proceeds of notes and drafts left by the customer for collection are treated in like manner. Some of the large banks, having many out-of-town customers, keep a separate ledger called the "foreign individual ledger" for these accounts. The debit items in the individual ledgers come from the paying teller's department in the form of checks. Where many checks against a customer's account are received throughout the day, they are usually listed on an adding machine as received by the bookkeeper from the paying teller and posted in the scratcher, from which the totals are carried to the individual ledger accounts.

There are two types of individual ledger in common use: the three-column or Cincinnati ledger and the Boston ledger. In the three-column ledger, the depositor's name is entered at the top of the page, which is divided into two sections, each having headings for the date, debit entries, credit entries and balance. The Boston ledger is arranged to show on a single page the postings for six days. The dates are entered at the top of the page, and the names of the depositors are placed, usually, in a middle section with space for three days' work to the left and to the right. The space for each day is ruled for checks, deposits and balance. The Boston ledger is advantageous where most of the accounts are active, that is, having frequent debit and credit entries, but it is wasteful of time and space in the case of accounts more or less inactive for balances must be extended daily irrespective of any change in the account. In the three-column ledger each account has a sheet of its own and need not be disturbed until a change occurs. Another advantage of the Boston ledger lies in the fact that the scratcher can be dispensed with by adding the items in the "Deposits" column and the column headed Checks.'

The other general books of the bank besides the deposit ledger are the cash book or journal and the general ledger. The size and needs of the bank will determine the particular form of cash book used. In the small bank an ordinary cash book with debit and credit sides may suffice.

The large bank may find it necessary to use two books, a credit journal and a debit journal. The debit items come from the following main sources: individual deposits credited from the receiving teller's department and from the discount register; interest and discount on notes discounted; bills discounted, collected by the note teller; va

rious banks, for remittances received and for collections made by our bank but not remitted; and collections and exchange on the foregoing collections. The credit entries are for individual deposits, debited from the paying teller; bills discounted as reported from the discount clerk; various banks for cash remittances sent to them and for collections made by them but not remitted; collection and exchange, representing deductions made by our correnondents for collecting items; and general expenses of the

bank including salaries of employees, rent, supplies, advertising, etc.1

The general ledger contains a condensed record of the business of the bank from day to day. It is kept by the general bookkeeper in such a way as to show each morning a summary of the previous day's transactions. From it can be drawn at any time a complete statement of the bank's condition showing the total resources and liabilities and their relations to each other. Thus the general ledger will carry such accounts as those relating to capital, surplus, undivided profits, individual deposits, bank deposits, United States Government deposits, cashier's checks, certified checks, circulation, interest and dividends on securities owned. Accounts on the other side of the ledger will include bills discounted, demand loans, time loans, cash, real estate, United States bonds, bonds and securities. The general ledger deals mainly, then, with aggregates which are derived from original entries in the various departments and here summarized in total debits, credits and balances. The profit and loss account, into which is gathered the final balances showing gains and losses from different sources, is usually closed only at the end of the year, half-year or quarter, but it is so kept as to admit of a statement of profit and loss at any time.

Some banks keep a "general balance ledger" which summarizes the aggregate debits, credits and balances of the various accounts in the general ledger. Generally this ledger is kept by some clerk other than the general bookkeeper and so serves as a check and a "proof" upon the latter's work. Again, some banks keep a daily statement book in which aggregate resources and liabilities are still further summarized, thus enabling the officers to see the condition of the various accounts which may serve as a guide in making loans and in other important transactions. This book furnishes the material for making up the periodic reports of condition required by the Comptroller of 1 Moxey: Practical Banking, p. 290.

the Currency, the state bank commissioner or the clearing house.

READING REFERENCES

Barrett: Modern Banking Methods (5th ed.), Chs. II, III. Bolles: Money, Banking and Finance, Chs. V, VI, XIXVIII.

Fiske: The Modern Bank, Chs. VI-XII, XXIII, XXV. Harris: Practical Banking, Chs. II-XVIII.

Jefferson and Escher: Banking Practice and Foreign Exchange, Pt. I, Chs. IV-XVIII.

Kniffen: The Practical Work of a Bank, Chs. V, VI, VIII, X, XI, XVI.

Moxey: Practical Banking, Ch. VI.

CHAPTER XIII

DEPOSITS AND DEPOSITORS

97. Kinds and sources of deposits.-As previously stated the main function of the commercial bank is the buying of deposits and the selling of credit in the form of loans. Making loans through the purchase or discount of commercial paper is the chief business of the bank and the one that makes money for its owners, but the bank's loanable funds come mainly, not from its own capital, but from funds deposited by its customers. These funds also supply the basis for deposit currency with which the great bulk of our business exchanges and transactions are carried on.

Bank deposits are of two general kinds-special and general. Special deposits consist of money, bonds, jewels, anything of value left with the bank for safe-keeping. General deposits consist of money or the right to receive money. Legally the relation created between the bank and the customer by a general deposit is that of debtor and creditor. The bank in accepting the deposit contracts to pay the debt or any part of it on demand, or in the case of a time deposit on or after a stipulated time. On the other hand the title to a special deposit does not pass to the bank, but remains in the depositor. It has been held that a bank is bound to exercise only reasonable care in protecting a special deposit, the same care as in protecting its own securities; but greater care must be exercised if it accepts a consideration for keeping such deposits.