The

435. Money that is deposited in a bank or trust company is usually payable to the depositor or his order on demand. demand is made by a written order called a check.

The terms maker, payee, face, negotiable, and the different kinds of indorsement, etc., apply to checks the same as to promissory notes.

To get this check cashed at the bank John Green, the payee, must indorse it, and then it will not be cashed unless he is known at the bank, or is identified by some one who is known there.

436. The stub that remains in the check book after the check has been torn out gives a complete record of the check.

After the check has been cashed at the bank, it will be canceled and later returned to Mr. Slawson. It then serves as a receipt from John Green since it has his name on the back of it.

437. When a depositor wishes to draw money for himself from his bank, he may write a check payable to the order of "Self," in which case he must indorse it before he can get it cashed; or, he may make it payable to the order of "Cash," in which case no indorsement is necessary.

438. A check payable to the payee "or bearer" is usually paid to any one presenting it at the bank on which it is drawn, if the bank is sure that the maker's signature is genuine.

DEPOSIT SLIP

439. Opening a Bank Account. A person wishing to open an account at a bank takes his money there and leaves it with the "cashier" or "receiving teller" together with a deposit slip properly filled out.

He is then given a small book with the amount credited in it. He is also furnished with a book of blank checks.

In order that the bank may have his true signature to refer to at any time, he is required to sign his name in a book of signatures.

When a stranger to the bank officials wishes to open an account, he usually has to

DEPOSITED BY

Samuel J. Slawson.-

be introduced by some reliable person or else he must furnish references.

A deposit slip is handed in each time a deposit is made, and the amount is credited in the depositor's bank book, which he brings with him.

WRITTEN EXERCISES

440. 1. A man's balance at the First National Bank was $846.20. Find his balance after checking out $45, $3.75, $75.50, $13.62, $175.25, and $126.10.

2. On the first of April a man's balance at the Franklin National Bank was $142.34. Apr. 3 he deposited $112.50; Apr. 10 he deposited $60.40 and a check for $18.75; Apr. 17 he deposited a check for $65; Apr. 24 he deposited $92; Apr. 30 he drew out $125. Find his balance in the bank on the first of May.

3. Henry Brown's balance at the bank May 1 was $3472.38. During the month he deposited $84.60, $250, $36.22, $80.01, $72.35, $39.17, $24.64, $7.77, $4.65, and $96, and drew out $125, $36, $72.50, $18.10, $23.90, $500, and $61.37.

was his balance June 1?

What

4. A man's balance in the bank at the beginning of a week was $196.50. During the week he deposited $234.60, $490.75, $325.50, $416, $325, and $410.75, and paid by check a bill of goods for $1250 less 3%, another for $98.50 less 2%, and $375 for store rent. Find his balance at the end of the week.

5. Suppose that you sell Charles Raymond of your city an automobile for $1850 less 5% for cash, receiving his check on the Second National Bank for the amount. Write the check,

supplying the necessary details.

6. Indorse the check in blank and deposit it to your credit in the Bank of Commerce, together with $75 in bills and $16.63 in coin, filling out a deposit slip in due form.

7. Draw against your deposit in the Bank of Commerce, check No. 1 for $125, payable to "cash"; draw check No. 2 for $80, payable to the order of "self" and indorse it; draw check No. 3 for $83.65, payable to the order of Frank A. Culver.

8. Write the stub record of each check, the first two being for personal expenses and the third for automobile repairs.

9. Suppose that Frank A. Culver applies your check No. 3 in part payment of his bill at Carroll Brothers' grocery, and that Carroll Brothers deposit it in the Bank of Commerce. Write the indorsements that the check will show.

10. John Dixon pays George White $37.50 per month for rent by check on the Mercantile Bank. Supplying the date and place, write one of these checks in such a form that Mrs. White, who is not known at the bank, may cash it there.

BANK DISCOUNT

441. Lending Money. Besides lending that part of its own capital that is not needed for other purposes, a bank of deposit and discount is able to lend a large part of the money that is deposited with it, for it is not likely that the depositors will all want the whole of their money at the same time.

442. Borrowing Money. A great part of the capital employed in business is borrowed. This money is largely obtained from banks. Banks lend for the most part on notes or on some other form of negotiable paper. As a rule the names of at least two persons are required on the paper; one person will be the borrower, the other, a person who becomes responsible with the borrower for the payment of the loan, by indorsing the note.

443. If Mr. Ford wishes to borrow money at a bank and Albert Ross agrees to indorse his note, Mr. Ford may make out a promissory note as follows:

$1000.00

Philadelphia, Pa., Aug. 8, 1906.

Ninety days after date, for value received,...promise

to pay to the order of Albert Ross..

When Albert Ross has endorsed the note, John Ford may get money on it at the bank, if the officials consider both men reliable. He will not, however, get the whole sum of $1000, The bank will take out interest in advance for the time the note has yet to run and will give Mr. Ford the balance.

444. Simple interest, collected in advance, upon the sum due on a note at maturity is called bank discount.

When the note bears interest, the bank discount is reckoned on the amount of the note at maturity.

445. The sum due on a note at its maturity less the bank discount is called the proceeds of the note.

446. The number of days from the time when a note is discounted to the time when it legally matures is called the term of discount.

In states that allow days of grace care should be taken to include them.

WRITTEN EXERCISES

447. 1. Find the date of maturity, the term of discount, the bank discount, and the proceeds of the note in § 443, if it was discounted Sept. 16, 1906, at 6%.

SOLUTION

The date of maturity is 90 days after Aug. 8, 1906, which is found to be Nov. 6, 1906.

The term of discount is from Sept. 16, 1906, to Nov. 6, 1906, or 51 days (see table, page 234).

The bank discount is the interest on $1000 for 51 days at 6%, or $8.50. The proceeds $1000 - $8.50 = $991.50.

=

NOTES.-1. If the time given in the note were "three months" instead of "ninety days," the date of maturity would be Nov. 8, 1906, instead of Nov. 6, 1906, and the other answers would be changed accordingly.

2. In some states the term of discount would include both Sept. 16 and Nov. 6, making the term 52 days instead of 51 days.

3. In states that allow days of grace, the date of maturity would be 3 days later and the term of discount 3 days longer.

Local customs should govern in all these matters.

The answers in this

book, however, are based on the method shown in the above solution.

2. Find the date of maturity, the term of discount, the bank discount, and the proceeds of a 60-day note for $5000, without interest, dated Mar. 4, discounted Mar. 7 at 6 %.