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59. The premium for one kind of accident insurance policy is at the rate of $5 per $1000. The agent's commission is 30% of the premium.

a. What is the face of the policy for which the company receives $17.50 after paying the agent's commission?

b. What is the face of a policy that yields the agent $3.75? c. What is the agent's commission on a $6000 policy?

60. A bill of $20 was reduced by three successive discounts. If the first two discounts were 20% and 10%, and the net price was $12.96, what per cent was the third discount?

BANKS AND BANKING

354. There are many kinds of banking institutions, but most of them may be included in three general divisions; viz. savings banks, banks of deposit, and trust companies.

355. Savings banks are designed to be safe places of deposit for small sums of money. These sums are usually the savings of people who have not the inclination or opportunity to engage in large business enterprises. Savings banks pay a low rate of interest on all balances of one dollar or more, and the interest is compounded quarterly, semi-annually, or annually. The interest is computed by means of tables, and each bank has its own method of calculation.

In order that the money of depositors may be safeguarded, savings banks are generally forbidden by law to make loans unless secured by mortgages on real estate, and from making investments, except in special kinds of property, such as government bonds and bonds of certain states and cities.

356. Banks of deposit, otherwise known as commercial banks, or banks of discount, transact a much wider range of business

than do savings banks. They may loan money on notes, collect accounts and notes for customers, issue bills of exchange and letters of credit, and make many kinds of investments which savings banks are not permitted to make. As a rule they pay

no interest on deposits, but the services that they render to their customers are considered sufficient compensation for their use of the money on deposit.

Banks of deposit which are organized under Federal laws and are under the supervision of the United States government are known as national banks; those that are organized according to state laws and are under the supervision of state authorities are generally known as state banks, though each individual bank adopts a name of its own.

State and national banks transact in general the same kinds of business; but national banks also perform a special function in connection with the issuance of paper money, which will be considered later.

357. Trust companies are similar in some respects to savings banks, and in other respects to banks of deposit.

They resemble savings banks in that they pay interest on deposits. They are generally not allowed to loan money on notes, except when secured by collateral, i.e. some specific piece of property, put into the hands of the trust company to be sold by the company if the note is not paid when due.

Otherwise they are much like banks of deposit, having in some respects even greater latitude in the kinds of business which they may transact.

DEPOSITING AND WITHDRAWING MONEY

358. One who has money on deposit in a bank is called a depositor.

When a person deposits money for the first time in any particular bank, he receives from the bank a book in which he is credited with the sum deposited.

DEPOSIT SLIP

A depositor in a savings bank takes his book with him whenever he deposits or withdraws money. To deposit money he merely hands it to the receiving teller, who credits in the bank book the amount of the deposit. To withdraw money, he hands his book to the paying teller, and signs a receipt for the money to be withdrawn. The teller charges in the bank book the amount withdrawn and pays it to the depositor.

In depositing money in any other bank than a savings bank, the depositor fills out a deposit slip stating in separate items the amount of paper money, of gold, of silver, and of checks which he deposits.

This slip is

handed in with the money

MARINE NATIONAL BANK

OF BUFFALO
Deposited to Credit of

Gerald W. Porter
Apr. 23 1908

Buffalo, N. Y.

CURRENCY,

GOLD,

SILVER,
CHECKS,

DOLLARS

CTS.

125

1875

Bank of Braff,

38170

Cleveland 183 40

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and checks deposited, and is used by the teller in making up his balance at the close of the day's business.

Withdrawals from a bank of deposit are made by means of

checks.

A check is a written order, signed by a depositor, directing the bank to pay to a certain person, or to his order, or to the bearer, a specified sum of money.

When the bank pays the sum directed to be paid, it charges the depositor's account with the amount paid.

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359. The amount named in a check is called the face.

360. The depositor who signs a check is called the drawer of the check.

361. The person to whom, or to whose order, a check is made payable is called the payee.

362. The bank on which a check is drawn is called the drawee. In the above check which party is John White? Gerald W. Porter?

Every depositor in a bank of deposit receives from the bank a check book, which consists of blank checks bound together, each check attached to a stub as shown above. When a check is filled out, the stub is filled out to agree with it, and the check is then torn off, through the perforated line. When all the checks have been used, there remains a book of stubs containing a record of all the checks, the number of each check, its date, its face, the name of the payee, and the purpose for which it was used. Some check books are so arranged that the stub may also show the balance remaining in the bank after each check is drawn.

Checks are convenient in paying bills; for by means of them the depositor may avoid carrying or sending money. To illustrate, let us suppose that Mr. A, a merchant in Cleveland,

buys a bill of goods from Mr. B, in Chicago. A fills out a check payable to B's order and mails it to B. B indorses the check, deposits it in his own bank at Chicago, and it is credited on his account. The banks attend to the rest of the business. The check is finally returned to A's bank in Cleveland, and the amount is charged to A's account, and credited to the account of B's bank in Chicago.

Most banks make a practice of returning all checks to depositors. These checks, being indorsed in each case by the payee, serve as receipts for the amounts paid.

363. If the drawer of a check is a stranger to the payee, the payee may be unwilling to accept the check in lieu of money, fearing that the maker may not have money on deposit sufficient to pay the check when presented at the bank for payment. Then the maker may be required to have the check certified. To do this, he takes the check to the bank, and the bookkeeper, teller, or other proper person stamps on its face the word "certified” with the name of the bank, and writes in his own name. He then makes a memorandum of the amount on the drawer's account. The bank is then obliged to cash the check when presented. The certification of the check is equivalent to the bank's promise to pay.

A COMPARISON OF CHECKS AND NOTES

364. 1. A note is a promise to pay money, while a check is an order to pay money.

2. A check always has three parties, while a note may have only two.

3. A check, like a note, may be negotiable or non-negotiable, according to the manner in which it is drawn.

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