of Penn. R. R. stock and substituted therefor fifty shares of Louisville and Nashville R. R. stock.

Many large banks do so much of this business of loaning upon collateral that it is necessary to keep a very close watch of their values, especially when the stock market is depressed.

In Fig. 117 the values of the securities are often extended only in pencil, and are changed from time to time when any material change takes place in their market prices. The collateral clerk makes it his business to keep a close watch of the market prices and to watch the values of his collaterals. Any serious decline in the value of the collateral will at once necessitate a call upon the borrower for more security.

Where exceedingly large amounts of collaterals are handled a convenient form of record for quickly determining how much of any one class of collaterals the bank holds, is seen in Fig. 119.

This might be called a collateral ledger, as it is in something of the form of ledger accounts with each class of collaterals. In the

monthly columns are seen, in the left-hand section, the number of shares on hand, and in the right-hand section, the amount of stock withdrawn during the month. The book has an index and the banker can quickly learn just how much of any class of collateral, and for whom, he is carrying. This is often very important to know. The care of the collaterals is equally as important as the proper recording of them, for while they are in one sense of the word the property of the bank, they are only conditionally so, and the bank is bound to exercise all due care of them and return them to their former owner upon the payment of the loan or debt. A bank is 1900 Delaware & Hudson R.R. Stock

Sany dirty. Mch. aph | May | Jun | July | Aug. Sept. Oct. Nov

bound to take the same care of them that it does of its own property, its money and valuables.

The best method for caring for the collaterals has been found to place them in strong linen or heavy Manila envelopes upon which are printed, on the outside, a blank form on which to describe the contents and to record the name of the borrower.

Sometimes these envelopes have a printed heading styled collateral loan, but some banks use two styles-one as just mentioned, which may apply to either time or demand loans, and one styled demand loans, in this instance separating their demand from their time loans, which is always advisable.

In Fig. 120 is shown such an envelope. At the bottom is seen a receipt for the contents. Many banks take the receipts for their collateral in this way; this necessitates the filing away of the old envelopes after the loan has been paid and collaterals returned. The book before mentioned in which is taken the receipt for all collateral returned is, however, to be preferred, as it is much easier preserved, and will occupy less space than the old envelopes.

In filing away the envelopes containing the collateral some arrange them alphabetically according to the borrower, and tie the envelopes in bundles, placing them in the safe or in a tin box made for

that purpose, which is placed in the safe. In very large banks the envelopes are numbered and placed in filing cases, and an index kept for each name and its number. These filing cases are of metal and are either built into a fire and burglar-proof vault, or into a safe which is placed in a vault. These are put in the charge of a clerk called the collateral clerk, who also keeps the records regarding the collaterals and their loans.

In some instances the character of the collateral is such and the number of pieces is so great as to make it impossible to get them into any envelope. In this case a stiff paste-board strip for both sides of the package, the strips being made the same size of the folded securities, may be used, and upon one of them should be printed the form as shown upon the envelope in Fig. 120.

Where a bank holds time paper as collateral, a memorandum of this should be made so as to run no risk of passing the maturity without presentation. A good plan in such cases is to note the name and conditions of the collateral on the note tickler at the bottom of the page, or so separated from the bank's regular paper as to be in no danger of becoming connected with it. In some instances these entries are made in red ink, which calls special attention to them.

CHAPTER V.

THE COLLECTION DEPARTMENT.

There are few more useful and necessary departments in a bank than the collection department. The methods of transacting business and of making payments by means of time obligations, such as notes or time drafts, or by sight or demand drafts, make it extremely necessary that some responsible agents, having the proper facilities, should attend to the collecting of these, and what agents are in a better position to do this than the banks? Their naturally intimate connection with the general business world and the constant intercourse between the banks, not only enable them to perform this branch of the business better but at much less cost than other means.

by any

The merchant holds a note of a customer residing at a distance; he desires it presented for payment when due, consequently he leaves it at his bank for collection. It is sent by due course of mail to the bank's correspondent, who presents it when due, and either collects and remits, or returns, with reasons for non-payment, and protesting, unless otherwise directed.

The merchant has a customer who owes him a bill; he draws a draft on him, either sight or time, for the amount of the bill, and places it in the hands of his bank for collection. The bank follows a similar course to that with the note.

A merchant in the South or West ships a lot of cotton or wheat to a dealer in the East. He draws a draft on the Eastern party for the whole or a portion of the amount of the shipment, and attaches the bill of lading to the draft. In some instances he gets his bank to discount the draft and place the proceeds to the credit of his account, and in others the draft is left with the bank for collection, and passes through the same course as those above mentioned.

While banks are willing to make collections for their customers, they are very right in hesitating to do so for strangers, especially if the collection item has been sent to them through the mail from some private party, a stranger to the bank. Instances are on record

of the raising of the draft sent by the bank in settlement for such collection.

"

The depositor who brings his collections to the bank should receive a memorandum of them either in his pass book, which is the customary way, or in an auxiliary memorandum book, where the depositor does a large business. These are, of course, what are called foreign collections, or collections on parties in other cities. The collection items received by mail may be either upon parties in the city where the bank is located, or as is called, city collections, or they may be on various points outside the city. These latter have to be reforwarded to their nearest bank.

The customary forms of collection items are notes, drafts and bills of exchange. The notes have been fully described in a former chapter. In Fig. 121 will be seen the customary form of a draft.

This is drawn as a time draft, and being accepted becomes then what is called an acceptance.

The bills of exchange are drawn in similar form as the drafts, and have a bill of lading accompanying, and attached thereto.

In sending forward drafts, with bills of lading attached, banks should be particular to give explicit instructions regarding the delivery of the bills of lading. If the drafts are sight, of course there is nothing in question. But where the draft has a time limit, and is accepted, the question sometimes arises regarding the delivery of the bill of lading upon the acceptance of the draft. The safe position for a bank to take in such matters is, first, to have specific instructions in writing from the drawer of the draft as to the disposition of the bill of lading. If it should be impossible to obtain this, the bank should hold the bill of lading till the draft is paid. The question may be asked, what should be done if the goods mentioned in the bill of lading be perishable?

I can simply say that I have never seen a time draft, longer possibly than one day, accompanying a bill of lading for perishable goods. In such a case, however, a bank would be justified in telegraphing to its correspondent, from whom it received the draft, for