News and citizen. [volume] (Morrisville, Vt. ;) 1881-current, 1882-02-02

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name under that direction. Then John
Smith must indorse it. By so doing he
admits that he has received the money
directly from s. FL.
5. All checks are returned to the per-
son who draws them. s. HIS banker
will receive the check duly Endorsed
after payment, but bankers carefully
preserve all paid drafts, as a rule, and if
s. FL. s banker lets him have the draft
1T will be an exception to the rule.
6. Every business man who can man.
age to do so should have his own bank
account and his own check book, and
should pay all his bills by drawing his
own checks directly to the order of the
payees /; these will all come round to
him duly Endorsed, and will be his best
evidences of settlement. In every case
where he pays the whole amount then
| due he can insert the words Gin full of
all dues, and SO prevent the possibility
of any second successful demand.
The ''course of draft is like this:
l. S. Fl. has bank account at his
nearest town-say at Syracuse-and de-
sires to pay debt to John Smith, at
Wooster, Ohio. He fills up a check,
which is simply an order to his banker
at Syracuse to give John Smith $16, and
sends this check in letter to John
Smith, at Wooster, Ohio.
2. John Smith has no bank account.
and is not known to any banker in
Wooster and cannot afford to travel to
Syracuse to collect the money. But he
is known to the merchant with whom he
trades, and although the merchant
does not know s. Fl. and does not know
the banker named in the check, and
therefore does not know whether the
check is good for anything or not, he
knows John Smith to be good for the
SIC, and can make him refund the
money if the check is not paid. Upon
this faith the merchant only requires
Smith to indorse the check, and then
gives him SIG for it.
8. At the close of the days business
the merchant deposits with his banker
what money he has taken in during the
day, including all checks and drafts he
has received. first indorsing his own
name ON every such check and draft as
a guarantee that he will make them
good if they are not paid on presenta-
ton.
4. His banker finds the check of s.
81. among others. He does not know
S. H., nor the banker on whom the
check is drawn, nor John Smith, the
payee, and first indorser; but he does
know the merchant who deposits it, and
relying on his Endorsement, he credits
the $16 to the merchants account as if |
it had been deposited in bills or in
coin.
5. The Wooster banker probably has |
an account with the Second National |
Bank in Cleveland, and sends to that |
bank every evening by mail all the
drafts on Eastern banks he has received |
during the day, first indorsing them
himself.
6. The Cleveland bank does not know
s. Fl. nor his banker, nor Smith, nor
the Wooster merchant, but it does know
the Wooster banker, and relying on his
Endorsement it Immediately credits the
SIG to the Wooster bankers account,
and the same evening indorses the check
and sends it forward to the Fourth
National Bank of New York, where it
keeps an account, and to whom it sends
all its Eastern checks and drafts.
7. The Fourth National Bank of New
York does not know anything about the
check except that it is Endorsed by the
Second National Bank of Cleveland, and
does not need or care to know any more
than this. 1t Immediately credits the
account of the Cleveland bank with S16,
and after indorsing the check sends it to
its collection agent in Syracuse-which
agent is some National Bank in that
city, and may happen to be the very
bank on which the check is drawn.
8. When the check is finally presented
by the collection agent to the bank on
which it is drawn, that bank, being re-
quired to pay it in "New York funds"
gives for it its own draft for $16 on some
bank or banker in New York City, pay
able to the order of the collection agent.
8. The collection agent indorses this
new draft to the order of the Fourth
National Bank of New York and sends
it down by mail.
10. The Fourth National Bank puts
the new draft, duly Endorsed, with all
other New York drafts and checks it re-
ceives that day into bundle, and sends
it over to the Clearing House.
IL. At the Clearing House is received
in like manner every morning a bundle
of checks and drafts from every bank
and banker in the city. These bundles
are first credited to the banks sending
them in, just as if the Clearing House
were itself bank, and the other banks
were so many depositors. Then the
bundles are opened and sorted, and
each bank In turn is charged with all
the checks that are drawn upon it.
Thus the Fourth National sends in a
bundle of checks footing up to say
So, 800, 600, and will be credited accord
ingly So 100000. But, after the sort
ing is finished, the checks sent in by
the other banks against the Fourth Ma
tional may foot up say 81, 10000 In
that case the Fourth National is said to
be "debtor at the Clearing House for
$500, 000," and on being informed, i'm
mediately sends $S0O,OO0 In coin or le-
gal tenders to make it's account good.
If, on the other hand, the checks against
the Fourth National should foot I'D
only $4,000, 900, it would be Creditor
at the Clearing House for $500, OOO,"
and the manager of the Clearing House
would Immediately send to it $500, 900
in coin or legal tenders, the money be-
ing furnished to him by the banks on
whom the extra $500, 900 of checks were
drawn.
IL. Here in the Clearing House the