7. The Scandinavian American bank writes to William T.

Adams, telling him that it holds a note signed by him, due ----, and asking him to make prompt payment. Write the letter.

8. Mr. Adams pays the note. The Seattle Bank notifies the Milwaukee Bank, enclosing a draft for the amount.

Write the letter.

9. See Exercise 301, 10. As John Elsworth's banker send the coupons for the American Telephone and Telegraph bonds to your correspondent in New York, the National City Bank, because the interest is payable in New York. Ask the bank to make the collection. Write the letter.

10. The National City Bank makes the collection and informs you by means of a printed form that it has credited you with the amount, $112.50. The form is just like a letter except that it is already printed with blanks left for the name and the address and for itemizing the coupons collected. Write such a form.

11. One of your depositors has overdrawn his account.

Notify him of the fact. Do this courteously so that the depositor may have no reason to withdraw his account.

12. In your city there is a real estate dealer who often has large sums of money idle for a short time because, when he sells one piece of property, he does not always have another immediately in view. He is not a depositor in your bank. Write to him, inducing him to take out a Certificate of Deposit at such times and telling him that the advantages of such a certificate are that he will get 3% interest on the money deposited and that he may draw out the money at any time.

13. One of your depositors has written to you, asking for a loan of $5,000 for nine months. Write to him, saying that it is not your practice to make time loans for definite periods longer than six months, as it is not a good plan thus to tie up your deposits. Explain that as most of a bank's deposits are payable on demand, you would suggest his taking out a demand loan for $5,000, payable on the demand of the bank. Under ordinary business conditions such a loan might easily run for nine months.

14. R. F. Marsden, President of the Truesdale Cotton Mill, Birmingham, Ala., has written to you, asking whether he can secure a loan next fall on the cotton in the mill as collateral. Reply that you feel certain that satisfactory arrangements could be made if the cotton were stored in an accredited warehouse, so that you could accept the warehouse receipt as collateral.

=Exercise 303=

Punctuate and paragraph the following letter, which explains one function of a trust company:

Dear sir as you are one of our clients you are familiar with the reputation of this bank for sound banking and conservative investments you may not however be aware that we have a fully equipped trust department prepared to act in any of the numerous capacities in which the services of trust companies have proved of special value at this time we wish to call your particular attention to the service which this department is prepared to render as trustee under agreement it is natural that one who has acc.u.mulated property should desire to superintend or direct its disposition formerly this was done by will now however as the complex laws of the various states frequently necessitate the payment of double or triple inheritance taxes it is becoming a more and more common practice for a man during his lifetime to administer his own estate so to speak this may be accomplished through the establishment of a trust with respect to either a part or all of one's property it can be accomplished not only with absolute safety to the donor but with entire secrecy as well the terms of the trust being regarded as absolutely confidential furthermore the donor has the satisfaction of disposing of his property during his lifetime in accordance with his desires the life of a trust company unlike that of any individual is of perpetual duration death does not interfere with its management of the trust estate its financial responsibility and the safeguards thrown around trust estates by the state laws insure the safety of a trust fund if you are interested in this subject let us discuss it with you either in person or by correspondence when this bank is named in a trust capacity no charge is made for service or advice in connection with the drafting of the trust instruments yours truly

Before writing the following, re-read The Richards' Baby Stocking Fund, page 337.

1. Suppose that you were a newspaper correspondent in Alaska at the time Richards was killed. For your home paper write an account of the finding of the baby stocking. In what ways would this account differ from a magazine article on the same subject?

2. As if you were the United States Commissioner of the Territory of Alaska, write to a Portland bank saying that you are sending the $2,500 to them, and asking them to put the funds in the care of a reliable trust company.

3. The Portland bank writes to the Kansas City Trust Company, asking if the latter will accept the trust.

Write the letter.

4. The Kansas City Trust Company replies that it will accept the trust without remuneration. Write the letter.

5. The Portland bank informs the United States Commissioner of the Territory of Alaska of the disposition of the funds. Write the letter.

=Exercise 304=

=Topics for Investigation and Discussion=

1. The panic of 1907 and some of its lessons.

2. Future banking reform.

3. Government supervision of banks.

4. Unscrupulous banking companies.

5. Clearing house certificates.

6. Postal savings banks.

7. The work of the clearing house.

8. The need of banks in a community.

9. The development of real estate firms into banks.

10. The Owen Gla.s.s Currency Bill.

=Exercise 305=

Books that will Suggest Topics for Talks

CROCKER, U. H., The Cause of Hard Times.

FONDA, ARTHUR J., Honest Money.

GIBBS, H. C., A Bimetallic Primer.

MCADAMS, GRAHAM, An Alphabet in Finance.

NEWCOMB, SIMON, The A B C of Finance.

NORTON, S. F., Ten Men of Money Island, or The Primer of Finance.

REEVES, JOHN, The Rothschilds: The Financial Rulers of Nations.

WHITE, HORACE, Money and Banking.

=Exercise 306=

Write the following from dictation:

1

THE DAILY ROUTINE OF THE CLEARING HOUSE

Each bank sends two clerks to the Clearing House: a delivering clerk and a settling clerk. There are three rows of seats running through the clearing room lengthwise, one in the center and one on each side parallel with it. The settling clerks occupy these seats and each one has a sufficient amount of desk room in front of him to do his work on, his s.p.a.ce being separated from his neighbors' by a wire screen.

The delivery clerks, with their packages of checks in separate envelopes, stand in the open s.p.a.ce in front of the settling clerks. At two minutes before 10 o'clock the manager, whose station is an elevated open s.p.a.ce at the extreme end of the room, strikes a bell.

The movement has all the precision of a military drill. When the second bell sounds, at exactly 10 o'clock, each delivery clerk takes one step forward, hands the proper package to the settling clerk of the bank next to him, drops the accompanying ticket showing the amount into an aperture like a letter box, and places before the settling clerk his schedule, on which the latter places his initials. Thus the procession moves uninterruptedly until each delivery clerk has presented to each settling clerk the proper package and ticket. Usually this part of the operation is completed in ten minutes. Meanwhile the proof clerk, who occupies a desk near the manager, has entered the claims of each bank under the head "Bank Cr." on a broad sheet of paper.

Inasmuch as the amount of each bank's claim against the Clearing House (entered under the head "Banks Cr.") is the sum of all the tickets which its delivery clerk has pushed into the letter boxes of the other banks, it follows that all the tickets of all the banks should equal all the entries under that head.

The next step in the operation is for each settling clerk to arrange the amounts of all the tickets in his letter box in a column, add it up, and send the amount to the proof clerk, who transcribes and arranges it according to the bank's number under the head "Banks Dr.," so that the debit of Bank A shall be on the same line with its credit.

Then the difference between the two will show how much the bank owes the Clearing House or how much the Clearing House owes the bank. The time occupied by the settling clerks in arranging their tickets and adding up the columns is about half an hour. As fast as these footings are completed, they are sent to the proof clerk, who puts them in the debit column opposite the credits of the banks, respectively. When all are completed, if no error has been made, the footings of the credit and debit columns must be exactly equal and the footings of the two other columns, which show the differences, must be exactly equal. Then these differences are read off slowly and in a distinct tone by the manager, so that each settling clerk can write down the sum that his bank has to pay or to receive.

As time is money at the Clearing House, a fine is exacted for every error and every delay in making footings, for every disobedience of the orders of the manager, or for every instance of disorderly conduct.--Horace White: _Money and Banking_.

2

The Treasury, in connection with its money washing, has asked national banks to exercise more care in sending in money for redemption. Banks frequently put into the same bundle, good notes, bad notes, and notes of different denominations. When they are mixed in this way, it requires a good deal of work to separate the money. The Treasury thinks that the banks could do this work, so that, when the money reaches Washington, it could easily be separated by packages instead of each package having to be separated first. The a.s.sistant Secretary says he believes that, when he gets the subject worked out in detail, new washed money will be returned to the bank in any denomination desired on the same day that it is received; that money unfit for laundering will be destroyed and new money issued. This expeditious handling of money sent in for redemption cannot, however, be attained, he admits, without the co-operation of the banks. In a short time, he believes, all banks will see that it is to their benefit to do this.

CHAPTER XXI

THE CORPORATION