The methods and machinery of practical banking

Front matter

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Appendix

Form of the "Skeleton Ledger." Blank Report sent to National banks by the Comptroller of the Currency.

♦Note.— Chapter XXVIII comprises a series of articles written by Mr. James G.. Cannon, Vice-President of the Fourth National Bank, of New York, and which have already been published in Rhodes' Journal of Banking. Mr. Cannon's many years' experience and thorough familiarity with the subjects treated render his contribution a fit supplement to Mr. Patten's work.

Chapter I. The Bane Clerk And His Profession

THERE are many aspects of this matter of Banking as a profession which deserve attention in such a work as this and any proper treatment of this topic must command the consideration of all readers who are in the banking business or who have thoughts of entering it.

It is often urged as an argument against positions in banks that there are few such that afford proper scope for the natural ambition of a lively and intelligent young man.

I doubt not that this argument has been given undue weight from the very fact that many rather unintelligent and unlively young men have entered banks and, as a matter of course, remained there in a very stagnant and unprogressive way of life, learning little or nothing that was not within the direct scope of their special duties, and, as a. consequence, never receiving promotion or advancement. It should be remembered that force, ability and faithfulness tell as well in banking as in the average business situations of the period, and that traits and conduct of the opposite character are as fatal there as elsewhere.

Some of the best bankers in the United States to-day are men who have passed rapidly through every minor office in banks. The names of many of them would have a familiar sound were they mentioned here, though the younger generation of bankers are living so far from the time when these prominent bank managers were serving as Messengers, Tellers, etc. , that any statement that they were once on the low rounds of the bank ladder would be news to the young men.

Then we hear objections on the score of health but there are no good reasons for deeming the bank officer's position particularly unattractive on account of its unhealthfulness. He leads, to be sure,, so far as his daily routine of work is concerned, rather a cramped and confined mode of life, and his position is open to the objection that it involves, at times, heavy mental strains. The bank officer also labors under the disadvantage of being at a sort of work which is extremely irregular in its character.

Every bank which is properly managed has to carry along a staff sufficiently strong to do its work promptly and well in times when its work is the largest and most pressing, for dealers cannot wait. Each day's work must be done in that day, and the right kind of extra help

2 PRACTICAL BAXKIXG.

cannot be summoned at a moment's warning. As a consequence there are days in active banks when its officers are overworked, and days when the hours drag heavily because there is so little to do.

This spasmodic and irregular character of bank work is a decided objection to it. Yet all these features which I have described as belonging to labor at the desk or counter of a banking institution are apt to exist in positions connected with general business. The countinghouse of the merchant and the salesrooms of the dry goods jobbers and the grocers present about the same class of drawbacks.

All sorts of business have their shady and their sunny sides, and one of the relieving features of banking is found in the fact that its workers have, as a general thing, more time to themselves than clerks and business men in the other occupations I have named.

And, if bank officers will properly improve their out-of-bank hours, there are no reasons why they cannot get along comfortably enough with the share of confinement which is their daily lot. It should be evident enough to them that they should, when away from the bank, shun as far as practicable a continuance of sedentary life. They should seek out-of-door work and recreations, should avoid late hours in confined halls and rooms, should not over-read or over-study, should cultivate pleasant society, and should have innocent hobbies which divert the mind from business care and thoughts.

If such methods of using the time outside the bank can be maintained they will effectually dispose of any objection to banking as unhealthful.

Again, men often say they do not like corporation service of any sort, since in it there is little opportunity for ''individual independence in conduct or self-reliant assertion. " They claim that, in positions of this character, a certain routine of movement is marked out for employees, of all grades, and that there are few opportunities, and little encouragement, for independent, discretionary action. There is in all this, it is said, a narrowing and belittling of true manliness and vigor of character, which tendency constitutes the real shady side of the business.

While I have quoted this objection as applying to all corporation employment we are only interested in its bearing on clerks in banking institutions.

We must admit that in all well-regulated banks where many officers of various grades are employed there must prevail an orderly discipline and subordination.

As in military service there are Generals, Colonels and Lieutenant- ( lolonels, here there are Presidents, Cashiers and junior officers — Tellers, Book-keepers and Clerks of different departments. The President, if lif Lb a working President and the responsible head of the bank, must b • Berved as Buch by all officers under him — must receive from them unquestioning service where no sacrifice of principle is concerned. The

THE BANK CLERK AND HIS PROFESSION. 3

Cashier, who is the executive officer of the bank, must receive similar service from those under him.

Outside and beyond all this way of bank life lies what may be termed a higher individual life and character.

In one sense all the officers of whom I have spoken are subordinate. The President is, in a measure, subordinate to the Directors, who are in turn subordinate to the shareholders. The Cashier is subordinate to the President ; the under officers subordinate to the Cashier. Yet, in the highest sense, none of these are the servants of anybody. It is perfectly possible for each and all to render unto Caesar all that is due to Caesar without sacrificing one iota of self-respect or surrendering any single feature of true manliness of character.

And so to live and move should be the determination — the resolution — of every bank subordinate.

I may appropriately say here that it should be the constant endeavor of those officers of a bank who hold what are termed superior positions to cultivate and develop, as far as possible, the self-respect of their subordinates. A person may for a lifetime occupy a junior position upon the staff of a bank. Promotion does not come to all — under some circumstances cannot, however deserving of advancement the subordinate may be — yet, in the minor position, faithful service and manly character are entitled to just as much honor and to as full recognition as that rendered by those in more conspicuous places. I have had a long and broad experience in banking, and my observation has convinced me that there are instances almost without number where bank officers of merit and abilities fitting them for the highest positions in their profession have, through unpropitious circumstances, never gravitated out of very inconspicuous offices, while, on the other hand, many men scantily equipped for high place have been lifted, as it were, by unusually favorable circumstances into it. But the man makes the place, not the place the man. And among those who are so situated as to be able to take an inside view of these men and these places in banks of which I am writing, estimates of the real worth and standing of men are made up from what the men themselves really count for, not from the positions they happen to hold.

There are few experienced bankers who cannot recall instances where they have observed men who have for generations faithfully served in such subordinate positions as junior clerks, bank messengers, etc. , who have really carried themselves better and showed more good judgment and ability than many others who have had, from high position, the nominal ordering of the goings and comings of these subordinates.

It will thus be seen that I find no reasons for discouraging the right sort of young men from entering banks. And many a bank manager will be ready to confirm the opinion that I here express, that there does not seem to be in these days in either city or country, an over-supply of the right sort of young candidates for situations in banking institutions.

And now let us see what general qualities the bank expects to find in those who desire to come into its employ and who look for advancement as their service continues. In selecting a young man for a vacant position the bank will certainly take the best one obtainable. The best will be none too good for the work. In the matter of integrity little need be said, for everything is understood.

In buying a piece of paper or in selecting a bank clerk the bank Manager does not ask whether or not the parties are superintendents of Sunday schools, deacons of churches, or what may be their theological views — whether they belong to the primitive Methodists or liberal Unitarians. He wishes to know whether the men are honest.

Honesty is a mental trait. It runs in families. There are many young men who may do very well in life, if they are kept out of positions of trust, but who should never be given places in banks. Heredity is against them.

The man who has once defaulted, in any shape or manner, should never again be placed in charge of other people's money — especially the money belonging to widows and orphans. Help him up in any way possible, but deem it impossible for him to serve in a bank.

But in addition to integrity and general ability the bank will look also for a natural adaptiveness for this occupation.

No young man ought to think of entering upon banking as a profession who has not a real taste for the business, and capacity adapted to the work upon which he is entering. He should have a good head for figures, a good hand for general clerical work, and a taste for financial matters. A person can somehow get along in the business of clerking in a bank — in some banks — without having many of the qualifications I have named ; but he cannot, under such circumstances, be otherwise than a failure as a bank officer. He fails of promotion, is a burden to other and better clerks, and there is a constant feeling that he ought to have chosen some other trade.

There is a practice, becoming more and more in vogue among our best banks, of taking in boys of from sixteen to eighteen or thereabouts, to learn the banking business — to become efficient and skilful aids in the profession by beginning on the lowest round of the ladder, at a boy's salary, and working along up by faithful and effective service. This method of supplying the staff of a bank with valuable officers is a good tiling for the boys and a good tiling for the banks. It is a practice which has for many years been followed in the English banks, particularly in the Bank of England, but one that has not long prevailed in this country.

The general custom here in the past was to make up the corps of officers of matured material, selected from other branches of business, and youths who were entering all other branches of business as learners,

THE BANK CLERK AND HIS PROFESSION. 5

on small salaries, were seldom given an opportunity to obtain apprentices' positions in banks.

In the Bank of England, youths of from sixteen to eighteen years of age, many of whom are the sons of clergymen, officers in the army, and of what the Londoners term "tradesmen of the better class," are received into the institution as assistants in the various departments, and as out-Tellers br Messengers, at a salary of £80 and Christmas money — a salary certainly equal to the average paid to junior clerks here. In London private banks these juniors commonly start with £60 a year.

I found the Scotch banks had a custom of receiving young men into their service on a stated system of three years' apprenticeship, under regular indentures and on a very small salary.

I have in my own practical banking done what I could by example and influence to promote this system of receiving boys just out of the higher schools into minor places in banks, and have never regretted my efforts in that direction.

The best position for a youth in a bank is that of general assistant. In such a place he can, if alert and competent, quickly learn a deal about the methods and machinery of all the departments which are moving on about him; in these departments there will be constant chances for him to acquire practical knowledge of banking by practical work. As he works along, helping here and there, as exigencies demand, he is likely to develop an aptitude for some particular phase of the work, and in due time the bank gladly promotes him into the position or department for which he has shown himself best fitted. Every junior officer of a bank may, to some extent, have the advantage which we have mentioned as attaching to the position of general assistant if he keeps on the alert and endeavors to make himself acquainted with the general run of affairs in Ms institution, and in a proper manner and spirit learns, as soon as possible, the ways and methods of doing the work in each of the departments which are being carried along about him. There are many reasons why this course is to be recommended. It will, in the end, prove of great advantage to the officer himself; for, by acquiring this knowledge of duties which are outside of his own department, he will be fitting himself for fining other and more important positions in his own bank, and also be preparing himself for the work of running a bank where many departments are consolidated in one, if he should happen to be called into such a position.

It has always been deemed, in some points, rather disadvantageous for a young man to enter upon banking life in a very large bank, since in such an institution, where many departments are run by many separate clerks, he is in danger of becoming but a spoke in a wheel, which is of little importance or value — unless surrounded and supported by others — which cannot go alone or stand alone. But well-informed and alert officers of the class I have named, who study into everything in the bank about them, are of great value to the bank which employs them. Customers — depositors — appreciate such officers.

Bank dealers dislike very much to be sent wandering around from one department to another when they call to make an enquiry at their bank. If they happen, in their unacquaintance with details of banking business, to strike at first the wrong officer, it is often very agreeable to them to have their matters looked into and explained by this first man, instead of being told by him that the business does not belong to his department, and that they must go to some other desk.

EDUCATION OP BANK OFFICERS.

The action of the American Bankers' Association establishing an order of auxiliary membership of that Association, based upon terms of service and an acquirement of a thorough knowledge of practical banking, is deserving of the highest commendation, and it is to be earnestly hoped that the scheme may receive thorough support. There never was a time when a closer acquaintance with the practices and principles of banking upon the part of those engaged in it was more needed than at present, and to-day the opportunities are excellent for young mentin banks or on the way to positions in banks to acquire a full knowledge of the profession of their choice. The press is constantly supplying the financial and banking student with aids to study. Many of our banks have quite extensive collections of reference books and authorities and periodicals and miscellaneous literature bearing upon the subject of practical and theoretical banking and finance ; and banks which have not been in the habit of counting a bank library as a necessary part of the "furniture" of a banking institution are now beginning to buy, for the use of their employees, the best current works on banking, and to subscribe for reliable banking journals.

It ought to be said here that the American Bankers' Association has simply taken the initiative step in the subject of practical education in banking of the young men in it, which, if carried forward earnestly, will surely produce sound results. By way of co-operation with the present move of the Association for the setting up of civil service examinations and certificates of progress made, local organizations of bankers' clerks for the study of banking should be organized in all our large towns and cities. And these local institutions should have regular meetings for discussion of bank practice, set up for themselves libraries of banking books, and subscribe for such banking periodicals as Avill aid them in their studies.

AN UNWAVERING PROMPTNESS.

An unwavering promptness in the discharge of all his bank duties is what every competent bank Manager demands, and has a right to expect, of every man on his staff of officers. Time is, in banking, of pre-eminent value. It is more than money. Anything in the methods and machinery of banking — whether it is in the officers themselves or

THE BAJK CLERK AND HIS PROFESSION. 7

in their modes of doing work — that tends to a waste of time is a steadycause of annoyance, worry and disarrangement. And a chronic tendency in an officer towards dilatoriness and slackness, no matter what may be the natural abilities of such an officer, is one of the most exasperating of things to an able and prompt Manager. I know of no single feature in the character of an honest bank officer which is likely in the end to be more fatal to his prospects of advancement, and more sure to undermine his good standing with both customers and Directors, than this tendency I have named.

The bank officer, whether he is Cashier or Messenger, or on any of the rungs between these two positions, should systematically cultivate a habit of unswerving promptness in the discharge of every class of work that stands before him in his daily routine at the bank. If there is work to be done, let the work be done first, and the newspapers read afterwards. The usual hours of bank work in this country are not burdensomely long. And these hours should be strictly given to the work of the bank. Private errands, private business of all sorts, should never be allowed to interfere in the smallest way with these morning bank hours and their special duties.

I have never believed in the setting up in banks of too* many iron rules regarding the regulation of the matters to which I am here referring. Bank officers of intelligence, strong common sense, and of a conscientious type of character, will make these rules for themselves, and live up to them. Bank officers of different make-up are out of place in a bank ; and, in well-managed banks, are apt to make an early discovery of that fact.

Bank hours, in this country, are generally frOm 9 to 2 or 3 o'clock. Nine is not a severely early hour. The clerks should be on hand at that time. And they should leave the bank as soon after the regular closing hours as they can without leaving any work behind them that demands immediate attention.

The after-work hours, if properly used, may be of great value in many points, as I have elsewhere shown, and the more of them they can consistently get the better.

I was struck by the sagacity of a remark made not long since by a distinguished banker, who was a great worker, that nothing gave him. more satisfaction than to see his officers put their work through promptly and get away early.

Here are some of the ways in which, in a most significant manner, bank officers show a remissness, where those officers are of the type which, to use seamens' language, may be termed the slow-going-about class :

They are apt to fail in coming home promptly after the time allotted to them for vacations has elapsed, allowing the most trifling causes to interfere with their return at maturity. Little illnesses, and sometimes what are really only imaginary indispositions, are apt to dispose them to remain away from the bank. And, for trifling reasons, they are apt to ask for occasional absences for a day or so — absences for the purpose of attending to matters which the alert and prompt bank clerk would not deem important enough to call him away.

And, as I have before said, the bank officer who is chronically deficient in general promptness may be depended upon to disappoint the Manager by not being regularly on hand at the right hour in the morning. To remedy this trouble, the Bank of England has an arrangement which might perhaps be introduced with good results in some banking quarters this side of the water. It has what is termed "The Attendance Book." This book lies open, every morning, upon a desk -which every officer of the old bank must pass as he comes each day to bis work ; and, as he marches past it, he writes his name in it. At 9 o'clock a black line is drawn across the page below the signatures of the prompt men, who have already passed in, and all who come along late must put their slow signatures under this black mark of reproof.

If an officer is three times late in the Bank of England, he is summoned before its Directors and reprimanded. If again, after this iormal reprimand, he fails in promptness, and can furnish no reasonable excuses, he is invited to resign.

Such rules as this are, of course, more likely to be needed in an institution having a vast number of employees, like the Bank of England, than they are in banks of more moderate size. And they are also more in harmony with the general style of administering affairs on the other side of the water than they would be with ways here.

I found the head clerks and accountants of the old Bank of England, in a late visit made there, very courteous and prompt, and they impressed me as being able and skillful men ; but the general rank and file there have the reputation of being machine-like men, who are behind the times in their ways and methods.

In the matter of promptness, as in many other matters, the force of example is a great power in a bank. If the higher officers of a bank are slow, dilatory, and generally slack in their administration, the lower down men on the staff are, of course, quite liable to be somewhat demoralized.

The bank which is so unfortunate as not to have, as its chief executive — as its Cashier — an alert and prompt man, is, in time, quite liable to find its entire staff falling into habits of remissness and sluggishness.

The setting up of the Clearing-House system in our cities has had, I think, the effect to make the bank officers of those places perhaps a little more systematic in the matter of morning promptness of attendance than they might otherwise have been. Many of our city banks nominally open at 10 o'clock in winter and 9 o'clock in summer; but, in cities where the morning clearing is 10 o'clock sharp, there is a pretty complete abrogation of the 10 o'clock opening. Winter and summer,

THE BANK CLERK AND HIS PROFESSION. 9

where clearing is 10 o'clock, officers of active banks — head officers not excepted — are generally found on hand at 9.

An illustration of individual influence in the matter of promptness is shown in the following little incident :

The minister said he had become tired of starting his Sundayservices at a quarter of eleven o'clock, when they were announced to begin at half-past ten o'clock — tired of seeing his congregation come late. He therefore announced that he was determined on a reform in this matter, and would, on the next Sabbath, and on all coming Sabbaths, commence services at half -past ten o'clock if there was not a person in the house. I liked his idea, and so presented myself at his meeting the next Sunday at half-past ten o'clock. Two or three of us were there ; but the minister was five minutes behind time then, and the same on the succeeding Sunday. Promptness at once died out there, for it was not practised by the head man.

When bank officers are unexpectedly detained at home for sufficient reasons, they should always send prompt word of the detention to the bank, so that their work may be at once taken in hand, and there be no waiting and enquiry for them. If on the home-stretch from a vacation they meet with blocks in their way, and are detained over time, they should use special pains to get word of their lock-out to the bank. Proper care about these little points, which one would think there was little need of urging upon intelligent bank officers, is really sometimes neglected by them ; and neglect in these matters is often a cause of no little inconvenience to the bank.

FAITHFULNESS IN WORK.

There are bank officers who would never dream of directly defrauding the bank for which they labor and who are scrupulously honest in all their monetary connections with their institutions, but who are nevertheless wanting in the spirit of integrity in the discharge of the routine duties of their positions. They go through their duties in a somewhat mechanical manner, taking little real interest in the welfare of their bank, and slighting and shirking their work whenever opportunity offers. Such are simple eye servants, whose only object seems to be to do as little as possible, and to manage to get through the labors of their department in such a manner as to enable them to keep their position and a respectable reputation and draw their salary. There is a word in very common use among English mechanics applied to work that has been shabbily done. It is said in such cases that the job has been "scamped." There is "scamping" in bank work. The workers of the scamping class are sure to be careless in the use of the property of the bank. They waste the stationery and other properties of the institution that are used in their departments. They waste time, which is the property of the bank, by insufficient attention to the duties of their position, and are apt to be out of the bank and on private errands during its regular business hours. The worst and most unmanly

10 PRACTICAL BANTLING.

feature of all this misdoing is that it is done in a hidden manner. As we have said, the class of which we write make a study to be proiicient in the art of eye service.

GOOD NATURE.

The bank officer while at his post of duty is, of course, expected to maintain the most imperturbable good nature. The dealing public, which is brought in contact with him, whatever may be its own shortcomings in the matter of grace and temper, does not expect to tolerate the slightest departure from perfect equanimity on the part of their servants the bank officials. The first lessons to be learned by the bank officers are to bear and forbear, to be very patient, and to be perfectly unresenting.

I have been speaking of the temper and carriage of the banker at his business. But he has another life that should be brought into view, and over which the requirements we have just described might also extend. The mind-wearing and nerve-wearying routine of labor through which he daily passes is apt to leave him in an irritable and nervous condition — a condition tending to disqualify him for the proper discharge of his social and domestic duties. But he makes a great mistake in self-management if he gives way to these dangerous influences of his harrassing occupation and allows himself to sink into a condition of chronic irritability, or that of morbid aversion to social pleasures or the natural stirs and excitements of domestic life.

It is well for the bank officer to have a family about him. The cares of providing for and generally looking after all the material, social and educational wants of a household should be viewed by him as a blessing in disguise. The presence of the head of the family should be like sunshine in the house, and he should there voluntarily school himself to the exercise of that patience, good nature and forbearance which is, as one might say, forced upon him when in the outside world and at his place in the bank. The children who cluster about him should be looked upon as customers, who deserve the most tender and persistent attention. They are hostages which he has given to fortune, and their presence may be made to serve as a guard and inspiration to his whole course of business life.