discount,
the names of indorsers, if any, or statement of collateral securities, the names of the payers, the time to
maturity, and lastly the amount. This record presents an abstract of the whole Offering, with the state
of each account, enabling the directors to judge of its
value and desert. The footing of the column shows
the total amount offered.
202 
P.A G' O F F  R 1 MT 
Av'P.AGI' AMOUNT
OFFBRIBD IY    BALANOF. <E  UNDER       INDORSZB.             PA:
BLN. DISCOUNT.
1 Jseh Aam      1200       4,00............... -timson..2 Aske  & Phyick....2,200  6,000. Hicks..............S. Acey&C
Collaterals with  their
T. Watson..............
R. Owen................
.......................
.........................
Enoch Lewis...........
..........................
Cyrus Newlin...........
25 shares bank stock as
15 business notes, as per
Amount accept
I E
61
7 
8 IT
91
LOJ
LI
L2'Z
8
4,500
6 000
7'000
1'500
'800
1,200
2,000
2,800
none
2,400
8,000
5,000
1,200
2,200
4,000
250
none
600
~verdr'wn
900
1,500
6 000
1'400
4,500
roseph Adams........
kskew & Physick.....
mo. Bullock & Co....
]obb & Brother.......
?oster &  Sons........
[hos. Larkin.........
ditchell & Clark.....
roseph Scott..........
['hempson & Co......
rames Wilson.........
~obert Young........
~abriskie & Co..
W.  Stimson...
S. Ackley  & Cc
own note.....
O. Jones & So{
Peter Smith...
Jesse Gauze..,
L. Jackson....
Robt. Hunard.
D. Thorn......
S. Griscom....
collateral to his
letter, amounti:
I
I 
THE DISCOUINT CLERK.
The form of the Offering Book is not the same in
all banks. Some dispense with the balance column,
and some add another, showing the liquidations before
the next discount day. Others enter loans also on
this book, to the credit of the borrower, on the theory
that everything in the nature of a discount ought to
be shown in one consecutive history. The Directors
have, then, before them when they meet, a statement
of every transaction that has taken place, without the
necessity of referring to other books.
The old-fashioned Offering Book was a mere blotter
of abbreviated entries, from which the accepted paper
was transcribed either to a General Register, and from
that to the Discount Books, or direct to the latter.
This method is still in use, and in banks which have
much paper of an inferior class offered, the transcription is necessary to a neat record.
After preparing the Offering Book, the clerk refolds
the envelopes, so that the notes can be conveniently
examined, without being separated therefrom.
The preparation of these details occupies considerable time; and therefore it is required that the offerings be brought in before two o'clock. They are
dropped in a box at the desk of the Discount Clerk.
Dealers seldom appreciate the value of time to
bank clerks.  They are apt to say: " That's what he
was put there for-to wait on customers. Hie gets a
good salary-who cares if it is after two?"
An addition to the offerings after they are partly
recorded deranges their alphabetical order-which
embarrasses every subsequent use of the book in
transcribing or posting. The Ledger accounts are
204 
DISCOUNT BOOKS.
opened in the same order, and not only the facility,
but the accuracy of the system is greatly aided by its
preservation. Each dealer should reflect how much
easier it is for him to observe a stated rule, than it
is for the clerk to overcome the inconvenience that
results from the concentration of many irregularities
on one point.
The Offering Book and the packet of notes are
returned to the Discount Clerk, after being acted
upon by the Board of Directors. He finds the letter
A (accepted), scored opposite to each offering that is
to be discounted, and the letter R (rejected), opposite
those which are refused. Any that are otherwise
disposed of, are marked accordingly.
The record of the accepted paper is now transferred
to Discount Books, of which there is one for each
dealer's ledger, embracing the same letters of the
alphabet. The discount and net proceeds of the notes
are extended in the additional columns on the Offering
Book, of which the footings must agree with the
aggregate footings of the Discount Books. From
these latter the credits are posted to the accounts in
the ledgers.
Another plan is, to transfer the discounted paper
from the Offering Book to a Register, whence it is
posted to the personal accounts.
There are also Discount Ledgers, which are opened
in the same manner as the personal ledgers, but embrace the accounts of those dealers only who get notes
discounted. They show each note that has been discounted for any dealer, the date of its discount, the
indorser or security liable for it, if any, and the time
205 
THE DISCOUNT CLER.
of its maturity. The whole is kept footed in pencil,
being subject to frequent change by the payment of
notes as they mature, and the addition of new entries.
They exhibit also the liability of each dealer as indorser for others on discounted paper; this being one of
the most important points to guard in the banking
business. If any two dealers should exchange notes
or indorsements, and put them in the same bank,
these books would expose the fact. They are placed
on the Directors' table on discount days for reference,
as may be required.
It is from these auxiliary Ledgers that the clerk
ascertains the amount of discounts set down in the
Offering Book. He keeps daily supervision over
them, cancelling the paid notes as fast as they mature,
by a ruled line across the figures, without obliterating
the record.
The notes are numbered on the back and end
with red ink, and filed in neat packets. They are
also transcribed on the Discount Ticklers, each under
the date of its maturity, with the number, name of
the payer, and amount. The Ticklers continue to
receive accessions by new discounts, up to within a
few days of the transpiring date. They are kept
added in pencil until that time, when they are finally
closed in ink.
In some banks, the notes are filed without numbering, those of each day being kept in a separate packet,
and the packets in the consecutive order of the dates.
This plan is thought to be more convenient where the
numb)er of notes is very large, and it has the advantage of easier reference to all that mature on any sin
206 
CUSTODY OF NOTES.
gle day. It also brings the department more within
the reach of an extempore examination without the
aid of the clerk himself.
The Discount Clerk makes a proof of his books at
the end of each month. The addition of his Ticklers
ought to show the exact amount of bills discounted,
corresponding with the balance of this account on
the General Ledger. The final and conclusive test
is, by checking off the Ticklers with the notes, which
proves them to be in actual possession of the bank.
The Discount Clerk holds in his immediate charge
the greater part of the bills receivable, in which the
means of the bank are invested. He deposits the
trunk containing them in the vault at the close of
the day, and resumes the personal care of it on the
next morning. The officers may change or regulate
this custody, but they do not interfere with it so
as to impair his direct responsibility for its contents. If they wish to examine particular notes,
they do so in his presence, or require him to produce them. Their own meddling, or that of other
clerks, would justify the defence that he is no more
accountable than they, if any should be lost or
stolen; and it might exonerate his bondsmen from
their liability.
Next to the officers, the Discount Clerk shares
most in personal intercourse with the customers
of the bank; and in some respects, on terms more
favorable to the observation of character, on which
so much depends in the business. They apply to him
after the adjournment of the Board meetings to know
how their Offerings have been disposed of, and he
207 
THE DISCOUNT CLERK.
witnesses their extemporaneous expressions of anxiety
and disappointment when they are rejected. He is
the stated medium  of communication between the
officers and the dealers respecting the business of his
desk, and in the majority of cases there is no need of
any other. In a season of severe pressure, when personal solicitation with the officers becomes common,
a half confidential tone is maintained with the clerk.
He is "near the throne," and if not specially instructed, is supposed to have more or less influence,
and to be capable of giving some useful hints.
The stated meetings of the Board usually begin at
nine o'clock, A. M., and occupy from one to two
hours. The customers, or their clerks, then call to
know the result of their applications. When the
market is very stringent, they not unfrequently throng
at the desk before the adjournment, taking their
places in succession to push forward as soon as the
books and notes are given to the clerk. The letter A
enables him to answer, either by an affirmative nod,
or the monosyllable "done," and the letter R, by
reference to the number, to return the rejected notes
in the original envelop to the owner.
The first crowd of the morning is composed of the
most anxious dealers. It is important for them to
know early, whether they must seek elsewhere the
bread of commercial life for the day. They are followed by the less needy, or the more deliberate, who
know the value of "deportment" ill a tight market.
" Notes done, sir?" is asked by  the applicants,
either verbally, or in pantomime.
Tile affirmative causes a bright gleam of sunshine
208  
~                i;;~MLii~ tic
Ii l
Consolation. Better fare  than at the Discount Board,
Consolation.  Better fare than at the Discount Board.  
DISAPPOINTED DEALERS.
in the face ot the questioner. But a negative to the
next comer substitutes a scowl of disappointment.
"What is the reason of that, sir?  Has the baun
stopped discounting?"
"Market tightened up, sir. Deposits down. Offerings very heavy."
The customer departs with an audible growl of
indignation at what he conceives to be "a denial of
rights."
Number Twenty.  "Good  morning, Mr. Smith,
what have you to say to me?"
" Nothing very encouraging, sir. The Board discounted one of your notes."
"What-only one out of ten?"
"That's all. Very good proportion, I do assure
you."
"A  single thousand!  And I want five to-day!
Wliere's the President?"
"In his room, sir.  But I don't believe you'll gain
anything by talking to him. Our receipts are very
small j ust now, and the Porter brings bad news from
the Clearing House."
Number Twenty-one fills the little gate in the railing with a grum and threatening visage, but does not
speak. The clerk knows him as a frequent applicant,
and seldom a fortunate one, the character of his
account, as well as of his paper, being inferior, and
presenting no claims worthy of consideration by the
Directors.  He  receives back his offering without
remark, and departs in sullen silence.
209 
THE DISCOUNT CLERK.
Nunibe' Twenty-two.  "Well, Smith, don't tell me
my notes ain't done?"
"Wouldn't if I could help it, sir. Board did
mighty little this morning."
"Hang the Board! Isn't there any explanation 
Dont they know the paper?  Is it too long?"
"No  explanation given to me.   Bank's short.
Can't help it. Majority in the same boat."
Twenty-two leaves an oath behind him.
Vitnber Twenty-three.  "My paper done?"
No, sir.
"What's in the wind now?"
"Market tightened up."
"Don't they do any thing?"
"Not much."
"Well, they do some! Why the devil can't they
distribute the thing impartially?"
"I s'pose they try to do it; but it's not an easy
matter to satisfy an offering of four hundred thousand
dollars with about one fourth of that amount of
means."
Number Twenty-four is a man in his shirt-sleevesa carman or laborer, with a small debt on his house
to discharge.
"Mr. Clerk, will you be good enough to hand me
the proceeds of that note?"
"What name, sir?"
"Axletree is my name."
"Mr. Axletree, I am sorry to return your note.
The Board couldn't discount it."
210 
~~~~~~                            ~~~~~\~~~
Outside.  Two per Cent. a Month.  
MR. AXLETREE.
"What!  Can't give me the money for a note of
five hundred dollars?"
The explanations of the clerk are nothing to him.
He sees only a bank with three millions of capital on
one hand, and his trifling call for five hundred dollars
on the other.
" Now, what shall I do?" he asks.  " I have no
other place to get this money. I've kept an account
in this bank for five years and never asked a favor;
and now I want this little accommodation, and can't
get it! Do you call that fair?"'
The Discount Clerk steps over to the Book-keeper's
desk and examines Mr. Axletree's account. He finds
that his average balance for several years has seldom
fallen below three or four hundred dollars. On communicating this fact to the Cashier, Mr. Axletree is
recalled, and the merits of his application appearing
sound, the note is passed to his credit.
Attention to these small and comparatively obscure
accounts is one of the best traits in a bank officer or
clerk. They are liable to be overlooked in the pressure and importunity of more important business.
"'M[r. Gray sent me to ask if his notes are discounted."
" No, my lad, they're not. Tell Mr. Gray that his
paper is too long." At the same time, the Clerk
hands back the offering, which the boy declines, saying that "Mr. Gray told him to leave it, and he
would see the President about it.. 
Three out of four of all the applicants are disap
211 
THE DISCOUNT CLERK.
pointed. They leave the bank, knitting their brows
into frowns and nervous distortions. Some mutter
oaths of indignation at "such infamous treatment."
Boys express themselves indifferently by a suppressed
whistle, or with a "Pooh! governor won't relish
that!"
The last thought that enters the mind of any, is,
that there are twenty applicants for every thousand
dollars that the bank has to dispense.
XNumber Thirty gets an affirmative nod from the
Discount Clerk; and the smile of satisfaction with
which he leaves the bank is like a sunbeam in the
midst of winter clouds.  Ile is such a profitable
customer, keeping a large balance on deposit, while
asking for comparatively moderate accommodations,
that the Directors dare not refuse him.
Number Thirty-one.-" What luck!"
"If you'll make a note for twenty-five hundred
dollars instead of five thousand, and put it forty-five
days instead of ninety, it'll go through."
"The deuce! That will only put me to the necessity of coming again next week; and that's what I
wanted to avoid."
"You are very fortunate to get any, I assure you.
The great majority are disappointed entirely."
"Well, I reckon a fellow must be satisfied with
half a loaf."
These examples of conversation and incident are
sufficient to give a general notion of the daily experience of the Discount Clerk.
212 
f     I1 l     I1;!
!~ ~ ~~~~~~~~~i;l\\~~\>>~~~~~~;:~~~ \\;..     " 
~~% i;%                                        I~~\~~
~\\~~~~~~~~~~~~~~~~~~~~~ \\~
\~~~~~~>~~~  4~    1;~~~~~~~~~~~~~~~~~~~
_  ~   ~~~~~~~~~~~i<       ~~~~~~~~~~~~~~ F
14~;~~ ~       ~~~~~~~~~~~~~ _  _
~y~~
Inside. The Consequences of Two per Cent. a Month.
,I',
.,i\,
li,11 ""!\
i i' I!,, 
14. 
A FRAUD.
The Discount Clerk handles no money. He has
no occasion to touch a bank bill or a piece of coin.
His business is exclusively with the bills receivable,
and with  the accounts.   The only most obvious
method by which he could perpetrate a fraud, would
be, by abstracting notes, and negotiating them through
other parties-an operation in which discovery would
threaten him at every turn. There was an instance in
the old Bank of the United States, of a Clerk abstracting notes after they were discounted and filed away.
He selected those which in his judgment would
be least likely to be called for, or referred to, before
maturity, and by the help of a friend outside of the
bank, hypothecated them in an obscure channel, for a
loan of money.   When  they were near due, he
selected others of longer date to substitute for them,
and restored them to their proper place in the files.
The trick was discovered by the maker of one of the
hypothecated notes calling at the bank to pay it
before its maturity. In banks of effective discipline,
such abstraction of paper could not long be concealed.
Discounted notes, which are payable in other cities,
are transmitted by mail; and when advice of their
payment is received, a Journal entry is made, charging the collecting bank, and crediting bills discounted,
in the usual commercial form. A remittance for the
balance liquidates the account.
The same end is answered equally well by other
methods of entry.
213 
THE NOTE DEARTMENT.
CHAPTER vm.
TRE NOTE DEPARTMENT.
COmmRCE, in its broadest sense, is carried on by
promissory notes. The multiplication of this form of
credit is beyond all control. It loads every department of trade, from pins and needles up to cargoes of
grain and cotton.  It represents ships, railroads,
manufactories, public and private contracts.   The
"pass-book" of the housekeeper is balanced by a
note at three or six months. The retailer purchases
goods of the jobber, and gives his note in settlement.
The jobber gives notes to the wholesale merchant,
and he in turn to the manufacturer or producer. The
manufacturer gives notes for the raw material. The
factor is already under acceptance to the grower, and
the grower's notes are given to the banks long before
his "fields are white unto harvest."  The sugar that
reaches our wharves from Havanna or New Orleans
has two or three sets of notes predicated on it before
the first hogshead is discharged from the vessel; and
it continues to accumulate notes as it passes through
the hands of the refiner into those of the grocer.
Even after it has been swallowed in confections, its
notes are still floating, unliquidated, in the market.
The market carries millions of notes for wht is
already consumed, and millions more for what is not
214 
RECEIVING NOTES FOR COLLECTION.
yet sprouted in the furrow. The United States Government has lately settled thirty millions of debt by
promissory notes, and is rapidly creating the necessity for a further indefinite issue.
The bank is the principal channel of liquidation for
all this mass of notes. Those which are not discounted are first entered on the Dealers' Book by
the clerk, after careful examination. Informality of
indorsement, obscurity of date, or other accident,
might make the bank liable to the holder, although
it is merely the collecting agent. It is the duty of
the Clerk to scrutinize every note narrowly before
entering it, and especially to see that the owner is the
last indorselr, that it may not be placed to a wrong
credit, when due. Banks generally will not receive
for collection notes which have been disfigured, or
changed after issue by the drawer; nor will they
receive them from strangers on any terms, even if
they are correctly drawn in every respect.
Promissory Notes are commercial currency. They
are transferred, by indorsement, from one merchant to
another, in settlement of debts, the same as bank bills:
differing only in this-that they mature at a stated
subsequent time, and that the other indorsers are
liable to the owner, in case of non-payment by the
drawer. An owner may transfer a note to another,
by special agreement that he is to be held exempt
from such liability. This is expressed in the indorsement by the words "without recourse," above the
name of the exempt indorser.
215
0 
THE NOTE DEPARTMENT.
The Collection Register is a book of record ruled
in columns, so as to describe the note in a single line.
See form on page 217.
The Clerk marks on each note the date of its
maturity. If he should mark it one day too late, and
the drawer fail to pay, the bank would be liable to
the owner, because the notice of protest to the indorsers would be out of legal time. Hence the importance of accuracy in this record. A careful clerk is
not satisfied without such revision of his "timing"
of notes as to give every possible guarantee against
error.
Tricky dealers have been known to mark a wrong
date of maturity on notes, for the purpose of "catching" the bank in this liability. The bank could not
escape by showing the wrong date to be that of the
dealer, unless it could prove the intent. It is bound
to be exact in its own business, and can urge no legal
excuse for adopting the errors of others.
After the notes are "timed," they are numbered
consecutively on the back and end, and recorded in
the Register, from which they are copied into the
Ticklers.
A Tickler is a book which exhibits, when complete,
all the notes maturing within the month, each under
its proper date of payment. Those which fall due on
the first, are transcribed under that date; and those
that fall due on the second, under that; and so on,
until the book presents a consecutive date record for
the month. There are twelve Ticklers for each year,
and two sets-one for the collection, and one for the
discounted notes. They are designated by the name
216
0 
}P:OP     S   OF  IOT'.: -C
DO3ESTIO NOTE REGISTER.
R             Wlqz] O L   INDOERSZB.      PAYL.    DAT  AND TIK.
June  18 Peter Scriber.....N. Dixon.........J. Holly & Co..... April -4 mo's.. Au
John Adams...... do......... S.Upton......... Mar. 8-6 mo's.. Sel
July  14 William Wilson....................Alexander Jones.. Jan. 208 mo's.. Sel
FOREIGN NOTE REGISTER.
INDOBSI,.       PAYEL    DATE AND TM WD.
June  20 Jno. Crane & Co...
24 William Wilson...
' E. Lewis & Co.....
BenJ'n Hicks......
" Gray & Thompson
July  12 Jno. Crane &  Co...
" E. Brown.........
HI. Wagstaff.......
Jno. Stacy........
E..............
Sam'l Snow........
E.o Bo...............
I
Hull & Bro........
O. Roberts........
Wheeler & Son...
Frost & Co........
S. Sweet..........
Hull & Bro........
W. Torry.........
April 4-4 mo's..
Jan. 1- mo'$..
Feb. 6- mo's..
June  -   mo's..
May 4-4 mo's..
May  24 mo's..
June 104 me's.
Aug
Sep.
Oct.
Jul3
Oep.
0ct. 
THE NOTE DEPARTMENT.
of the month-the January Tickler, the February
Tickler, and so forth. There is an auxiliary set in the
Discount Department, for the foreign notes.
:P A GlE O F T I C IM M. X: R -
MONDAY, June 1st, 1857.
$      C
240
1,650
1,000
500
5,240
1,320
750
2,250
110
48
10,050
W. Stimson..................................
S. Ackley & Co................................
T. Watson.....................Merchants' Bank..
E. Sickles....................................
Bell & T.......................................
Corse & N.................... Merchants' Bank..
T. Thomas....................................
S. Wilson............... 14 Pearl street.... 
O. Jones......................Leather Bank....
G. Roberts....................................
L. Jackson...................Notice to L. J....
One of the chiefuses of the Tickler is, to facilitate
the drawing of notes from the packages, as the days
of maturity come round. The record consists merely
of the number of the note, the name of the payer,
and the amount. The residence of parties whose
names are not in the directory is given, to aid the
Runner in serving notices. When notes are made
payable at banks, that also is set down in the Tickler,
to indicate that notice to the drawers is not necessary.
Application is frequent for notes due at a future
day, out of the regular routine of business, either for
payment, examination of indorsements, or other purpose. Reference to the Tickler gives the number,
and they can be produced in a second.
It is a general rule of banks, that collection-notes
should be deposited not later than ten days or a fort.
218
. C.
00
15
00
20
75
1 00
00
00
16
75
14
53
62
63
110
240
241
245
246
400
570
860 
CUOTODY OF NOTES.
night before their maturity, that there may be ample
time to pass them through the various books, and to
serve seasonable notice on the payers. But this regulation cannot be strictly enforced, since merchants are
in constant receipt "of short-time drafts.  Their collection-paper is often hypothecated for temporary
loans, or attached as collateral to discounted paper;
and various other circumstances interfere with their
observance of the rule. When notes are deposited
too near their maturity to admit of notice being served
without unreasonable trespass on the time of the
Runner, it is either dispensed with, or the depositor
himself serves it.
The Clerk of this department is responsible for the
safe keeping and production, at an instant's call, of
any note or draft deposited in the bank. If payable
in the city, he can exhibit it; if in the country, he
can show the course of transmission by which it has
passed out of his custody.
The Foreign Note Register is a book which differs
from the Domestic Register, only in having one
additional column for the name of the place where
the note is payable, and another for that of the bank,
to which it is sent for collection (p. 217).
It is the practice of the banks in New York to
make their collections for a district of country
through some one bank, which has an established
correspondence with all parts of it. For instance, a
bank in Albany or Troy will collect notes in all the
adjacent counties more promptly and cheaply than it
219 
THE NOTE DEPARENT.
could be done by separate correspondence of the city
bank with each town.
On this plan the Clerk opens another book, and
records on a page appropriated to the Bank of Albany,
all notes that fall within that collection circuit. He
writes or stamps on the back of each, below all other
indorsements:
PAY BANK OF ATLy.
Under this the Cashier signs his name; and the
letter enclosing the notes, after being copied, is sent
to its address by mail.
220 
TH1  BOOK-   PER.
CHAPTER IX.
THE BOOK - KEEPER.
AT first sight, nothing is more simple than the keeping of a bank-ledger of personal accounts. All that
is to be done is, to post the deposits of a dealer to his
credit, and the checks to his debit. His Bank-book
must be "written up" to correspond with the Ledger,
and balanced from time to time, as a mutual test
between them.
The first requisite of a bank Book-keeper is, a fair
style of writing. It is more essential to write plainly
than elegantly. To a bank officer, the flourishes and
fine hair-strokes of an accomplished penman are like
foppery. He wants to see full, strong figures, that
can be distinguished from each other at a glance:
add to this, that they must be set down in columnsunits under units, and tens under tens-and the most
important requisitions for bank book-keeping are
answered. The Clerk must be ready at addition and
subtraction, with a habit of prompt and accurate
transcription.
Moderate as these requirements are, our city banks
have frequent cause to complain of inefficiency in
their book-keepers. Ledgers are not regularly balanced. They gradually fall behind, and it is extremely difficult to bring them up again; for the accu
221 
T[E BOOK-KEEPER.
mulation of figures never ceases. An account cannot
be stopped short, subject to the convenience or tardiness of the Clerk. The whole Ledger, with its five
hundred accounts, has hundreds of postings added to
it every day. The reason why so many Book-keepers
fail, is not for want of capacity, but because of poor
system, or no system at all.
The number of Book-keepers in a bank is in proportion with the number of its dealers. Three or
four hundred accounts may be kept in a single ledger;
but where there are twelve or fifteen hundred, as in
the Metropolitan Bank, and others of the same rank,
four ledgers are necessary, and a clerk to each. The
dealers are classed alphabetically. All names beginning with the letters from A to F are assigned to the
first ledger; those from G to L, to the second; those
from M to R, to the third, and those from S to Z, to
the fourth.
A ledger of the usual size contains twelve hundred
pages. On the supposition that four hundred accounts
are to be opened in it, it would be very easy to
arrange them alphabetically, assigning three pages to
each. But the result of this would be, total disorder,
after the ledger has been in use a short time. Some
accounts will show but one deposit and three or four
checks in a week, while others have twice that many
for every day-which would soon make it necessary
to transfer them from page to page, and so destroy
the arrangement. There is another difficulty to be
provided against: when a ledger is begun in a new
business, the clerk has no prepared list of names in
an index to apportion; these will come in the pro
222 
THE BOOK-KEEPER.
gress of the business. To meet this case, and also the
fact that the letters of the alphabet are not equally
fruitful in proper names, a complete system of apportionment has been devised, which shows, that in a
ledger of 1200 pages, 68 should be appropriated to
names beginning with A, 88 to B, 136 to C, 52 to D,
only 8 to Q, 6 to Y, and but one to the letter X;
that is to say, that the number of proper names
beginning with C is about double the number beginning with A, and seventeen times greater than those
with Q. This apportionment is based on a careful
examination of directories, encyclopedias, dictionaries,
library catalogues, gazetteers, and other alphabetical
works; and although it embraces the names of objects
and places, it may be assumed as correct for all practical uses in book-keeping.
The "vowel order" is generally adopted in the distribution of accounts, and the apportionment under
this also has been.determined with great accuracy.
For example, the 136 pages in C must be appropriated as follows:
To     Ca,   Ce,  Ci,  Co,   Cu,
48,   12,  12,   48,   12,
This is the order in which every ledger should be
opened, to obtain the full aid of classification to the
memory. It gives the following result:
i)
Chisholm,
Crisp,
Clifford,
223
CY)
4, pages.
0,
Corwin,
CroweR,
Corning,
Y)
Clymer,
Cryder,
Clyde.
a,
Charlton,
Candy,
Carter,
el
Cresson,
Crewel,
Creamer,
u
Cruden,
Church,
Cludius, 
THE BOOK-KEEPER.
If all the accounts in all the ledgers of a bank are
opened in this order, the economy of time must be
very sensibly felt in conducting the business; and it
is not too much to say, that neglect of such arrangement will inevitably expose it to errors, inaccuracies,
and greater expenses.
The continual changes arising from the discontinuance of old, and the accession of new accounts,
make it impossible to preserve a stricter alphabetical
order than is obtained by following the inflecting
vowel.
The number of blank pages to be left for each
account depends on the frequency of transactions, and
must be left to the judgment of the Book-keeper.
The time occupied in laying out his plans, and reducing everything to a regular system, will return to him
a thousand-fold in the general economy of his work.
The Certification Check-list, ou page 115, being
the same in its rulings and forms of entry, may represent equally well the Second Teller's Cash-book, supposing the entries to be deposits instead of checks.
The Book-keeper who has the Ledger from S to Z,
extends into his column the deposits of Slater & Co.,
E. West & Co., and Wood & Carpenter; and in like
manner, each other Book-keeper makes the extensions
which belong to his column, and the amounts are
posted to the credit of the depositors in the Ledgers.
At the close of the day, the footings of the several
columns are brought together, as in the example, and
their sum must agree with the addition of the main
column. This process of receiving and posting goes
224 
B A. A NCIOG ACCOUNTS.
on with short intervals until three o'clock, the alter nate Cash-book being substituted on the Teller's desk,
while the Book-keepers use the other. In the same
way precisely the proceeds of collection notes are
posted to the Ledger. See page 191.
It appears by their Bank-book, on page 161, that
Slater & Co. have deposited at various dates the
sums that are attested by the initial of the Teller's
name, A. They have received credit also for bills
discounted, $22,363.18, and for the notes of Jones, and
Brown, from the former of which $12.50 is deducted
for exchange or expenses of collection. This is all
the variety there is in bank credits. It exemplifies
all the entries that are made on every dealer's book
to his credit. The checks drawn by Slater & Co.,
from June 19 to July 16, are charged on the opposite
page, and the balance $18,819.84 is carried down as
a fnew starting-point in their dealings, corresponding
with the statement of their account in the Ledger.
The transposition of the columns of figures, and of
the heading of the Bank-book, so as to read "Slater
& Co. in a/c with the Commercial Bank," would
make an exact copy of the account of Slater & Co., as
it appears in the Ledger.
All checks paid by the Paying Teller, and all that
are received in deposit, or for notes at the desks of the
Second and Third Tellers, are cancelled by them,
and handed over to the Check Clerk, by whom they
are recorded in books, called Check-lists, from which
they are posted to their proper ledger accounts by the
Book-keepers. The cancelling of checks consists in
passing them on to a wire over a blade, which cuts
10*
- 225 
THE BOOK-KEElPE]R.
them, so that if they should be lost and presented a
second time, they would be known as old checks
already paid.  Each Teller has a distinctive cancelling cut, which at any future time indicates the desk
at which the check was paid.
Many dealers draw twenty or thirty checks almost
every day. These are entered singly on the Checklist in an inner column, extended in one sum into a
main column, and posted to the Ledger in one sum,
to economize the page. When the Book-keeper
"writes up" a dealer's account, he copies the amount
of each check from the list into his Bank-book, and
if no mistake has been made, the book-balance and
the ledger-balance will agree. Then he compares the
cancelled checks with the record on the dealer's book,
and thus arrives at a double test of the accuracy of
the account.
Connected with each Book-keeper's desk is- a
drawer, divided into boxes like the money-drawers,
in which the checks are kept distributed, those of
each dealer separate from all others. If a dealer
should come in at any moment, in the apprehension
that a forged check had been paid against his account,
the Book-keeper can produce all his checks, instantly,
for examination.
It is of the first importance, that the Book-keeper
post the deposits and checks (more particularly the
latter) as fast as they come in; and keep both sides
of every account in the Ledger added up in pencil,
that, if he should be absent, either of the Tellers may
ascertain at a glance whether a check is good. If
226 
THE BOOK-]EEPERS MEMORY.
present, he can answer from memory as to the condition of the active accounts. It is not necessary that
he shall always know the exact balance of an account,
to tell whether checks against it may be safely paid
or certified. Long familiarity with it enables him to
answer on the instant, without interrupting even the
additions in which he may be engaged. The Paying
Teller asks:
"Is Edward Wilson's account good for ten thousand dollars?"
"Yes-for twenty on top of it."
" Can I certify Peter Smith's check for five hundred dolls?"
" No-not for five hundred cents!"
"'How does Robert Taylor's account stand?"
" He has about sixteen hundred dollars here."
The Book-keeper may not have seen either of these
accounts for a week; but he knows them by heart.
One of the officers requests him to open the Ledger
to John Brown's page.
"What sort of an account does he keep?"
"Very poor-a mere tax on the bank."
"fHow's that a He seems to make large deposits!"
"Yes, sir; but the Exchange checks consume them
every morning, almost to the last dollar."
"Does he ever overdraw?"
" No, sir; but always lean."
John Brown does not succeed in getting the loan
he applied for. Neither does he know how com
227
I 
ITE BOOK-PEER.
pletely the Book-keeper has destroyed his chances fox
the future.
Many accounts appear on the Ledger with a running balance of thousands of dollars, when, in fact,
nearly every thing is drawn out by the Exchange
checks-a very important point to be watched by the
Book-keeper. In stating balances, the Exchange
checks are always deducted from the apparent balance at the close of the previous day.  Thus, if John
Brown had a balance of twelve thousand dollars on
the Ledger at night, and his checks for eleven thousand five hundred dollars should come in through the
Clearing House on the next morning, his balance of
account would be reported at five hundred dollars.
The statement of balances made on the Offering
Book is generally an average for the previous month.
Heavy deposits, which dealers sometimes borrow to
swell their account on the day or two before offering
notes for discount, go for nothing.
The freedom of the Book-keeper's accounts from
all complexity leaves him without excuse for errors.
He has no original entries to make, and there is no
variety of transactions, as in mercantile affairs. There
are no different currencies, and there is no mixing of
work between different ledgers. Each Book-keeper
has exclusive control of his own, with such division
of labor and susceptibility of proof, at every step, as
ought to assure positive correctness. The officers,
therefore, hold him to very strict account. Their
presumption is, that errors can come about only by
inattention-not by want of capacity; and the con
228 
ALEX,ANDER JONES.
sequences of inattention may be too serious to admit
that as an excuse. For example: the posting of
John Brown's deposit of one thousand dollars to the
credit of Alexander Jones, would give the latter a
chance to draw it out; and Brown may not want to
use any money for a month. His check then appears
as an overdraft, and the Book-keeper sends him a
note:
" COMMERcIAL BANX, June 18th, 1857.
"JoHN BROWN, Esq.:
"Your account appears overdrawn $1,000. Please
deposit that amount, and send your book to be written up.
"For the Cashier,       W. GRIEEN,
Book-keeper."
This is a printed form, which the clerk fills up
with the name of the delinquent, and the amount.
Mr. Brown very promptly appears, with his Bankbook, to prove that he had the money in bank; and
the Book-keeper then discovers his error. The posting is immediately corrected, and the overdraft
thrown upon Jones, who is unable to pay, and the
bank loses. The rule of revision is, that after the
credits have been posted, they shall be checked off
between the Ledger and the Cash-Books, either after
banking hours on the same day, or before the beginning of business on the next day.
The balancing of the dealers' books is one of the
most laborious parts of the Book-keeper's duty. It is
the practice to "rule off" the Ledgers on the last
day of every month, for the purpose of making the
monthly Proof-sheet. The additions of the account,
229 
TE BOOKR-KEEPER.
and the balance carried down, are commonly left in
pencil, until their accuracy is tested by agreement
with the dealer's book. Dealers are requested to
leave their books, at the end of every month, for
this test.
The monthly Proof-sheet of the Book-keeper is
sim'ply a list of all the balances on his Ledger, which,
added together, must agree with the amount of
deposits posted in gross to the General Ledger. A
skillful and accurate Book-keeper will generally lay
this Proof complete on the Cashier's table, on the
first or second day of each month. Otherwise, the
Cashier calls on him to know the reason of delay.
The Book-keeper, like every other clerk, has his
share of interruptions and annoyances.   A  dealer,
whose own carelessness has led to an overdraft of his
account, takes fire at the notice thereof, and throws
his book on to the open Ledger, demanding. that it
shall be immediately balanced. Others want omitted
deposits entered, or bills discounted, and collection
notes written in at unseasonable times. Many call to
know what the balance of their account is; and are
surprised to learn that it is less than one hundred
dollars, when it ought to be over a thousand. "l av'n't
you made some mistake in the additions?  Is that
last discount of mine entered? Hav'n't you charged
me with a wrong check? Won't you be good enough
to get out my checks, and let me examine them," &c.
The Book-keepers have no direct connection with
the money department; but they may be accessory
to fraud, and successfully conceal it for a long time.
230 
A FRAUD
A recent case occurred, in a city bank, of collusion
with a dealer, in which, by altering figures on the
various books, nearly a hundred and thirty thousand
dollars were embezzled. Such a daring act of forgery
as this, is fortunately beyond the reach of common
hardihood; and therein consists a better security
against it, than can result from any degree of vigilance by bank officers. Where one attempt of the
kind would succeed, forty would fail from lack of
impudence in the guilty person, if not from some weakness of a less disgraceful character. It is, nevertheless, the duty of bank managers to adopt precautions
against the most unlikely frauds; and it has been
proposed that the Clerks should serve in rotation at
the respective desks, so as to increase the chances of
detection, or to shorten the term of its possible concealment, if collusion should be attempted between
the clerk and the dealer.
The Book-keeper is generally employed about seven
or eight hours a day.. In that time, with diligence
and economy of minutes, he may keep a Ledger of
twelve hundred pages and four hundred accounts in
perfect order.
For a Ledger of three hundred pages, the following
scale is to be divided by 4; for one of six hundred
pages, by 2; and so by any number that leaves no
remainder.
231 
THE BOOK-KEEPER.
Sale of Apportionment for  a Ledger of 1200Tpage8.
From "GOULD's Universal Index."
0,         U
52         64
124        144
232        280
328        836
396        400
436        456
488        492
524        536
560         $60
572        580
600        600
628        636
684        700
728        736
756        756
824        836
876        896
996       1016
1056       1084
1104       1104
1124       1124
1172       1180
1184       1184
1188       1188
1196  to  1200.
a,        e,
A,        1         16
B,       72         96
C,      160        208
D,      296        308
E,      348        368
F,      404        412
G,      460        472
H       496        508
I,      544        548
J,      564        568
K,      584        588
L,      604        612
M,      640        672
N,      708        712
0,      740        744
P,      760        788
R,      848        856
S,      904        924
T,     1020       1036
U,     1096       1100
V,     1108       1120
W      1128       1140
X,     1184       1184
Y,    1184        1184
Z,     1192  to  1196
232
32
116
220
320
384
424
480
516
556
568
596
620
676
720
752
808
868
956
1044
1104
1120
1152 ~
1184
1188
Q,
y  68
156
292
844
400
456
492
540
560
580
600
686
704
736
756
844
900
1016
1092
1104
1124
1180
1184
1188 
METHOD OF ACCOUNTS.
CHAPR X.
THE GENERAL BOOK-KEEPER.
THiS Clerk derives his title from the character of
the accounts in his Ledger, which are general, in distinction from individual or personal; and also, from
the fact that he brings together the general results of
the business, which appear in the Bank Statement.
In rank, the General Book-keeper stands at the
head of the department of accounts. He takes precedence of the Discount Clerk, and is often regarded
as equal with the Tellers, rather than below them.
The object of describing in advance several of the
inferior desks, is to show the origin of all the different
entries which are posted to his Ledger.
The books of a bank are kept by double entry,
though this is not always apparent in one book, but
in the whole, as one set. Thus, the footings of the
Discount Books, and of the extension columns of the
Cash Books of the Second and Third Tellers, are posted
in gross on the General Ledger to the debit of the
respective ledgers to which the personal credits are
carried, and the footings of the several check-lists
are posted in gross to the credit of those ledgers; consequently, the balance must show what amount of
deposits there is on the personal ledgers, respectively.
233 
THE GENERAL BOOK-KEEPER.
This method furnishes the test of accuracy in the
monthly Proof sheets.
When a bank begins business, the General Book keeper debits Cash to Capital. The cash is transferred
to the Paying Teller, and the corresponding entries
are then found in the General Ledger and in the
Paying Teller's Proof. The entire check-list of the
bank continues to be credited daily to the Paying
Teller, and all the receipts, including those from the
Clearing House, charged to him. It follows that the
Teller's daily Proof, if correct, must agree with the
balance of the Cash account on the Ledger.
A separate account is kept of the different denominations of circulating bills which are issued by the
bank; also of the securities pledged with the Bank
Department for their redemption.
The General Book-keeper posts daily the liquidations and the accessions of Bills Discounted to that
account, and the balance shows what the addition of
the Ticklers should be, and precisely what amount
of bills receivable should be on hand. The Certification account shows the balance of outstanding certified checks.
He posts to Expense account all salaries, rents, and
expenditures; likewise the debits and credits to Interest, Exchange, and other accounts of this class. These
are finally absorbed in Profit and Loss, when the
books are made up for a dividend.
He keeps all the accounts with foreign banks,
charging them with notes sent for collection, and crediting remittances; and renders to them a monthly
account current, or receives one, as the case may
234 
THE BANK STATEMENT.
be. In some banks this is too heavy a service for
one clerk, especially where interest is allowed on
balances: the duties are then divided.
From the footings or balances of these various
accounts is composed the Bank Statement (see pages
236-237), designed to- show at a single view the condition of the business. Unimportant details are omitted in the example, as they would serve rather to
confuse than to inform the general reader.
Most of the items are sufficiently explained in the
record.  The " Commercial Bank notes," $102,524,
is the unused portion of the circulation, which the
Paying Teller retains in his drawer. "( Cash items"
are unexchangeable funds, such as uncurrent bills,
foreign or informal checks, and memoranda which
represent money.;  The item, $1,127,205.33 is the prepared Exchange for the Clearing House. All the
sums on this side are actual resources which would
be available in liquidating the debts, excepting that
set down to Expenses, which stands as an offset to the
profits on the other side.
The liabilities are due either to the stockholders, to
individuals, or to other banks. To the former belong
the capital, and the profits-including the unpaid
dividends.   The  circulating  bills,  $358,248, are
covered by the securities on the other side of the
account, $416,490.66. The remainder of the column,
amounting to $6,839,396.63, is the debt due to depositors, the certified checks and the certificates of
deposit, being substantially a part thereof.
"Profit and loss in reserve," $301,378.20, is the
surplus of profits left after declaring the previous
I
235 
THE GENERAL BOOK-KEEPER.
BT.'ld:__,:E]B.  18, 1857,
$
7,382,812
400,000
1,640
RESOURICES:
Bills discounted...............
Loans on demand..............
Expense account..............
Securities deposited with the
Bank Department, consisting
of Stocks of the U. S. and of
the State of New York.......
Cash on hand:
Commercial Bank notes........
Cash items-lst Teller, 8,423.10
2d   "   14,200.00
3d   "    7,982.23
Bills and checks of city banks...
Specie.......................
80,605
1,127,205
2,791,499
.ee........
..........
4,051,833
1 79,916
181,403
12,614,097
Real estate...................
Treasury Notes................
dividend. The several items composing the sum of
$109,797.90, constitute the profits of the current dividend period up to the date of the statement.  These
profits will be increased by the end of that period
(June 30), and form a fund sufficient to pay the
expenses of the bank, and the usual semi-annual dividend, leaving a remainder to be added to the reserved
profits. In this way, the reserve is increased every
half year, by whatever excess of profits may be realized.
To ascertain the exact profits of the bank at any
time, interest on the unmatured bills discounted, must
be subtracted from the apparent profits in the Statement.
This Statement, for practical purposes, may be
I
286
..........
..........
..........
C.
0.
96
00
00
416,490
6
............
102,524 00
33
33
07
73
81
07
28 
THE BANK STATEMEN T.
OP T:I  Lo      a  BACK
5,000,000
301,878
LIABILITI]S:
Capital.......................
Profit and loss in reserve.......
Exchange account.............
Interest account...............
Discount received.............
- 1099 90
Circulation:
Bills on hand (see opposite).....    105
Bills in circulation.............
858,248  00
5,276 50
Unpaid dividends..............
Due depositors:
City depositors..............
Foreign banks..............
Certified checks outstanding....
Certificates of deposit..........
12,614,097
reduced to fewer terms.   The entire debt of the
bank i8:
To stockholders, the capital and
profits.............
To depositors, including bill-holders
$5,416,452.60
7,197,644.63
$12X614,097.23
To pay which the bank ]
Bills discounted... $7,72
Exchangeable funds. 1,2,
Specie.......... 3,38
Real estate.......   1
Expenses (chargeable
ag anst profits)..
1,640.00- $12,614,097.23
237
C.
0.
00
20
...........
.... i. - -
,ii 0
1,500
107,047
102,524
255,724
..........
3,989,059
2,262,110
444,999
..........
16
00
74
00
00
23
22
71
0
6,696,769 16
142,627 47
23 
THE GENERAL JOOK-KEEPER.
The point from which the Directors regard the
Statement, and- which governs the discount of paper,
is, the ability of the bank to redeem that portion of
its debt which is demandable by the creditors.  In
this case, it is $7,197,644,63; for the stockholders
cannot demand back the capital or profits, until all
other debts are paid.  They are, corporately, the bank
itself. The bank has specie-$3,389,392.80, by which
it could reduce its debt to $3,808,251,83; and to provide for this, it has more than twice that amount of
bills discounted, in current maturity, to say nothing
of its real estate. This would be called a very strong
poition.  Allowing that one million of dollars is a
sufficient average of specie to hold in reserve with a
deposit of seven millions, the bank might safely
increase its discount line very materially. The only
question then left for the Directors to determine is,
whether the deposits of the bank are likely to be
maintained; and to judge of this contingency, they
have the successive statements of the business, running back for years, showing the average on which
they can depend.   The general condition of commerce must also be considered.
These are the principal views that govern the
councils of bank directors.
The certificates of deposit specified in the Bank
Statement are issued to persons who keep no regular
account in a bank, and who merely deposit their funds
for safe-keeping.  This document is frequently used
as a bank check in remittance, and is of equal credibility, though subject to a slight discount when negotiated at a distance from the redeeming bank.
238 
THE STOCK LEGER.
The General Book-keeper mostly has the Stockledger and Transfer-books in his custody. The former
is opened in alphabetical order like other ledgers,
and each stockholder is credited with the shares
standing in his name. When he sells them, he fills
up a form in the book of printed transfers in favor
of the buyer, whose credit for the same is balanced
by the debit of the seller. No transfer of stock is
allowed without the surrender of the old certificate.
It is cancelled, and a new one issued in the name of
the new holder.
From time to time, the ledger is proved by making
out a list of the stockholders with the number of
shares held by each, which multiplied by their par
value, should give the exact capital of the bank. This
proof is necessarily made three times in a year-twice
to ascertain who is entitled to receive dividends, and
once to know who has a right to vote for directors.
The transfer books are closed for a short time previous
to the payment of the dividend, to prevent wrong
payments by an inaccurate list.
The Officers and Directors of the bank repose much
confidence in the General Book-keeper.' He is constantly referring to all the different books and desks,
to get postings for his own ledger, and is so familiar
with their theory, and also with the various methods
by which an account may be mystified, that even his
casual supervision is regarded as of great value to
the institution.   He  is generally employed  aout
seven or eight hours a day.
239 
THE ASSISTA/T TELLER.
CHAPTER XI.
THE ASSISTANT TELLER.
THE chief duty of this clerk is to assist the Paying
Teller in counting the Exchanges from the Clearing
House, and the Deposit Teller in distributing and
counting the money received by him. He is also
regarded as a pupil in the money department of the
bank, and is required to fill the place of the Second
or Third Teller, if either should be absent. There
would be hazard in employing a clerk in this capacity
who is not familiar with bank bills.
When the Exchanges are brought in from the
Clearing House, the Assistant Teller immediately
begins to examine and count them on a separate
table.  The items are checked by a pencil-mark,
which distinguishes the bank bills from the checks.
He marks dach check with the number of the sending
bank, so that if a question should arise subsequently
as to the channel through which it was received, the
number would indicate it. Thus all checks received
from the Bank of America, would be found to have
the figure 6 upon them; and all received from the
Irving Bank would be known by the number 34.*
Those which are paid at the counter by the Tellers,
* See the Numerical List, on pages 168,164
240 
EXAMINING THE EXCHANGES.
have no number marked on them, but are distinguished by the peculiarity of the cancelling cut.  As
the Assistant completes the examination of each list,
the addition included, he lays the checks and bank
bills in separate piles; and every list is thus proved
by itself. The bank bills are then counted into
packets, and the checks entered on the CAeek-list by
another clerk. The sum of the two must agree with
the total of the Exchanges.
Before the checks are passed over to the clerk who
enters them on the list, they undergo inspection by
the Paying Teller, as already described in the duties
of his desk.
The Assistant Teller transfers his services to the
Deposit Teller about twelve o'clock, and is his aid for
the remainder of the day.
An accurate, skillful, and faithful clerk in this place,
is sure to be promoted.   The officers observe his
habits of business, and regard him as a very important
aid in the money department. He is frequently
obliged to  act as Deposit Teller,  and gradually
acquires all the tact and self-possession necessary to
the office. He is the acting Third Teller also, when
that clerk is absent, and succeeds him in the scale of
promotion.
In some of the larger banks, the examination of the
Exchanges from the Clearing House, is kept in its
details entirely separate from the Paying Teller's
department. A book of printed forms like the following, is used:
241
11 
AMOUNT OF ExCOHANGES RECEIVED......
Composed of
Checks on Commercial Bank.......................................
"   of country banks..........................................
Commercial Bank bills..............................................
Bills of country banks redeemed.....................................
Checks returned for corrections, to 2d Teller..........................
4r,    I,~    I~r, 4d..,.........................
"  on Commercial Bank returned for correction.....................
Error in addition...................................................
SECOND TEL                    TtD TxLR.
Bird on Mec. B'k-wrong
sent to Merchants'.....1
Carroll on America-not
due.................
Smith on Manhattan-no
date.................
p            C.
60O 00
240 80
2,250 09
2,990 89
I
I
,I
a:c P: A3E I NC~a —:HO1:J 83 3S 
I
SECOND TELLZ.P
THIRD TImLLEB.
Crow on Phenix Bank not good.............
Jones on Republiec-no
account..............
Wilson on City-not in
dorsed...............
1,500
226
1,936
3,662
C.
00
23
50
73 
EXAMINING THE EXCHANGES.
By this method the Paying Teller has nothing to
do with the details, excepting in examining the
checks before they are charged on the ledgers. He
adopts the total, $907,658.02, as a receipt, and the
amount of checks, $873,206.43, as a voucher for that
portion of it. The bank bills, $10,210, are incorporated with his cash, and the foreign bills are sealed
up and charged by memorandum checks to the
issuing banks. The irregularities of the returned
checks are corrected as far as possible and sent back
in a subsequent exchange.
243 
THE CHECK CLERK.
CHAPTER XH.
THE  CHECKx  CLERK.
IT is the duty of the Check Clerk to make out a
separate list of the checks, paid by each Teller, to
enable him to make his Cash proof. For this purpose
they are assorted alphabetically, and their amounts
only, transcribed and added together.
Then, as each Teller has checks to be charged in all
the Ledgers, they must be transcribed in the list of
each Ledger, for the postings and proof of each. This
is a full record, embracing the name of the drawer as
well as the amount. It is from these lists, that the
checks are posted to the Ledgers, and they are therefore called, also, -Debit Cash Books.
The agreement of the footings in this different
division of the checks, proves the work to be correct.
The Exchange Checks, belonging to the Paying
Teller's cash, are the first copied into the Debit Cash
Books, and they are added up before any others are
entered. These several footings must correspond with
the amount of checks in the original list, made up for
the Assistant Teller.
It is indispensable that the Check Clerk should be
an accurate and rapid copyist, and quick at addition.
This is the most of what he has to do. But he acts
as a general assistant, when not occupied with his spe
244 
CHANOES OF PROMOTION.
cific duties. This is a course of preparation for the
higher desks which he is unwise to neglect; for if
well qualified, his chances of promotion are better
than if he were nearer the top of the scale. The
retirement of any one of the ten or twelve clerks
above him will be sure to advance him; whereas, the
Note Teller, for example, has but two chances before
him, and the Deposit Teller but one.
The Check Clerk is generally a young man, receiving a salary of from five to eight hundred dollars.
Many of the higher Clerks and Tellers, and not a
few of the Cashiers of our city banks began their
career as Check Clerks. They have advanced step
by step, according to their merits, and are among
those who possess the best practical knowledge of the
banking business.
245 
THE RUNNER.
CHAPTER XII.
THE RUNNER.
THE Runner is so called, because he does the running of the bank, to serve notices, collect drafts, and
so forth. Hie is the bank's courier-its local mail; and
for the note-paying part of the community, its sergeant-at-arms.
Ilis distinctive office is, to prepare and deliver notices
of all payments due at the bank counter. The usual
'form of the notice is placed at the end of this chapter-the italicized portion being that which he fills up
with his pen.
The duties of the Runner are not the same in all
the banks. In those of very extensive and active
business, he has enough to do to keep up the delivery
of his notices, which may average from two to three
hundred for every day in the year. In some of
the smaller institutions, he "ticklerizes" the notes
from the Collection Register, or acts as an assistant
to the Tellers. In most of the banks, the collection
of the sight drafts which are received by the morning
mail is an important part of his service.
The preparation of the bank notices is a work of
considerable labor. They are printed in sheets, all
on the same sheet with the title of the same month.
The Runner takes a sheet for May, and from the
246 
THE RUNNER GIVING CREDIT.
Tickler fills up the blanks with the name of the payer,
and the amount, of all notes due on the first day of the
month; and so with each subsequent date. They
are then cut apart, and arranged alphabetically. By
the aid of the directory, he marks on each the residence of the payer. He then assorts them by streets,
for the most convenient route of service. After long
practice, his memory becomes itself a directory of
names and places, and saves him much writing and
trouble of reference.
Having arranged his notices for the delivery of the
day, the Runner stands ready to receive the drafts,
of which there may be from twenty to fifty, to be
collected at various points through the city. These
are briefly copied in his Memorandum Book, and he
sets out on his tour. He returns their proceeds in
the course of the day to the Note Teller, who tests
their accuracy by comparison with his own record.
In an active market, the amount of the sight-drafts
collected in a single day often exceeds one hundred
thousand dollars. It is very necessary that a bank
Runner should possess good judgment and knowledge
of men; for he is measurably trusted with the power
of credit. The drafts are commonly paid by checks,
which, in his discretion, he takes without being certi fied. But he has often to deal with strangers and
new firms, when he insists on certification, or on bank
bills. If any refuse to pay in satisfactory funds, he
returns the draft to the Note Teller, where it remains
till three o'clock, and then, if still unpaid, it is given
to the Notary for protest.
The Runner experiences more difficulty when the
247 
THE RUNNER.
market is growing stringent than at other times. He
withdraws his credit, and alleging the instruction of
the bank officers, declines to take uncertified checks.
The payers generally acquiesce in the propriety of
the rule, though not always with good grace. Occa sionally one refuses to pay except by his check, as
usual, which the Runner will not receive. The draft
is handed over to the Notary, by whom it is either
collected or protested, at a later hour in the day.
The Runner has many short-time drafts, payable
after date, or sight, which, if not immediately accepted, are left with the drawee, who agrees to return
them to the bank. If declined, they are protested
for non-acceptance, and again for non-payment at the
due date. Sight drafts must be accepted or protested
under the date of presentation, for that is the date on
which they are firs;- seen, by the drawee. It is legal
"sight," if the presentation is made at the store or
domicil of a man, though he may be absent from both;
otherwise, a messenger or notary might pursue the
drawee for a week or a month, without effecting a
proper demand. If the Runner is not satisfied to
trust a draft with the drawee, as above stated, he
informs him that he can call at the bank in the course
of that or the following day, and accept it. One day
is allowed, by custom, for examination of the account
on which it is drawn.
In the distribution of notices, the Runner has the
advantage of not being confined to particular hours.
He can serve them while enjoying an evening ramble,
and he can walk in no direction that does not give
him the opportunity of dropping some by the way.
248  
l          i.
::I
-=~                                            ~         7
-a,        ~r~~~~                                      ~      ~~~ 
The Runner at a Loss. 
SERVING NOTICES.
His pockets are always full of them. Every shop,
trade, sign, and finally, every man, seems to his imagination to invite a bank notice. A very intelligent
Runner once stated to the author, that he seldom met
an acquaintance or friend, without being annoyed by
an involuntary feeling that his first duty was to serve
him with a bank notice.
Frequent complaints are made at the Note Teller's
desk that the payer received no notice. Mr. Spitfire
flies into a passion, and wants to know "what in the
devil a Runner is good for if he can't find where people
live, even if their names are not in the directory!"
Mr. Short takes some satisfaction in abusing the
Runner for not sending him a notice, although there
might be a better reason for his not paying promptly.
Mr. St. Vitus asks "why that notice was sent to him?
He didn't owe it, and wouldn't pay it, and considered
it an insult to have other people's debts poked in his
face."
The Runner sometimes attempts an explanation.
He cannot follow all the removals, nor be advised of
the new-comers in a large city. Changes of residence
take place from many causes: the pulling down of old
stores to rebuild; the destruction of property by fire;
the dissolution of old partnerships, and the formation
of new firms. Death takes names out of the Directory, though he does not always foil the Runner; for
law says that a man shall not die until his notes are
paid.
The Runner is embarrassed also by the repetition
of names.  He may be excused for serving a notice
on the wrong John in some families, especially among
11*
49 
TEE RUNE R.
the Smiths and Browns. These gentlemen, if they
are anxious to pay their notes, write their residence
as a part of the signature. Again, the number of a
store is changed or defaced by accident or design.
There are some people who prefer retirement to publicity, and refuse their names to the canvasser. Bankruptcy drives men from the great thoroughfares into
alleys and attics. " The Panic" tears down gilt blockletters from plate-glass fronts, and sends the Runner
to look after their old owners in upper stories, behind
a strip of tin with characters in white paint. One or
other of these accidents explains most of his omissions.
The Runner picks up a good deal of information
in his jostling intercourse with men, and the bank
officers are not above asking him for the results of
his observation. He hears the gossip of loungers in
stores and along the streets. If a great house is shaking in the wind, he is told of it. Hie inquires what
other great houses are likely to be implicated, or how
many smaller are to be drawn into the vortex.  He
is regarded as an official confidential person, familiar
with financial secrets, always answering less than he
knows, and therefore subject to many questions.
When any extraordinary excitement prevails, he
seldom returns from his daily tour without a considerable budget of news.
"Well, Mr. Foote, what do you hear to-day?"asks the President or Cashier.
"Things look pretty black, sir.  Bigg & Co. have
failed!"
"What! Bigg & Co?'
"Yes, sir. That's the talk of the street."
250 
GIVING NEWS.
"Anything more?"
"Yes, sir. Trouble among the flour men. Sweatem,
Sore & Co's paper is offered at three per cent a
month."
"You don't say so!"
"It's a fact, sir; and no buyers even at that."
"What else?"
"I heard a good many rumors, but only two names
mentioned, besides Bigg and Sweatem. -Hawk &
Hawkins, and Blue & Co. There's a rumor about a
large shipping-house on South Street, but nothing
definite. Sort of apprehension all round."
" Mr. Foote, didn't I hear you say something about
Sturgeon, the oil-man, the other day?"
"Yes, sir.  I took a sight draft there, and he got
mad, because I refused his check without being certified. I took his check once before, and they refused
to certify it at bank until his deposit was made."
The Cashier returns to the Directors' room with this
information.
Like every other clerk, the Runner is sometimes
called in as talesman, to make up a short jury in commercial trials.
!~~~~' I:~ V' Ir lq C/ 23.A.T  X,
CORNER OF GREENWICH AND WARREN STREETS.
Your Note for   /,       O.O   Dollars
is payable   05   AUGUST.
251 
THE PORTER.
CHAPTER XIV.
THE PORTER.
THE Porter of a bank, though at the lower end of
the line, is by no means least among its servants. The
authority of the President is exerted from the head
to the foot-that of the Porter runs from the foot
towards the head; and in this direction it bears considerable analogy to that of his great coadjutor.
His situation is one of high responsibility and trust.
Like his associates he gives bonds-generally to the
amount of five or ten thousand dollars.
The key of the outer door of the building is placed
in his custody. Consequently, he must be at the bank
first in the morning, and last at night. In some
instances, he takes charge also of the key of the bookvault, that the clerks may have as early and as late
access to the account-books as they desire.
It must be an extraordinary and well-authenticated
order, that would induce one of the New York City
Bank Porters to open the doors of the building, or to
surrender the key for a moment, to clerk or officer,
during the night-hours, or on Sunday. Yet he might
visit it in person, alone, without other authority than
his right of office; it is his duty to do so, and to search
the premises, if he has any suspicion of danger from
burglars, fire, or other cause. Some porters make it
252 
GENERAL DUITIES.
a rule to visit the bank once at least on every holiday.
The modern plan of bank building includes under
the same roof other apartments for hire; and a Janitor
is employed to take charge of the property, which
makes the Porter's watch less necessary.
The first work of the Porter in the morning is, to
open the bank, and to prepare it for the comfortable
possession of the officers and clerks.  He unlocks the
book-vault, and carries the various accounit-books to
their respective desks. As soon as any of the clerks
arrive to relieve his watch, he goes to the Post-office
for the letters. He is the only accredited messenger
to whom they would be delivered without a special
order. Any other would be required, also, to give
proof of his identity.
The Porter is regarded as a general assistant to the
clerks; but his principal duties are closely connected
with the department of the Paying Teller. He counts
all the gold that is received, and ties it up in bags,
with the bank seal, and a label of the amount affixed,
ready to be paid out in quantity on demand. This is
done immediately under the eye of the Teller; and
the bags are then carried into the vault. The Porter
keeps a record, so that he can tell, at any moment, the
number of bags on hand, the denomination of the
coin, and the total amount.
If two hundred thousand dollars of specie is needed
to pay a balance due to the Clearing House, the Paying Teller goes into the vault, and designates the bags
which are to be carried out; or if pressed with other
duties. he intrusts this service to the Porter, being
253 
THIE PORTER.
careful to count the bags before they are taken from
the bank.
Every bag is labelled with the name of the sealing
bank. Claims for deficiency by miscount, abrasion,
or counterfeit pieces, must be made "within a reasonable time," or they lose their validity.  The rule of
every well-regulated bank is, to count or weigh all
coin as soon as possible after receiving it, even if it
should be a return of its own bags with unbroken
seals. The two hundred thousand dollars paid by the
Metropolitan Bank at the Clearing House may be
distributed among ten other banks, each of which
counts its portion, affixes its own seals and labels, and
holds it ready to be paid back through the same
channel. The following day may bring some of the
same bags again to the Metropolitan, where it is again
counted, and sealed as before.
Gold suffers abrasion by long use.  It is first
counted by hand, and the pieces slip on each other.
It is then taken up in iron scoops and poured into
bags. These are handled roughly in carriage from
place to place, and thrown heavily from the counter
to the floor. As often as the bags are opened for
counting, the contents are turned out in bulk, and the
uneven surfaces grind against each other. It is frequently poured into metallic scales to be tested by
weight, or spread out on a table for inspection to
detect false pieces. It undergoes no trifling friction
in the pocket against other coin. Although this does
not for a long time sensibly affect the value of the
pieces separately, it is very perceptible when a thou.
sand of them are taken together, especially of the
254 
DETECTING BAD COIN.
smaller denominations. It is rarely that a bag of five
thousand dollars by count, of what is in current use,
of the quarter-eagles and of the one-dollar pieces,
holds out full value in weight. The deficiency on
that sum is very commonly from seven to ten dollars.
The ten and twenty dollar pieces of our oldest coinage
are not yet sensibly reduced from this cause. The
fraudulent process of "sweating" consists in putting
the coin into revolving cylinders with sand, after the
manner of polishing steel pens, by which it is worn
away evenly and imperceptibly. It is also reduced
by filing, and by having small holes drilled through
it, which are concealed by hammering. The onedollar pieces are sometimes cut in two with a saw,
and the parts are then ingeniously joined together.
This last device may be detected by an irregularity
in the "milling," or little cross furrows on the edge.
The Porter is watchful against these various processes, and rejects every piece that is impaired by
them. It seldom happens that they are brought to
the bank for deposit in any quantity, but they slip in
singly. When but slightly injured, they are received
and paid, over the counter, but are kept out of the
bags put up for the Clearing House. If they collect
in considerable amount, they are sold by weight to
the jewellers, or sent to the mint for recoinage.
The Porter acquires a very delicate skill in the
detection of false or light coin. Peculiarities of color
attract his eye as it wanders over the table where the
pieces are spread out, or as they slide in bulk from the
bags. He weighs even the lighter coin with almost
unfailing accuracy, onil the end of his finger. Both
255 
THE PORTER.
by touch and smell he can distinguish the genuine
from the base, of silver or gold-and also by the sense
of hearing, as he twirls the piece in the air, or throws
it upon the counter to catch its "ring."
Foreign gold is not current in the bank settlements.
What is offered on deposit, is received at a fixed rate,
a trifle below its value; and when it accumulates, it
is sold to the brokers at a small profit.
A very large amount of foreign gold is brought into
the United States by emigrants and travellers from
Europe. It is mostly taken to the West, either to
buy land or to be kept for emergencies. Gradually
it finds its way into the shops, and thence either to
the banks or private exchange dealers, who ship it to
their correspondents in New York. It is quite usual
for our city banks to receive from some thriving town
beyond the Mississippi River a well-ironed box of fifty
pounds' weight, filled with an indiscriminate mixture
of half the coinages of Europe, to the value of nearly
ten thousand dollars. The Porter assorts the pieces
with the interest of a connoisseur in numismatology;
and after making a complete invoice, sells them to a
specie broker, by whom they are again sold for shipment, generally to France or England.
The amount of coin counted daily by the Porter
depends on the activity of the market. It has been
much reduced by the adoption of specie certificates
for the Clearing iouse settlements; but still reaches,
occasionally, perhaps two hundred thousand dollars,
from which it varies to the one-tenth part of that
sum.   Large amounts are frequently drawn from
Philadelphia and Boston to pay balances; and lesser
256 
TIEE PORTER'S POUCH.
remittances flow in from other places. A Porter in
one of our active city banks counts, in the course of
a year, from twenty to twenty-five millions of dollars.
The time occupied in counting depends on the
denomination of the coin. Twenty bags, or one hundred thousand dollars in Washingtons (twenty-dollar
pieces) may be counted within one hour. The tendollar pieces require near double the time, and the
smaller coin still more in proportion. The one-dollar
pieces are put up for counter use in rolls of one hundred dollars each.
Silver is not used in the bank settlements. The
immense supply of gold from California and Australia
has superseded it in the general exchanges of commerce. As it is not legal tender for sums over five
dollars, our banks decline receiving it on deposit in
large quantity.
It is impossible for the Paying Teller to satisfy
himself, by personal oversight, of the accuracy of the
Porter's work in detail, or even to observe him always
in the movement of large amounts of coin; and it
follows, that there is a divided responsibility between
them. This is provided for in their separate relation
to the bank. If the Porter should abstract any gold,
it would be in his capacity as an assistant; and his
bondsmen would be liable. The various expedients
by which he could perpetrate a fraud are obvious
enough; but his chances of carrying it over from day
to day, without detection, are very narrow.
When the Exchanges are fully prepared in the
morning, the Porter packs them neatly in his Pouch,
257 
THE PORTER.
in their numerical order, and sets out for the Clearing
House, which he reaches a few minutes before ten
o'clock. By half past ten, he is back with the return
Exchanges.
The Porter's Pouch was formerly made to sling
over the shoulder, so that it would rest within the
fold of the left arm, leaving the right at liberty. A
chain was enclosed within the strap, to foil any
attempt that might be made to cut it. Such precautions were regarded as necessary when a large proportion of the Exchanges consisted of bank bills-a
single Porter often carrying more than fifty thousand
dollars. Several of the banks were in the habit of
sending a guard with the Porter-and in one or two
instances, he was armed with a loaded pistol; but,
happily, no case occurred requiring its use. The
route of the Porter was then very long, and through
many crowded streets. There has been, however, as
the writer is informed, but a solitary instance of personal attack on a bank messenger within the last
twenty years, and that was unsuccessful.
The Porter of the present day might readily be
mistaken for a traveller, with his valise or carpet-bag
in hand; but, more likely still, he may pass along on
foot, or in the omnibus, without attracting other than
casual notice.
The Porter's Table, with the scales for weighing
gold, stands within the enclosure of the desks, near
the Paying Teller; and when not occupied with outdoor duties, he sits there awaiting orders. In a busy
season, these are not long coming. The Paying
Teller requests him to make up a tray of gold
258 
THE PORTER'S TROUBLES.
pieces-that is, to count them into piles of fifty,
twenty, or ten each, as may be required; and, also,
to prepare several trays of silver coin-the half-dollars and the quarters, in piles of twenty; the dimes,
commonly in paper rolls of two dollars each; and the
half-dimes, in rolls of one dollar, with a quantity open
for convenient use. This is hardly done, before one
of the Book-keepers asks him to "step down to Jones
& Brass, and get their bank-book. Those fellows
have got credit for a note that belongs to another
dealer, and they've drawn against it."
The Deposit Teller requests him, at the same time,
to "get that check of Peter Johnson's indorsed by
Powell & Company."
The Cashier inquires where Donaldson has gone! I
"It is very singular," he says, "that he is so apt
to be out of the way, just when I most want him!
Mr. Crook, send him to me as soon as he comes backwill you?"
"Yes, sir."
Donaldson reports himself to the Cashier, and
returns from another errand just in time to get fifty
thousand dollars out of the vault in exchange for that
amount of specie certificates, to accommodate a neighboring bank; and, also, to take part in an altercation
between the Receiving Teller and a dealer's clerk, on
a claim for ten dollars deficiency in a bag of mixed
coin, which the latter had deposited the day before.
The clerk is swearing that he counted it himself, and
knows that it was correct; and the Teller maintains,
with equal obstinacy, that the bank is right. The
259 
THE PORTER.
Porter affirms that he "counted it three times over,
and could not be mistaken." Such differences cannot
always be adjusted to mutual satisfaction. They
sometimes give rise to petty quarrels, and to suspicions of dishonesty between the disputants; but
dealers generally admit that the Porter is the more
likely to be correct; and there is little room for
doubt, if the accuracy of his reckoning is confirmed
by the proof of the Teller's cash at the close of the
day. Occasionally, Mr. Donaldson is gratified by an
acknowledgment from the depositor:
"You were right in your count of that specie.  We
discovered the error in our own books."
He is seldom wrong. Old customers, who know
how careful he is, what various tests he employs, and
how he values his reputation for accuracy, very coinmon]y prefer his count to their own. They do not
hesitate to take from him bags of gold without examination, and pay them over at the Custom House for
duties.
One of the habitual tests of correctness in counting
is, to observe that the tops of piles containing the
same number of pieces, of the same coinage, are on an
exact level. Each piece being precisely of the same
thickness, one more or less in any pile is seen at a
glance. The application of a straight-edge to pieces
as thin even as the quarter eagle or the silver dime,
is an almost infallible test. The Porter lias also the
test of agreement with the previous count by another
person; and finally, that of weight, in scales which
sensibly show the difference of a single grain.
260 
MESSAGES TO OTHER BANKS.
The Note Teller seizes the first favorable moment,
towards the middle of the day, to dispatch the Porter
with notes for certification. There may be thirty,
fifty, or a hundred of these, payable at twenty different banks; and at each he is obliged to fall in at the
tail of the column that waits at the Paying Teller's
counter. This column is always longer and slower in
its movements when business is most hurried, and
consequently when the Porter's minutes are most
precious. If he does not at the same time present
the overdrafts and informal checks which have been
received through the Exchanges, he must make a
second journey for that purpose; and a third to collect from the dealers of his own bank the amount of
checks returned from their deposits for similar defects.
Within the half hour after one o'clock, he must be at
the Clearing house with coin or specie certificates to
liquidate the debit to the other banks; or during the
subsequent half hour, to receive his credit balance.
He is expected to know the earliest moment at which
the Southern mail arrives, and to- get the letters. The
delivery of letters by a foreign steamer may be going
on at the same time, and he is subject to the delay
of waiting his turn in a long row of applicants. He
is the Cashier's authority for the hours at which the
departing mails close, and for all changes of rule in
the Post-office which may affect the convenience of
the bank.
In his various walks and contacts, the Porter gains
much knowledge of men and things, which, discretionally, or in answer to questions, he communicates to
the bank officers between whom and himself there is
261 
THE PORTER.
free and often confidential intercourse.  "What news
at the Clearing House to-day, Mr. Donaldson?" asks
the President.
"I didn't hear any thing particular, sir. It looks
as if things might be a little excited and uncomfortable, that's all."
"Ah! Well, that's a good deal. What makes you
think so?"
"A little sort of snap, sir. Some of the Porters
came in late, as if they'd been holding back for morning checks."
"Did you hear any thing in the street?"
"I heard some talk about a failure among the
brokers, but no name."
"No steamer in?"
"Well, yes, sir; but the boys ain't crying an extra
yet. They've got a notice on the bulletins-' Delhi
not taken!"'
The President catches a valuable hint from many
a conversation, of which this is an example.
"Delhi not taken!  Then, Mr. Cashier, I think you
may answer Mr. Borrow that we can't give him any
privilege of overdraft, nor re-discount his paper.
These country banks must learn to take care of themselves."
An application for a credit of fifty thousand dollars,
which had been lying in suspense, is thus decided by
the state of things in ~ndia.
It is not unlikely that the Porter will carry notices
to parties within the next half hour, calling in one or
two hundred thousand dollars of demand loans, so
sensitive are bank officers to imaginary effects that
262 
ASSISTS THE PAYING TELLER.
may follow an announcement that some "Delhi" or
other is " not yet taken."
During the last half hour before the closing of the
bank, the assistance of the Porter becomes indispensable to the Paying Teller. He must replenish the
specie trays as they are exhausted of their contents.
If large amounts of gold not corresponding with the
prepared bags are called for, he counts them up in
separate trays to the Teller's hand.   He  conveys
checks to the Book-keepers to see if they are good,
before certification. The great brokers, Nimble, Rig
& Co. have already obtained advance certifications
to the amount of one hundred thousand dollars, and
another single check is presented for seventy thousand
dollars. The Teller is unwilling to risk certifying
such a large additional amount before their deposit is
made. He says to the Porter in an undertone: "Ask
the Book-keeper if that is good?" and to the customer:
"I will answer you in a minute."
The clerk of Nimble, Rig & Co. has just joined the
string of depositors outside of the counter, and the
holder of the check waits for his certification until the
Book-keeper announces that their account is good.
At three o'clock, the Porter carries the letters to
the Post Office. He then counts the coin in the trays
of the Paying Teller, and makes an exact statement
of it. He renders the same service to the other Tellers, if required, and assists them in the carriage of
their trunks into the vault.
The Porter's salary ranges from seven to fifteen
hundred dollars a year. He enjoys some perquisites
for taking charge of the trunks of dealers who are not
263 
THE PORTER.
willing to trust their valuable papers in a common
office safe.
The remaining duties of the day consist in seeing
that the ledgers and various account-books are conveyed into the book-vault, and that the banking-room
is thoroughly swept and cleaned. It is the duty of
each clerk to put away his own papers; but the Porter examines the fragments that are scattered about
the floor, that nothing of consequence may be destroyed. His last care is to look into all the corners
and closets, and under the counters, to see that no
thief has made a lodgment for the night. Every window-bar and bolt undergoes his personal inspection;
and when he locks the outer door, and puts the key
in his pocket, he has more authority over the building than any other person.
"Did I lock that door?"  It is not surprising that
the habit of twenty years has taught him to do it so
mechanically, that he cannot always remember to
have heard the bolt shoot when he turned the key.
To verify the fact, he returns to try the fastenings,
and he may sleep soundly after removing the last
doubt of having performed his last duty. i
All the services described under this head are generally considered as belonging to the place of Porter.
But they are very much varied in different institutions.  For instance, in some of the larger banks, an
extra hand is employed to do the drudgery, and in
some of the smaller, the Porter acts as Runner, or as
assistant to the Receiving Teller. He is often competent to discharge the duties of check-clerk or bookkeeper; and with a little practice, might enter some
of the higher clerkships.
264 
Mattliias.  
THE SPECIE CERK.
Many of the principal banks in New York have
found it necessary, from the great increase of business,
to separate the higher duties of the Porter from the
the more laborious, and to institute another office, to
which the old and faithful incumbent has fallen heir,
under the title of Specie Clerk. In truth, the responsibility attached to the counting and partial custody
of the coin, the daily contact with confidential affairs,
the many grave services rendered, and especially the
importance of an intelligent and trustworthy messenger to attend the Clearing House, make altogether a
charge that deserves to rank with the higher offices
of the bank, both for dignity and compensation.
Where the office remains undivided, the Porter, as
well as the Specie Clerk, is practically an Assistant
Teller; and on many occasions, he has a larger amount
of the bank funds within his unsupervised personal
control than any other clerk.*
The Bank Porters of the City of New York have
singularly maintained their character for integrity
and fidelity. But a solitary instance of fraud has
occurred amongst them in twenty-five years; and
that originated in the bank allowing one of its most
important rules to be disregarded. The defaulter
was conducting a mercantile business with an extensive correspondence, and numerous agents through the
country, while at the same time he was intrusted
with an unusual custody of the specie vault. The sum
abstracted was small, and repaid by his bondsmen.
~ In some instances, the specie vault has been taken front the custody of the
Paying Teller, and given to the Specie Clerk, who alone is held responsible for its
contents He makes a daily report of its condition to the officers.
12
265 
THE PORTER.
In the mean time, however, Book-keepers, Tellers,
Cashiers, Presidents, and Directors, have been implicated in the dishonest use of bank funds, by which
successive dividends have been lost to the stockholders, and in a number of cases, the institutions completely wrecked. They have not been able to resist the
example and the rage of speculation, which at certain
periods has overrun the popular mind, and for a
season apparently destroyed the sense of common
honesty.
It is no credit to a man that he shall abstain from
theft, and that he shall fulfill his solemn engagements
-although costly services of plate testify that such
an extent of virtue is highly esteemed by some very
respectable people; yet there is positive and rare
merit in a persistent, faithful discharge of duty, where
the desire of personal gain, the strongest and most
constant that possesses the human mind, is tempted
by the immediate control of the means to gratify it.
Contentment with a moderate, but sure income, and
resolutely shutting out of view all thoughts of "growing rich" by lucky adventures, has been the safeguard of the Bank Porter in his long and creditable
career.
While there are many instances of the Porter
advancing by the usual steps of promotion to the
higher clerkships, and even of their "jumping over
the heads" of Book-keepers into the place of Teller,
there are more of their remaining stationary, through
a continuous term of years, than in any other grade
of bank clerks. This comes from no want of natural
ability, but partly from want of cultivation in early
266 
LONG SERVICE.
life, especially in mercantile practice; partly, because
their ambition is satisfied with having secured a more
fortunate service than the majority of their class, and
partly from a true appreciation of certain advantages
of their position over most of the inferior clerk
ships in the bank. It is less monotonous in its routine, and it imposes less personal confinement. It
requires more character than the employment of an
ordinary book-keeper. It is more in contact with
the general history and the extraordinary excitements of the bank.   There are many Book-keepers
whom the officers would reject as Porter; but
there are few Porters who would not be accepted
as Book-keepers, so far as substantial character goes.
In every valuable quality that constitutes the true
man of business, saving the mere practice as clerk,
and the cultivation of manner that makes the accomplished officer, the experienced Bank Porter of
-New York is not second to any class of his associates;
and as it relates to knowledge and capacity, it is not
extravagant to say, that the interests of the stock holders and the convenience of the dealers, of a pro portion no less than one-fifth of our city banks, might
be improved by transposition of office between the
Porter and the President or Cashier.
The Porter has the same right as any other servant
of the bank, and it is equally his duty to exert an
independent watchfulness over its interests. It would
not excuse him to allege, that it was "none of his
business," if he should become acquainted with any
abuse of trust in clerk or officer, and fail to report
it-if of the former, to the President or Cashier; and
267 
THE PORTER
if of either of these, then to the other, or to some
proper person connected with the institution. A case
is known to the writer, in which a Porter, of his own
accord, prevented a Cashier entering the vault, when
he suspected the honesty of his purpose; and his conduct was warmly approved by the Board of Directors.
The Porter has, comparatively, little direct intercourse with the dealers.   The  care of the bank
checks is commonly assigned to him; and he enjoys,
in some cases, a small perquisite in the sale of
different varieties of check-books, which are furnished by a stationer. He comes into contact with
the specie-shipping houses-receiving and preparing
large amounts for disbursement. What is known
as a cross-grained disposition, is frequently connected with diligent habits and faithful service. It
would be singular, if among the sixty Porters of
our city banks, most of whom have had but little
chance of education and social refinement, there
were not some to adopt the conceit, and to imitate
the manners of their superiors.
Of the fifty-three banks now in existence in the
city of New York, about one-half have been organized since 1850. Among the older, there have been
many instances of Porters holding office from fifteen
to twenty-five years; and several have "died in the
harness," after faithful service for a longer period.
Mr. JAMES CORKERY, at present the Specie Clerk of
the Union Bank, is now in the seventy-fourth year of
his age. He has served the institution as Porter for
thirty years, outliving three Presidents, two Cashiers,
and several successive companies of clerks. For the
268  
-j
~;(,;j~~;;&~
II
"F F ather Cole."
f 
THE GOLD SPECTACLES.
last twenty years, he has been the Receiving Specie
Clerk of the New York Savings' Institution (now
located in Bleecker street), attending there on the
afternoon of two days in the week, in addition to his
regular duties at the Union Bank. The specie that
he has counted and weighed would be tedious to
measure by tons or ship-loads. The amount of money
trusted to his charge, in one shape or another, if it
could be brought together, would exceed the entire
wealth of New York; and of all, he has rendered a
true account.
The frontispiece to the volume represents him, surrounded by the implements of his office.
"Father COLE" entered the service of the Ocean
Bank, as Porter, when that institution was organized.
He was already past the prime of life; but retained
his full intellectual vigor, and apparently a good
reserve of bodily strength. The faithfulness with
which he performed his duty, gained for him a high
place in the esteem of officers, clerks, and dealers.
He possessed, in a remarkable degree, the qualities
that are most valuable in a confidential Porter. But
he soon had to contend with failing sight. This mark
of age was not acknowledged by the old man, until
the clerks, to whom it was apparent, presented him
with a pair of gold spectacles, as a proof of the
respect and affection with which they regarded him.
He unwillingly retired from the service. At a later
period, he submitted to a surgical operation for cataract, which was only partially successful. His physical strength gradually declined, and he died on the
8th of March, 1858, in the 74th year of his age.
269 
PRESENTS.
CHAPTER XV.
PRESENTS.
THE strict theory of banking is, "an eye for an eye,
and a tooth for a tooth."  The bank, at least, gives no
favors. If the note offered for discount is not safe, it
is rejected. If securities are deficient, they must be
increased.   And  the bank lends only for its own
interest. It may be obliged to discount paper for an
undeserving dealer who keeps no balance on deposit;
but that is to save a running debt, and the motive is
still, to serve the bank, and not to gratify the dealer.
If ever a loan is granted as a favor, it is dishonestly
granted. The officers, even with a full Board of
Directors acting in concert, have no right to discount
a note as a favor. The money or the credit which
they are dispensing is not their own. It belongs to
the stockholders, and they are trustees merely,
appointed to invest it. Whenever they have departed
from this rule, it has been a violation of duty and
integrity which ought justly to involve personal
responsibility, if the debtor should fail.
The object of stating the case so fully is, to show
that there is no ground for the supposition by merchants, that bank officers confer favors when they
discount paper for them; or if there is such ground,
that it is dishonest.  The box of "Black Dragon," or
270 
PRESENTS.
the caddies of "the veritable tears of Confucius,"
which ]A. Fum sent to the President or Cashier after
the discount of his bills receivable last week, therefore, had better been bestowed on the convalescents at a hospital, where the gift would be a thousand times more appreciated, and whence it would
never be followed by repentance. The market which
cannot be conciliated by a cup of tea, will get into
spells of tightness; and if Mr. Fum's balance of account
is less, or if his paper is not quite so good as that of
Mr. Smith, who never made the officers any present,
it will be rejected, as it should be. There is not a
market in the world where a merchant is less likely
to get two for one, than at the bank counter.
If there is any favor between the dealer and the
bank, it is conferred by the former, and by direct
solicitation of the latter. The bank seeks deposits.
It is dependent on depositors for its ability to declare
dividends. The measure of favor that it receives is
partly indicated by its willingness to pay interest on
balances, where it is demanded. But the mass of
personal depositors do not ask interest, and so far as
they receive no return in the shape of loans, they
confer on the bank a very solid favor, from which
great profit is realized. Substantially, deposits are
capital-a discounting basis, not subject to dividends,
and therein, for the bank, better capital than its own
stock.
Nothwithstanding these facts, banks are commonly
regarded, with respect to commerce, as the holders and
granters of favor; and hence comes the habit ot
dealers making presents in return. Mr. Fum sends
271 
PRESENTS.
choice tea; Mr. Raisin, a sample of new wine from
Hungary; and Mr. Plumb, a barrel of fine pippins.
It would seem ungracious to refuse such gifts, as they
need not draw after them any bad consequences to
the bank. But where or how to stop when once
begun, is more difficult than to resist the beginning;
and the influence of example in the chief officers is
not lost on the clerks, who may withhold conveniences,
if they cannot grant favors. The notion that banks
are superior to commerce, extends to their minor
employments. A bank clerk is better than a merchant's clerk. He is treated with more deference;
and it is conceded that his position is surrounded with
more dignity. In addition to this, he holds some
powers which, rightly or not, he may make discretionary. The Book-keeper may not be too strict in reporting occasional overdrafts; or, what is very natural
he may be so impressed with the generous and honorable character of a man as to believe him incapable
of taking advantage of his relaxed vigilance. It is,
therefore, desirable to conciliate him, and this is done
bypresents. Such is the circumstantial origin of some
of the worst frauds in bank history.
The author vouches for the authenticity of the following anecdotes. Most of the incidents related came
under his personal observation.
A Cashier asked a Director of the same bank, if he
could advise him where to purchase a certain description of tea. The latter engaged to find the article.
On the same evening, a "quarter-chest" was left at
the Cashier's house without a bill, and the matter was 
PRESENTS.
not again alluded to. The director was subsequently
indebted to the officer for some favors, which, however, did not keep him solvent.
A dealer in fancy goods asked the same Cashier for
his adress, without specifying any object. On going
home, the latter found his parlor mantel furnished
with some elegant ornaments.
A Bank President inquired of a dealer in foreign
porcelain, where he could best get an English dinnerset at a cost not over one hundred dollars. The latter
answered that his acquaintance with wholesale
importers would enable him to purchase it at a considerable discount, and he did so. The President
never asked for the bill, but he discounted his friend's
paper liberally "between the Boards."
A Bank Officer said carelessly to a jeweller, after
serving him with a loan:
"By the way-where is that gold-headed cane that
you promised me?"
The jeweller smiled, but said nothing. In a week,
the cane was sent; and when the donor called at the
bank subsequently, he was accosted with an expression of great surprise:
"Why, Mr. D., you didn't suppose I was in earnest
the other day, did you?"
Another Officer called at the store of a dry-goods
merchant, after assisting the latter to a liberal discount of paper. While walking along the aisle, his
eye was attracted by some ladies' kid gloves, of
273
12* 
PrESENTS.
superior quality.  "Ah I" said he, "you keep these
articles, do you? They are really very soft and
beautiful!"
"Yes, sir," answered the proprietor, at the same
time wrapping up a dozen in some fine tissue-paper"put those in your pocket. Yes, yes, do!" overcoming the apparent reluctance of his visitor, by
unaffected earnestness.
The same scene was acted over again on the next
occasion, when the merchant had paper discounted.
A third rehearsal taught him to add a dozen of the
finest kid gloves to the legal rate of seven per cent,
whenever he obtained an accommodation at that
bank.
A Clerk took lodgings at a hotel during the absence
of his family in the country, which led to the landlord opening an account with the bank. In the
"progress of human events," baskets of brown stout
were left at the residence of one of the officers, and
dining privileges were enjoyed without cost. The
result in this case was a loan of over twenty thousand
dollars on inferior securities; and although it was
finally paid, the process involved transactions of
questionable propriety.
A Dealer, who was impatient to rectify his accounts,
urged a Book-keeper to balance his bank-book. After
waiting several days, the request was repeated, and
the clerk promised that it should be done.  "But,"
he added, "you haven't sent me that umbrella yet!"
-It was added to his wardrobe.
274. 
PRESENTS.
It was formerly the practice, in some banks, for the
clerks to order from the stationers the articles necessary to their convenience, such as pencils, rules,
erasers, blotting-paper, and other things.   And it
was not considered improper for the stationer to distribute small presents among them occasionally. A
better system of economy has been established in
later years.
Bank clerks receive presents thoughtlessly, and
mostly, perhaps, without committing themselves to
an improper understanding with dealers. They are
not alive to the danger of being made accessory to
fraud, and to the consequent destruction of character.
The officers have no alternative, but to dismiss
immediately a clerk who allows himself, even by accident, to be brought into collusion with a dealer. The
collusion of silence only, if a fellow-clerk is in fault,
would be fatal to him. In a bank of strict discipline,
the discovery that a clerk had received presents from
a dealer would lead to the expulsion, both of himself
and the donor, from all connection with the institution-so important and critical is the point of this
most pernicious practice. Every dealer should know
that a bank clerk has no favors to bestow. His duty
covers every requisition that can be made of him
with respect to the business.
In  every case where  a bank  clerk  has  been
betrayed into collusion, the worst consequences have
fallen on himself. Whatever advantages have resulted
to others, he has reaped none; for, from the first
moment, he has been in the power of his betrayer,
who takes all the gain, and leaves to him the shame
275 
PRESENTS.
and the disgrace.-Can any trifling gift compensate
for such a risk a
Presents from a dealer are always annoying to a
high-minded bank officer. They may be interpreted
to imply that he can be influenced by them to do
what is opposed to his sense of duty or justice. In
such case, the donor must sink in his esteem, and
their effect be precisely opposite to what is expected.
Mr. GEORGE CURTIS, the first Cashier of the Bank
of Commerce, and late President of the Continental
Bank, was occasionally the unwilling recipient of "a
present." His well-known high sense of honor and
propriety would have protected him against all suspicion of improper influence in the administration of
his trust; but so sensitive and scrupulous was he on
the subject, that he uniformly placed the article,
whatever it was, in the discount-room, and related its
history at the next meeting of the Board of Directors.
Mr. CURTIS was one of our most accomplished and
intelligent bankers. He took an active part in the
organization of the Clearing House, and was one of
the few persons in New York, connected with finance,
who made it a matter of serious study.
276 
BANK DISCIPLINE.
CHAPTER XVI.
BANK DISCIPLINE.
THE foregoing chapters contain a description of the
different departments of a bank, of the duties of the
officers and clerks, and of their daily experience.
It will occur to the reader, that there is one peculiar feature running through the whole system; and
that is, tle  /wrekensio  of fraud.  It is suggested
with every clerk, in the beginning, by the requisition
of a bond of indemnity against it; and it is never lost
sight of for an instant. The constant purpose of the
managers is, to devise a system of accounts to prevent
it. Every thing else is easy enough. But that has,
hitherto, been the one thing that no vigilance could
forestall.
The same idea exists in the public mind. Although
there is not an equal amount of any other business in
the world transacted with so little fraud, yet the common suspicion is much more alive with respect to it
in this business, than in any other.  It is certain that
there are fifty-three dry-goods, jewellers, and fancy
stores in the city of New York from which more
money or property is stolen every year than from the
fifty-three banks, and the fact is hardly recognized.
In this view, the presentment is a very strong testimony to the integrity of bank clerks.
277 
BANK DISCIPLINE.
The anxiety of officers is, after all, induced by the
poss88ibility, rather than the 8u82pico2 of dishonesty in
the clerks. It would be most unfortunate for both
parties, if the governing sentiment of the former were
not one of thorough confidence. The moment that it
ceases to be so, the clerk is dismissed; and dismissal
on this ground is very rare, although the number of
clerks in the city banks is near one thousand. On
the other hand, the cases are also rare, in which a
clerk, seeking promotion in another bank, is not
cheerfully assisted by the officers with whom he has
been employed. It is recognized as his right to refer
to them for testimony of capacity and character; and
no petty considerations of inconvenience from loss of
valuable services are allowed to have influence.  The
terms of intercourse between them are uniformly and
mutually respectful and polite. No insulting superiority ia assumed, nor mean servility manifested;
but the common feeling is rather that of partners in
the same interest.
Neither is the possibility of fraud suggested by
reflection on the personal character of the clerk, but
by outside circumstances.   The  embezzlement of
bank funds, in most cases, has either had its origin in,
or been greatly aggravated by the vice of gambling;
and this has generally been brought about by the
persuasion, or the acts of persons connected with
gambling-houses.  The bank clerk or the bank officer
is a promising victim, if he can be induced to make a
fu-st experiment in this direction; and a single victim
will reward many plans. The author will cite but
one instance of several that have come to his know.
278 
PLANS OF GAMBLERS.
ledge within a few years past. A Paying Teller
accepted the invitation of a friend to take a ride into
the country. The further end of the ride proved to
be a house frequented bysporting characters.  He
believed this to be accidental, until a subsequent proposition, after an interval of several weeks, revealed
the true character and design of his polite friend.
That plans are deliberately laid to entrap the unwary
into the practice of gambling, is well known. It is,
unfortunately, a very common vice, and easily concealed. A masonic honor makes one gambler safe
with another; but what is more difficult to explain,
men who have no interest but to expose a vice which
destroys all integrity of character, aid in its concealment. After the development of the fraud described
on page 155, several respectable dealers of the bank
came forward and said:
"Didn't you know that that fellow was a gambler?
-Why, I've known it for more than a year."
"Why didn't you tell us of it?"
"Because it wasn't my business."
The moral of this anecdote might have been appreciated, if the informant's house had been burned
down; and a friend had called at the ruins on the
next morning to say: " I saw a man in the act of
setting fire to it."
The knowledge of such facts as these is the root
of the bank officer's anxiety on behalf of his clerks. It
induces a more attentive study of their character, and
a desire to know something of their habits and associations. Their hours of leisure are many, compared
with those of commercial clerks, affording time either
279 
BANK DISCIPLMNE.
for idle dissipation or mental improvement; and the
manifestation of these opposite dispositions cannot be
concealed, nor fail to command respect, or to excite
distrust. However uncultivated may be the officer
himself, he appreciates the fact that the mental habit
is a better safeguard against embezzlement than can
be put into a legal instrument. The author is acquainted with a Paying Teller whose healthful rambles before and after bank hours have made him an
accomplishedbotanist; with another, who is a diligent
student in political economy; and with a third, who
is devoted to natural philosophy. It is almost needless to say, that these gentlemen enjoy, in an unusual
degree, the respect and confidence of their superiors,
and that their chances of promotion are greatly improved by their habits.
Finally, however, the real safeguard of a bank
against collusion and fraud from without, as well as
from embezzlement within, is to be found in the general organization of its accounts, and in its discipline.
Nothing short of daily personal supervision of all
the postings, additions, and transfers in the work of
ten or fifteen desks, could give to the bank officers a
positive assurance that there is no error or fraud concealed in the accounts. This being impossible, the
next best thing is to prove the accuracy of result.
When a dealer's book is balanced, and the balance
agrees with his own cash-book, the presumption is,
that the account is correct in its details, because the
same result is attained by two persons, each independently of the other, and by different processes.
On this theory, one of our city banks has adopted a
280 
REPORTS.
system of daily reports of the reciprocal departments,
the separate entries of which are checked off against
each other. The following are the principal of these
reports for one day:
PAYING TELLER'S DAILY REPORT.
Balance of cash from previous day.........
Received from the other Tellers...........
000
000
000
000
000
"      "  Clearing House............
Added to Exchanges............................ 
Paid Clearing House (Exchanges)............
I " I              Ibalance, in specie.....
"  Checks at counter in specie.....10,000
"    "           "     bills.......50,000
I" I in Exchanges........1,600,000
000
000
000
000
000
000
000
"  Receiving Teller....................
"  Note Teller........................
"  Uncurrent Teller....................
060
25
10
15
410
990
400
Balance of cash carried to next day.......
Completed, 3i o'clock. Difference in cash, 0.
RECEIVING TELLER'S DAILY REPORT.
Number of deposits, 275-amount..........
Received from Paying Teller..............
Deduct checks on this bank, charged......
Balance of cash.........................
Consisting of: 
Specie.................................
Clearing House matter..................
Office matter............................
Foreign checks..........................
)00
Completed, 4 o'clock. Difference in cash, 0.
281
000
500
000
000
1
2
3
4
5
6
7
1
50
00
00
00
00
1
1
1
.. i;....
.. 0 000
1
660
...
...
000
...
9
10
11
12
is
4
3
3
7
00 000 15
25 000 16
...... 17
I
025
120
905
000
00
00
000
000
600
400
is
19
20
1
5
75
5
19
90 
BANK  DISCIPLINE.
NOTE TELLER'S DAILY REPORT.
900 000 22
10 000 23
,    50 000 24
960 000
150000 25
200 000 26
350 000
.............. 610  000
40 500 27
560 000 28
9 500 29
.-.610000
ash, 0.
2-of discounted, none.
T RING HOUSE.
Balance..............................
Consisting of:
Specie...............................
Clearing House matter.................
Office matter.........................
Receiving Teller's footing................ 750 000
Note Teller's footing.................... 3500 0 00
1 100 000
Added by Note Teller............................... 200 000
Total......................................... 30  1300 000
EXCHANGES RECEIVED FROM CLEARING HOUSE.
Number of checks, 2,500.
Am't of checks on Commercial Bank....
Bills of    "          "       "                0....
Redemptions for other banks in bills  6....
'i            "       in checks..
495 000
189
16
700
Sundries..................................
Total.......................................
Completed     o'clock.  Difference in cash, 0.
1
282
1
000
000
000
000
000
000
1 
REPORTS.
UNCURRENT NOTE TELLER'S DAILY REPORT.
Received from Paying Teller..............
4"    "  Correspondents............
"  "  City depositors.............
"     "  other banks, redemptions...
15
30
15
50
160
$5
75
Deduct redemptions charged.............
Paid Note Teller.......................
Office matter...........................
75 000
25 000
Amount rec'd for credit on the following day......
Completed,        o'clock.  Difference in cash, 0.
CHECK CLERK'S DAILY REPORT.
Amount of Paying Teller's checks:
In Exchanges-domestic................ 1 400000
foreign...................200 000
Checks paid at counter.................. 60 000
--- 37 1 660 000
Receiving Teller's checks-domestic............... 38.. 120 000
"    foreign................ 39.. 19400
Note Teller's checks-domestic................... 40.. 150 000
General Ledger checks, redemptions charged........ 41.. 35 000
Completed,     o'clock.
PORTER'S DAILY REPORT.
Specie received by Receiving Teller...............42.   5 000
4      " " Note Teller.............          43.   401500
GENERAL BOOK-KEEPER'S DAILY REPORT.
Balance of cash............................... 44  3 990 000
Amount of Receiving Teller's credits............... 45 1000 000
Note Teller's credits................... 46.. 900 000
"    certifications...........................47.. 700000
283
3
33
34
000
000
000
000
000
000
000
0
5
000
000 
BANK DISCIPLINE.
CERTIFICATION CLERK'S DAILY REPORT.
-1 —--------—... 185
Number of checks certified, 250.
Amount.................. 48.....$700,000
Completed, 3i o'clock.
COMMERCIAL BANK.
No. Letters received from Post Office, A. M...225
1" " I                               tP.MI.P   75
- 300
— 8O
No. Letters sent, 295.
185     Amount of Postage, $11.50.
COLLECTION CLERK'S DAILY REPORT.
~~ —--------- 185
No. of Sight Drafts sent out for payment..........150
"   Time Drafts sent out for acceptance......... 50
City Notes and Acceptances registered.....270
" Drafts protested.......................... 3
"Foreign Notes and Drafts registered....i...150
Time completed, 3~ o'clock.
These reports are laid on the Cashier's desk every
day, after the close of business, by the respective
clerks.  For brevity of explanation, the items will be
designated by the number opposite to each.
Number 1 is the balance of cash brought forward
from the previous day. It is verified by the report
of the General Book-keeper for that date. Number
2 is the sum of the several Tellers' receipts, also for the
previous day, including the exchanges, the office
284 
REPORTS.
matter, and the specie. Number 3 is verified by number 31; 4, by 26; 5 is the entire amount of cash from
which the payments are to be made. Number 6 is
verified by 30; 7, by subtracting the amount sent to
the Clearing House (6) from that received (3); 8, by
37; 9,byl 16; 10,by23; 11,by32; 12,byaddition;
13, by the balance test and by 44; 14, by 5; 15,
by 45; 17, by 38; 18, by 42; 19, 20, 28, and 29, by
the reports of the succeeding day; 21, by 39; 22, by
46; 24, by 35; 25, by 40; 27, by 43; 34, by41;
36, by the Paying Teller's report of the next day; and
47, by 48.
The report of every clerk is thus proved by the
report of another clerk; and mostly the proof of one
is established by comparison with the items of several
others, each distinct. The Cashier is enabled by this
system to check off the results of each day's business
in all the departments, in the space of fifteen minutes.
When a report shows extraordinary results, an
explanation is required on the back of the ticket.
For example, if the Paying Teller should pay out an
unusual amount of coin, a memorandum on the back
of the report would give the names of the drawers,
and for what purpose it was required-perhaps to
pay duties, or for shipment. If any discounted notes
are protested, the Note Teller writes on the back of
his reports the amounts, with the names of the
indorsers and drawers.  The CertiJfcation Clerk commonly notes the names of the dealers who have
obtained the largest certifications.
The protection gained by these reports is measurably secured by other methods of supervision in many
, 285 
BANK DISOIPLINE.
of our city banks.  It cannot be said that they pre.
clude the possibility of fraud; but they make an
incredible extent of collusion necessary to carry it
on continuously and successfully.
In the same institution, the record of certified checks
has been given to a separate clerk; which, in connection with the separate counting of the Exchanges, is
an effectual bar to abuse by the Paying Teller, of the
power of certification. The check is first recorded
by the Certification Clerk, who writes his initials upon
it, and it is then certified by the Paying Teller. When
it returns through the Clearing Hlouse for redemption, it comes to the Assistant or Exchange Teller,
by whom it is checked off on the Certification List,
before it passes into the hands of the Paying Teller.
Under this plan, a fraudulent certification, to be
carried over a single day, must have the collusion of
at least four persons-three clerks in the bank, and a
confederate outside. If this is not guard enough
against the dishonest issue of certified checks, it is
hardly to be secured by human vigilance.
286 
HOW TO TRANSACT BUSINESS WfIT A BANK.
CHAPTER XVII.
HOW TO TRANSACT BUSINESS WITH A BANK.
IF you are a stranger to the officers, and wish to
open an account, get some respectable person who is
known to them to introduce you, either to the President or Cashier. Do not ask him to vouch for anything beyond your integrity and fairness in dealing.
Tell your own story about capital, business, property,
and other matters which pertain to your commercial
prospects - and exaggerate nothing.   There is no
humbug that will recoil upon yourself so surely as an
attempt to palm off big tales on a bank officer. Your
deposit-tickets, your checks, your bills receivable,
your indorsements, and your ledger account, make
together a history that dispels all shams, and leaves
little to say. A man who begins with an exaggerated
account of himself is measured by it afterwards, and
appears relatively small.
Borrow no money of your neighbors to swell your
first deposits. This is a common practice, with the
idea that it will make a favorable impression on the
officers. They see through it at once, and take it as
a proof of weakness.
Never try to bargain for special indulgences, such
as the certification of your checks before your deposit
is made or the discount of your paper by the officers
287
I 
288   HOW TO TRANSACT BUSINESS WITH A BANL
without its submission to the Board of Directors. The
character of your account will settle these matters
much more satisfactorily to all parties.
Let your intercourse with the officers be candid and
respectful, and be sparing in your personal solicitation for discounts. Choose the earlier hours of the
day for your interviews, and especially avoid the last
hour before three o'clock.
Write your signature with the same freedom that
you do in your own office, and never vary the style
of it.
Teach your clerks to use always the deposit-tickets
furnished by the bank, to examine the date and
indorsement of every check, and also to see that the
writing of the amount corresponds with the figures.
Instruct them to learn and to follow the rules of the
bank with: respect to getting checks certified before
deposit.
Make your deposit as early in the day as possible.
If you are accustomed to have many checks, or large
packages of bank bills, it is better to make two deposits-one at an early hour than to hand in all at
once just at three o'clock. Never change checks with
other people merely to make larger figures. It causes
needless labor to the bank clerks, makes you responsible for the debts of others, and is a real prejudice
to your credit.
Never try to put in your deposit before those in
advance of you, but take your place in the line, and
wait your turn patiently. Never make deposits without your bank-book, if you can help it. Avoid all
unnecessary conversation with the clerks, especially
with the tellers.
-1 
PRACTICAL RULES.
Never get angry if the Paying Teller examines
your account before certifying your check; nor if he
keeps you waiting a few seconds before he can pay it.
Make it an invariable rule to give checks only out
of your own check-book, and at your own office; and
never write a check payable to order, when you can
as well do it to " the bearer." When you want the
indorsement of the person to whom you give it, let
him indorse it in your presence, and write your own
name below, to assure the Teller that it is right.
Never give out checks dated ahead. When you
have need to cut checks out of the end of your checkbook, mark in the margin what they are for - to
supply duplicates, or otherwise. Keep your checkbooks out of sight and reach of strangers. Never give
a stranger a check unless you have some evidence
that he is not seeking it for fraudulent purposes.
Never draw checks against your account, on the
ground that you have sent some abroad that will not
return immediately. Always consider a check paid
when you give it out.
Never attempt to pay a note with an uncertified
check, at a bank where you keep no account. If you
make your promissory notes payable at bank, give
the Paying Teller a list of them on Monday morning
for the current week, or send him your bank-notices
on the day of their maturity.
When you want notes discounted, offer them on the
regular days, and in good season for the clerk's convenience. Never call on bank officers to discount
notes between the Board meetings, if you can wait
until the following discount day, Do not put off the
13
289 
290    IOW TO TRANSACT BUSINESS WITH A BANK.
offering of notes for discount until the last day of
your need. It is better to keep from ten days to a
fortnight ahead, and to let your balances remain in
the bank until you require them. The loss of interest
is very trifling at best.  You lose more by anxiety
and unfitness for business.
When you want your bank-book balanced, or
entries made in it, apply to the Book-keeper early in
the day. Never ask a service of him later than one
o'clock if you can wait till the next morning. Do
not allow your book to run too long without being
balanced, and when balanced, examine your cancelled
checks without delay.
If the bank ledger shows a larger balance in your
favor  at any  time, than  your  own  check-book,
acquaint the Book-keeper with it immediately. As
you value your credit with the bank, never take
advantage of deposits wrongly entered to your account,
but let your dealings be strictly honorable.
If you have any cause of complaint against the
clerks, state it directly to the officers. The clerks
act under their instructions, which they dare not disobey.
The Book-keeper is the proper person to apply
to, to know if collection notes are passed to your
credit.
The Note Clerk will inform you of the maturity of
notes for a future time. In the case of discounted
notes apply to the Discount Clerk. The Discount
Clerk, or the Note Clerk, will commonly tell the
exchange or charges for collecting foreign paper.
When you have notes to send abroad for collection, 
IRACrICAL RULES.
deposit them in ample time for deliberate record and
transmission by the bank.
If the drawers of any notes lodged as collateral to
loans or discounts should fail, do not wait for the
bank officers to discover it, but substitute good notes
for them without delay.
The observance of these rules, and such others as
may be suggested by your own observation, will be
a great economy of time to yourself as well as to the
bank clerks, and promote your real credit with the
institution.
Dealers should always instruct inexperienced clerks
not to transact business with strangers outside of the
counter. If they want advice how to proceed, let
them ask any clerk who is not too busy to answer, or
go direct to the officers. There are often well-dressed
persons in the lobby, or about the counters, watching
for those who appear at a loss, and ready to assist
them very politely. An old merchant sent his carman to draw a check for two hundred dollars. It
was his first message to a bank. A gentleman, observing him to be a little gawky, said very kindly: " You
want the money for that check-this is the place!"
and took him to the proper teller, who paid him in
large bills.  " Now," he added, "you want some of
this in small notes. Come with me." He took him
into a broker's office in the same building, changed
the bills, and managed to retain thirty dollars in his
own possession. The teller and broker supposed the
two to be friends, and the carman thought that the
bank was very accommodating, to keep a clerk only
to help strangers!
291 
THE NEW YORK CLEARING HOUSE.
CIIAPTER XVIII.
THE NEW YORK CLEARING HOUSE.
As account of the Clearing House may very pro.
perly be introduced by a sketch of the old plan of
exchange and settlement between the banks.
During the few years following 1849, the number
of banks in New York was increased from twentyfour to sixty. To make the daily exchange, one-half
of them must necessarily send to the other half. But
this plain division of the service was not convenient
or economical. It was found better for all of them
to do a part of the distribution, and thus the whole
sixty Porters were in motion at the same time. Each
carried a book of entry, and the money, for every
bank on which he called. The Paying Teller of the
receiving bank took the exchange and entered it on
the credit side of the book; then he entered on the
debit side the return exchange, and gave it with the
book to the Porter, who hastened to the next bank in
his circuit. The Porters crossed and recrossed each
others' footsteps constantly; they often met in companies of five or six at the same counter, and retarded
each other; and they were fortunate to reach their
respective banks at the end of one or two hours. This
threw the counting of the exchanges into the middle
292 
THE NEW YORK CLEARING HOUSE.
and after part of the day, when the other business of
the bank was becoming urgent.
Instead of attempting a daily adjustment of accounts,
which would have consumed several hours, and caused
much annoyance, it became a tacit agreement, that a
weekly settlement of balances should be made after
the exchange of Friday morning, and that intermediate draft-drawing should be suspended. The
weaker and more speculative banks took advantage
of this by borrowing money on Thursday,  which
restored their accounts for Friday; and its return on
Saturday threw them again into the debit column. In
this way, the banks distant from Wall street managed
to carry an inflated line of discounts, based on debts
due to other institutions. It became an affair of
cunning management by some to run a small credit of
two or three thousand dollars each with thirty or
more banks, making a total of one hundred thousand
dollars, on which  they discounted bills.  Consequently, the Friday settlements proved to be no settlements at all, but a prodigious annoyance. As soon
as the Paying Teller or his Assistant completed the
Exchange Bal ance List, the Cashier of each bank would
draw checks for every debt due to him by other
banks, and send out the Porters to collect them. A
draft on one in favor of another might settle two
accounts at once, but there was no understanding that
made it possible to secure that small economy; or if
there was, it was disregarded. The sixty Porters
were out all at once, with an aggregate of two or
three hundred bank-drafts in their pockets, balking
each other, drawing specie at some places, and
293 
THE NEW YORK CLEARING HOUSE.
depositing it in others; and the whole process was
one of confusion, disputes, and unavoidable blunders,
of which no description could give an exact impression.
After all the draft-drawing was over, came the
settlement of the Wall street Porters among themselves. A Porters' Exchange was held on the steps
of one of the Wall street banks, at which they
accounted to each other for what had been done
during the day. Thomas had left a bag of specie at
John's bank to settle a balance, which was due from
William's bank to Robert's; but Robert's bank owed
twice as much to John's. What had become of that!
Then Alexander owed Robert also, and William was
indebted to Alexander. Peter then said, that he had
paid Robert by a draft from James, which he, James,
had received from Alfred on Alexander's account.
That, however, had settled only half the debt. A
quarter of the remainder was cancelled by a bag of
coin, which Samnuel had handed over to Joseph, and
he had transferred to David. It is entirely safe to
say, that the Presidents and Cashiers of the banks
themselves could not have untangled this medley.
Each Porter had his tally, and by checking off and
liberating, first one whose account was least complicated, and then another, they finally achieved a
settlement.
This scene was re-enacted on every Friday. In
consequence of the Porters being withdrawn from
their regular service in the bank, extra labor was
imposed on others, responsibilities became mingled
together, and the officers were kept for the whole day
294 
/' 1'7-              -- -~~1 
L~~~~~~~~It
~~  ~~;;1;~~~ ~~
~;'~                             ~~~~~~~~~~~~~
tjj~~~~~~~~~~~~~~~~~~~~~~~~  ~~~!
_________                 I~~~
________ F —-~!/2 ~/:i~   I;;/          r.
-1 
I 
THE NEW YORK CLEARING HOUSE.
in a state of distraction and anxiety. The Paying
Tellers were subject to frequent interruption, as they
were obliged to receive and deliver all specie.
Not the least irritating feature of the case was, that
a single small draft by any one bank on any other
induced a general drawing, and all became involved
in commotion, and "war" upon each other.  If time
were allowed, the debtor banks would finally be
obliged to pay the liquidating balance; but three
o'clock arrested the process, and the banks where
the demand was then in force were obliged to disburse the coin. It was not unusual for a debtor bank
to add fifty thousand dollars to its specie at the close
of the day, with its debt doubled, while a creditor
bank to half a million in the general account, would
find itself; at three o'clock, depleted of one or two
hundred thousand dollars in coin.
The question had been occasionally discussed
whether these difficulties might not be obviated by
some other mode of exchange; but without approaching a practical issue. It began now to be more
seriously entertained.
The subject was discussed in all its bearings, at
informal meetings of bank officers, and steps were
taken to obtain general co-operation in some partial
and experimental plans. Such, however, was the
diversity of opinions, even among those who were
most anxious to promote the object, that nearly a
year passed before it was thought expedient to issue
notices for a meeting to take decisive action upon it.
Then, it encountered much silent and determined
opposition. Those banks which had profited most
295 
THE NEW YORK CLEARING HOUSE.
by enforced credit balances, feared the restraint and
domination of the others; and these had prejudices
to overcome, and a long score of annoyances to forget;
but it was manifest that the subject could be deferred
no longer. A plan was finally adopted, and went into
effect on the first of October, 1853. Its complete
success soon banished all feelings but those of gratification and common interest.
The operations of the Clearing House were carried
on for nearly one year without a Constitution. Some
opposition was manifested, on the ground that it was
not needed, and might favor a dangerous concentration of power in the hands of a few managers; but
the necessity of fixed rules soon became apparent,
and the following Constitution, prepared by GEORGE
CURTIS, Esq., was adopted on 6th of June, 1854:
CONSTITUTION.
~ 1. THE name of this Association shall be, "TIE
NEW YORK CLEARING HOUSE ASSOCUTION."
~ 2. The objects of the Association shall be, the effecting at one place of the daily exchanges between the
several Associated Banks, and the payment at the same
place of the balances resulting from such exchanges.
B3ut the Association shall be in nowise responsible in
regard to such exchanges, nor in regard to the balances resulting therefrom, except  so far as such
balances shall be actually paid into the hands of the
Manager. The responsibility of the Association is
strictly limited to the faithful distribution by the
Manager among the Creditor Banks, for the time
being, of the sums actually received by him; and
shold any loss occur whilst the said balances are in
the custody of the Manager, they shall be borne and
296 
CONSTITUTION. 
paid by the Associated Banks, in the same proportion
as the other expenses of the Clearing House, as hereinafter provided for.
~ 3. The Association at present consists of the following Members: [The same as the Proof-lists.]
~ 4. Each Bank belonging to the Association shall
be represented at all meetings thereof, by one or
more of its principal officers, and shall be entitled to
one vote.
~ 5. A general meeting of the Association shall be
holden at the Clearing House, on the first Tuesday in
October, in each year, at 12 o'clock, M. At every
annual meeting, a Chairman shall be elected, by ballot, to preside at that meeting, and all subsequent
meetings during the year.  Whenever  he shall be
absent, a Chairman pro tern. shall be appointed. At
the same meeting, a Secretary shall also be elected
by ballot.
~ 6. Special meetings shall be called by the Clearing House Committee whenever they may deem it
expedient, or whenever they shall be thereto requested
by any seven of the Associated Banks.
~ 7. At all meetings of the Association, a quorum
for the transaction of business shall consist of a
majority of the whole number of Associated Banks.
~ 8. At every annual meeting, a Standing Committee of Five Bank Officers shall be elected by the
majority and by ballot, to be called the Clearing
House Committee, whose duty it shall be to procure,
from time to time, a suitable room or roomns for the
Clearing House; to provide proper books, stationery,
furniture, fuel, and whatever else may be necessary
for the convenient transaction of business thereat; to
appoint a Manager annually, and such Clerks as may
be necessary; to establish rules and regulations to be
observed at the Clearing House in cases not provided
for in this Constitution, subject to the approval of the
Association; and generall to supervise the Clearing
House affairs. This Committee shall have charge of
13*
297 
THE NEW YORK CLEARING HOUSE.
the fimds belonging to the Association; shall draw
on each Bank for its quota of the expenses; and shall
also, at the first meeting of the Association after their
election, submit detailed estimates of the expenditures
that will be required for the Clearing Hlouse during
the current year.
~ 9. The salary of the Manager shall always be
fixed by the Association.  The salaries of the Clerks
shall be fixed by the Clearing House Committee.
The Manager shall give a bond, with sureties in the
sum of ten thousand dollars, and each Clerk in the
sum of five thousand dollars, to be approved by said
Committee.
~ 10. The Manager, under control of the Clearing
House Committee, shall have immediate charge of all
business at the Clearing House, so far as relates to the
manner in which it shall be transacted; and the
Clerks of the establishment, as well as the Settling
Clerks and Porters of the several Associated Banks,
while at the Clearing House, shall be under his direction.
~ 11. The Clearing House Committee shall have
power to remove the Manager, or any of the Clerks,
whenever, in the opinion of the Committee, the interest of the Association shall require.
~ 12. The hour for making exchanges at the Clearing House shall be 10 o'clock A. M., precisely. At
one o'clock P. M., the Debtor Banks shall pay to the
Manager, at the Clearing House, the balances against
them, either in actual coin, or in the certificates hereinafter mentioned, except fractional amounts. At
21 o'clock P. M., the Creditor Banks shall receive
from the Manager, at the same place, the respective
balances due to them, provided the balances due from
the Debtor Banks shall then have been paid.
~ 13. Should any one of the Associated Banks fail
to appear at the Clearing Hiouse at the proper hour,
prepared to pay the balance against it, the amount of
that balance shall be immediately furnished to the
298 
CONSTIrUTION.
Clearing House by the several Banks exchanging at
that establishment with the defaulting Bank, in proportion to their respective balances against that Bank
resulting from the exchanges of the day; and the
Manager shall make requisitions accordingly, so that
the general settlement may be accomplished with as
little delay as possible. The respective amounts so
furnished the Clearing House, on account of the
defaulting Bank, will, of course, constitute claims on
the part of the several responding Banks against that
Bank: but, as before stated, the Association shall in
nowise be responsible therefor.
~ 14. Errors in the exchanges, and claims arising
from the return of checks, or from any other cause,
are to be adjusted directly between the Banks who
are parties to them, and not through the Clearing
House, the Association being in no way responsible
in respect to them.
~ 15. Reclamations for errors and deficiencies in
specie received at the Clearing House, contained in
bags or other packages, sealed and marked in conforminity with any rules established upon that subject
by the Clearing House Committee, should be made
within a reasonable time by the receiving Bank
directly against the Bank whose mark the sealed bag
or package bears, the Association not being responsible for the contents of such sealed bags or other
packages.
~ 16. The Associated Banks shall, from time to
time, appoint one of their own number to be a Depository to receive, in special trust, such coin as any of
the Associated Banks may choose to send to it for
safe keeping. The Depository shall issue certificates
in exchange for such coin, in proper form, and for
convenient amounts. Such certificates shall be negotiable only among the Associated Banks, and shall be
received by them in payment of balances at the
Clearing House.  Such special deposits (f coin are to
be entirely voluntary, each Bank being left perfectly
299 
THE NEW YORK CLEARING HOIUSE.
free to make them or not, at its own discretion. The
coin thus placed in special deposit is to be the absolute property of such of the Associated Banks as
shall, from time to time, be the holders of the certificates, and is to be held by the Depository, subject to
withdrawal, on the presentation of the proper certificates, at any time during banking hours.
~ 17. New members nmay be admitted into the
Association at any meeting thereof. Such new mnembers shall pay an admission fee of one thousand dollars, and shall signify their assent to this Constitution,
in the same manner as the original members. But no
new member shall be admitted except by a vote of
three-fourths of those present.
~ 18. A Standing Committee of Five Bank Officers shall be appointed. at every annual meeting, to
whom all applications for admission into the Association shall be referred for examination.
~ 19. For cause deemed sufficient by the Associated Banks, at any meeting thereof, any Bank may
be expelled from the Association, and debarred from
all the privileges of the Clearing House, provided a
majority of the whole number of Associated Banks
vote in favor thereof.
~ 20. A Standing ConImittee of Five Officers of
Banks shall be elected at every annual meeting, who,
acting in concurrence with the Clearing House Committee, shall have power, in case of extreme emergency, to suspend any Bank from the privileges of
the Clearing House until the pleasure of the Association thereupon shall be ascertained. But no such
suspension shall take place, unless a majority, at
least, of each of these two Committees, shall be present at the ordering thereof, nor unless the vote be
unanimous. In case of such suspension, the Clearing
House Committee shall forthwith call a general meeting of the Association, to take the matter into consideration.
~ 21. Any member of the Association may with
300 
CONSTrrUTION.
draw therefrom at pleasure, first paying its duo
proportion of all expenses incurred, and signifying its
intention to withdraw, to the Clearing House Committee.
~ 22. The expenses of the Clearing House, not
including the expense of printing for the several
Banks (which last-mentioned expense shall be apportioned equally), shall be borne and paid by the several Banks belonging to the Association, according to
their respective capitals, as follows:
Banks having capitals of less than $500,000, shall
pay $100 each, annually.
Banks having capitals of less than $1,000,000, and
not less than $500,000, shall pay $200 each, annually.
Banks having capitals of $1,000,000, and over, shall
shall pay $300 each, annually.
And in the same proportion, if more funds become
necessary.
~ 23. This Constitution, when agreed to by the
Association, at any general meeting thereof, by a
majority of votes, shall be submitted to the respective
Boards of Directors of the several Banks herein
named as members of the Association, for their adoption.  When  adopted by a majority of the whole
number of Banks, it shall be deemed and taken to be
in full force and operation. Adoption shall be signified by the signature of the proper officer of the Bank
to two copies hereof-one to be kept by the Chairman of the Clearing House Committee, and the other
by the Secretary of the Association. A copy of the
vote or resolution of the Board, authorizing such signature, shall be deposited with the Secretary. Such
Banks as shall not adopt this Constitution within two
months from the time it is agreed to in general meeting, as above mentioned, shall, at the expiration of
such two months, cease to be members of the Association, provided the Constitution shall then be in operation.
~ 24. Amendments of this Constitution may be
301 
THE NEW YORK CLEARING HOUSE.
made at any meeting of the Association, by the vote
of a majority of all the members thereof, notice of the
proposed amendments having been given at a previous meeting.
The following amendments, proposed by GEORGE
CURTIs, Esq., January 11, 1855, were subsequently
adopted:
~ At every annual meeting, a Standing Committee of Five Bank Officers shall be appointed, to be
called the Committee of Arbitration, whose duty it
shall be, to hear and determine all disputes that
may be submitted to them by both parties thereto;
any member of the Association being one: such
Committee shall record a brief abstract of each case
referred to them, together with their decision therein,
in a book to be provided for that purpose, which
book shall be kept at the Clearing House, open to
the inspection of all members of the Association.
The first Committee shall be appointed immediately
upon the adoption of this amendment, and shall serve
until the next annual meeting.
~ Whenever exchanges shall have been made at
the Clearing House, by previous arrangement between members of the Association through one of
their own number, and Banks in the city and vicinity
who are not members, the Receiving Bank at the
Clearing House shall in no case discontinue  the
arrangement without giving previous notice, which
notice shall not take effect until the exchanges of the
morning following the receipt of such notice shall
have been completed.
302  
l ~     HSKY-LIGTl AND VENTILA TOR.        TE~
W~~~~;,i              IM   elI I;I;I11
/I/ZZMM S~Er7T 
DIAGRAM.
THE CLEARING HOUSE ROOMS.
The opposite diagram represents the ground plan
of the rooms of the Clearing House Association.
They occupy the fourth floor of the new building
recently erected by the Bank of New York on the
north-east corner of Wall and William streets.
The Manager's Room has a front of thirty-six feet on
Wall street, and is twenty-four feet in depth. It has
a slightly raised platform at E, with a desk and chair,
suited for the occupancy of the President in the meetings of the Association.
D is a solid centre table, on which are usually kept
files of the daily papers and financial periodicals.
The Ledgers are laid upon it for examination by the
members.
C is the Manager's desk, facing the middle of the
room. A book-case with the nucleus of a financial
library stands against the northern wall. The apartment is carpeted, and every arrangement speaks of
taste, order and discipline.
A door near William street communicates with the
Clerks' Room, twenty-four feet by seventeen feet in
size, neatly furnished with desks and drawers for the
books and papers. B, in this room, is the settling
counter at which the Bank messengers transact their
business. On one end of it is placed the Specie Clerks'
Receipt Book for balances paid to them. An iron
railing and wire net-work protects the other part from
intrusion by visitors. The vestibule on the outside,
303 
THE NEW YORK CLEARING HOUSE.
at the head of the stairway, communicates with the
Manager's Room on one side, and the Exchange Room
on the other.
The Exchange Room is eighty feet long by twentyfour feet wide. It is well lighted on both sides; that
opposite to the street looking out into a spacious area
with a glass roof, which ventilates the building. The
black spots inside of the counter, on which the desks
are placed, represent stools for the use of the Settling
Clerks. The desks are numbered from one to fiftyfour, beginning at the left hand of the entrance. The
name, also, of each bank is engraved on a plate on the
outside.
A is the Manager's pulpit, in a raised doorway
which opens from the Clerks' apartment, and overlooks the Exchange Room.  The floor of this room is
covered with a stout rug, to deaden the noise of feet
while the Clerks are in movement.
The desks on the counter are separated by a light
iron railing, and each one is furnished with pigeonholes and drawers for the necessary papers and implements of writing. Closets under the counter afford
convenience for hats, coats, &c.
THE DAILY ROUTINE.
EACH bank sends to the Clearing House a messenger or Specie Clerk, and a Settling Clerk; the
former to distribute the packets of money of which
his exchange is composed, and the latter to receive
the return packets from the other messengers. They
begin to arrive about fifteen minutes before ten
304 
THE DAILY ROUTINE.
o'clock, A. M., that being the hour at which the Manager gives the signal for the distribution to begin.
Each Specie Clerk leaves at the settling-desk B, as
he passes into the long room, a printed form, the blank
of which is filled with the gross amount of money
that he has brought to exchange. For example, the
Clerk of the Bank of New York leaves the following:
N o. 1.]         NEW YORK: CLEARING HOUSE,
0~~~~~~~~~~~~~~~
March 20th, 1857.
Credit BANK OF NEW YORK,  ~d4j6'.J9
------------,Settling Clerk.
The Assistant Manager is thus furnished with the
amounts composing the right-hand main column of
the Clearing Hffouse Proof (page 310), which he
transcribes under the head of "Banks Cr.," and adds
together, making in the example $40,515,703.66.
This is the total sum sent in by all the banks, and it
is called the Credit Exchange. If each Messenger has
a packet of money for every bank in the House
(excepting his own), there are of course twenty-five
hundred and fifty packets to be distributed.   The
manner of effecting this distribution is the distinctive
feature of the Clearing House system, as compared
with the old plan of separate exchange.
305 
THE NEW YORK CLEARING HOUSE.
The Manager appears on his stand under the door
way (A) at two or three minutes before ten o'clock,
and giving a stroke on his bell, calls out: " Take your
places."
The Settling Clerks immediately occupy their
respective desks on the inside of the counter, and the
Specie Clerks, standing, on the outside.' Each of the
latter carries on his left arm an open box of some
light material, containing his packets of money
arranged in the consecutive desk-order for delivery
as he passes sound the counter. He has also a
Receipt List,* called " The Specie Clerks' Statement,"
with the amount designed for each bank, set down in
the same order.
A fine is imposed for absence or late attendance.
There are now in the room one hundred and two
Clerks, besides those who are attached to the House,
and the scene is not always free from confusion by
loud conversation, which the Manager corrects by a
call:
"Order, gentlemen, order!"
Occasionally there are notices to be given of change
of rules, or other matter relating to the business. The
Manager calls the attention of the Clerks to any violation of rules that may have come to his knowledge,
and perhaps enforces in a few words the necessity of
strict discipline. Some one bank may have a communication on a subject of common interest. A discrepancy in the cash of any one, on a previous date,
* This is a copy of the Receiving Teller's Proof List, with a blank column for
the Settling Clerks to sign their initials as a receipt.
306 
I'll"'
'Ii'                                                                          IiI
; ~ I FtF
____________  11t~\i''1I II\i~t)~!
The Manager in his Pulpit.   
_______              I              __
_____                  ____    "``i
___ ct;;!
_____=  ____          ffi-       -~  ----
-  -~                       -      -    ~i';{;;  F
_____    1'';''
-__       Fl;  I
_______                          ff/?-j~MfflstDD Fit  F
____                                      11F;FF;;
__       - --  -  ~                "
-  -          -~   __ _ ))FFF 7 -  t' II
________               -   -~ F~-~~M
____________                            F    F
_________________             ~~1i — &mdash; ~-=%- 1;,~t 
TRE DAILY ROUTINE.
is notified, and perhaps discovered by a corresponding
error in some other. New counterfeits or altered
bills may be reported.
When the minute-hand of the clock reaches the
stroke of ten, a second ring of the Manager's bell
gives the signal for the distribution of the exchanges
to begin.
Each Specie Clerk advances one step forward, and
is brought opposite to the first desk, at which his
delivery is to be made. Hie hands over the packet
of money designed for it, and also the "Statement,"
on which the Settling Clerk writes his initials against
the amount as a receipt, being careful to observe that
the record is correct.  The Statement is then returned
to the Specie Clerk, who goes through the delivery
at each desk in like manner. The whole line advances at the same time, resembling in its movement
a military company in lock-step. While this is going
on, the Manager walks round the interior of the desks,
and silently identifies every Specie Clerk with the
bank which he represents. It is rarely that a substitute is employed in this service; and if not already
known to the Manager, he must be officially introduced.
In about six minutes the circuit is made, bringing
each Messenger round to the starting-point, opposite
his own desk. His Statement, signed by every Settling Clerk, is the voucher to his bank that he has
delivered all the money intrusted to his care.
There is no part of the Clearing House routine that
exhibits such striking results in economy and safety,
compared with the old plan of exchange, as this move
307 
TIE NEW YORK CLEARING HOUSE.
ment of six minutes. Two thousand five hundred and
fifty packages of money have been distributed and
receipted for in this short space of time, by a method
that excludes almost the last possibility of loss or
error. The same work, on the old plan, occupied
each messenger an average of not less than two hours,
and was attended by great exposure in passing
through jostling streets from one bank to another.
Supposing the whole service to be performed by one
person, the relative time occupied would be as five
hours is to eight days of twelve hours each, or a clean
saving of ninety-seven out of one hundred and two
hours!
Each Settling Clerk has now on his desk the packets
of money which constitute his Debit Exchange.  He
copies them in his Statement,* under the head of
"Banks Cr.," and the accuracy of the copy is tested
by the Specie Clerks calling back the amounts from
the packets. The footing of this column furnishes
the debit of his bank in the Clearing House Proof.
The Specie Clerks are now at liberty to leave the
House with their return exchanges, which they do
generally within fifteen minutes of the time that the
distribution begins; and although not able to state
the precise balance of their banks with the House,
they can report it in round numbers. The Settling
Clerks are obliged to remain until the Manager
announces an exact proof.
* "The Settling Clerks' Statement" is the original of the "Specie Clerks' State.
ment," with a blank column in which to copy the return exchange; and when
complete, the difference between the two columns is the debit or credit balance
or the day.
308 
THE DAILY ROUTINE.
The rapidity and accuracy with which the more
skillful of the Settling Clerks accomplish their work,
is almost incredible. The distribution occupies six
minutes. At the end of two minutes more, they have
copied and footed their column. But they must then
make a deliberate revision of it, to be assured against
errors.
The two footings of the Settling Clerks' Statement,
and their difference, debit or credit, are written in the
following form, which is sent to the Assistant Manager,
to make up "the Clearing House Proof" (page 310).
The examples given will enable the reader to trace
the figures in the course of their transfer.
NEW YORK CLEARING HOUSE.
P4
go
March 20th, 1857.
D)ebit BANK OF NEW YORK, Am't received, $780,070.76
Credit    "    "      "       "       "   brought,  $842,539.19
$ -----...    - Debit balance due Clearing House,
Credit balance due BANK OF NEW  YORK....  $62,468.43
-....                               Settling Clerk.
While the Proof is in preparation from these forms,
the Settling Clerk of each bank fills up a set of blanks
with the amount credited on his list from every other.
For example, the Clerk of the Bank of New York
sends to the Clerk of the Manhattan Bank the
following:
309
No.. i.] 
THE NEW YORK CLEARING HOUSE.
OL3AR IN G H O I S  P RIt O OOF.
March  20th, 1857.
Balances
due to  l
Clearing
House.
..........
3 Merchnts'..................344994372787246583
4~~~~~~~~.. Mehn...7973 1. 9922143556.....
12929          43
285 80483  3
..........
"i' 2ii i4 
164 525 52
95 302 91
8 City~~~~~~~~~~.3501.. 5065.. 5533........8
9 North River~~~~~~~..................7704.1685    366 
10 Tradesmens~~~~~~~.................1437.10714 36211
12 Chemical.........~~~~..............1702.. 19867...8901
13 Merchants' Exchange~~~..............4082.   2  72   121 1
tn3921 96.
1'......-..  1
16 Mchancs'& Trders...11 587 23..4124.29.925....6
17 Greenwich.........................  350.... 3  85   4861
18 Leather Manufacturers'~...........99..   5650  21611
19 Seventh Ward~~~~~~................18527 287     639631
20 Bk. of the State of N.Y~............89892 403923126662
21 American Exchange~~~~.............30672   31962 3265.. 2
22 Mech. Banking Assoc'n.........7590.. 2.27.s 66792
23 Bank of Commerce 294 626 9932253 297434....2
24 Bowery~~~~~~~~... 7233.... 00 O. 46522
4853 02.
2..  4.97.5
27 Merantil.....................8930.59172121432
28  95144 
29 Bak ofthe epuhc...164 525 52  2355321778.....2
31 1People's~~~~...              94*70..   961.6 10413
32 Bankof Nort Americ....        686.. ~ 6. 742  8376723
33  ilanver...............255.82326.4.002 64488
34.~~~~rving.........           423    1274                3
35~~~~~~~~~ Merplia. 705291.706,616205::.3
I...8898455......                       10341..1923
41  80 51     6
......9..4
Bank of Ne w Yor k.......
Manhattan Company....
Merchants'...............
Mechanics'.............
Union..................
Bank of America.......
Phenix................
City....................
Nor     th River................
Tradesmen's............
Fult     on...................
Chemical...............
Merchants' Exchange...
National................
Butchers' & Drovers'....
Mechanics' & Traders'...
Greenwich..............
Leather Manufacturers'.
Seventh Ward..........
Bk. of the State of N. Y.
American Exchange.....
Mech. Banking Assoc'n..
Bank of Commerce.....
Bowery.................
Broadway..............
Ocean..................
Mercantile..............
Pacific.................
Bank of the Republic...
Chatham...............
People's...............
Bank of North America.
Hanover................
Irving.................
Metropolitan............
Citizens'................
Grocers'................
Nassau.................
East River..............
Market.................
Saint Nicholas..........
Shoe and Leather.......
Corn Exchange.........
Continental.............
Bank of Commonwealth
Oriental................
Marine.................
Atlantic................
Importers' & Traders'...
Park...................
Artisans'................
55 ~ ~  ~     ~    ~ ~        - Arlas.............................
r.
6
6
2
7
6
7
2
2
8
T
7.
T
T
6
3
6.
1.
7.
9.
2.
5.
6.
3:
6
8.
5.
2.
9.
3.
1.
8:
6 i4
1
0
i
1
6
I
I
i
I
I
i
I
i
I
7
6
1
1
310
Balances
due to
Bank&
621468
179 355 5
248 686
18416 9
6
3 65211
12 727 2
.i. 809 2
i 241'
2 051 91
47
62 186 01
63 1976
142 063 66
32 695'. -
6 66T,99
....... I - -
4 675 72
23 6
132 134 83
.... 799 31
1 604 71
37 697 92
68 447 88
12 319 62
1 70
4 331
50 556 54
"7 2'9
49 97T 02
73 621 66
1444419 79
No
BANIKS.
ANiKs D
A.WIKS Cr.
TSO
198
484
592
813
600
115
580
172
104
241
197
410
452
070
412
091
992
023
723
098
666
720
139
717
OOT
632
994
719
182
404
464
572
899
4T3
589
050
330,
402
.539
973
845
505
36T
507
922
32,
62
84
690.
872
96
143
366
901
183
108
T32
693
31
624
850
842
3TT
T32
413
goo
315
133
Mb
196
107
254
197
526
413
131
29
37
053
243
035
109
254
977
77
213
358
579
90
IST
so
96
24
20
15
63
01
112
14
5T
98
5
63
5
2T
96
40
68
99
60
...
539 1
768
778 7
515 8
094
419 3
515.3
164 3
283
T91
445 1
8164
873 2
7T6 2
7Tl 6
.95 2
882,5
650'0
770..
962 9
168 27
257 0
423 3
006 0
549 39
516 63
10T 92
894 40
9T9 51
167 13
111 76
620 T8
800 52
237 48
260 05
304 1T
692 58
853 04
828 88
691 45
923 39
304 53
825 34
163 39
386 48
T4,5 32
904 84
992 02
601 4T
4Tl T4
T03 66
1
2
8
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
so
31
32
33
34
35
36
38
0
49
50
52
53
54
1%,
1
2
8
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
2T
28
29
30
81
32
83
34.
85
86
88
40
41
42
43
44
45
4T
48
49
50
52
53
54
55
12
4
3
99
1
89
07
24
2T
7
21
44
9
35
7
9
68
85
11
76
8
11
33
5
20
29
36
03
39
S4
3
39
24
31
57
1
51 
THE DAILY ROUTINE.
No. 2.
DANHATT AN C OCMPAsY
From No. 1,
BANK OF NEW YORK.
pgff.-40 —--------
The words: "From No. 1, Bank of New York," run
through the whole set; and in like manner, the number and name of each bank runs through the set
belonging to it. The other number and name is the
address of the particular bank to which the ticket is
sent.
This ticket ought to correct all errors of transcription, although the money has been carried away. It
is to be remembered that the Specie Clerks' Statement
is a transcript of the "total debit" column in the
Settling Clerks' Statement. If any Settling Clerk
copies a wrong amount from his list in one of these
tickets, the Clerk, to whom it is sent, discovers the
mistake by comparison with the original Statement
in his hands. So perfect is this plan of direct and
alternate revision, that the Clearing House Exchanges
have been made for nearly five years without the
error of a single cent.
If no mistake is made, the Assistant Manager announces a proof in thirty minutes from the beginning
of the movement. But the first trial is rarely so
311 
THE NEW YORK CLEARING HOUSE.
fortunate. Fifty-one clerks make over twenty thousand figures in less than ten minutes, and a single one
faulty or obscure vitiates the result.
The accuracy of the General Proof consists in the
agreement of the debit and credit columinns with each
other, and in that of the balance columns. Such is
the regularity and discipline of the House, that the
Assistant Manager seldom varies a minute from the
half-hour in announcing his first trial.
"The difference is $7,643.22 "-or it may be but a
few cents.
The writing and distribution of the small tickets
has been going on in the meantime, and it frequently
happens that the error is discovered almost simultaneously with its announcement. At other times, the
whole corps of Settling Clerks may be detained an
hour or more by further revision.
If the tickets fail to expose an error promptly, the
Manager requires the Clerk at either end to pass down
the line with his Statement, whilst the others call
back, each the amount charged as delivered by the
Specie Clerk. The second Clerk follows the track of
the first, and the third that of the second, as they
successively pass. This is the final method of revision; and if the additions are correct, it must make
the proof.
Errors discovered within forty-five minutes from the
beginning of the distribution incur no penalty; but
after that, they are chargeable with a fine, payable
by the bank in whose figures they occur. The banks
are therefore careful to send accurate and skillful
clerks. It is, moreover, a matter of pride and econ
312 
THE DAILY ROUTINE.
omy with themselves to avoid errors, as they involve
detention from home duties.
SCALE OF FINES.
Fer all errors remaining uncorrected at the expiration of one hour
and a quarter from commencing, the Fines in this list will be doubledand at the expiration of two hours, the Fines will be quadrupled.
lst-All errors on the Credit side of the
Settling Clerk's Statement (i. e. in the
amount brought) whether of footing or
entry, and all errors causing disagree      ment between the credit entries, the
check tickets, and the exchange slips      each............................$3.00
2d-Errors in making the Debit (i. e. amount
received) entries-each..............2 00
3d Errors in the Tickets reported to the Clear      ing House, causing disagreement be      tween the balances and aggregates      each.............................2.00
4th-All other errors-...................1.00
5th-Disorderly conduct of Clerk or Porter at
the Clearing House; or disregard of the
Manager's instructions-each offence.  1.00
6th-Clerk or Porter, failing to attend punc      tually at the morning exchanges-each   2.00
7th-Debtor Banks, failing to appear to pay
their balances by 1- o'clock, P. M... 3.00
The Clearing House Proof exhibits in one view the
total amount of the exchange, the amount received
from each bank, the amount taken away again by
each, and the balance due to or from each; also the
total balance of the Clearings.
Up to this point, the Clearing House has nothing
to do with the money. None of its employes touch
it, and neither does the Manager. It has been during
313
14 
THE NEW YORK CLEARING HOIJUSE.
the whole process entirely within the custody of the
Clerks and Messengers-the representatives of their
respective banks; and every package has been receipted for, immediately on delivery. The exchange
is effected independently of the IIouse, the authority
of the Manager being limited to the preservation of
order, and to the enforcement of the rules of the
Association.
The column on the left hand of the Clearing House
Proof shows the balance due from each debtor bank
to the House, which here stands for all the other
banks; and that on the right, the amount due to each
creditor bank from all the others-both in the aggregate. This is another remarkable economy over the
old system, by which settlement was effected only by
the drawing of as many different drafts as there are
banks. For example: the balance of $179,476.36,
due by the Mechanics' Bank to the House, can now
be paid in one sum, and by coin certificates, in the
time necessary for a single messenger to walk over
the ground between the two places; whereas, formerly, it involved the drawing of a separate draft by
the Mechanics' Bank for every debit balance, and the
liquidation of another for every.credit balance; besides, the frequent carriage of gold by hand or in
carts, and the time of one or more messengers for the
entire day-to say nothing of the interdrawing and
confusion growing out of cross-errands and disarrangement of original balances.
At one o'clock, the debtor banks begin to send in
their balances, for which the Manager's receipt is
returned.
314  
Paying out a Ton of Gold in the old Clearing House on Broadway. 
THE DAILY ROUTINE.
NEW YORK CLEARING HOUSE.
March 20th, 1857.
Received from the MECHANICS' BANK One hundred and
seventy-nine thousand four hundred and seventy-six M  Dollars,
in full for balance due the Associated Banks.
a   /,       -       ---—,-.. [Signed  by the Manager.]
Each bank keeps a current ledger-account with the
House, charging it with alkmoney sent, and crediting
it with all that is returned; and this receipt is
charged, as a voucher, on the books of the paying
bank.
The Specie Clerks of the creditor banks come in
from half-past one to two o'clock, to get the balances
due to them, for which they give receipts in a book
prepared with suitable forms for that purpose. The
settlement is completed by two o'clock. It is for this
period of one hour only, that the Clearing House has
any money in actual possession, and then simply as
trustee-receiving from one to pay to another.
Default in payment, on the part of any bank, leads
to its immediate suspension from the Exchange. The
balance due from it to the House is assessed on the
other banks in the proportion of their respective
claims against the defaulting member, and the settlement is not deranged, so far as the House is concerned. In effect, the several claims revert to the
condition in which they stood before the exchange
316
No. 4.] 
THE NEW YORK CLEARING HOUSE.
was made, and become open accounts between the
banks and the defaulting member, with which the
Clearing House has thereafter nothing to do. [See
section 13 of the Constitution, page 298.]
The amount of coin required in the settlement of
March 20th, 1857, when the exchanges were heavier
than on any other day since the establishment of the
Clearing House, was $1,444,419.79-equal in gross
weight to about three tons avoirdupois, or six thousand five hundred pounds, which would make nearly
three hundred bags of gold of five thousand pounds
each. The daily movement of such a weight; first
from the debtor banks to, the House, and thence to
the respective creditor banks, would be attended with
considerable expense and risk. To avoid this, the
Association constituted the Bank of America a common-coin depository, to hold in trust, and to issue
certificates, for such sums of gold as the other banks
might place therein. The form of the Certificate is
as follows:
Xo. 246.]             NEW YORK,  May 4th, 1858.
BANK OF AMERICA.                [$5,000.
This certifes that the Bank of New York has
deposited in this bank Five Thousand Dollars, in
coin, to be held in trust as a special deposit, payable
in coin, on demand, to any bank menber of the New
York Clearing House Association, only on presentation of this Certifcate, indorsed by the bank derizaning payment of the same.
[Signed by the Cashier and Receiving Teller of the Bank.]
316 
The New-Fashioned Way of Bank Settlement.   The Specie Clerk has $500,000
of Co n Certificates in his pocket.  
THE DAILY ROUTINE.
These certificates are issued for the several amounts
of $1,000, $5,000, and $10,000, in the option of the
depositing bank. They are numbered, registered,
and countersigned on the back, by the General Bookkeeper of the Bank of America. When paid in at
the HIouse, they are indorsed by the paying bankand when paid out, charged to the receiving bank;
so that they can always be traced by the records.
They are valid only in the Clearing Hlouse settlements, or directly between the banks.
Any of the Associated Banks that may have these
certificates on hand, and a deficiency of ready coin,
can obtain the latter in exchange with any other that
has an excess.
The bills of the several banks are admitted in settlement of balances under one thousand dollars.
The Clearing I-louse is not responsible for any mistakes, overdrafts, or other irregularities that may
occur in the exchanges. These are corrected by the
banks between themselves.
Reclamations for differences, resulting from the
miscount of money, or the omission of entries on
the exchange slips, have always furnished cause
for dispute between the banks. The open exchange
is in the exclusive personal charge of the messenger, between the bank and the Clearing House,
either way. Hie might abstract bills without being
discovered.   Claims for deficiency have frequently
been resisted on this ground. To remove it, some of
the banks seal up their exchanges in large envelopes,
and thus relieve the transit of all suspicion. For reasons not apparent, the practice is far from general.
317 
THE NEW YORK CLEARING HOUSE.
The economy of time and labor effected by the
Clearing House system is stated by the Manager, Mr.
GEORGE D. LYMAN, in an appendix to "CLEVELAND'S
Banking Laws of New York," as follows:
"On the day when the Clearing House began
business, about twenty-seven hundred open, active
accounts on the ledgers of the associated banks were
balanced-the most of them for the first time,* and
all of them finally. The business which had rendered
necessary this large number of accounts was thenceforth accomplished more quickly, with less annoyance
to bank officers, and with greater safety to all concerned. The results may be briefly enumerated as
follows:
"First Tle condensation for each bank of fortyeight balances into one, and the settlement of that
balance without a movement of specie.
" Secondly-The avoidance of numerous accounts,
entries, and postings.
"Thi,d.ly-Great saving of time to the Porters, and
of risk in making exchanges and settlements from
bank to bank.
"Fourthly-Relief from a vast amount of labor and
annoyance to which the great army of Cashiers,
Tellers, and Book-keepers were subjected under the
old system.
"FiftAly-The liberation of the Associated Banks
from all injurious dependence on each other.
"Sixtthly-The absolute facility afforded by the
books of the Clearing House for knowing at all times
the management and standing of every bank in the
Association."
* The practice of the banks had been to draw settlement-checks on each other
for even thousands of dollars near the balance due, and the account was never settled
to a point. The accuracy thereof was frequently tested by comparison of the books
318 
THE CLEARING HOUSE RECORDS.
OF THE CLEARING HOUSE RECORDS,
The daily footings of the General Proof are posted
to the Ledger, exhibiting a continuous history of the
aggregate dealings of the banks.
In like manner, the daily debit and credit exchange
of each bank is posted to its account, and shows not
only the extent of its business, but measurably its
character also. This is the most essential of all the
records. It is that which brings the banks separately
within the supervision and control of the Clearing
House-a necessary complement of the joint responsibility created by the organization.
The twentieth section of the Constitution empowers
a Committee to suspend any bank from the privileges
of the Clearing House, " in case of extreme emergency." This emergency is indicated by the daily
course of the exchanges; and there is no possibility of
concealing it. For example: The sworn weekly
statements of a bank may show that it held up to a
certain date an average reserve of coin of three hundred thousand dollars. The records show that its debit
balances of the three following days reach that sum.
It must then be entirely exhausted of its coin. If, on
the fourth day, it is again brought into debt sixty
thousand dollars, it must either borrow or buy coin
to pay it-both extreme resorts, and hurtful to the
character of the institution. With the knowledge of
these facts, the Committee visit the bank, and investigate its affairs. If they are found to be hopelessly
involved, it is suspended from the exchange at the
319 
THE NEW YORK CLEARING HOUSE.
Clearing House-a last blow to its credit.  If, on the
the other hand, the embarrassment is temporary, and
does not impair the solvency of the bank, it receives
assistance, and is preserved in line. This action of
the House has been exemplified in several instances,
with most satisfactory results.  If the restrictive
power has brought unwisely-expanded, but otherwise
well-conducted banks to the bar of examination, the
preservative power has given relief, and saved them
from public discredit. If the insolvency of a badlyconducted bank has been hastened by the requirement of prompt and full daily liquidation, no mischief
or injustice has been done thereby; and the general
credit of our banking system has been improved by
the excision of a bad member.
A bank which receives frequent remittances of
specie from abroad is an exception to the supposed
case. With such an explanation, its debit balances
at the House may exceed its credit, without injury to
its standing.
A Summary-book is made up from the daily postings, showing the total receipts and payments of specie
by each bank for the week, and also for the month
and year. The adverse balances of one period may
be compensated by the favorable balances of the
succeeding period; and thus the specie history of each,
and of the whole, is followed up with unfailing precision. If, at the end of a month, it appears that a
bank has paid in to the House one million of dollars
more than it has received, and if it has no foreign
sources of replenishment, the conclusion is, that it has
supplied itself by purchase. If the same result should
820 
THE CLEARING HOUSE RECORDS.
be shown at the end of another month, without signe
of recuperation, and so on continuously, it becomes
evident that the institution is carrying a forced average of loans, and it will receive a call from the Committee, under the twentieth section of the Constitution.
But this extreme case is most unlikely to happen.
The credit that every member derives from the Association is too valuable to be cast off or treated with
lightness. The action of the Association is too impartial and just to give offence, or to admit excuse
for disregarding its advice.
A  positive principle, or rule of financial government, has been demonstrated by this action of the
Clearing House on the city banks-that is, the restriction of loans, by the necessity of maintaining a certain average of coinfrom resources within the bank.
Borrowing from day to day will no longer do. It
cannot be concealed. The records will show conclusively whether the average is kept up by a healthy
business, or by a forcing process.
The limitation imposed does not stop at the bank
loans, but passes through them into the commercial
system. The loans rest on the coin average, this
rests on the deposits, and the deposits rest on the
means of trade. The Clearing House has not created
any new dependence of this kind, but it has brought
the facts into a manageable shape, and established
something like an axiom in the banking business.  It
is not a mere arbitrary requirement that a specific
average of coin must be maintained, but it is in the
constitution of that average as a result, and the control of it by an organization which permits no escape,
14*
821 
THE NEW YORK CIEARING HOUSE.
and works no injustice,-and what that organization
is for the city of New York, the city is for the country;
a restrictive power over the general currency of
trade must be exerted through this channel to its
remotest sections.
Each bank in the city of New York is required by
law to publish, "on the morning of every Tuesday, in
a newspaper printed in the said city, a statement
under the oath of the President or Cashier, showing
the average amount of loans and discounts, specie,
deposits, and circulation, for the next preceding week."
The object of this law, which went into effect on the
1st of August 1853 (two months before the organization
of the Clearing House), was to check the tendency to
a dangerous expansion of bank loans.   While it
answered the purpose measurably, it proved the
inadequacy of legislative action of itself to correct
the evil. The law was satisfied with the publication,
merely, of the statement. It neither imposed penal
ties nor indicated any relation to be preserved between
the amount of loans and that of specie. It did not
compel banks to liquidate between themselves. A
bank might show a creditable average of coin, whilst
carrying a discreditable average of debt-enough, if
paid, to exhaust the last dime in its vaults. In reality,
nearly all the force and value of the Weekly Statement is due to its incorporation with the records of the
Clearing House. These have given it the stamp of
truth, which it had not before. There is no longer a
possibility of "fixing it up" so as to give a false show
of the condition of a bank.  It must tell "the truth,
the whole truth, and nothing but the truth."
322 
THE CLEARING HOUSE RECORDS.
Every bank in the State of New York is required
by law to publish, in a local newspaper, under the
oath of the President and Cashier, a quarterly statement of its condition, and to transmit a manuscript
and a printed copy thereof to the Bank Department
at Albany, where a synopsis of the whole is prepared
and published by the General Superintendent, for
presentation to the Legislature. The original law
specified a certain day near the end of each quarter,
on which this statement should be made up. It was
supposed that this would be sufficient to restrict the
business of the banks within safe limits; but it proved
wholly ineffective. To show how the purpose of the
law was defeated, the form of a Quarterly Statement
is given on page 324.
The date on which the Statement was to be called
for, being known, nothing was easier than to prepare
for it. Some of the new banks especially, whose
loans were generally stretched beyond prudence,
found it difficult to make a creditable show by the
side of the older institutions. Deposits were borrowed
for a single day. The loans to directors were reduced
for a few hours, or jumped over by transit checks
through other banks.   Any  desirable changes, to
make a good show out of bad facts, could be carried
long enough for a commissioner to administer the
oath; and the purpose of the law was so effectually
defeated, in the very spots where it was chiefly
intended to apply that the Legislature amended it by
authorizing the Superintendent to specify, after the
expiration of the quarter, an antecedent date, under
which the Statement should be made. But even this
323 
THE NEW YORK CLEARING HOUSE.
Q  A-It I'=LM:LY I:3EPORT O0F - BAN
RESOURCES.
Loans and discounts...............................$1,225,419 42
Overdrafts........................................ 663 86
Due from Banks.................................. 70,867 78
Due from the Directors of the Bank............$56,500
Real e s t a t e........................................ 178,074 16
Specie............................................   154,862 22
Cash Items, viz: Checks and sight drafts on solvent
Banks, taken in the course of the day previous......  109,001 93
S t ocks.......................................... 146,398 90
Bills of solvent Banks............................. 19,544 00
Loss and expense account............................ 3,931 42
$1,908,763 69
LIABILITIES.
Capital........................................... $979,200 00
Circulation registered....................$125,802 00
Less notes on hand...................... 28,080 00   97,722 00
Profits............................................   41,042 91
Due to Banks...................................... 175,080 77
Due to Individuals and Corporations other than Banks..   16,780 87
Due Depositors on demand........................... 597,749 14
Amount due, not included under either of the above
heads, for dividends unclaimed.....................1,188 00
$1,908,763 69
STATE OF NEW YORK, COUNTY OF NEW YOREK, SS.: 
President, and  -, Cashier of the -        Bank, an Associated
Bank, located and doing business at New York City, in said county,
being duly and severally sworn, each for himself, saith, that the foregoing is, in all respects, a true statement of the condition of the said
Bank, before the transaction of any business, on the morning of Saturday, the 26th day of September, in the year one thousand eight
hundred and fifty-seven, in respect to each and every of the items and
particulars above specified, according to the best of his knowledge and
belief; and that the business of the said Bank has been and is transacted at the location aforesaid.
(Signed), President.
, Cashier.
Severally subscribed and sworn by both deponents, the 10th day of
October, 1857.
(Signed)         J. VAN NAME, Commissioner of Deeds
324 
BAD PRACTICES CORRECTED.
was not beyond the constructive ingenuity of dishonest bankers. The accounts could be so kept as to
justify, technically, a different analysis from that
contemplated by the law, and the result could be
shaped accordingly.
It was not until the Clearing IIouse was organized
that the Quarterly Statements of our city banks could
be depended on for general accuracy. It was only
when the Clearing House record8 were brought to
such perfection as to give the means of analysis and
test beyond dispute, that the positive integrity of
those statements could be guaranteed to the public.
That concealment can yet be practiced, in some
details, is true; but the main fact of truth is assured
to the public.
It has been shown, that the moment a bank
increases its loans imprudently, it begins to feel the
check of depletion in its specie; and if it does not
return immediately within the common average, it is
subject to discipline, from which there is no escape.
But what is to prevent a bank from making bad
loans, and becoming gradually insolvent? What is
to prevent the absorption of the funds by a few persons-by the directors, and a "startling development" some day when it is least expected? This
question brings into view a cause of jealousy that
was manifested by opposition to a Constitution, on
the first organization of the Clearing House. It was
feared that an inquisitorial power might grow up, and
find pretexts for arbitrary supervision; and even for
inspection into personal accounts. While the practical action of the HIouse has developed no such ten
325 
THE NEW YORK CLEARING HOUSE.
dency, it has wrought a healthful change in the
business of each bank, enforced better judgment over
its internal affairs, improved the character of its
loans, and started anew the subject of bank discipline; so that, not only is all jealousy dispelled, but
every member of the Association has come to regard
it as a necessary auxiliary to his own prosperity!
The improvement in the character of its loans is
consequent upon the fact, that if a bank becomes
embarrassed by their imprudent extension, it can get
a good class of paper rediscounted, and thus obtain
immediate relief; whereas, if its discounted paper is
of a low grade, or if the assistance required is to help
the directors only, and not its dealers generally, it
loses sympathy and reputation. The character of its
discounted bills is, therefore, its sheet-anchor in a
storm.  In fact, the credit of the Clearing iouse
Association would itself be impaired, if it should
allow one of its members to fail from inability to convert good assets into cash funds.
Before the establishment of the Clearing House, a
bank might have maintained specie payments with
the other banks almost to the entire exhaustion of its
means of liquidation with the public. It could have
borrowed or bought specie continuously for a long
period, without exposure. It cannot now borrow or
buy a dollar, without the knowledge of the Hiouse.
It is arrested immediately, in the first steps towards
insolvency.
There is one fact stated in the foregoing description
which deserves repetition, for the testimony that it
326 
WHOLESOME RESULTS.
bear to the admirable working of the system in its
practical details. It is, that the exchanges have been
made, and the liquidations erected, for flve years,
without an error or loss of one cent.
The whole amount of bank funds that passed
through the Hiouse, up to August 31, 1858-was
thirty thousand six hundred and seventy-jve MmLIONS, nine hundred and thirty-three thousand, flve
hundred and flfty-six dollars, and ftfty-sizx cents$30,675,933,556.56.
The amount of specie or its representative certificates received and paid out, during the same period,
was ftfeen hundred and seventy four MILLIONS, four
hundred and thirty thousand, three hundred and
thirty dollars and forty-six cents-$1,574,430,330.46.
The specie is counted four times, twice when
received, and twice when paid.
To avoid carrying bags of coin up to the rooms, a
clerk is stationed in the Bank of New York on the
first floor, who gives receipts for it, which receipts are
presented at the settling desk.   A  speaking-tube
enables the Manager to communicate with the Clerk
below, and thus to verify such transactions.
The expense of conducting this vast amount of
business does not exceed eight thousand dollars a
year. This covers salaries, clerk hire, and the pay of
a detective police officer, who is always in attendance
while the rooms are open. Stationery bills and rent
amount to about eight thousand dollars a year; but
these are not strictly chargeable to the conduct of
the business.   In fact, the stationery bills of the
327 
THE NEW YORK CLEARING  HOUSE.
several banks are much less for being executed under
one order, and the House acts merely as an agent to
get the printing done.   Instead of the old paper
labels to bags of coin, it furnishes strips of leather,
printed with the several amounts that are sealed up.
In this account of the Clearing House, the author
has, doubtless, overlooked some of its bearings. The
original idea of its founders was, simply to facilitate
the exchanges between the banks.   It has already
added to this many other advantages and uses which
were not contemplated; and more are suggested. It
has put an end to speculative banking in New York.
It has exerted a powerful influence to arrest speculative commerce.  It has set the example of positive
liqguidation, which henceforth must spread and increase. Especially, in the organization of accounts, it
has gained results which were before thought to be
out of reach. There is probability, at least, that the
New York Clearing House leads the way, in a practical use of statistics and commercial facts, far beyond
our present attainments, and for which there has long
been great need.
To Mr. GEORGE D. LYMAN, the Manager of the
Clearing House, belongs chiefly the credit of systematizing its details, planning its records, and bringing
them to their present state of efficiency and perfection. His practical acquaintance with the banking
business, gained as Clerk and Teller in several institutions of high standing, have well qualified him to
discharge the duties of his responsible office; while
the intelligence, zeal, and perseverance with which
he follows up every suggestion that occurs in the
328 
TABLES.
working of the system, is a guarantee for any improvements that may be required, or of which it is susceptible.
To Mr. WILLIAM  A. CAMP, the Assistant Manager, to whom is intrusted the principal labor of
details, is due the merit of unusual accuracy and
promptness in the daily proofs, on which directly
depends the convenience of fifty settling clerks, and
of hundreds, if not thousands of bank dealers.
The following tables, copied from the Clearing
House records, exhibit the rise and fall of bank
credits, in the City of New York, from the first of
August 1853, to the 31st of August 1858.
The accompanying diagram illustrates these tables
in fluctuations from week to week of the loans,
specie, and deposits. The scale is constructed on the
actual averages of the year ending on the 29th of
July 1855, which were ninety millions of loans, fiftyfive millions of deposits, and fourteen millions of
specie.
Each line across the diagram represents one million
of dollars in the loans and the deposits; and half a
million in the specie. The lines up and down represent the weeks. The scale for loans is on the left
hand; that for deposits, on the right; and that for
specie, in the middle. By following the line for any
week of the year to its intersection with the other
lines, and thence referring to the respective scales,
the relative amount of loans, deposits, and specie, is
ascertained.
329 
THE NEW YORK CLEARING HOUSE.
~VE ELY AVERAGE:S OF THE NW
YORE CITY BANES,
FROM AUGUST, 1853, TO AUGUST, 1858.
CIRCULATION.        DEPOSITS.
9,5o10,465....   39,410o,756
9,451,945.... 39,I66,712
9,414,696....   39,817,718
9,427,191.... 38,431,8o08
9,554,294....  38,502,970
9,597,336....  38,545,164
9,566,723....  38,61 2,3o0i
9,477,54I....  39,312,334
9,521,665....  38,968,661
9,673,458....  38,985,760
9,464,714.... 37,435,499
9,388,543....   3   36, i86,864
9,300,350.... 35,73I,o38
9,492,I58.... 36,241,623
9,287,629.... 37,970,796
9,151,443.... 39,047,o0i6
g9,032,769....  42,099,942
9, I 33,586....  39, I 21,739
9,075,704....  39,600o,092
8,939,830....  39,243,5oi
8,867,26I....  40,262,979
8,927,o013....  41,372,382
1854.
Janl.
9o, I33,887.... I I,506,1 I24.... 9,075,926.... 38,551,290
90,010,012.... 11,894,453.... 8,668,344.... 40o,516,717
go,068,738.... II,455,i56.... 8,605,235.... 41,311ii,989
89,759,465.... I,I I7,958....  8,642,677.... 41,405,422
g90549,577.... I 1,634,653.... 8,996,675.... 41,476,I60
gI. 434,022....  11,I872,126.... 8,994,083....  42,983,I38
92,698,085....  11I,742,384.... 8,954,464.... 43,257,792
93,529,716....  11I,212,693.... 8,929,314.... 42,965,270
94,558,42I.... i o,56o,4oo00.... 9,209,830.... 41,655,792
94,279,994....   9,832,483.... 9, I37,555.... 40,955,635
93,418,929.... IO,OI8,456.... 9,255,78I.... 40,278,250
92,972,71 I.... io, I32,246.... 9,209,406.... 40,124,736
92,825,02 4.... 10,264,009.... 9,395,820.... 39,84I,920
330
165.
LOANS.
97,889,617
95,562,277
93,866,970
92,386,954
91,741,338
gI,!08,347
90  I 90,589
90,O92,765
90, 1 49, 540
89, I 28,998
87,837,273
85,367,98I
83,400,32I
Aug.       6....
13....
20....
27....
Sept.    3....
10....
17....
24....
OCt.   1....
8....
15....
22....
29....
1 I,o92,552....
I I,319,o49....
I 1,268,04g....
I I,38o,693....
I I,86o,235....
I 1,34o,925....
II123I,912....
I0,266,602....
I i,33o, 172....
0,303o,254....
Io,866,672....
11,771,88o....
12,823,575....
I3,69I,324....
i3,343,I96....
12,830,772....
I2,493,760....
12, i66,020...
1,98I,270....
I:,o58,478....
Nov.   5....
12....
19....
26....
Dec.   3....
10....
17....
24....
31....
83,092,630....
82,882,409....
83,7I7,622....
84,802,530....
85,824,756....
86,708,028....
87,865,073....
88,760,623....
9o,162,Io6....
Janl.   7....
14....
21....
28....
Feb.   4....
11....
18....
25....
March 4....
11....
18....
25....
April   1.... 
TABLES.
1854              LoAis.            SPECm.         CIRCULAON.          Dzposfr
April  8....  92,551,808.... 10,188,I41.... 9,7I3,215...  38,993,744
15....  g91,636,274....  II,044,044.... 9,533,998.... 39,729,730
22....  90,376,340.... 10,526,976.... 9,353,854....  39, 153,964
29....  90,245,049.... Io,951,153.... 9,377,687.... 40,270o,391
May    6....  90,739,721.... 1 1,437,040.... 9,823,oo8.... 40,625,252
18....  90,245,928.... 12,382,o68.... 9,5,07,797.... 42,212,552
20....  90,886,728.... 1I2I,118,043.... 9,480o,oi018.... 42,591,85I
27....  90,981,974.... IO,98I,531.... 9,284,807.... 41, 114 4,763
Jurne   3....  g91,91g6,7io.... IO,281,969.... 9,38I,714.... 50,775,744
10....  91I,015,171....   9,617,180.... 9,307,889.... 51,871,9o00
17....  9go,o63,573.... IO,OI013,157.... 9,1I44,284.... 51,243,245
24....  88,751,952....  9,628,375.... 9,00oo9,726.... 49,938,638
July   1....  88,608,59i....  II,I3o,8oo.... 9,o68,253.... 51,865,928
8....  88,347,28i.... I2,267,318.... 9,195,757....  54,803,679
15....  9go,437,oo4....  5, o74,o93.... 8,837,68I.... 56,549,703
22....  92,01 1,870.... 1I5,720,30o9.... 8,768,289.... 58,871,I544
29....  92.588.579....   5.386.864.... 8.756.777.... 58,925,151
Aug.   5....  93,723,141.... 14,468,98I.... 9,124,648.... 58,271,954
12....  93,435,057.... I3,522,023.... 8,917,I79.... 57,582,455
19....  92,88o, I03.... 14,253,972.... 8,855,523.... 57,037,727
26....  91,447,075.... 1I4,395,072.... 8,8i1,369.... 57,o055,505
Sept.   2....  g91,391,188.... 14,714,618.... 8,934,632.... 58,114,408
9....  91,528,244....  14,446,317.... 8,968,707.... 56,080,400
16....  91,639,782.... 1I4,484,259.... 8,820,609.... 56,439, i IO
28....  92,095,9g I....   2,932,386.... 8,802,623.... 55,221,762
80....  92,102,013.... 12,042,244.... 8,712, i36.... 54,308,512
Oct.    7....  91,38o,525.... Io,630,517.... 8,918,492.... 51,480,375
14....  88,61  8,936.... I I,1  30o,377.... 8,534,1  88.... 50,352,306
21.... 87,092,8I0.... i0o,320, 163.... 8,497,556.... 47,78',224
28....  84,709,236....  9,826,763.... 8,I31,933.... 45,058,781
Nov.   4.... 83,369,IoI.... I0,004,686.... 8,238,126.... 43,504,964
11....  82,717,052.... 10,472,538.... 8,197,444....  43,619,326
18....  82,191,994.... io,80oi,532.... 7,877,604.... 44,Ioo00,821
25....  8I,699,705.... I10,2o00o,983.... 7,7I8,I58.... 43,409,843
Dec.   2....  8i,678,423.... I10,488,383.... 7,849,289.... 43,491,999
9....  80,593,636.... I10,484,501.... 7,480,833.... 43, i8,595
16....  80o,946,653.... 11,471,841.... 7,26i,,Ii.... 44,334,684
23....  80,721,224....  11,490,495.... 6,914,866.... 44,877,723
80....  8i,653,637.... 12,076,147.... 7,0o75,880.... 45,402,377
1855.
Jan.    6....
13....
20....
....   3,596,963....  7,049,982
....  15,488,525....  6,686,46,i
....  I6,372,127....  6,68i,355
331
82,244,706
83,976,o8I
85,447,998
.... 47,740,767
....  5o,614,846
....  53,29o,3i  
THE NEW YORK CLEARING HOUSE.
1855.             LOANS.             SPECreL       CIRCULATION.        DEPOSrN
Jan.  t7.....86,654,657.... I6,697,260.... 6,639,823.... 55,127,932
Feb.   3....  88,1i45,697.... 17,I43g,196.... 7,000,ooo766.... 56,712,546
10....  89,862,170.... 17, I 24,39I.... 6,969, 1i1 1i.... 58I,124,415
17....  9go,85o,o3I.... 17,339,o86.... 6,941,606.... 59, I186,888
24....  9 i,5g9o,505.... I6,370,875.... 6,963,562.... 58,992,863
March 3....  92,386,125.... 16,531,279.... 7,106,710.... 59,100oo,643
10....  92,331,789.... i6,87o,669.... 7,131,998.... 59,543,221
17....  92,447,345.... 16,933,933.... 7,o061i,o018.... 59,688,I05
24....  93,o50,773.... I6,602,729.... 7,452,23I.... 59,620,122
81....  93,634,041....  j6.O18, 105          7,337,633.... 59,948,549
April  7....  94,499,394.... I4,968,004.... 7,77I,534.... 59,283,096
14....  94,140,399.... 14,89o,979.... - 7,523,528.... 59,478,598
21....  93,632,893.... I4,355,o41.... 7,510o,1i24.... 59,025,615
28....  92,5o5,95I.... 14,282,424.... 7, 610o985.... 58,345,546
May    5....  93,093,243.... 14,325,o50.... 8,087,609.... 58,403,227
12....  91,642,498.... I4,585,626.... 7,804,977.... 58,365,766
19....  91,675,500.... i5,225,o56.... 7,638,630.... 58,999,522
26....  9gi,i6o0,518.... i5,3i4,53i.... 7,489,637.... 58,687,274
June   2....  91,197,652.... I5,397,674..... 7,555,609.... 59,034,612
9....  92,109,097.... 15,005,155.... 7,502,568.... 59,042,817
16....  93,Ioo00,385....  14,978,559.... 7,452,16i.... 60,092,058
28....  94o,029,425.... 14,705,629....  7,335,653.... 6o,66i,862
80....  95,586,424.... I5,640,1I46.... 7,396, i 19.... 63,553,440
July   7....  97,852,491.... i5,3810o93.... 7,7,43,o69.... 68,459,59I
14....  98,521,002....  I6,576,506.... 7,5i 5,724.... 67,770, I 24
21....  99o,029,147.... 15,918,999.... 7,407,o86.... 66,oo6, i3i
28....  gg99,083,799.... i 5,920o,976.... 7,409,498.... 66o,070,296
Aug.   4.... i oo, i i 8,569.... 15,298,358.... 7,642,903.... 65,846,924
11....  oo00,774,209.... 15,28o,669.... 7,7 I4,401.... 64,583,266
18.... ioi,i54,o6o.... I4,64g,245.... 7,6io,i0o6.... 66,128,237
25.... i oo,6o4,6o4.... i3,326,378.... 7,582,093....  64,0oog,o67
Sept.  1.... I00,436,970.... 12,852,823.... 7,620,178.... 63,900,757
8.... 100,273,733.... o2.oo6625.... 7,86i,153.... 62,340,942
15....  99,397,00oo9.... 12,2i3,240.... 7,72i1,825.... 6i,963,872
22....  98,58i,734....  11,655,391.... 7,717,860.... 60o,729,518
29....  97,385,225....  9,919,124.... 7,724,970.... 57,908,647
Oct.    6....  95,5I5,02I.... I II I0o,687.... 7,853,217.... 56,527,490
18....  95,0o59,420....,III38,878.... 7,840,114.... 56,632,o69
20....  95,o103,376....  12,46I,723.... 7,888,i64.... 57,372,644
27....  94,216,373.... Ii1,i63,52I..... 7,828,489.... 56,o38,975
Nov..  8....  93,369,079.... i II,I06,298.... 8,071,5u8.... 54,785,463
10....  92,454,290.... io,855,526.... 8o88:608.... 53,538,966
17....  92,029,920....  I,302,917.... 7,941,579.... 53,617,740
832 
TAB13LES.
L. SPEcIrz.  CIECULATION.    DEPOBr
7,779,567.... 54,612,212
7,841,654....  58,663,668
7,861,741.... 55,474, II6
7,701,052.... 56, I I 1,334
7,778,893.... 56,555,999
7,841,946.... 56,736,775
1856.
Jan.
Jan.    5....  95,863,390....   i,687,209.... 7,903,656
12....  96,145,408.... Ii,777,71Ii.... 7,612,507
19....  96,382,968.... 13,385,260...  7,462,706
26....  96,887,22I.... 12,733,o059.... 7,406,986
Feb.    2....  97,970,61 I.... I3,640,437... 7,622,826
9....  98,344,077.... 14,233,329.... 7,819,122
16....  99,401,315         i,.... 5678,736.... 7,693,44x
23.... 100,745,448.... i5,835,874.... 7,664,688
March 1.... io2,632,235....   i5,640,687.... 7,754,392
8.... IO03,9g9g,688.... 15, I 70,946.... 7,888,176
15.... 104,528,298.... 14,045,024.... 7,863,148
22.... Io4,533,576....  14,369,556.... 7,912,58I
29.... 0Io4,745,30o7....  14,21  6,84 I.... 7,943,253
April  5.... Io6,962,6i8.... I3,38i,455.... 8,347,498
12.... 10o7,840,435.... I2,626,094.... 8,281,525
19.... Io6,765,o85.... 12,958,132.... 8,22i,518
26.... io5,538,864.... I3,Io02,858.... 8,246,121             
May    3.... Io05,325,962.... I 2,850,228.... 8, 7 715,i63
10.... I03,803,793.... 13,31I7,365.... 8,662,485
17.... io03-,002,320.... 12,796,541.... 8,488,152.
24.... I02,207,767.... 13,85o,333.... 8,335,097
81.... 102,451,275....  14,o21,289.... 8,2669,15 5I
June   7.... Io03,474,92I.... i6,i166,18o.... 8,430,252
14... io4,i68,88i.... 17,414,680.... 8,360,735
21....  o05,626,995.... 17,871,955.... 8,278,00oo2
28.... I07,087,525.... 17,o069,688.... 8,250,289
July   5.... o109,267,583.... I6,829,236.... 8,637,47I
12....  IC9,748,042....  14,793,409.... 8,405,576
19.... II0,873,494.... i5,326,xi3...  8,346,243
26.... III,346,589.... i3,9gi0o,848.... 8,386,285
&ug.  2.... 112,221,563.... 14,328,253.... 8,646,o43
9.... 112,192,322....  3,.270o,602.... 8,676,759
16... 111,406,755....  12,806,673.... 8,584,499
28....  IIo,X188,oo004....  12,914,732.... 8,588,4I3
80.....o9,373,9gI...... I 2,965,237.... 8,589,745
Sept.   6.... Io09,560,943.... I3,o098,876.... 8,887,860o
333
18i
LoAffs.
Nov. 24....
Dec.    1....
8....
15....
22....
29....
92,312,4o8....
92,526,921....
93, I 89,8o3....
93,8oo, 1 38....
94,380,487....
95,1 x4,o6o....
I 1,715,239....
Ix,227,I34....
I I,844,625....
I I,584,075....
12,o88,359....
Io,788,o98....
.... 58,32o,328
.... 58,575,652
.... 6o,I6I,127
.... 60,430,978
....  6I,62 2,874
.... 62,x 28,682
.... 64,34,9o3
... 66,329,67o
....  67,237,728
.... 67,88i,o84
.... 67,0o0,460
.... 67, X 53,493
.... 67,66i,944
.... 67,985,678
.... 68,3oo,783
.... 66,839,625
.... 66,285,88o
.... 65,025,870
.... 64,854,4I6
.... 63,9o5,512
.... 63,874,195
.... 64,527,837
.... 67,o33,708
.... 69,586,695
.... 7o,38i,21Io
.... 7 I,349,933
....  77,3I8,825
....  71,522,7I6
.... 72,744,569
.... 72,38iX,62
.... 73,o75,328
*... 7I,377,87I
.... 70,357,736
.... 69,022,934
.... 67,6o6,1 I8
.... 67,225,342 
THE NEW YORK CLEARING HOUSE.
185&              LOANs.            SPio.           CIRCULATION.       DzPO8T.
Sept. 18.... 109,579,775.... 1I 2,281,387.... 8,741,o64.... 66,049,411
20.... O109,715,435.... 12,27o,685.... 8,760,383.... 65,866,422
27.... 108,992,205....  Io,873,220.... 8,665,194.... 63,66I,171
Oct.    4.... 107,931,707.... ii,oi5,i84.... 8,830,628.... 62,052,545
11.... 107,147,392.... Io,382,75I.... 8,748,930.... 60o,978,200
18.....105,929,265.... 10,846,857.... 8,696,736.... 60o,319,718
25.... 104,156,483....  O,1058o,795.... 8,649,802.... 58,696,456
Nov.   1.... I03,142,o93.... 11,057,675.... 8,686,835.... 58,024,128
8.... 102,508,639.... II,516,420.... 8,946,721.... 56,933,387
15.... 1i03,554,450.... 1I 2,253,737.... 8,856,977.... 58,942,049
22.... 104,504,919.... 12,971,868.... 8,818,323.... 65,362,520
29.... 105,483,053.... 12,123,887.... 8,608,228.... 61,570,260
Dec.    6.... I06,898,534.... 12,278,347.... 8,671,758.... 62,923,969
13.... 1io8,336,586.... I0,832,543.... 8,5i6,854.... 62,854,773
20.... Io08,334,593.... 11,151,3I7.... 8,397,440.... 62,265,155
27.... I08,527,429.... I0,392,428.... 8,387,167.... 62,259,390
1857.
Jan.
Jan.    3.... IOg9,I49,153.... II,172,244.... 8,602,II3.... 63,677,829
10.... 110,1 I50,234.... 11,o9I,,Io9.... 8,328,394.... 64,316,552
17.... x I o,86o,4o10.... I 1,955,054.... 8,047,065.... 66,o76,987
24....  I 111,094,415.... I 1,633,924.... 7,879,o26.... 66,877,981
81.... II 1,785,332....  12,191,825.... 8,0o24,948.... 67,241,670
Feb.   7....  112,876,712.... 1i,143,894.... 8,426,817.... 65,997,16I
14.... I I12,722,799.... 10,497,382.... 8,151,799.... 65,943,495
21.... 111,773,57I.... i0o,432,158.... 8,106,074.... 65,o98,896
28....  I I I,137,717.... io,10645,254.... 8,159,275.... 64,627,068
March 7.... I I i,899,649.... 11,707,346.... 8,465,697.... 64,894,959
14.... 113,250,988.... 11,077,732.... 8,452,540.... 66,694,524
21....  113,448,692....  11II 291,373.... 8,494,238.... 65,975,949
28.... 112,884,024....  11,325,733.... 8,473,829.... 66,228,4i5
April  4.... II4,833,902.... i 1,538,732.... 8,812,328.... 66,884,088
11.... 115,374,717.... Io0,884,490.... 8,787,344.... 67,042,866
18....  114,398,174.... 12,o61,372.... 8,770,828.... 67,547,241
25.... I I 3,39,g9IO.... II,827,862.... 8,736,768.... 67,o68,424
May    2.... 114,409,275.... 12,009,9I0.... 9,00oo6,566.... 68,078,676
9....  115,o068,322.... 12,01I1,491.... 9,I182,783.... 67,954,460
16.... ii4,620,042....  12,543,693.... 8,935,297... 68,595,168
23.... I114,049,102.... 13,126,735.... 8,738,025.... 68,517,240
30.... 114,o049,633.... 12,815,515.... 8,696,693.... 68,565,909
June   6....  11I5,338,592.... 13,134,714.... 8,838,575.... 69,233,090
13.... 115,412,541.... 11,974,879.... 8,696,893.... 68,111,324
20.... 115,114,765.... 12,790,7I01.... 8,59o,132.... 68,791,049
27.... 11I5,0o15,5o4... 10,9OI,O9I.... 8,5o5,o65.... 67,212a,278
334 
TABLES.
SPECIE.      CIMuLATION.    DEPOsBS
12,837,346.... 8,9goi,590.... 65,391,582
12,666,1 I46.... 8,693,578.... 65,702,597
I3,594,606.... 8,448,833.... 67,00oo5,588
I 2,956,855.... 8,528,814.... 67,377,056
12,918,o0I4.... 8,665,422.... 68,682,o88
11,737,367.... 8,981,740.... 67,372,94I
I i,36o,645.... 8,780,012.... 66,814,929
I oo097I,178.... 8,694,o01I.... 64,241,47I
9,241,376.... 8,671,o060o.... 6o,86o,8ot
o10,227,964.... 8,673,192.... 57,260,609
1I2,181,857.... 8,322,316.... 57,334,121
I3,556,i86....  8,073,80oi.... 57,851,965
i3,327,095.... 7,838,308.... 56,918,863
II,400,413.... 7,916,102.... 52,798,365
I 1,476,294.... 7,523,599.... 49,745,176
7,843,23I.... 8,087,441.... 42,696,o012
10,4I1i,643.... 6,884,739.... 47,873,901
12,883,44I.... 6,334,748.... 51,853,159
i16,492,153.... 6,434,312.... 56,424,807
19,451,967.... 6,258,652.... 60o,601oi,556
23,I67,980.... 6,283,417.... 64,917,932
24,303,144.... 6,520,783.... 64,307,380
26,o69,833.... 6,555,ooo....  64,444,375
26,o58,877.... 6,348,494.... 62,907,999
27,957,326.... 6,309,466.... 63,710,106
27,142,098.... 6,352,i87.... 65,239,374
1858
Jan. 2.... 98,549,983
9.... 98,792,758
16.... 99,473,162
2a.... 1o0,172,642
80.... I02,I8o,o8g
Feb. 6.... Io3,602,932
13.... io3,783,3o6
20.... Io3,7o6,735
27.... IO3,769,I27
March 6.... Io5,o21,863
13.... I05,293,63I
20.... I07,440,35o
27.... 1o9,o95,x12
April  8.... I IO,588,354
10....  I10,847,617
17.... Iii,344,89I
.... 6,490,403....  67,300,760
.... 6,6i5,464.... 65,942,282
6....  6,349,325.... 67,723,909
.... 6,336,042.... 69,523,586
..... 6,369,678.... 70,467,784
.... 6,873,93i....  70,544,737
.... 6,607,270....  70,425,906
.... 6,542,6i8.... 72,00oo3,657
.... 6,53o,759.... 71,728,972
.... 6,854,624....  72,379,748
.... 6,755,958....  73,552,929
....  6,853,852.... 74,173,918
9....  6,892,23I....  73,606,709
.... 7,232,332....  76,023, i 76
.... 7,245,809.... 76,790,864
7....  7,190,170....  78,121,025
335
IbST.         Lomm
July    4.... I I 5,o44,3o3
11....   I I6,028,6I7
18.... I 17,365,321
25.... I i8,848,i3i
Aug.  1.... 1  20,597,0o50
8.... 122,077,252
15.... 12I,24I,472
22.... I20,I39,582
29.... I i6,588,o99..
Sept.   5....  II2,22I,365
12....  Io9,985,573
19.... I08,777,421
26.... 107,791,433
Oct.    8....  io5,935,499
10.... 1o0,917,570
17....  97,245,826
24....   95,593,5i8
81....    95,317,754
Nov.   7.... 95,866,24.
14.... 95,239,247
21....    95,375,432
28....    94,963, 3o.
Dec.    5....    96,333,687
12....    96,526,o37
19....  97,21I,69o
26....   97,902,o35
... 28,56i,946
.... 29,i/76,838
.... 3o,21I,266
.... 3o,829,I51
.... 3i,273,022
.... 3o652,948
30,226,274
3I,4I6,o77
3 i,658,694
32,739,73q
32,69i,o76
3 I3,902,656
30%929,472
3I,53o,ooo
32,o36,436
. 33,I96,449 
THE NEW  YORK CLEARING HOUSE.
SPzcEL     CIRO0UAON.  DIoOiu
.... 34, Ii3,891.... 7,140,85I.... 79,198,893
..... 35,064,214.... 7,431,814.... 8o,563,3o3
.... 35,453,I46.... 7,735,056.... 81,727,146
....  34,730,728.... 7,502,975.... 83,599,295
..... 34,o47,446.... 7,307,445.... 84,297,738
..... 31,496,144.... 7,252,616.... 83,i52,244
5.... 32,790,332.... 7,548,830.... 83,5o6,886
.....  33,367,253.... 7,367,725.... 84,283,194
32.... 32,396,456.... 7,297,63 I.... 85,280,949
.... 31,948,o89.... 7,2 I 5,689.... 85,95o,307
... 33,83o,232.... 7,458,190.... 88,337,184
..... 34,705,593.... 7,571,373.... 92,337,o42
.... 35,329,988.... 7,346,213.... 90,064,1I44
..... 35,515,243.... 7,35I,045.... 90,}05,690
..... 35,712,107.... 7,408,365.... 91,145,874
.... 35, 145,844.... 7,784,415.... 90,339,478
..... 31,150,473.... 7,588,939.... 89,826,o80
..... 28,343,998.... 7,484,306.... 89, I59,34I
.... 27,817,oo006....   7,466,846.... 87,719,I39
Totals and Averages of the foregoing Tables, for the
Years ending at the given Dates:
SPECII.
596,813,662
11,477,185
LOANS.
July 31, 1854-Total,   4,690,181,881
Average,   90,195,805
July 31, 1855-Total,   4,683,097,192
Average,   90,059,561
July 31, 1856-Total,   5,225,378,400
Average,  100,488,046
July 31, 1857-Total,   5,781,082,592
Average,  111,174,665
July 81, 1858-Total,   5,607,403,139
Average,  107,834,676
336
18i8
LoA.wa.
April  24....  I i i,oo3,476
May 1....  I x,868,456
8.... II92,741,955
15.... I I 4, 119,2  8
22.... I i5,658,o82
29....  I I6,650,943
June 5....  II6,424,597
12....  II6,022,152
19.... I I7,797,047
24....  I18,823,40I
July 8.... I19,812,407
10.... i I 8,863,937
17.....I 9, I 65,73 I
24....  II8,940,482
81.... I I9,850,456
Aug.    7.... 120,89 2,857
14....  23,374,459
21.... 126,341,827
28.... 126,o84,424
DIEPOsrrT.
3,199,800,399
42,287,491
735,515,384
14,144,526
3,775,339,284
55,377,224
696,290,025
13,390,192
4,400,980,965
63,208,919
618,053,639
11,885,646
4,809,971,107
65,195,290
i,323,396,873
25,449,940
4,496,592,884
71,898,419 
FINANCIAL CHART.
The average of circulation was, for the year ending July 31:
1854....................................$9,228,388
1855.................................... 7,738,839
1    856.................................... 7,975,405
1857.................................... 8,604,582
1858.................................... 7,226,475
The diagram exhibits a remarkable coincidence,
or parallelism of movement, in the several years. The
loans reach their highest point on the first week of
August in 1853, 1854, and 1856; on the third week
of August in 1855, and on the second week of
August in 1857. They begin to fall at these dates,
and reach their lowest point on the second week of
November, in 1853, 1856, and 1857; on the third
week of November in 1855, and on the second
week of December in 1854-the  year uniformly
going out with an ascending average.   Another
decline takes place from the early part of March or
April, previous to the uniform ascent to August.
There is a general concurrence of movement with the
loans, in the deposits and specie. The year 1857 is
exceptional only in the violence of fluctuation after
August.
The adoption of some scale of relation between the
several movements which compose the volume of
bank transactions, will be a great help in forming a
judgment of its condition within itself, at any given
period. The averages of the year, ending with July
1855, are more "conservative" for this purpose than
those of any other year in the record. They exhibit
a remarkable correspondence of movement, perfect
1,
337 
THE NEW YORK CLEARING HOUSE.
agreement with the periodical currents, which are
demonstrated in the commercial system, and the full
amount of depression in the autumn, which is always
our most important and critical season. The average
line in the chart represents this scale. When the
other lines recede from it above, proportionate expansion is indicated; when they recede below, proportionate contraction or depression. When the lines
recede from each other, and from the scale also, there
is a proportionate destruction of the equilibrium.
Beginning with August 1854, it is apparent that
the relation of the loans, specie, and deposits, is not
materially changed with respect to the scale, or to
each other, up to August 1855. The lines are in close
contact, and mingle with each other. But an extraordinary fact is developed after that date. The proportion of specie with the loans and deposits, on the
adopted scale, is lost. It separates from them in the
second week of June; in the third week of August, it
falls below the scale, and instead of returning again
to cross and recross the other lines, it continues permanently below them; and only for two short periods,
about February and June, does it re-ascend above the
scale, until the chasm is closed on the first of November 1857. The gradual widening of the gulf between
the specie and the liabilities after June 1855 is shown
with singular clearness and force. There is not a
more significant demonstration in the whole record
than at this precise point. It does not appear that
the specie line sinks even so far below the scale as it
had done at former periods; but the deposits and
loans ascend ravidly above the scale,  In July, 1856,
338 
ORIGIN OF THE CLEARING HOUSE.
the loans separated from the deposits in a gradual
rise, and did not return to the scale of 1854 until the
panic of 1857. As it will be necessary to refer again
to the chart, in the history of that event, a further
illustration of it here would be superfluous.
The first proposition to establish a Clearing House
in New York, was made by the late ALBERT GALLATIN.
In a pamphlet of 124 pages, entitled: "Suggestions
on the Banks and Currency of the several United
States, in reference principally to the suspension of
specie payments," published by WILEY & PUTNAM, in
the year 1841, occur the following paragraphs, on pp.
63 and 64:
"There is a measure which, though belonging to
the administration of banks, rather than to legal
enactments, is suggested on account of its great
importance. Few regulations would be more useful
in preventing dangerous expansions of discounts and
issues on the part of the city banks, than a regular
exchange of notes and checks, and an actual daily or
semi-weekly payment of the balances. It must be
recollected, that it is by this process alone that a
Bank of the United States has ever acted or been
supposed to act as a regulator of the currency. Its
action would not in that respect be wanted in any
city, the banks of which would, by adopting the process, regulate themselves. It is one of the principal
ingredients of the system of the banks of Scotland.
The bankers of London, by the daily exchange of
drafts at the Clearing House, reduce the ultimate
balance to a very small sum; and that balance is
immediately paid in notes of the Bank of England.
The want of a similar arrangement among the banks
.c
339 
THE NEW YORK CLEARING HOUSE.
of this city, produces relaxation, favors improper
expansions, and is attended with serious inconveniences. The principal difficulty inll the way of an
arrangement for that purpose, is the want of a common medium other than specie for effecting the payment of balances. These are daily fluctuating; and
a perpetual drawing and re-drawing of specie from
and into the banks is unpopular and inconvenient.
" In order to remedy this, it has been suggested,
that a gneral  Cash onice might be established, in
which each bank should place a sum in specie, proportionate to its capital, which would be carried to
its credit in the books of the office. Each bank would
be daily debited or credited in those books for the
balance of its account with all the other banks. Each
bank might at any time draw for specie on the office
for the excess of its credit beyond its quota; and
each bank should be obliged to replenish its quota,
whenever it was diminished one-half, or in any other
proportion agreed on.
"It may be that some similar arrangement might
be made in every other county, or larger convenient
district of the State.  It would not be necessary to
establish there a general cash office. Each of the
banks of Scotland has an agent at Edinburgh, and the
balances are there settled twice a week, and paid
generally by drafts on London.  In the same manner,
the balances due by the banks in each district might
be paid by drafts on New York, or any other place
agreed on."
These extracts contain the whole germ of the Clearing House system. They comprehend, essentially,
the manner of its action, by the establishment of a
"cash office" (the coin depository);  and also, the
effect —to prevent "relaxation and improper expansions;" and they even suggest, negatively, the coin
340 
ORIGIN OF THE CLEARING HOUSE.
certifecates, in the "commom  medium  other than
specie, for effecting the payment of balances," the
want of which was "the principal difficulty in the
way" of a Clearing House at that time. The merit of
removing this difficulty belongs to Mr. FRANCIS W.
EDMONDS, late Cashier of the Mechanics' Bank. A
year before the organization of the Clearing House,
he induced the Bank of America, the Merchants', the
American Exchange, and the Metropolitan Banks to
join with the Mechanics' Bank, and to make up an
aggregate sum of one million of dollars in coin, for
which the last named institution issued its certificates.
These were received by the other banks in payment
of balances, and when the depositing banks were
creditors, they were entitled to a preference in their
payment back, and were thus saved the trouble of
counting, and the risk and burden of carrying coin.
These certificates were held as more desirable than
coin, on account of the greater facility, expedition,
and safety of their transfer.
Mr. EDMONDS was chairman of the committee, under
whose directions the Clearing House was organized,
his associates being Mr. JAMES PUNNETT, Cashier of
the Bank of America, and Mr. AUGUSTUS E. SILLIMAN,
Cashier of the Merchants' Bank-now Presidents of
those institutions. The names of these gentlemen,
and also that of Mr. LYMAN, the Manager, are inseparably connected with the origin and early history
of the New York Clearing House.  But to Mr. GEORGE
CURTIS, the author of its Constitution, was conceded
by the common voice of his associates, the precedence,
as it regards intelligence and ability, in regulating
341 
THE NEW YORK CLEARING HOUSE.
and administering its powers. Though not publicly
connected with the first movements in favor of its
establishment, he made it the subject of attentive
study, and prepared a plan for its organization at a
very early period. His personal influence was particularly exerted in removing objections, and in
bringing the discordant elements of the Association
into harmony with its general purpose. Like Mr.
GALLATIN, he appreciated from the outset all the
advantages that would accrue from it to our financial
system; and he was unanimously chosen as Chairman
of the Committee on Suspensions, which made it his
duty to take cognizance of all short-comings on the
part of the different banks. This was at the same
time, the least popular, most important, and critical
post in the Association. It exposed him to the jealousy of the weaker members on one hand, and to
censures for a dangerous indulgence on the other;
but he exercised his powers with such strict justice
and impartiality, that no instance of appeal from his
judgment is on record.
342 
343
CHAPTER XIX.
THE PANIC
Ur to August 1857, our commercial affairs were
generally prosperous. The local journals throughout
the country represented business as in a wholesome
condition. High prices were said to have enriched
the farmer, the stockgrower, and the planter. Trade
and mechanical industry flourished with corresponding success.
In estimating probabilities for the future, great
stress was laid on the fact, that the madness of railroad building was arrested. The bond market, and
with it improvement securities generally, had fallen
into disrepute.   Stock companies could no longer
send an agent to Europe with five millions of credit
tokens, and receive the money for them within sixty
days from the engraver's press. Heavy financial
negotiations in this direction were suspended; and
although the country had several hundred millions of
foreign capital in use, there was no danger of any
considerable portion of it being recalled, since our
home market would reject the bonds which represent
it, at half the par cost. We might, therefore, continue to enjoy the use of this large capital, and avoid
the disaster consequent on a further accumulation of
THE, PANIC. 
THE PANIC.
foreign debt. The common sentiment was, that we
had passed the dangerous point in railway credits,
and with the immense -productions of the year at our
doors, there was little probability of serious financial
disturbance. The most sagacious of our city bank
officers saw no indications of an unusual storm in the
commercial skies. When the loans reached the
unprecedented height of one hundred and twenty-two
millions of dollars, on the eighth of August, they
pointed to the annual reduction of ten or twelve
millions in the autumn months, as one of the regular
ebbs to which the market is subject; but they had no
foresight of extraordinary pressure, and no dreams of
panic. Credit was extended, but " the country never
was so rich."
The banks began to contract their loans about the
eighth of August. Securities immediately fell in price
at the Stock Board. The failure of a heavy produce
house was explained by the depression of that particular interest in the market. A report of dishonest
jobbing, and of the misuse of funds in a leading Railway Company, caused partial excitement, without
seriously disturbing confidence in mercantile credit.
On the twenty-fourth of August, the suspension of
the Ohio Life Insurance and Trust Company was
announced. It struck on the public mind like a
cannon shot. An intense excitement was manifested
in all financial circles, in which bank officers participated with unusual sensitiveness and want of self
possession. Flying rumors were exaggerated at every
corner. The holders of stock and of commercial paper
hurried to the broker, and weie eager to make, what
344 
GENERAL OUTLINE.
a week before they would have shunned as a ruinous
sacrifice.
Several stock and money dealers failed, and the
daily meetings of the Board of Brokers were characterized by intense excitement.
Every individual misfortune was announced on the
news bulletins in large letters, and attracted a curious
crowd, which was constantly fed from the passing
throng.
The Clearing House report for the twenty-ninth of
August-the first after the suspension of the Ohio
Life Insurance and Trust Company-showed a reduction of four millions of dollars in the bank loans
during the previous week. 
The most substantial securities of the market fell
rapidly in price at public sale.
The safety of bank notes in circulation was suspected or denied.   The publishers  of counterfeit
detectors spread alarm among the shopkeepers and
laborers, by selling handbills with lists of broken
banks, which were cried about the streets by boys, at
"a penny a piece."
One of the Associated Banks fell into default at
the end of August, and a fraud of seventy thousand
dollars by the Paying Teller, roused suspicion of
similar misconduct in other institutions.
The regular discount of bills by the banks had
mostly been suspended, and the street rates for money,
even on unquestionable securities, rose to three, four
and five per cent a month. On the ordinary securities of merchants, such as promissory notes and bills
of exchange, money was not to be had at any rate.
15*
345 
THE PANIC.
House after house of high commercial repute sue
cumbed to the panic, and several heavy banking firms
were added to the list of failures.
The settlements of the Clearing House were watched
with the expectation of new defaults; and their successful accomplishment, each day, was a subject of
mutual congratulation among bank officers.
The statement of the city banks for the week ending
September 5th, showed a further reduction in the loans
of more than four millions of dollars.
Commercial embarrassments and suspension became
the chief staple of news in all the papers of town and
country. The purchase and transportation of produce
almost entirely ceased.
From this period, there was nothing wanting to
aggravate the common distress for money. The failure
of the Bank of Pennsylvania, in Philadelphia, was
followed by.that of the other banks of that city, and
by those of Baltimore, and of the Southern Atlantic
States generally. Commercial business was everywhere suspended. The avalanche of discredit swept
down merchants, bankers, moneyed corporations, and
manufacturing companies, without distinction. Old
houses, of accumulated capital, which had withstood
the violence of all former panics, were prostrated in a
day; and  when  they believed themselves  to be
perfectly safe against misfortune.
The bank suspension of New York and Zew
England, in the middle of October, was the climax of
this commercial hurricane.
Such is the outline of the most extraordinary,
violent, and destructive financial panic ever experi
346 
si -~,jI
,I I I    Ij~
Wall Street on Suspension Day. Oci  
CONCEALED CAUSES.
enced in this country.  What caused it?  To what
source or sources can it be traced? Where lies the
responsibility of it?  What lessons does it teach?
What preventives are indicated against the recurrence
of similar disaster?   These  axe questions which
agitate the public mind, and which ought to be
answered, if possible, for our instruction and future
guidance.
A financial panic has been likened to a malignant
epidemic, which kills more by terror than by real
disease. If its exact causes could be ascertained, they
would doubtless be found in minor proportion with
the imaginary and the accidental; but so many terms
enter into the case, which, from their character, are
beyond our grasp, and equally beyond estimate, that
a clear, practical analysis is impossible. For example:
Who can tell how much gold is hoarded-how much
of what has been supposed to be real capital, is
nominal or mortgaged-how much insolvency has been
buoyed up for years on the general tides of credit-and
to what extent dishonest people take advantage of the
common distress, to repudiate debts which they are
able to pay?  Who can tell what frauds are carried
along in stock companies, or what speculations in land,
mines, and railways are mixed up in the mass of
trade?  On  these points, the sharpest scrutiny is
wholly at a loss.  In truth, the egg of the crisis of
1857 was buried where it could not be seen-in the
private and household accounts of individuals. The
relation of the exports and imports of a country is
comparatively of little consequence, so long as its
homine trade and labor is in a sound condition. It
347 
lb
THE PANIC.
signally failed in this instance, to give warning of the
approaching storm, if it did not sadly mislead those
who most relied on it for instruction.
A state of crisis, or severe financial pressure, is not
necessarily destructive of all confidence. We have
been accustomed to its frequent recurrence, and found
it to be manageable without excessive straining of our
financial means. The loans have uniformly declined
from the highest point, in August, to their lowest, in
November or December, and the stringency has then
gradually relaxed. This annual pressure may be
compared to a high Spring wind, which breaks the
superfluous growth of vegetation, and gives stronger
development to the uninjured mass. The following
table shows that stringency in the market, more or
less severe, is not inconsistent with a prosperous state
of commerce.
REDUCTION OF
Increase o!
Specie
Is Loans.   Deposits &   peci.
*Circulation.
1853, Aug. 6 to Nov. 12, 84 15,000,000 1,600,000             3,000,000
1854,  "  5 "Dec.  9,10013,000,000 16,800,000 4,000,000........
1855,  " 18 " Nov. 17, 78  9,000,00012,200,000 3,300,000........
1856,  "  2 "Nov.  8, 84 9,700,000 15,800,000 2,800,000........
The rate of reduction in loans was very gradual in
each of the four years preceding 1857. The greatest
fall for any week during the entire period was
$2,800,000, from October 7 to October 14, 1854, and
for the several previous weeks it was hardly appreci
able.   The  characteristic feature of this annual
contraction was an almost insensible ebb; and this
348 
OHIO LIFE AND TRUST 00.
was frequently relaxed to suit the convenience ol
dealers, as is manifest from an examination of the
weekly tables.
It is clearly shown that a reduction of loans offrom
tee to fteen millions of dollars may take place in an
average term of ninety days without serious injury to
commerce.
Is there sufficient reason for assuming that this scale
of contraction might not have been as successfully
applied in 1857, as it was in 1853-or that it might
not have been extended several millions of dollars
beyond that of the latter year, if the emergency
had required it? This is the point about which
opinions clash. The best evidence bearing upon it is
to be found in the same tables.
The bank contraction began on the eighth of August,
and continued for two weeks on the gradual scale of
former years. This brings us to the twenty-third of
the month, on which day the commercial interest was
undisturbed by any extraordinary accidents or apprehensions.
On the twenty-fourth of August, the Ohio Life
Insurance and Trust Company-a chartered institution with banking privileges-closed the doors of its
branch office in New York. It was not a bank of
issue, nor, to any considerable extent, of deposit, in
this city. Its principal business was to receive remittances from the home office in Cincinnati, and numerous correspondents in the West, and to hold them
subject to draft. It was not a discounter of bills
receivable; but on the contrary, a large borrower from
other institutions. The consequences of its stoppage,
349 
THE PANIC.
therefore, did not fall directly on our merchants, as
in the case of a bank on which they are depending
for continuous loans. The capital of the company
was two millions of dollars.
The general circumstances of this failure, so far as
they were published, were not in themselves very
alarming. The home office was reported, by tele graph, to have its doors open as usual, with its affairs
apparently unembarrassed, notwithstanding the stoppage of the New York branch. It was soon known,
however, that the entire capital of the institution had
been virtually embezzled, and serious alarm was
immediately manifested in banking circles.
On the day after the failure, our merchants found
that the terms of business between them and the
banks were changed. The discounting of commercial
paper was stopped. The certification of checks was
imposed  with  unaccustomed  rigor.  It suddenly
dawned on financial managers, that the city loans
were ten millions of dollars higher than ever beforea very gratifying fact during their accession, but now
inspiring only fear and distrust, which in a few hours,
comparatively, ripened into symptoms of alarm.
The Weekly Statement of August 29th showed a
reduction in the loans of four millions of dollars, and
that of September 5th as much more.  This unmistakable indication of the course of bank policy was every
where accepted as evidence of existing panic. Who
should know better than bank managers how much
consequence to give to the failure of the Ohio Life
and Trust Company?   They were terrified by the
stupendous fraud. They saw no safety, but in com
350 
OHIO LIFE AND TRUST CO.
pelling the payment of their loans at maturity, and
denying all indulgence. The gradual scale of reduction was abandoned at once. Instead of ten millions
of dollars in eighty-four days, it was ten millions in
fourteen days. Whether this was forced on the banks
by the withdrawal of deposits, or whether it was the
result of a common understanding, or of the want
of such understanding on the part of bank officers, is
of little importance, so far as relates to its effect on
the public mind. Its immediate sequence to the
collapse of the Trust Company gave to that event the
distinction of the first act in the panic of 1857. The
institution had stood high in the public esteem for a
number of years. It was regarded as the more safe,
because it was not a bank of issue, and because its
affairs were supposed to be conducted on the conservative plan of our Trust Companies, avoiding the
active and changeable risks of commerce, or touching them only with extreme caution. The bankers
and exchange dealers of Ohio bought its drafts for
remittance very extensively; and the immediate
injuries caused by its failure arose from these being
dishonored at New York, where, for several successive
days, they accumulated in the hands of many parties,
to the extent of several hundred thousand dollars.
There was not a bank in the city, with a Western correspondence, that had not these drafts sent to them in
payment for collections, or for deposit, to be drawn
against by the remitters. The sensible consequences
of the failure were, therefore, widely distributed,
especially among the city banks, several of which
were large lenders to the Company. The Company
351 
THE PANIC.
had borrowed, also, of individual bankers, exchange
dealers, and stock brokers, hypothecating not only its
own collaterals, but the property of its dealers, for
whom it was merely a collecting agent.  Most persons who held claims against it were persuaded that
they would be lessened in value by an untimely
exposure of its affairs, and a curtain of mystery was
thus drawn before them.
The quick apprehension, by bank managers, of the
dangers to which our financial system is exposed by
the loss of public confidence, their knowledge of the
facility with which frauds may be concealed and
propagated in large institutions, and the immediate
reflection of the consequences upon the banks, explain
why they so promptly take the alarm when any material part of the fabric of credit gives way. They
were the first to seize and to act upon the suggestions which were provoked by the sudden collapse
of the Ohio Trust Company. If its entire capital of
two millions of dollars could be dissipated if its
nmeans could be employed in desperate stock-gambling in the public market, with all the usual hypothecation of securities, and transfers, and extensive bank
loans, of which the records of the Company must
have given some evidence-all this without discovery,
and even without exciting suspicion in the minds of
the trustees-whyi might not similar transactions be
concealed in other institutions of which the trustees
are equally well accomplished and esteemed?  Under
the fears instigated by such thoughts, the manifestations of distrust were more open from day to day.
The notes of houses in high standing were rejected
352 
BANK STRICTURE.
when presented for payment in the usual manner,
unless the deposit to cover them was already made.
The most trivial accommodations were denied, with a
positiveness that sent the applicant away dissatisfied
and indignant. All the forms of suspicion were
thrust out into a prominence that was not unfrequently insulting. The honor of the best dealers,
who had never committed an impropriety in their
accounts, was totally ignored. Good faith and confidence disappeared from the bank counters, under the
rigid instruction of the officers; and personal intercourse with them became difficult, without such delays
and exposures as were offensive to high-minded and
honorable men. Stocks held as collateral security
were marked down in value from ten to thirty per
cent; and successive instalments on loans were
required to restore the continuous depreciation caused
by this process. All these hard points were pushed
out with such disregard of the trying necessities of the
dealer, that a common feeling of indifference to obligations began to spring up as their counterpart.
It is remarkable that there was no interval of pressure between the plentiful money-market, which
lasted until the twenty-second of August, and the
panic with which the month closed. There was no
treaty between commerce and money as to the common interest. The panic was an explosion without
notice or premonition. It was not, as in former cases,
the result of gradually increasing embarrassment
after vain struggles to prevent it. This is demonstrated by the following figures:
353 
THE PANIC.
Weekly Fluctuation of Loans, -eposits, Circulation,
a?6d Specie,from Aug. 22d to Sept. 26th, 1857.
LOANs.         DEPoSITs.    CIRCULATION.       SPECIE.
Aug.  29 dec. $3,550,663 dec.  3,380,670 dec.   22,951 dec.  855,802
Sept.   5 dec.  4,367,554idec.  3,600,192inc.       2,132inc.   986,588
12 dec.   2,235,792inc.       73,512 dec.  350,876 inc. 1,953,893
"   19 dec.   1,208,152 inc.    517,844dec.   248,515 inc. 1,374,329
"   26 dec.    985,988dec.   933,102 dec.  235,493 dec.  229,091
dec. 12,348,149 dec.  7,322,608 dec.  855,703]inc. 3,229,917
The deposits and circulation are the basis of the
loans and specie.
The exact loss of basis, during this term, was
$8,178,311, while the loans were reduced $12,348,149.
The increase of specie reserved from the liquidations
makes the true relative decrease $15,578,066. The most
violent action was between September 5th and September 19th, when the loans were reduced $3,443,944,
in the face of an increase of deposits of nearly six
hundred thousand dollars. In the latter period, the
true relative change is represented by a reduction of
$6,172,775 in the loans, while the deposits actually
increased $591,356.
There can be no escape from these figures. They
show, beyond cavil, that the banks, not the depositors,
took the lead in forcing liquidation. In the twenty
days prior to the 26th of September, the dep6sits fell
off but $341,746, while the resources of the banks
were increased $6,694,179.
Au important fact must be stated in connection
with the fall of deposits between August 22d and
354 
BAiK STRICTURE.
September 26th, viz., that of the $7,322,608, full
three-fourths was drawn out by the country banks;
so that the amount withdrawn by the individual
dealers was, at most, not above two millions of dollars. Thus, the consequences of holding a treacherous
country fund on interest, and treating it as bank
capital, fell ultimately on our city merchants.
When dealers are denied the usual facilities by
discount, they have no recourse for their payments but
to their deposits; but they did not use these to the full
extent of their loan reduction in any single week
from the 22d of August to the 19th of September.
The fluctuating part of the basis of bank loans is
cominposed of deposits and circulation the capital
being a permanent investment by the stockholders.
The force of reduction is, therefore, measurable by
the proportion between this fluctuating basis, and the
amount of loans above the capital. It is this proportion which constitutes, at the same time, the profit
and the danger of our banking system. For example:
the capital of the banks was $65,000,000 on the 22d
of August.  Deducting this from the loans of that
date, $120,139,582, gives $60,139,582 as the proportion resting on the deposits and circulation, which
then amounted to $72,935,482. The proportion of
loans on this fluctuating, or pure credit basis, was
eighty per cent. The same percentage on the deposits
and circulation of September 26th, would have given
the dealers an aggregate loan of $51,805,737; whereas,
they had but $4:2,791,433-a deficiency of $9,014,304,
relatively, with the resources of the banks. The lose
of basis, by the decrease of circulation and the dimi
355 
THE PANIO.
nution of deposits, was but eleven per cent, while the
reduction of loans was twenty-nine per cent.
This method of estimating the force of a financial
contraction, by taking into view the fluctuating basis
only, exposes the real danger of extending loans on
that basis beyond the point which experience has
determined as safe. It is the true scale of measurement for the guidance of the Bank Board.
" The sudden withdrawal of country balances" has
been assumed as the chief cause of the panic, by some
of our principal bank officers.  The Clearing House
tables give no support to this assumption. No feature of our financial system is more remarkable than
the stability of its deposit line. The monthly average
for 1857 is directly to the point. It is as follows:
J  $65,638,204
F65,416,635
M65,948,462
A67,135,655
a68,342,291
J68,336,935
.66,369,206
66,777,857
August 1st to August 22d.
This brings us to the exact date of the panic, with
so little fluctuation of deposits, that the loans were
. not more affected, from week to week, than is usual
in the best condition of our market.
But we have direct testimony, on this part of the
subject, in the Report of the Clearing House Com
356
January.
February
March.
April,.
May..
June..
July.. 
COURSE OF THE MARKET.
mittee, to whom was referred the proposition to
abolish the payment of interest on deposits.
They say, on page 17: "During the week of financial excitement, in October last, the exaggerated
reports of which were carried with the speed of lightning to every part of the land, this new medium of
communication (the telegraph) filled our banks with
imperative orders for the immediate return of their
deposits, in specie."
It was not, then, until October, that the withdrawal of deposits operated so fatally!
The point implied by the Committee is, that the
panic occurred in October; and the purpose of the
implication is, to shift the responsibility of having
caused it, from the banks to the depositors. There is
no evidence to sustain this presumption. The Bank
Superintendent says, in his report to the Legislature,
" that about the first of October, a list of more than
thirty failed banks, in the State of New York, was to
be seen daily in our newspapers." He says, also,
that the interior banks began to return their circulation, and to withdraw their securities, for sale, about
the 20th of September-an extremity of action that
does not characterize a state of ordinary pressure.
The weaker banks began to fail near the first of September; and the commercial failures of the early part
of that month, were largely of a class that had withstood all former panics.
A comparison of the stock sales from August 22d to
September 30th, with those of the " week of financial
excitement in October," further refutes the theory of
the panic set up by the Clearing House Committee.
857 
THE PANIC.
RELATIVE DECLINE IN BONDS AND STOCKS.
FROM AUG. 22   FROM OOT. 1
TO OCT. 1.      TO OTr. 13.
Virginia State Sixes...................
Missouri State Sixes...................
Illinois Central Railroad BoDds...........
New York Central Railroad Sixes.......
do.           do.      Stock......
Delaware & Hudson Canal Company.....
Bank of America.....................
Bank of Commerce....................
American Exchange Bank............
Metropolitan Bank....................
Park Bank...........................
Panama Railroad..................... 10       d
Reading Railroad....................
Michigan Central Railroad.............
Michigan Preferred Railroad...........
Illinois Central Railroad................
New York & Erie Railroad..............
Galena & Chicago Railroad.............
Chicago & Rock Island Railroad........
Cleveland & Toledo Railroad...........
Milwaukie & Mississippi Railroad........
Cleveland & Pittsburgh Railroad........
Pennsylvania Coal....................
The foregoing list includes a wide range of securities, from the best, down to what are called "fancy."
The general decline of the market was from three to
thirty-six per cent more between August 22d and
October 1st, than it was during " the week of financial excitement in October." It is apparent that
the latter period was but the sequence of the former
-the breaking away of the dykes, when the pressure
of the flood became irresistible. The ball had been
set in motion, and it was impossible to stop it on the
side of a hill.
358
131 per cent
11 do.
32 do.
18 do.
19i do.
16 do.
15 do.
22i do.
40i do.
33 do.
26 do.
20 do.
36i do.
37 do.
211 do.
32i do.
17 do.
25 do.
31i do.
15i do.
36 do.
201 do.
Ill do.
10
8
16
4
5
24
19
13
15i
17
18
10
3i
6
0
gi
3
9
3i
7i
0
1
15i
per cent.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
do.
. do.
do.
do.
do.
do.
do. 
CALL LOANS.
Although the assumption that the panic was catsed
by the sudden withdrawal of country balances is not
borne out by the tables, it is true that those balances
constituted a bad element in the market, and that
they contributed to the common wreck. The presence in our financial system of a borrowed fund,
payable on demand, of fifteen millions of dollars, on
which loans were predicated, was a disturbing fact,
even with the probability that it was not likely to be
withdrawn suddenly, or all at a time. But the conditions on which it was held prohibited that state of
preparation, which alone could protect the market
from the injuries of a requisition for immediate
payment.   It carried interest; it was reloaned on
interest, and doubtless re-reloaned to various parties,
who had invested it, perhaps mostly in the hazardous speculations of the stock market. If the country banks, which were borrowers No. 1, were called
on by their depositors, they called on the city
banks, which were borrowers No. 2; and these
called on the large broker, who was borrower
No. 3; and he again on the small brokers, who were
borrowers No. 4, in whose hands the money spread
out into various channels of fluctuating investment,
if it was not further loaned to a fifth series of borrowers. The difficulty of collecting loans is in proportion to the number of borrowers between the first and
the last. The city banks do not commonly " call in,"
until they have paid drafts against the fund, and they
are likely to be left a day or two in the lurch before
they can restore themselves- meanwhile falling
behind at the Clearing House, or denying usual
359 
THE PANIC.
accommodation to their commercial dealers. This is
the literal history of the " call loans" of the city
banks, and the only management by which they can
reimburse themselves for the interest which they pay
on borrowed money. The committee justly denounce
the practice as " a departure from sound principles."
They show that it reflects injury on the whole com)nunity, while the profit is confined to a few banks,
and is inconsiderable at best; also that it accumulates
balances beyond the necessities of a healthy exchange,
and withdraws capital from productive employment
in the country.
It is not to be doubted, that the " imperative
orders" from the country banks, together with the
action of the home depositors, did cause, directly, the
suspension of specie payments. It is impossible to
ascertain how much they contributed, separately, to
the final result, though appearances indicate that
country depositors had less to do with it than the
resident dealers.
The balances of the foreign bankers had accumulated, in consequence of the stoppage of specie shipmnents, and the non-sale of bills of exchange. These
were understood to be specialized by agreement with
the bank officers. That is, they were either to be
reserved in coin, or the owners were to be advised in
season, that they might withdraw them before the
suspension of specie payments. The tables show that
seven millions were withdrawn between the tenth and
the seventeenth of October-the greater part of it,
probably, on the morning of the suspension. The
360 
I 
__                      C
1/ ~    m __
~                 -
_ ~~
A Run on a Bank.
:: ~,, 
THE FINAL BLOW.
next week brought it all back again. The restoration
of the specie line was even more remarkable than its
depletion. A single glance at the diagram will
excite astonishment at the resources that were found
immediately available; and still more astonishment,
that suspension could have occurred while they were
within such speedy grasp.
The relative decline in loans and deposits, from
September 26th to October 17th, covering the period
referred to by the Committee, was as follows:
-Deposits.
$4,120,498
3,053,189
7,049,164
Oct.  3...
" 10.
"C  10...
", 17...
$10,545,607
Besides this loss in deposits, the banks suffered
depletion in coin to the amount of $5,483,864. They
could not withstand such an onslaught. In twenty-one
days, the deposits fell twenty-five per cent, while the
loans were reduced but eleven per cent-a complete
transposition of the movement following the 22d of
August, when they fell but eleven, while the loans
decreased twenty-nine per cent.
The history of the panic is clearly divisible into
these two periods: the former, when the banks took
the initiative in forcing down their loans; and the
latter, in which the depositors seized it and brought
on the closing act of suspension.
16
361
Loans.
$1)8551934
4)017,929
4)671,744
$14)222,,851 
THE PANIC.
The depositors were not alarmed, up to the 26th of
September.   For five successive weeks, preceding,
they withdrew less from the banks each week than
the banks withdrew from them by the depression of
loans. So far from exhibiting distrust, there is every
appearance of striving against it on their part, with
the hope that the storm might pass its crisis, and subside. The united community will testify to the
anxiety with which the Clearing House Reports were
watched, for signs of relaxation in the forced contraction; but no such signs were given. At length, the
third of October exhibits a sudden and marked
change. Over four millions of deposits are withdrawn
during a single week, and in twenty days, over fourteen millions. It is probable that a much larger
amount was withdrawn up to the fourteenth (the day
of suspension) than is indicated by the statements;
for these do not show the restoration which began on
the fifteenth, and which materially lessened the
average of withdrawal for the week ending on the
seventeenth. The report of the Clearing House Committee confirms the fact that the depositors did not
become alarmed before this period.
The gradual expansion of bank credits through the
several previous years, not only on a fictitious home
basis, but on country deposits which had been
allured by competing rates of interest, made sufficient ground for an extraordinary pressure, when a
reduction was to be effected; and thus the banks
were doubly responsible for the pending issue. There
is no evidence, however, in the records of the Clearing House, nor in the experience of past years, nor in
362 
THE  CAIJSE.
any events which have transpired since the suspension,
to prove that a panic was inevitable. The foregoing
facts indicate that it was directly caused by the violenit contraction of bank loans immediately after the
twenty-fourth of August.
The beginning of the contraction on the twentyfifth of August, marks the precise point at which the
panic was started on its destructive course. From
that date, distrust  grew rapidly.   The telegraph
spread it throughout the country.   Every latent
cause of embarrassment sprung into activity. Trifling
causes were a thousand-fold magnified. False alarms
were created, and public apprehension kept up by
successive disasters. Unusual accidents were added
to excite the popular mind. For the first time since
the establishment of regular intercourse with California, the steamers were delayed with their remittances of gold; and one of them was lost.
In this state of things, the Clearing House daily
settlements in coin exerted a crushing influence on
the commercial interest, and became a new source
of terror. What in ordinary times was a safe-guard
against the unwise expansion of bank-credits, was
now a remorseless power compelling the smaller
banks-the majority of the whole-to a violent contraction of their loans to dealers, forcing them into
the sacrifice of property, and finally into bankruptcy;
thus sending out through a thousand channels daily,
new streams of misfortune.  Default at the Clearing
.House, was the presiding spectre at every Bank Board
of the smaller institutions. It was forgotten that the
363 
THE PANIC.
whole of a thing is composed of its parts-that public
credit is made up of the credit of individuals-that
if the parts of a thing are broken and scattered, there
is no longer a whole.*
It did not occur to the managing committees of
the Clearing House to relax its destructive energy,
whilst there was yet a chance of preserving the last
stronghold and pledge of commercial integrity-specie
payments. They thought of it afterwards, and found
in it a wholesome alleviation for themselves; but the
time had passed for it to be of any material service
to our merchants. The admission of the State debt
of New York, and of the debt of the United States,
represented by the bank currency, as a substitute for
coin in the daily settlements, was of great service in
preventing further depreciation, and in repairing the
mischief that had been done.
It is often the case, that things good in themselves
become hurtful by a change of circumstances which
destroys their fitness. This may be said of the Clearing House, without detracting firom its real value to
our financial interests.
There are always operating causes in commercial
and financial affairs, of which any violent disturbance
may be made to appear as the consequence, after the
issue is over; but which, nevertheless, may have had
no actual share in its production. Thus, the advocates
of a protective tariff see in low duties on foreign
*  All community of interest, all concert of action, as the crisis approached, was
apparently, if not actually abandoned."-Report of Bank Superintendent, p. 7.
"The suspension was preceded by a desperate struggle between all the banks
themselves; and distrust and fear of currency was more apparent among them than
with the public generally."-Ibid., p, 17,
364 
THE CHART.
merchandise a primary and sufficient cause for the
panic of 1857; and the "hard currency" theorists
find its explanation in the use of paper money. Fortunately, the figures of the Clearing House afford
such a palpable demonstration of a direct and simple
cause in this instance, that all complicated questions
of political economy may be left out of view. Yet,
it is often important as well as interesting to look
back over the history of things, and to discover, if
possible, the exact point where judgment was lacking,
and where a slight turn of the rudder would have
saved the vessel from destruction. The chart constructed from the Weekly Statements is instructive
on this point.
In August, 1853, commenced the publication of the
Weekly Statements; and in October following, the
Clearing House was organized. The lines of the chart
of that year begin in a straggling, and apparently
dubious manner, as if engaged in an uncertain experiment; but they are brought into complete harmony
in July, 1854, when the influence of the Clearing
House is perfectly established; and from this point
they rise and fall together. During the year ending
with July, 1855, the specie was kept at twenty-five
per cent of the deposits.  The evil of disproportionate
expansion by the banks separately, which was so
grievous before the organization of the House, was
effectually cured; but afterwards came the evil of
harmonious expansion, which was something quite
new, and not contemplated. The balance-wheel was
perfect so far as to prevent individual members going
astray; but for want of a fxed scale, it did not pre
365 
FTHE PANIC.
vent the whole  from going astray together.   In
August, 1855, the specie line fell below the scale, and
did not again ascend to it before the suspension in
October, 1857. The transient recovery in February,
and in June, 1856, was extraneous friom the market,
being caused by the payment of a State loan at the
former, and of a city-Joan at the latter date. The
average of specie with respect to the deposits, sunk
from twenty-five per cent in 1854-5, to twenty-one
per cent in 1855-6, and to eighteen per cent in 1856-7,
while the loans were steadily on the increase.
It is held that a fair proportion of the resources
of a bank should be reserved in coin, to meet immediate liabilities. The market is uneasy with high
loans and low specie. Tried by this measurement, the
force of our bank expansion after August, 1855, is
exhibited in a most striking manner. The proportion
of coin with the whole resources for the year, ending
July 31, 1855, being preserved in the subsequent
years, would have given but eighty-five millions of
loans on the actual coin of 1855-6, whereas they were
$100,488,046; and it would have admitted but seventysix millions of loans on the actual coin of 1856-7,
whereas they were $111,174,665. That is to say, that
the loans of 1855-6 were fifteen millions of dollars in
excess of the scale, and the loans of 1856-7 were
thirty-Jfve millioqzs in excess!  These results are
astounding. If such a departure from equilibrium
does not foreshadow the suspension of specie payments as inevitable, it lessens our surprise that it
should have occurred (to borrow the words of the
Banik-Superintendent)-," with overflowing granaries,
366 
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BANK EXPANSION.
exemption from pestilence, neither internal insurrection nor foreign invasion, and our country at peace
with every nation of the earth." *
The chart shows that, in July 1856, a new gap was
opened between the loans and their basis. The deposits receded, but bank expansion went on, in defiance
of this significant change of current, and the continued depression of specie; until on the 8th of August,
1857, it reached its highest point. The loans, then,
with respect to the specie reserve, were in excess
forty-lve millions of dollars!
All these movements are shown on the reduced
diagram, on which the point of departure from the
scale is indicated by straight lines. It is manifest
that the rules of sound discretion in our bank management were lost sight of as far back as July, 1855; and
since the expansion was not arrested at any subsequent period, when it was possible, but one result
could follow. In fact, it appears that the escape from
panic in the two previous years was remarkable,
since the excess of loans, with respect to the specie,
reached, on the 29th of September, 1855, thirty-three
millions of dollars, and on the 27th of September, 1856,
thirty-eight millions of dollars!
The relative condition of our city banks at the
different periods named, with their condition on the
31st of July, 1858, is strikingly shown by the amount
of loans that their average reserve of specie would
have admitted, in the same proportion, viz.: two
hundred and thi?ty-fyve millions of dollars!
* Report of 1857, page 4.
367 
THE PANIC.
It is, doubtless, the examination of the whole ground
here set forth, that has induced a majority of our
bank officers to name arbitrarily a proportion of
specie, as proper to be kept in reserve from the
resources.* The Bank Superintendent, also, has recommended to the Legislature, that the banks be obliged
to maintain an average of twenty per cent of their
deposits in coin; though for want of a more practical
acquaintance with bank figures, he quotes their deposits in gross at $72,602,678, instead of $55,377,224,
omitting to deduct the clearings. It may rather be
doubted whether the proportion of twenty per cent
is sufficient to assure a steady equilibrium. That of
the years ending with July in 1854 and 1855, was
over twenty-five per cent of the net deposits, while
that of 1856 was but little below twenty, and that of
1857, eighteen per cent.
The circulating bills may safely be left out of view
in this provision, as their independent security has
been abundantly tested.
AN EXCEPTION.
A very important exception remains to be noticed,
as to a portion of our city banks, in connection with
* At a meeting, March 16th, 1858, where forty-two banks were represented, the
following resolution was adopted:
Resooed, That in furtherance of the end proposed by our agreement, to discontinue the payment of interest on deposits, and in accordance with the recommendations of the Report of the Committee on that subject, we also agree, each to keep
on hand, at all times, an amount of coin equivalent to not less than twenty per
cent of our net deposits of every kind, which shall be made to include certified
checks and all other liabilities (except circulating notes), deducting the daily
exchanges received from the Clearing House.
368 
BANKS NOT WANTED.
the expansion of credit which prepared the conditions
of the panic.
From 1839 to 1850, our banking capital was increased but little over three hundred thousand dollars; and during these eleven years, more than thirty
per cent had been added to our commerce and population. Unquestionably, there was room for some
additional banks. Several were organized, and soon
acquired such a prosperous business, that bank stock
became a favorite investment. It was so easy to
" get up" a bank, and its offices were so respectable,
that Tellers and Clerks, who were ambitious to
become Cashiers, called their friends together, and
began  subscription-lists.   A  retired capitalist was
flattered with an offer of the Presidency; mechanics
and merchants were pleased at the idea of becoming
Bank Directors, with the enjoyment of unrestricted
"facilities;" lawyers and notaries were flattered with
the hope of counsel and protest fees; and all joined
together to get stock taken. Scores, if not hundreds,
of small subscription-books were in circulation at the
same time, in all trades and professions. Underclerks in old banks, who were desirous of promotion,
aimed at tellerships in the new institutions, and
sought to make claims by soliciting stock; subscribers became solicitors, on condition of having
their friends appointed to clerkships; brokers became
solicitors, in view of large commissions for the purchase of securities; stationers were actively engaged,
under a promise of furnishing the ledgers and accountbooks; engravers were set to work, by the promise
of employment in their art; and people in particular
16*
369 
THE PANIC.
sections were stimulated by the prospect of increased
value to their real estate, by the near location of a
bank. In 1851, a new bank was started for every
month in the year; in 1852, one for every two
months; nine were added for 1853 —making twentyseven in three years, with an aggregate capital of
over sixteen millions of dollars. If this had been
real capital, the case had been better; but it was
mostly fictitious-merely paper capital-nothing, in
fact, but the creation of a book debt, with hypothecated stock certificates as collateral security.  More
than half of it was of this character-and at least
another fourth was in excess of the commercial want;
but it was legally organized, and it attracted, or hired
deposits, and so created a larger basis for more credit
in the shape of loans,' which, in August, 1857, were
extended to over forty millions of dollars. It is safe
to say, that two-thirds of this prodigious debt was a
grievous burden, super-imposed on the legitimate
debt of the community; and that, instead of benefit,
it brought embarrassment and injury to the trade and
labor of the city.
This was the expansion that prepared the crisis of
1857. It was an overgrowth of banks, and an overtoppling of credit on the overgrowth. It does not
alter the case, that many of the new institutions have
since become entirely successful and well managed;
but it furnishes the ground of an important exception
in favor of the older banks, as to exact responsibility
for the panic. These, almost without an exception,
maintained their discount lines nearly unchanged,
while the panic was created by other institutions.
370 
AN EXCEPTION.
The affairs of some of the new banks, also, had been
so judiciously managed as to rank them with the
exceptional part of the system.
The author does not pretend to find a complete
apology for the older banks, in the fact here stated.
If their managers were more experienced, they might
have furnished counsel, and ability, to guard the
system against the calamity which the figures of the
Clearing House prognosticated as far back as August
1855.
Bank government, as it relates to the whole system
in the City of New York, is made difficult by the
composition of its management.   The twenty old
banks, with their established machinery, worked
together with comparatively little difficulty; but
when forty others were added, making an aggregate
Board, of directors and bank officers, of over eight
hundred persons, without any representative body to
deliberate upon common interests, the whole system
was out of control. To this fact, must be added
another, before the difficulties of the case can be fairly
appreciated.   A  very large proportion of the new
bank managers were without experience in the business. Presidents were chosen with no reference whatever to their knowledge  or capacity.   One  had
acquired wealth by selling dry-goods, and therefore
he was fit for a bank president; another had been
equally successful in making shoes; another had
been a ship-chandler, and fortunate in the schooner
coasting-trade; another had been a stage-driver: not
a few were men of the narrowest minds, wholly lack
371 
THE PANIC.
ing in mercantile education, and without the ability
to conduct the simplest commercial correspondence.
It is due to some of these gentlemen to say, that if
they were ignorant in the beginning, they have improved by close attention to practical duties, and that
for general intelligence they are not far below the
average of their cotemporaries in office. They have
yet to learn, however, that it is one thing to be a bill
broker and a shrewd calculator of balances, and quite
another to understand the principles of true economy
in finance.
The natural consequences of placing incompetent
men in the responsible office of bank president, could
not in all cases be averted. Several instances of gross
mismanagement occurred, in which institutions were
saved from insolvency, either by a change of officers,
or by the help of the Associated Banks. Several others
maintained a feeble existence for a short time. and
sunk into final discredit; and in five or six cases, at
least, there were such serious deficiencies, as to justify
suspicions of dishonesty and collusion among the Directors. Hiow the legal weekly and quarterly statements could be sworn to, up to the time when the entire
stock of a bank was lost or squandered, is a question
for the parties concerned to settle with themselves.
It is not necessary to clog this sketch with the
numerous accidents that were added from day to day,
to increase the popular excitement, and to multiply
its terrors. The embarrassment of the exchanges
between different parts of the country, and the consequent stoppage of remittances; the depreciation of
372 
THE INDEPENDENT.
the bank currency, which the farmer refused to take
in payment for produce; the failure of individuals and
corporations, including the Illinois Central Railroad
Company; the run on the Savings' Banks-all these
were but the gathering wrecks that fell in as the torrent rushed on.
There was one cause of aggravation, however, that
cannot be called an accident. The weekly publication of failures, in The Independent, a religious paper
of wide circulation, spread dismay over the country.
This frightful record was copied by all the principal
journals, from Boston to New Orleans. It sharpened
and fed the common appetite for calamities. It cut
off remittances firom debtors who were too ready to
adopt the plea, that "money would be of no use to
broken merchants," and to follow it up by assuming
that "all were as good as broke"'-a pretext that
found some color of support, in a record that embraced, by the middle of October, more than twelve
hundred merchants of all classes, incorporated stock
companies, and banks. It became a reproducing
cause of embarrassment, and one of the chief agencies
in propagating that moral insolvency which constituted a prominent feature of the panic. The sanctity
of engagements was openly repudiated, under the
pretext of universal bankruptcy. The authors of
this commercial necrology could urge nothing in its
defence, but  the improved sale of a newspaper!
Their excuse might be thoughtlessness, or incapacity
to see that any rule of decency is broken by holding
up the misfortunes of individuals to gratify a morbid
public curiosity.
373 
THE PANIC.
The disclosures of the panic show, measurably
what was the state of things before it commenced.
Notwithstanding the appearances of prosperity, there
existed all the conditions of extraordinary financial
disturbance.
A prodigious weight of insolvency had been carried along for years in the volume of trade. Extravagance of living had already sapped the foundations
of commercial success, in hundreds of instances where
credit supplied the place of lost capital. Mismanagement and fraud had gained footing in public companies to an incredible degree. Hiundreds of millions
of bonds were issued with little regard to the validity
of their basis, and pressed upon the market by dishonest agents, at any price, from sixty down to thirty
cents on the dollar. False quotations were obtained
by sham auction* sales. The Press, in particular
instances, was bribed into silence, or became a partner in the profits to be derived from the various
schemes which it commended to general confidence.
The land grants by Congress to railway companies
gave renewed activity to speculation, and State Legislatures were bribed to locate roads to serve individual interests. Public, as well as private credit,
was compromised. The example of corruption in
Government commissions and contracts, and of bad
faith with neighboring nations, was an extreme, but
a faithful expression of the tone of popular feeling
with respect to the sacredness of trusts and obligations.
The general mass of credit in the United States
rested on these facts; and the strictly commercial
part of it was involved in the common risk. There
374 
CAUSE OF FLUCTUATION.
were few merchants whose secret drawers did not
contain sore evidences of capital sunk or withdrawn
from legitimate use, to be invested in some dazzling
speculation. The deficiency of means to carry on
business could be supplied only by an increase of the
personal credit.
It is this personal credit that prepares all the
extreme fluctuations of our commercial or financial
system. The bills payable of the merchant represent
not only his merchandise debt, but his debt for sunken
capital, his debt for railway bonds, his debt for
extravagant living, for real estate, and for fancy
stocks. The one hundred and twenty-two millions of
bills payable that constituted the bank loans in
August, was probably less than one-fourth of the
personal debt then current in the city of New York.
Three times that amount besides, floated in other
channels, in the hands of private capitalists, in trust
and insurance companies, in open book account. and
in foreign banks. Immediately on the accession of a
financial pressure, this entire mass of debt starts into
new activity. It presses on every bank, and through
every channel, for negotiation, renewal, or compromise. That which is least entitled to considerationthe extra-commercial portion-is most pressing, and
leads the market in paying high interest; while
that which represents real trade, is reluctant to go
above the bank rates. Speculative rates are thus
imposed on the whole market.
There are no positive limitations to the expansion
of individual credit. A pernicious practice* prevails
* This practice originated with the commission merchants.
375 
THE PANIC.
of making promissory notes payable to the order of
the drawer, and thus negotiable without indorsement.
When the seller finds that his customer has reached
the line of credit that he is willing to allow, instead
of refusing to sell more, and thus offering a prudential
restriction to the extent of his business, he goes on
selling, and disposes of the accumulating excess of
the buyer's paper in "the street." In this way he
overstocks the market with goods, and gives a credit
of thirty thousand dollars to a man whom he considers
it unsafe to trust for more than three thousand; and
the risk of twenty-seven thousand is scattered broadcast in the community! The buyer knows that his
creditor gets rid of his notes, and what does he care
if strangers lose by him?  This should be regarded
as a commercial offence of the gravest character. It
is impossible to have an honest money-market while
it is tolerated. What better is it, than a trick of the
manufacturer and wholesale merchant to reap the
profits of trade while throwing off his risks upon innocent people?  It corrupts credit, and turns commerce
into mere headlong chances.
OF BANK CURRENCY.
Of all theories intended to explain our financial
fluctuations, that which attributes them to the bank
currency has least foundation in fact. A confusion
of terms is probably the chief source of the misunderstanding that prevails on this point.
In common parlance, bank currency means circulating bank notes-" paper money." Yet, it would seem
376 
BANK CURRENCY.
that some writers include under the same head,
checks and promissory notes, if not also loans and
deposits; considering them all to belong to the
volume of the business, and to be subject to expansion or contraction at the will of bank managers.
Thence comes the general idea, that whatever is not
specie, in bank transactions, is bank currency.
WEBSTER defines currency to be that which "continually passes from hand to hand, as coin or bills of
credit; circulation, as the currency of cents, or of
English crowns; the currency of bank bills or Treasury notes."
That which "continually passes from hand to hand,"
in buying or selling, is the primary idea of currency.
Bank currency can properly refer only to that which
emanates from banks; and circulating notes, or
" paper money," is the only form of credit which they
are authorized by law to issue, or which practically
answers the function of currency in their transactions.
Again, bank currency is something that it is in the
power of the banks to control-to increase, or to
diminish; and above all, which they are bound to
redeem on presentation.
If this definition is correct, it cannot include
checks and promissory notes; because, in the first
place, these are not issued by the banks; in the
second, they do not continually pass from hand to
hand; and thirdly, they are not redeemable by the
banks.
In reality, the several terms employed represent
but one thing. Checks, promissory notes, and loans
377 
THE PANIC.
are mere accessories of the deposit. The first are
issued by the individual dealer in his discretion, and
the bank pays them out of his deposit; promissory
notes are a dormant security during the continuance
of the loan, which itself is made available to the
dealer in the character of a deposit. The only question to be answered is, therefore, whether deposits
can be called bank currency. The only approach to
circulation by any document which represents the
deposit, is in the check, when it is certified and sent
abroad to pay a debt, or when it is deposited in
another bank and redeemed through the exchanges.
The "certificate of deposit" is the same thing in
another form. The promissory note, when it is discounted, is filed away in the vault, and is rather withdrawn from, than put into circulation.
Banks cannot govern the amount of deposit by the
dealers, otherwise than by discounting paper, and
giving them credit in account for the proceeds. They
cannot govern the issue of promissory notes in the
market, this being the act of individuals. It would
be a solecism, to apply the term bank currency to
documents which are issued by every merchant in
the community without the knowledge of bank
managers..
Finally: banks do not send out, for circulation, a
single document in any shape, excepting the bank
note-" paper money."
Whatever terms may be employed to distinguish
the different evidences of debt which are circulated
in the market-whether individual currency or comne srcial currency-it seems proper to confine. the
378 
PLANS AND CURRENCY.
application of bank currency to bank notes. It is
certain that this is what the advocates of " hard currency" aim at, when they urge their theory as the
only preventive of excessive financial fluctuations.
The following table shows the relative movement
of loans and circulation in our city banks, from
August, 1853, to September, 1858, excepting periods
which exhibit no remarkable fluctuation:
1853......From Aug.  6 to Nov. 5, dec. $14,796,987 dec.
18534..... "  Nov. 12 to Mar. 4, inc.  11,676,012 dec.
March 4 to July 8, dec.
July  8 to Aug. 5, inc.
Aug.  5 to Dec. 9, dec.
Dec.   9 to April 7, inc.
June  2 to July28, inc.
Aug. 25 to Nov.10, dec.
Dec.   8 to Mar. 15, inc.
April 12 to May 31, dec.
May  10 to Aug.  2, inc.
Nov.   8 to Aug. 1, inc.
Aug.   1 to Oct. 17, dec.
In six of the thirteen periods cited, the movement
of the currency was adversely to that of the loans;
and in the other seven, though in the same direction,
it is manifest that there was no governing sympathy
between them. In one case, the loans were reduced
fifteen millions of dollars, while the circulation diminished but eighteen thousand-they were then increased
twelve millions, while the circulation continued to fall,
but in four times greater ratio. In two instances, the
loans increased eleven millions of dollars: in one of
them, the currency was diminished seventy-eight thousand, and in the other it was augmented one thousand.
379
18,307
77,799
6,211,140 dee.
5,373,860 dec.
13,129,505 dec.
13,905,758 ine.
7,886,147 dee.
8,160,314 inc.
11,338,495 inc.
6,389,160 dee.
8,417,770 dec.
18,088,411 dee.
14,073
71,109
1,641-1,815
290,701
146,111
506,513
1,407
12,374
16,442
281,299
1854.......
1854.......
1854.......
1854-5.....
1855.......
1855.......
1855-6.....
1856.......
1856.......
1856-7.....
c &
I &
4 c
I i
4 1
1 1
1 1
4 1
4 1
1 1
1857....... 11
23,351,224 dee. 577,981 
THE PANIC.
In one case, the circulation increased five hundred thou
sand dollars, and in another it diminished six hundred
thousand, with a coincident reduction in the loans of
eight and twenty-three millions. Only once in the
table is there an appearance of sympathy-when the
loans fell thirteen millions, and the circulation one
million six hundred thousand dollars; and in this case,
the withdrawal of deposits fully accounted for the
reduction of loans, leaving that of the circulation to
be otherwise explained. The scarcity of exchange at
points in debt to New York will, at any time, cause
our city currency to be rapidly returned from all parts
of the country.
The annexed diagram shows the relative fluctuation
of the currency and the loans from August, 1853, to
December, 1857. The extreme range of the former
was about one and a half millions of dollars, while
that of the latter was over forty millions.
The opinion that bank loans are governed by the
currency was justified under the old laws, which
allowed an issue of bills equal to twice the amount
of capital, without a pledge of securities, and without
personal liability for the debts; but it is groundless
under our State system. The old laws would have
given an issue of one hundred and twenty millions of
bills to our present city capital; whereas, we have but
ten millions, and but three-fourths of that in circulation.*
* The Superintendent of the Banking Department, in his report for 1857, in
view of the fact that the New York City bank currency was contracted but a
million and a half during the panic, says: "This would seem clearly to demontrate, that whatever may lead to a suspension of specie payments, the currency
of our banks, properly secured, is not an element in its production."
380 
II
~
____
I_
I_____
V
z            IO-   "~'N, ~4z4             %NC~   bN 
I
t 
BANK CURRENCY.
A proposition, that the issue of bank bills, of a less
denomination than twenty dollars, shall be prohibited
by law, has met with a good deal of public commendation. It is not easy to see how this could add
any security to our bank currency, nor how it would
guard our financial system from the dangerous fluctuations consequent on excessive commercial credit.
It might restrict loans, by making it necessary for
banks to keep on hand a larger reserve of coin, and
therefore lessen the profits of the business. One of two
things must then follow: either banking capital will
be surreptitiously employed to make up the deficiency
of profit, or it will seek more productive methods of
organization. Another result might be expected:
credit suppressed in one form will find another, beyond
the reach of legislation. The personal check, or order,
would take the place of the bank bill in all remittances under twenty dollars, involving delays and
expenses of collection that would fall most heavily
on small dealers or laborers, who can least afford them.
Men who keep no bank account, women, and minors,
would be obliged to pay a broker's commission for
the most trifling remittance. The amount of this
small check credit would be infinitely greater than
the decrease of bank currency, without its convenience
or security.
In the midst of the late panic, everybody felt the
necessity of doing something to prevent its recurrence; and under the weight of its consequences,
various legislative restrictions have been proposed,
with a view to render our banking system less unstable in future. But it may well be questioned, whether
381 
THE PANIC.
more mischief is not to be apprehended from the con
stant tinkering of politicians than from any other
source-not excepting the errors of past legislation,
which we are gradually correcting by experience, and
by voluntary action, without the aid of law.
BANK-NOTE REDEMPTION.
The diversion of bank currency from its legitimato
channels, and the establishment of a trade in it between the banks themselves, has had a share in the
general derangement of credit, and iD the misapplication of banking capital.
The only proper use of currency is, circulation-to
pay wages, to buy commodities in store or market,
and to answer the convenience of daily expenditure
by the people. The privilege of issue is given by
law for this purpose, and for no other. The advantage to the bank consists in the currency fulfilling this
function of circulation-in its passing from hand to
hand, giving life to industry, and forming the basis
of the larger operations of commerce. The bank
pays it out for notes discounted or for deposits, and
realizes interest upon it until it is returned for redemption.  The more circulation, the more profit.   Itis,
therefore, an object for banks to keep out their bills
as long as possible. They resort to various expedients
for this purpose, such as discounting notes, on condition that the bills shall be taken to a distance, and
paid out for purchases of wool, for wages on a railroad, or other service. A large aggregate of currency is thus forced out upon the country, to find its
382 
THE REDEMPTION SYSTEM.
way back for redemption through the usual channels
of exchange. The city merchants who received this
currency in remittance for debt, formerly sold it to the
money-broker at a certain rate of discount, which
varied more or less firom one per cent. It might be
resold by the broker at a smaller rate to manufacturers, who could save by this process a certain per
centage on their entire disbursements, and it would
then start out on a new tour of circulation through
the shops. Banks could often better afford to divide
with brokers the profits of a perpetual circulation than
to redeem it in gold. Those banks which were least
able to redeem, and whose bills were, therefore, least
entitled to credit, were most persevering and ingenious in keeping the community supplied with their currency. This was a debased paper currency. Accordinigly, as it supplied the market, the bills of better
banks, which would not stoop to competition in such
business, were kept out of circulation. The result,
so far as our city banks are concerned, is, that their
circulation hardly pays the cost of maintaining it.
A new source of profit was suggested to some of
our city banks. If the redemption that was distributed among the money-brokers could be monopolized
by one or two institutions, it would yield a rich
revenue; and it could easily be attracted by reducing
the rates of redemption so low as to exclude individual competition. This was the origin of the New
York redemption system, copied from the Suffolk
Bank of Boston.   Coupled with the payment of
interest on country deposits, it had grown into aston
ishing activity before the panic of 1857. It worked
383 
THE PANIC.
admirably as a piece of machinery, with the popular
commendation that it restricted the bank currency
by enforcing prompt redemption, and saved our merchants a heavy brokerage.  It was a great convenience in the first days of the panic, when private
capital was withdrawn from the purchase of currency,
and when our merchants, but for the redeeming banks,
would have been overburdened with unavailable
notes.
But the Redemption System, like everything else
that was susceptible of abuse, was turned aside from
its legitimate purpose, and made to answer a mischievous end. The low rate at which the bills were
taken in New York accelerated their return in bulk,
as a basis of exchange, or for credit in account, and
thus their distinctive character as circulation was in
a great measure destroyed. This is plainly illustrated
by the diagram on the opposite page.
The natural course of the circulation is represented
by the curved lines a, a, a. It is paid out by the
banks at Buffalo, Syracuse and Whitehall, and after
performing its function in the service of trade, it
reaches the common point of liquidation-New York.
Here, it is assorted, charged in account to the issuing
banks, and sent home by express, to be again issued,
circulated, and redeemed, in the same manner. This
is our bank currency in legitimate use as contemplated by law.
But the cheap redemption, so desirable in a common state of the market, became, virtually, a premium on the currency, at New York. The tendency
was then to take it out of the curved lines of a health
384  
BUFFALOb
,~~~~
~'~'~~~ ~NEW YORK' 
BANK-NOTE REDEMPTION.
ful circulation, and to throw it into the elliptical lines
b, b, in which it profited nobody so much as the stockholders of the Express Companies.   The country
banks might keep their own bills in a perpetual circuit by exchanging them with each other, and thus
creating a trade in them. The same packages were
not unfrequently kept unopened in the circuit, and
reissued in bulk as often as they were needed to
supply balances.
When, from having been to much expanded, there
arises necessity for a general contraction of credits,
if then a portion of the circulation is withheld by the
banks, as it should be, the redemption of the other
portion would go on quietly, and no apprehension
would be excited in the public mind as to the safety
of bills. The proportion of capital appropriated to
this special service would keep in harmony with the
diminishing volume of commercial credit. But this
does not commonly happen. To keep out the circulation, and to increase it, gives relief to the bank. If
it cannot enforce the liquidation of its loans, it is still
more urgent to keep its bills in circulation —to throw
out more, and to stave off actual redemption. The
redeeming banks are then likely to be required
to do one of two things: either to appropriate more
capital to this service, or to reject the bills. In the
former case, its commercial loans must bear the brunt,
and in the latter, it would spread alarm among bill
holders, and aggravate the evil that it wants to ward
off.
Precisely this state of things occurred in the summer of 1857. In spite of the best management by
17
385 
THE PANIC.
the redeeming banks, the circuit of currency credit
was kept up, and relatively, if not positively, increased. Currency was made to redeem currency;
that is, the bills of one bank were paid for by the
bills of all others which it remitted for credit in
account; and thus there was no actual redemption.
Another fact, which was claimed to be beneficial
in an ordinary state of things, now proved a source
of apprehension and real danger. The credit given
to an unsecured currency by the indorsement of the
redeeming banks had obtained for it a wide circulation, to the displacement of bills that were based on
State and United States stocks. It was now seen
that this credit had no other dependence than a current deposit by the issuing bank, which deposit was
in very small proportion to its outstanding bills, and
that the redeeming bank was prompt to the hour in
repudiating those bills, if the deposit was not maintained. This was a fallacious credit, entirely independent of the separate ability of the issuing banks.
The general result was, that bills were likely to fail
while in transit, and they would not then be admitted
as a deposit, which would involve the rejection of
other bills; and so the row of bricks began to tumble
in both directions.
There was no incident of the panic, that spread its
terrors abroad with such sure and rapid steps, as the
rejection, by the redeeming banks, of bills which they
had been accustomed to receive on deposit. If it had
been possible to remove all other causes of excitement, that alone would, probably, have involved the
suspension of specie payments. It filled all the shops
386 
WILL SUSPENSION OCCUR AGAIN?
in the country with alarm.  It created mobs in our
savings' banks, and pushed forward the panic by
exciting the fears of the multitude.
WILL SUSPENSION OCCUR AGAIN?
"Well," says a judicious bank President, "this
will. be a warning to our merchants! It is to be
hoped that such experience will burn into them some
lessons about their long and excessively-extended
credits."
Yes, Mr. President; and we hope it will be a
warning to you, also!  It was not our long credits
only, that threw us into embarrassment, but your
expansion, and then your repudiation of all credits!
Shall we not profit by both of these "experiences?"
Our bank officers are invested with a controlling
power over the market. They can positively command
the ship of commerce, and guide it through the storm,
or they can dash it upon the rocks.
It is a false notion, that panic comes from mysterious and unmanageable causes. So long as we give
credence to this commercial fatalism, and accept it as
an excuse for the incapacity of financial managers, we
shall be liable to a recurrence of panic whenever an
adverse wind sweeps the ocean.
"If there had only been an able man among bank
officers, in whom the others had confidence, to take
the lead, the panic might have been crushed in the
bud."
This was a common and freely-expressed opinion
among all classes of merchants. It is a singular fact,
387 
THE PANIC.
that must occupy the foreground in any history of the
suspension of 1857, whatever part different writers
may assign to accessory causes. In the fright and
confusion which succeeded the failure of the Ohio
Life Insurance and Trust Company, our bank officers
fell back, each to his separate place, to "fortify" his
institution, though at the expense of every private
and common interest of the market. They did not
recognize, in any one of their number, that superiority
of intelligence and capacity in management, which
in times of anarchy and doubt never fails to be feltnever fails (where it is known to exist) to be called on
to lead. Never, in the whole course of our commercial history, did the public distress cry louder for the
ability that can unite separate interests for a common
purpose; and for the want of it, no common purpose
was created. Every thing went by chance, or by
necessity.
As the recurrence of financial pressure is only less
certain than the tides of the ocean, and as our commercial dealings are annually becoming more extended and complicated, we may look for the damage
resulting firom the mismanagement of banks to be
more and more serious, unless measures are adopted to
prevent it.
Efforts have been made, occasionally, during the
last ten years, to organize something like a College
of Finance, in which the general interests of the
market should be kept in revision-but without success. This result, however, is now foreshadowed by
the Clearing Hiouse. Its records are the theme of
388 
A COLLEGEF OF FINANCE.
daily conversation in financial circles. They form
the basis of our city bank administration. A nucleus
is thus already created, to attract the ideas which
have heretofore floated loosely in the minds of men
without object.
A college composed of intelligent merchants and
bankers-practical men-would  combine individual
experience and research. By elucidating the causes
of financial fluctuation, and its bearings on the general enterprise of the country, and therefore on labor,
they might aid materially to correct popular errors
with respect to our banking system, whilst securing
needful instruction to themselves. At present, all the
statistics of finance, excepting only those of the Clearing House, are gathered up by the industry of the
newspaper press.  "The commercial editor" is the
principal collator, analyzer, and elucidator of financial data in the city of New York; while the professional banker conceives his duty to be confined to the
mere accidents of the business during five hours of
each day!
With a deliberative body in existence (such as is
here suggested) the suspension of specie payments
could not have occurred in 1857; because the violent,
separate, and destructive action of the banks, which
started the panic must have been overruled by sober
counsel.
There are certain anomalies in force, as applied to
banks, by which they are exposed to extreme liabilities, not only in seasons of pressure, but at all times.
By a strange absurdity of law, the deposits of a bank
389 
THE PANIC.
are held to be payable in specie, on demand, although
the amount of specie in the whole country is not sufficient to pay the one-twentieth part of them. It is,
therefore, plain, that the banks might be forced into
suspension by the depositors at any moment, without
regard to the state of the market.
The actual relation between the bank and the dealer
gives no color of right to the latter to demand specie
for his deposit. Hie is fully aware that the bank does
not consider itself holden for the coin. Hie does not
give coin; and why should he take it? He deposits
a form  of credit, or individual currency-checks.
When this form of credit sinks in the general depreciation, by what rule of consistency or justice can he
require the bank to fill up the deficit? The depreciation originates with the dealer, in the excess of trade,
and not with the bank: it may encourage the excess
by loaning too freely, but the dealer is not obliged to
borrow. There is obviously no propriety in his loading the bank with the ill consequences of his own
action. Yet such is the accepted rule.
This is the bull goring the ox. If the ox attempts
to gore the bull, the case is changed. Debts owing
by the bank are held payable in coin on the instant;
but debts due to the bank, by the very same party,
are held to be negotiable and renewable, consistently
with commercial honor and usage. In one case, the
failing debtor is declared " broken," while in the other,
his credit continues unimpaired.
As a general fact, the depositors of a bank are also
its borrowers; and if they demand their deposits
in specie, they ought to pay their loans in specie.
390 
PRACTICAL ABSURDITIES.
But no written agreement could be made less equivocal than the understanding between the bank and the
dealer, that the deposit will be held payable by check,
or in bank bills; and that its demand in coin out of
the usual practice, or its final withdrawal as a current
account, before the payment of the loan, will be a
breach of honor and good faith. No bank officer
would permit an account to be opened on his books
specifically subject to these contingencies.
The relation between the Savings' Banks and their
depositors is an example of still greater absurdity,
both in law and practice. These institutions are organized to encourage economy among the laboring
classes, by paying interest on small amounts. They
are conducted mostly by benevolent men, and gratuitously, excepting necessary clerk hire. The law
does not leave the investment of the funds discretionary with the managers, but defines the securities that
may be taken- one of the chief of which is the
mortgage on real estate. The depositor is a party to
this mortgage, and is cognizant of the fact, that it is
not immediately convertible into money. The process
of foreclosure involves a delay of three months, which
cannot be shortened by law; and yet, when a panic
occurs, the law sustains the depositor in his right to
demand immediate payment; and because the bank
does not pay immediately, it is declared "broken."
This is equivalent to a legal requisition, that the bank
shall keep the money of its depositors on hand in
gold, and at the same time have it out on mortgage
earning interest! Because this cannot be done, the
whole country is to be loaded with the discredit of
391 
THE PANIC.
bankruptcy, of which the suspension of the Savings
Banks is regarded as the least doubtful evidence.
Neither is this all. If the Savings' Banks had been
forced to pay off their depositors in October, 1857,
immeasurable wrong must have been done to the
mortgagors, by selling their property at less than half
its value; and the laborer also must have been involved in the common misfortune, by legal expenses
and delay of payments.
Finally, this demand of the bank depositors can
reach but one result. If the deposits in the Commercial and Savings' Banks of New York amount to one
hundred millions of dollars, and the amount of specie
on hand to twenty millions, those who apply for it first
will get their money, and the eighty millions will go
unpaid, or be liquidated by some form of credit.
The practice of holding tokens of pure credit as
legally liable to immediate redemption in coin is here
carried to the extremest practical absurdity; and it
is so deeply imbedded in. popular opinion, as to constitute a dangerous, if not an insuperable anomaly in
our financial system.
The true office of gold, in commerce, is an unsettled question. It may be a question, also, whether,
if once determined, it can remain so among all the
changes of commerce, production, and ideas which
are going on. It is hardly supposable that any commercial relations can be the same before and after such
improvements as those which govern the present age.
The establishment of ocean steam navigation, the
construction of railroads, and of the magnetic tele
392 
TRUE OFFICE OF GOLD.
graph, have practically ignored two of the principal
elements in exchange-distance  and  time.   The
markets of the world have already been stimulated
in an excessive degree by the opening of gold mines
in California and Australia. Notwithstanding the
extent to which discovery and explorations have been
pushed, the scope for human energy is still enlarging.
Is it likely that questions of economy alone shall not
change their terms in this general growth and expansion of affairs?
The popular notions, concerning gold, are for the
greater part hereditary. They are less the result of
practical experience, and of reasoning on facts, than
of pure theory.
The destructibility of paper money, the facility of
its emission without limit, and its consequent fluctuation in market value, with the various frauds that it
may serve, and especially its imposition as wages on
the poor and ignorant, brought it deservedly into bad
repute. The idea, that there was any reality about
it, became almost obsolete. It was natural thence to
assume, that silver or gold was the only real money
in existence. It was, therefore, predicated as " the
standard of value."
In the United States, politicians have made the
most of this theory. The laboring masses vote; and
they have flocked to the polls in support of "hard
money." This is about the whole history of the case
in its political bearings, which are its most influential
bearings.
But paper money has been forced into narrower
limits. It has been so guarded by legislative restric                        17*
393 
THE PANIC.
tions and penalties, as to have lost, in no small mea
sure, those features in which it differed so widely
from gold. It cannot be issued with the same facility
as formerly, and the fluctuation of its market value
is much less. In the State of New York, it has
become established on such a secure basis, as to be
transposable with gold in all conditions of the market,
at such an insensible fluctuation, as to remove the
ground of all the old objections to it. The politicians
do not publicly or theoretically abandon the controversy, because it is still available in the elections.
But that they no longer entertain it as a question of
economy, is manifest from their participation, as legislators, in the business of making and circulating it.
It has been shown by the demonstrations of the
Clearing Hiouse that the bank note currency of the
city of New York is the most stable of all known
forms of credit. Of an average circulation of eight
millions of dollars among the people, but one million was returned for redemption in 1857, during the
unexampled depreciation of every other token of
credit, not excepting even the State bond, and the
mortgage on real estate. And this return was made,
not by individuals through alarm, but mostly by
country banks to meet their bills of exchange.
It appears, therefore, as an established fact, that
gold is not an indispensable pledge for the soundness
of paper money, with such guarantees, and with such
limitations as are established by the laws of New
York.
It is not used, either, in the ordinary transactions
of commerce. Debts are paid by bank notes, or by
394 
TRUE OFFICE OF GOLD.
checks. But little gold passes in the channels of
trade for the daily payment of fifty millions of dollars, in the city of New York. More than half of
this amount is settled through the Clearing House;
and here, for the first time, we meet the use of gold
in any considerable sum. One million and a half of
specie settles the exchanges of thirty millions of commercial currency. It is, then, in final liquidation of
balances only, that gold is used. We find it performing the same function between Europe and America.
Four hundred millions of credit pass either wayand fifty millions settle the balance.
The only other channel in which gold accumulates,
or is used in large sums, is in the Postage and Revenue
Departments of the Government. Here we are at the
end of our facts.
Gold appears nowhere in large sums, excepting in
the transactions of the Government, in any other office
than as liquidator of balances.   And the amount
necessary to a running credit of one hundred millions
of dollars in our city banks, has not heretofore exceeded an average of fifteen millions. With this
sum in steady reserve, every operation of our extended commerce and labor has been satisfactorily
conducted for a number of years past. It fails only
when individual credit fails, from excess of trade, from
speculation, and accumulated losses.
There is one fact that ought not to be overlooked:
while the business of the country has steadily
increased, the bank note circulation has diminished,
and the difference has not been made up in coin.
Other forms of credit have mostly supplied it
395 
THE PANIC.
especially the individual bank check. But the more
active service of the circulation consequent on the
telegraph, and on swifter transit by railroad, has also
done much to supersede the necessity of such large
bank issues as were formerly required. Why has
not gold come in to fill the void? Is it not because
that, too, has been quickened in its office?  Has not
this new element, of activity, practically answered
for quantity? What, under the old modes of transport lay inert, because inaccessible, is now always
in motion, performing its function of liquidation.
Another result has been established by the rapidity
of transit. It is, comparatively, non-essential whether
the gold of the market is held in one sum at New
York, or whether it is distributed at various points in
the country, provided it be kept within the power of
the exchange. The transport of it by railway is a
mere accident on the surface of things. The amount
of coin in the Clearing House, at a given time, is
therefore not an unerring index of the strength of the
market. That it should be distributed where it is
most needed to give efficiency to labor, or to develop
resources, is of more consequence to the common
interest.
Rapidity of communication and transit is a new
feature in commerce, which economists have not yet
had the opportunity to study in all its bearings. The
tendency of it is, to simplify our system of trade, to
cure it of local eccentricities, and to bring all its parts
under the influence of one regulating principle-the
Exchange, of which it is a vital element. In proportion as the telegraph is extended, it seems inevitable
396 
ACCUMULATION OF GOLD.
that the Exchange shall become a more perfect index
of the state of commerce between different countries.
The accumulation of gold, since the panic, in the
several financial centres of London, Paris, Vienna, and
New York, has suggested the theory, that it is not
necessary in the provincial towns in quantity beyond
the current wants of the retail trade; that it is only
at the liquidating points where it is ever required in
large sums. The idea here is, doubtless, the true
one-that gold is not the basis of credit, but the
balance medium. The mass of credit settles itself by
exchange; while the gold only pays up the difference
between the debit and the credit column. It is precisely this office that it fills in the Clearing House.
The influx of gold into New York, after the suspension of specie payments, soon enabled the banks
to resume; and it was then said, that they would not
have suspended, if this gold, instead of being scattered abroad through the country, where it was not
wanted, had been in the Clearing House. Therefore,
to prevent panic in future, let us keep the gold in
New York.
It has thus been accidentally discovered, that the
true policy of finance is, to denude the country of
coin, and to keep it only at points where it will be
wanted if the foreign exchanges should run adversely.
We ought not to be ungrateful for the knowledge of
truth because it comes by blundering, however we
may regret that it has not been evolved by an atten tive study of facts. The error of this theory consists
in assuming the results of disease in a prostrate body
397 
THE PANIC.
as indications of health in a sound body. Why not
rather revert to the phenomena that existed when the
body was in vigorous health, and adopt these as indications of a wholesome state of the system?
The unprecedented accumulation of gold in the
banks of New York is the result of cancelling a
foreign debt by insolvency, and of a general suspension of labor throughout the country.  Capital has
returned to its owners, and lies dead. They refuse to
invest it as heretofore, in public improvements and
in trade. Let labor and enterprise be resumed-let
the produce of the West come into market let our
commerce with foreign nations be restored, and the
coin will find its right place. The same laws of trade
which have brought it here, will take it away. The
amount held in reserve by the banks of New York
will be adjusted by the exchanges;-it will be found
expensive to maintain a reserve in opposition to them,
at any point above the natural level. All uneasiness
about deficiency at particular points may cease, if the
exchanges are wholesome; because, as already observed, our means of communication and transit will
restore every thing in a few hours.
There is a certain common property in gold, or in
the liquidating medium, from which it is impossible
to escape. It is not the product of individual sagacity, but of the market at large-of industry and
labor generally. The moment that it is taken out of
this relation, it becomes a dead and worthless weight.
It must be treated as the property of the market,
giving value to everything in it; and losing its value
the instant that it is hoarded.
398 
COMMON PROPERTY IN GOLD.'
Are not these precise facts?  And shall we not
give weight to them, and to all other facts with
respect to gold that may be developed in the progress
of discovery and combination?  Shall we continue to
look to old theories of economy as the source of all
wisdomn in finance-theories which were based on a
narrow range of facts, as compared with the present
period; or shall we analyze, combine, and elucidate
our own facts, and presuming a little on our own
capacity and experience, add our knowledge to that
of the p)asf, and make the most of it!
399  
D. APPLETON & CO.'S PUBLICATIONS.
THE
NEW AMERICAN CYCLOPEDIA.
EDITED BY
GEORGE RIPLEY AND CHARLES A. DANA.
PUBLISHED BY
D. APPLETON & COMPANY, New York
In 16 Vols. 8vo, Duuble Columns, 750 Pages eaeh.
Price, Clots, $4.; Sheep, 4.765; Half Mor., $5.00; Half RPuss., $5.5C
per Volume.
EVERY one that reads, every one that mingles in society, ib
constantly meeting with allusions to subjects on which he
needs and desires further information. In conversation, in
trade, in professional life, on the farm, in the family, practical
questions are continually arising, which no man, well read or
not, can always satisfactorily answer. If facilities for reference
are at hand, they are consulted, and not only is the curiosity
gratified, and the stock of knowledge increased, but perhaps
information is gained and ideas are suggested that will directly
contribute to the business success of the party concerned.
With a Cyclopaedia, embracing every conceivable subject,
and having its topics alphabetically arranged, not a moment is
lost. The matter in question is found at once, digested, condensed, stripped of all that is irrelevant and unnecessary, and
verified by a comparison of the best authorities. Moreover,
while only men of fortune can collect a library complete in all
the departments of knowledge, a Cyclopedia, worth in itself,
for purposes of reference, at least a thousand volumes, is within
thie reach of all-the clerk, the merchant, the professional man,
the farmer, the mechanic. In a country like ours, where the
humblest may be called to responsible positions requiring
intelligence and general information, the value of such a work
can not be over-estimated. 
2       D. APPLETON & CO.'S PUBLICATIONS.
PLAN OF THE CYCLOPAEDIA.
The New American Cyclopedia presents a panoramic view
of all human knowledge, as it exists at the present moment.
It embraces and popularizes every subject that can be thought
of. In its successive volumes is contained an inexhaustible
fund of accurate and practical information on Art and Science
,n all their branches, including Mechanics, Mathematics, As tronomy, Philosophy, Ohemnistry, and Physiology; on Agri culture, Commerce, and Manufactures; on Law, Medicine, and
Theology; on Biography and History, Geography and Ethnol ogy; on Political Economy, the Trades, Inventions, Politics,
the Things of Common Life, and General Literature.
The Industrial Arts and those branches of Practical Science
which have a direct bearing on our every-day life, such as
Domestic Economy, Ventilation, the Heating of Houses, Diet,
&c., are treated with the thoroughness which their great im portance demands.
The department of Biography is full and complete, embracing the lives of all eminent persons, ancient and modern. In
American biography, particularly, great pains have been taken
to present the most comprehensive and accurate record that
has yet been attempted.
In History, the New American Cyclopedia gives no mere
catalogue of barren dates, but a copious and spirited narrative,
under their appropriate heads, of the principal events in the
annals of the world. So in Geography, it not only serves as a'
general Gazetteer, but it gives interesting descriptions of the
principal localities mentioned, derived from books of travel
and other fresh and authentic sources.
As far as is consistent with thoroughness of research and
exactness of statement, the popular method has been pursued,
The wants of the people in a work of this kind have been carefully kept in view throughout.
It is hardly necessary to add that, throughout the whole,
perfect fairness to all sections of country, local institutions, public
men, political creeds, and religious denominations, has been a
sacred principle and leading aim. Nothing that can be construed into an invidious or offensive allusion has been admitted. 
THE NEW AMERICAN CYCLOPIEDIA.
DISTINGUISHING EXCELLENCES.
While we prefer that the work should speak for itself, and
that others should herald its excellences, we cannot refrain
from calling attention to the following points, in which we
take an honest pride in believing that the New American
Cyclopedia surpasses all others:   I. IN ACCURACY AND FRESHNESS OF INFORMATION.-The
value of a work of this kind is exactly proportioned to its correctness. It must preclude the necessity of having other
books. Its decision must be final. It must be an ultimatum
of reference, or it is good for nothing.
II. IN IMPARTIALITY.-Our work has undergone-the examination of Argus eyes. It has stood the ordeal. It is pronounced by distinguished men and leading reviews in all parts
of the Union, strictly fair and national. Eschewing all expressions of opinion on controverted points of science, philosophy,
religion, and politics, it aims at an accurate representation of
facts and institutions, of the results of physical research, of the
prominent events in the history of the world, of the most significant productions of literature and art, and of the celebrated
individuals whose names have become associated with the
conspicuous phenomena of their age-doing justice to all men,
all creeds, all sections.
III. IN COMPLETENESS.-It treats of every subject, in a terse
and condensed style, but fully and exhaustively. It is believed
that but few omissions will be found; but whatever topics may,
through any oversight, be wanting, are supplied in an Appendix.
IV. IN AMERICAN CHARACTER.-The New  Cyclopedia is
intended to meet the intellectual wants of the American people.
It is not, therefore, modelled after European works of a similar
design; but, while it embraces all their excellences, has added
to them a peculiar and unmistakable American character. It
is the production mainly of American mind.
V. IN PRACTICAL BEARING.-The day of philosophical abstraction and speculation has passed away. This is an age of
action. Cui bono is the universal touchstone. Feeling this, we
have made our Cyclopedia thoroughly practical. No man of
action, be his sphere humble or exalted,can afford to do without it.
3 
4       D. APPLETON & CO.'S PUBLICATIONS.
VI. IN  INTEREST OF STYLE.-The cold, formal, and re pulsive style usual in works of this kind, has been replaced with
a style sparkling and emphatically readable. It has been the
aim to interest and please, as well as instruct. Many of our
writers are men who hold the foremost rank in general litera ture, and their articles have been characterized by our best
critics as models of elegance, force, and beauty.
VII. IN CONVzENIzENCc  OF FORM.-NO ponderous quartos,
crowded with fine type that strains the eyes and wearies the
brain, are here presented. The volumes are just the right size
to handle conveniently; the paper is thick and white, the type
large, the binding elegant and durable.
VIlI. IN CHEAPNESS.-Our Cyclopedia has been univer sally pronounced a -niracle of cheapness. We determined, at
the outset, to enlarge its sphere of usefulness, and make it
emphatically a book for the people, by putting it at the lowest
possible price.
Such being the character of the New American Cyclopedia,
an accurate, fresh, impartial, complete, practical, interesting,
convenient, cheap Dictionary of General Knowledge, we ask,
who can afford to do without it? Can the merchant, the
statesman, the lawyer, the physician, the clergyman, to whom
it gives thorough and complete information on every point
connected with their several callings? Can the teacher, who
is enabled, by the outside information it affords, to make his
instructions doubly interesting and profitable? Can the farmer, to whom it offers the latest results of agricultural research
and experiment? Can the young man, to whom it affords the
means of storing his mind with useful knowledge bearing no
any vocation he may have selected?   Can the intelligent
mechanic, who wishes to understand what he reads in his daily
paper? Can the mother of a family, whom it initiates into the
mysteries of domestic economy, and teaches a thousand things
which more than saves its cost in a single year? In a word, can
any intelligent American, who desires to understand the institutions of his country, its past history and present condition,
and his own duties as a citizen, deny himself this great American digest of all human knowledge, universally pronounced the
best Cyclopedia and the most valuable work ever published