( Originally Published Early 1900's )
Where the conditions of life are simple and people have few wants, the goods and services they need are obtained by means of direct exchange, or barter. Thus, one person may offer grain in exchange for meat, and another wood for cloth—but in every case the transaction is an extremely simple one. Where the conditions of life are more complex, however, business trans-actions are more involved. If goods or services of any sort are needed, money, or that which represents money-creditis offered in exchange for them. In small everyday exchanges, money is frequently used, but the instruments of credit form the basis of practically every large business transaction. It is the duty of the bank to supply the money and credit with the help of which these transactions are carried on. Banks not only furnish individuals and corporations with credit, by buying their notes, bonds or stocks, but they perform also the function of taking care of the money of depositors. Taking care of the funds of these people does not mean keeping it locked away in a safe. It means investing the money in securities and making loans with it.
All banks are not of the same kind. The most important type is the commercial bank, which furnishes business men with credit. The savings bank serves as a depository for private or public funds, for the privilege of investing which interest is paid the depositor. The investment bank usually makes loans upon real estate, through mortgages. Bonds and stock brokerage houses extend credit to corporations by buying and selling the stocks and bonds these firms issue. There are also general banks which combine the main features of each of the above. They have a savings department, invest in real estate, stocks and bonds, and make loans on good security.
Every bank has a number of departments which carry on its business. First may be mentioned the receiving department, through which, money is deposited by clients. The paying department pays out the bank's funds in exchange for commercial paper. The note and discount department makes and keeps track of loans, investigates the borrower's credit and makes sure of the worth of the securities he offers. The bookkeeping department keeps accurate records of all trans-actions of the various departments, and so guards against error or fraud. The collection department attends to the collecting of interest and principal due on notes and other loans. The exchange department deals in foreign and domestic currency. The clerical or correspondence department is also an important one. The newest department of the modern bank is the advertising division, which attempts to increase the number of the bank's clients through publicity methods.
In these various departments there is, of course, opportunity for many workers. Though the organization of a bank may seem rather complicated, it is a very systematic one, so that, whether banking houses be large or small, the men employed by them will do much the same type of work, though on a comparatively larger or smaller scale. The chief executive in a bank, the man who is most frequently given the title of "banker," is the president. As the head of the board of directors, he exercises a general supervision over the policies of the bank. With the help of the other directors, and also upon his own responsibility, he determines investments and loans, and otherwise controls the bank's transactions.
The private banker, head of his own banking house, holds in it a place similar to that of the president of an incorporated bank. It is, of course, no easy matter to hold such a position, which is one of the greatest responsibilities. The bank president must have many qualifications. He must, of course, have a thorough knowledge of banking—but this is a subject of tremendously wide compass. A knowledge of economics, finance and accounting are all included under the name of banking. Then, too, the head of a large banking house must be an expert on investment securities, must keep himself thoroughly informed on the daily condition of domestic and foreign trade and must know the laws of banking practice. All this means that he must be a man of brains, and of some education. A high grade of executive ability, and a strong and impressive personality, are also most important requisites. But, above all, he must be a man of good character. Absolute integrity is essential in the profession of banking, and this holds good not only for the head of the banking house but for every employee down to the errand boy.
Next to the president in importance is the cashier, who actively supervises the business management of the bank. He is responsible for the funds of the bank, and is the man who signs all notes issued and contracts made. He also should have as thorough a knowledge of banking as possible, should be a good business man, and a man of upright character and unquestionable honesty.
The paying teller heads the paying department. All money paid out by the bank goes through his hands. He should, however, not make his work merely a mechanical handing out of money. He should, through his work, be able to keep himself informed of the business conditions of the community, and of the business methods of the clients who draw funds. In this way he can make himself a valuable man on the bank's staff one whose word and opinion will carry weight. In a small bank, the paying teller keeps an accurate account of all money paid out, entering each item, and at the close of the day making a complete statement of the transactions completed. In a large bank this portion of the work is usually left to assistants, and the payment teller does nothing but pay out funds.
The receiving teller receives deposits made by customers, entering these in the depositor's pass book, as well as making a record of them for the bank's bookkeeping department. The discount clerk enters in a special book all notes and discounts; the collection clerk keeps account of drafts and time notes and the date of their maturity; and the correspondence clerk attends to items sent or received by mail. In small banks many of these functions belong to one or two men; in larger houses, however, there is a staff of variously titled employees among whom the work is divided.
The bookkeeping department of a bank is an extremely important one. This department keeps a record of all transactions carried on by the bank, and of its resources and liabilities. In a large bank there are numerous bookkeepers, who do the routine work of the department, and a head bookkeeper, or auditor, who supervises it. The head bookkeeper must, of course, be a skilled accountant, and also a man who understands the details of the bank's business activities. He should be a man with executive ability, for his position is an important one and involves the supervision of a number of people.
The chief requisite for the person who wishes to enter the banking business is good character. In banking, it is other people's money which is constantly being handled, and the banker can take no risks in choosing his employees. Men of strong moral fiber and absolute honesty are the only ones wanted in this business, for there are many temptations to the worker in a bank or brokerage house. Intelligence, the ability to figure quickly and accurately and the ability to think clearly and form sound judgments are all necessary. The young man who wishes to work in a bank need not be of the creative type; most of the work is more or less a matter of routine, but this does not mean that it should be done in a mechanical manner. In order to rise to an important executive position, the young man must have power of independent thought, and be a person of initiative. Personality is an important factor in banking. The man of courtesy, tact and the ability to create good will and confidence has a fine chance of rising to a high position, if he combines with these qualities integrity and general banking knowledge.
Most bankers believe that the best time for a young man to begin his work in this field is at the age of about eighteen or twenty. And many do this, starting as messengers for banks, and working their way into positions of responsibility. For the minor positions which a boy is apt to obtain in a bank, not much preparation is needed. He should have a high school education, be rather proficient in mathematics and be a conscientious worker who will be able to keep silent about business matters, after hours. If a boy wishes to start in as a clerk, he should at least know something of the nature of ordinary business documents; he can learn about these, and obtain some training in bookkeeping,, commercial law and other business matters at most business schools.
Banking is usually taught in connection with courses in commerce in the universities. The American Institute of Banking, with branches in every important city, also offers practical courses in the subjects connected with banking. Graduates of the schools mentioned are likely to obtain somewhat better positions than young men who come less well prepared; but actual experience in the bank is the best way of preparing for an important position. The banks realize this, and some offer their employees a chance to work in various departments and so acquire all round experience.
There are very few disadvantages connected with banking. The work is, of course, indoors and sedentary, but it is carried on in pleasant surroundings, and the work itself is not very difficult. For bank messengers there is some element of danger, and there is some moral danger, too, in the bank employee's close contact with the methods of speculation and in his contact with large sums of money. Advancement in a bank is usually very slow, but for a man of marked ability there will be much opportunity for rising to a place of trust. Banking is also a business which is so necessary for commerce and industry in general that it usually offers the bank employee as great an amount of security as could be expected in any position. Salaries range from about $15 a week for office boys, to from $1,000 to $1,500 a year for clerks, and about $2,200 and upward for tellers and bookkeepers. Bank officials are frequently very highly paid, with incomes of $10,000 or more annually.
The public service which banks render in promoting business and encouraging thrift is of the utmost importance, and men in the banking business may feel that they are doing much towards promoting the prosperity of their country.
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