Short essay on the Office and Staff of a Bank

The office of a bank is always divided into several departments, to every one of which a particular share of the business and a qualified staff is assigned.

In a joint-stock bank the direction of the whole concern is entrusted to the chief official, usually called the manager, who takes his instructions from the board of directors, but has a large range of action in transacting the general business of the bank.

He must, therefore, be a man of the highest capacity, and thoroughly acquainted with banking business. When a bank keeps branch houses in different places, a manager, called a branch manager, is appointed to the direction of every branch office, under the superinten­dence of the head manager residing at the head office.

In private banks the management of the business is generally carried on personally by the banker; the chief officer’s duties are then limited to the direction of the counting-house, and are, therefore, of much less importance. He is then called the head clerk.

Sometimes, also, no such officer exists in a private bank, the head clerks of each department acting under the immediate direction of their principal.

The office of a bank is usually composed of-

The cash department, where all the money movement in and out of the bank takes place under the responsi­bility and direction of the cashier, who is also charged with keeping the required cash books.

The accountants department (also called book-keeping department), superintended by the chief accountant wherein the books and accounts of the bank are kept.

The corresponding department, where one or more clerks attend to the daily correspondence with the clients, agents, and other business connections of the house.

The collecting department, whose staff is employed in presenting bills for acceptance or payment.

Such banking establishments as transact business at the clearing-house keep also a particular depart­ment of their office wholly devoted to clearings, and known, therefore, as the clearing department.

Clearing.-

A clearing house is an institution set up by the bankers of a town, or of a region, for the pur­pose of settling and clearing their reciprocal debts, by exchanging among themselves such bills, drafts, or cheque, due by any one of them, which are in the possession of another.

As the greatest number of bills due at a place are paid through bankers, this mode of settling difference by book credit, without having recourse to the trans­mission of cash from hand to hand, saves both time and trouble, besides the interest on the amount of ready money which would otherwise be required.

The banks and bankers admitted to transact busi­ness in the House are called clearing banks, or clearing bankers.

The London Clearing House.-

The arrangement of the great London Clearing House, which originated in 1775, and whose present transactions amount yearly to upwards of 6,000,000,000, is still very simple. A committee appointed by the clearing bankers is en­trusted with the management of the House, whose operations are superintended by an inspector and a sub-inspector.

The operations of the House are distinguished into town clearing and country clearing. The former con­cerns the clearing of bills, cheque, and notes drawn on, or made payable at, any one of the clearing banks; the latter deals with the clearing of like money-orders drawn on, or made payable at a country bank, for which some one of the clearing establishments acts as an agent.

Town clearing takes place twice a day, viz., the morning clearing, from 10.30 a.m. to 12 noon; the afternoon clearing, from 2.30 to 4 p.m. Country clear­ing takes place only once a day, from 12 to 2.15 p.m.

The House is situated in Post-Office Court, Lombard Street. It consists of a large room fitted up with separate desks all round, each desk being allotted to one of the clearing banks for the operations to be carried out by its respective clearing clerk.

Each bank keeps two books for the record of clear­ing operations, viz., the clearing-out book and the clearing-in book.

All cheques, drafts, or notes due to the bank are daily entered by the out-clearer at the bank’s office in the clearing-out book as they fall due, each under the neaten of the party who is to pay it.

All such bills are made up in separate bundles for each paying party, and then sent to the clearing-house, where each bundle is laid on the desk of the respective paying banker. The in-clearer at the House enters them directly in the clear­ing-in book, under the name of the firm demanding payment, and then sends the charges to his bank, to see whether there is any objection as to their pay­ment.

Every in-clearer having brought down the totals of his in and out clearings for the day, draws up a balance- sheet on a printed form, by entering, opposite to the name of each clearing bank, the amount of its credit or debit balance, previously agreed on by the other clearers, with whom he has dealt.

The difference between the totals of the two columns will, of course, point out the credit or debit balance of the house he represents.

To settle such a difference the clearer fills up for the amount of his credit or debit balance a ticket addressed to the Bank of England, with which the Committee of clearing bankers and every clearing bank must have an account, and hands such a ticket with his balance-sheet to the inspector.

When, on liquidation of the day’s transactions, the clearing bank turns out a creditor, its clearer fills up a green ticket, whereby the Bank of England is requested to credit for the sum the account of the clearing banker, out of the account of the Committee.

When, on the contrary, the clearing bank is a debtor, a white ticket is filled, directing the Bank of England to transfer the amount due from the debtor’s account to the account of the Committee. In either case the ticket is to be veri­fied, on revision, by the inspector of the House, and the Bank of England returns a certificate, stating that the transfer has been duly executed.

Thus, by the simple means of a few entries in .the books of the Bank of England, numberless operations are settled, which would otherwise require an immense amount of work and exchanging of money

Bank Notes.-

Banks, like private individuals, are fully empowered to issue promissory notes on their own liability, but there is a particular kind of such notes, the issue of which is subject to Government authority and control, and carried on, therefore, by a limited number of banks of issue.

The peculiarity of such notes, exclusively called bank notes, consists in this: that they are payable to bearer on demand and. are intended to act as a substitute for money, circulating like money, and forming part, therefore, of the currency of the country.

Banks of Issue.-

There are in the United King­dom three different descriptions of banks of issue, viz.:-

(a) Banks whose notes are covered by a fixed amount of money and securities under Government control.

(b) Banks empowered to issue unsecured notes to a fixed amount, their issue being thus called fixed issue.

(c) Banks with a fixed issue also, but empowered to exceed the limit provided the surplus be backed by gold and silver. The notes issued by all such banks must always be changeable into gold on demand.

The Bank of England is the sole institute of credit belonging to the first of these classes. Its bank notes for the value of five pounds sterling and upwards have been a legal tender since 1833, but limited to England and Wales.

The second group consists of the so-called country banks, that is, joint-stock banking companies act­ing out of the City of London, the circulation of whose notes, called country notes, is based merely on trust.

The third class is composed of the Banks of Scot­land and Ireland, which are permitted to issue notes with limited circulation. Their one-pound notes are now in general use throughout these countries, where they form the principal circulating medium.

The circulation of bank notes in England is regulated by the Bank Charter Act of 1844. By this Act severe restrictions were imposed on the private and joint-stock banks of issue then existing; a fact which prevented the establishment of any new one, and greatly reduced, and is still reducing, their number, to the advantage of the Bank of England. The Banks of Scotland and Ireland are governed by a subsequent Act of 1845.

The notes of the Bank of England are issued both by the London head office and by the several branches of the Bank. The form of the notes is, of course, always the same, and the” are signed by the chief cashier. When issued by a branch office the words, here, or in London are added on the face of the note.