The Dawson news. (Dawson, Ga.) 1889-current, 1909-02-10
CHECK KITING MAKES
$1,000 LOOK LIKE $4,000

ST. LOUIS-So widespread ha:
now become the practice here OF
''check kiting" (by which a man may
double his capital without paying in
terest for several days, and still re-
main within the pale of the statutes)
that St. Louis bankers are taking
concerted measures towards stamping
it out. They are talking of urging
the passage Of a law making It
illegal
The kiting of checks (Which is
said to have been invented by the
banks themselves as an artifice for
avoiding the payment of interest or
for continuing to draw interest for
a number of days on their deposits
after these had been expended), has
spread to the depositors, to the in
dignation of the bankers. The large
banks in st. Louis have special eX
perts watching the accounts of their
customers for the first sign of kit
ing" When this is discovered the
offending depositor is requested to
withdraw his account at once.
Not only private citizens have been
discovered at the practice, but bust
ness houses also. Detection for the
latter, as well as for private custo-
mers, means an invitation to close
the account
Enttinu OF hir1Cr ic
the formula reduced to the lowest
terms, of all schemes for defrauding.
The man who kites a check gets
something for nothing, for a few
days, but he escapes the penalty of
obtaining money under false pre-
lenses by making good" in the end
after his purpose, of acquiring the
use of money without cost for sew
eral days, has been attained.
How is this device operated, which
has something of magic about it, con-
sidering the restrictions which the
world of finance places about money?
How is it possible for a man with
only 5000 in the world to walk into
a bank and obtain $500 without
breaking the law?
How 1t Is Done.
Mr.. Smith, for instance, has a de-
post of 500 in the National Bank
of Business, and another account of
500 in the Twenty-third National
Bank, both st. Louis institutions.
He has pressing need of $500, but
cannot obtain the sum for a couple
of days. He solves the difficulty by
"kiting" his own checks
He deposits in the National Bank
of Business his check for 500,
drawn on the Twenty-third National
Bank. He then deposits his check
for 800 in the Twenty-third National
Bank drawn on his account in the
National Bank of Business. For the
moment or for "a hours, to be ex-
act, he has a credit of $500 in each
bank By the time his two checks
get through the clearing house he
has the cash with which to meet them
in each bank. He has really Dor
rOWed 5000 from the two banks for
"A hours, without their knowledge
and without paying them interest
The banks, at present, are unable
to penalize him, save by ordering him
to withdraw his account.
Or Mr.. Smith and Mr.. Jones, with
accounts of 500 each in different
banks, may exchange" or kite"
their checks, effecting a momentary
credit for each of 5000. The tenn
porary command of this capital
which they do not own may afford
Smith and Jones a means Of avoid
ing lawsuit, or of making a Iucra-
tive bargain, or of meeting an in
sistent obligation. But the banks
are not in the philanthropic business
and object to loaning their money for
nothing, especially when they are not
let into the secret that they are
lending it.
Game Without Redress.
OF course, on small sums like a
couple of hundred dollars, when the
depositors make good finally the
banks are not injured greatly save in
their feelings, which are irritated at