failure of any one bank, or of any one business house, increases the panicky feeling. Therefore, the Clearing House Association naturally and from very self-interest, must do its utmost to keep its members and their customers on their feet. In financial storms, the Association may adopt certain rules and regulations which may seem unreasonable to the public; but these methods are put in force for "the greatest good of the greatest number"; not only for the protection of the banks, but of their customers and depositors. It is a time for the public to be as reasonable as possible; to uphold the banks and their officers and directors. It is a time for the public and the banks to come closer together. Rest assured the banks have no desire to see any firm or person fail in times of panic, or any other time. They make their largest dividends when business is brisk and everything is prosperous.

What every Clearing House Association does want to wipe out, however, is the dishonest and reckless banker. He is a menace and source of anxiety to every bank in the community. The sooner the other banks can detect and expel him from the business, the better. In some cities, notably Chicago and St. Louis, the Clearing House Association regularly employs expert accountants to make periodical and unexpected examinations of the banks in the Association. If any bank is found to be doing a reckless business and not living up to the rules and regulations of the Clearing House, it is heavily fined or expelled. And expulsion from the Clearing House means ruin for that bank as soon as the business community learns of it. All Clearing House Associations should adopt this strict supervision.

Many a bank was saved embarrassment and possible failure in the recent panic of 1907 by the wise methods put into effect by the Clearing House Association. Selfishness and enmity were ordered to the rear. There are always banks whose officers have less foresight and wisdom than others. Some of these had been lending too freely, and their actual cash reserves were not sufficient to meet the storm of checks of their frightened depositors; frightened mainly because of ignorance, for, with a few exceptions, the banks were in good condition. To call in their loans and replenish their supply of cash would cause business failures and add to the panic.

So the Clearing House Associations of the different cities determined that the strong and wise banks should help the weak and foolish ones. Loan Committees were appointed to sit daily at the Clearing House. The various banks brought to this Committee notes they had discounted, or stocks and bonds owned by them. If the Committee thought them good, the Clearing House Association would lend the bank bringing them, up to about 75% of their face value. Of course, the Clearing House Association did not lend these banks actual cash, but they issued them Clearing House certificates, bearing interest, which could be used among the banks in settling daily claims against each other; just as if the banks had deposited actual cash at the Clearing House. In this way, if Bank Number One had the Clearing House Manager's check on Bank Number Two for $50,000.00, in settlement of some daily balancing at the Clearing House, Bank Number Two could pay Bank Number One with Clearing House certificates instead of actual cash. In other words, the banks which had a number of good notes, or stocks and bonds, but a small amount of cash, were saved by the combined, unselfish and patriotic action of all the banks working together for the common weal.

If the public generally knew of the many instances of generosity and unselfishness that were shown in the Clearing Houses in this and other panics, the banks, as a class, would not be denounced and condemned as they sometimes are. And this unselfishness was not exercised by the banks for the salvation of the banks alone, but for the business interests of the whole community as well; for, as has been pointed out, the interests of the banks and the people are one.

  IX

A CERTIFIED CHECK

Your check is nothing but a piece of paper on which is written an order on your bank to pay some one a certain sum. Strangers might not like to accept this piece of paper in payment of debts due them. In many cases your check should be "certified."

When a depositor presents a check to his bank to be certified, it should be handed to the Paying Teller. He, in turn, hands it to the individual bookkeeper having charge of that depositor's account. If the bookkeeper finds the balance sufficient to cover the amount of the check, he stamps across its face the words "Good for $—— (the sum named in the check) when properly endorsed." Then the Teller or some officer of the bank, signs that statement and the amount of the check is immediately charged to that depositor. In other words, the bank guarantees or certifies that your check is good.

The bank must be very particular about certifying a check. If any officer or employe of a National Bank certifies a check, which calls for more than the maker of the check actually has to his credit, such officer, or employe, has committed a penitentiary offense. This provision of the National Banking Act is most strictly enforced, and the penalty is severe.

When certification is necessary, the maker of the check should be the one to have it certified. If you take Brown's check to his bank and have it certified, you release Brown entirely and can only hold the bank. For example,—a man sold a piece of land, and, on delivering the deed, took the purchaser's uncertified check. After the purchaser had left with the deed, the seller, thinking the check might not be good, had it certified. The bank failed that afternoon. The purchaser proved that he had more than the amount of the check to his credit on the bank's books. On consultation with his lawyers, the seller found that he had no claim on the drawer of that check and could only file his claim against the bank with its other depositors. And he only received about fifty cents on the dollar when the bank's affairs were finally wound up. All because he did not insist on the purchaser of the land having his own check certified. If he had done this he could have held both the purchaser and the bank.

By having your check certified, you practically exchange your check for one guaranteed by the bank. For example, the bank certifies your check for $100.00. It immediately charges your account with the $100.00, and credits its "certified check account" with $100.00. Then when your certified check comes back to the bank, through the person to whom you delivered it, the bank charges its "certified check account" with $100.00, and the transaction is closed.

Therefore, if, for any reason, you decide not to use a check after you have had it certified, do not destroy it as you would an uncertified check. Be sure to bring it back to the bank so that the amount may be credited your account, and be charged to the bank's "certified check account."

Otherwise your account will remain charged with the amount and your balance will show that much less.

  X

PROTESTING NOTES, DRAFTS, ETC. WHY NECESSARY AND HOW IT IS EXECUTED

Protesting notes, drafts, checks, or other commercial paper is simply warning or giving notice to people, secondarily liable on that paper, that it has not been paid when due. The person who ought to pay the paper is primarily liable. All other persons who have endorsed the paper or drawn it on another person, firm or bank are secondarily liable.

You have endorsed Brown's note. Brown does not pay it when due. If you do not receive a prompt notice of this, you might endorse another note for Brown under the false impression that he had paid the first one.

Likewise, if you have endorsed Jones' draft on his firm, or his check, and his