XLII The Discount Departmext 813
General Functions and Organization ofthe Discfjunt De- partment
TheNatureofDiscounting
TheNature and CareofDiscounted Paper RediscountingofBillsReceivable
Guaranties inLieuofIndorsement
Responsibility of Directors forApprovalofDiscounts RoutineofDepartment'sWork
Advances andRediscountswith the FederalResen.-eBank RecordsintheDiscountDepartment
XLin The Loan Department —Loans to Stock Brokers . 828 General Functionsofthe Loan Department
InternalOrganization
Classification ofLoansofBanksintheUnited States Classification of CollateralLoans
StockBrokers' Loans MethodofPlacingLoans Collateral forLoans TheLoan Agreement
DayLoans andOvercertification
DayLoan Agreement
MarginsonStock Brokers'Loans Requirementsas to Collateral Requirementsas toMargins
CONTENTS XXlll
Chapter Page
Collateral SubstitutionsonStockBrokers'Loans Ratesof InterestonStockBrokers'Loans MethodofDeterminingCallLoan Renewal Rate DangersofSystemofRateDetermination FactorsInfluencing CallMoneyQuotations MethodofDeterminingTimeLoanInterestRates Dailyvs.FortnightlyClearings
RelationoftheCallLoan Rate and theCommercial Paper Rateof Interest
TheCollectionand Computationof Interest
XLIV The Loan Department — Other Loans ....
MerchandiseLoans andCommodityPaper Legal ProtectionofMerchandise Loans RisksofLoansonStapleCommodities
SubstitutionsofCollateralon Merchandise Loans Loanson BillsofLading
TheRediscountofCommodityPaper HandlingtheCollateral ofRediscountPaper LoanstoBanks
Collateraland MarginsofBankLoans
Examination and Substitution of Collateral for Loans toBanks
HandlingApplicationsforLoans
RatioofLoansandBalances—FormsofLoans TimeLimit,Renewal,andCancellation ofLoans RecordsoftheLoanDepartment
Overdrafts—Disadvantagesof Practice Prevalenceofand RemediesforOverdrafts
863
XLV The LawofLoansandDiscountsandofNegotiable
Instruments 887
DistinctionBetweenPledge,Mortgage,andLien RelationofPledgorand Pledgee
What May BePledged
CreationandEstablishmentofa Pledge RightsofPledgorandPledgee
TheKeepingofthe Pledge Redemption, Termination, andSale
WarehouseReceipts—Uniform WarehouseReceiptsAct Classes ofReceipts
LiabilityofWarehouseman
Satisfaction ofWarehouseman'sLien
NegotiationandTran'^ferofWarehouseReceipts TheUnited StatesWarehouse Act
XL VI The LawofLoansandDiscountsandofNegotiable
Instruments (Continued) 913
BillsofLading—TermsofIssuance Classes ofBillsofLading
Chapter Page
LiabilityofCarrier
NegotiationorTransferofBillsofLading Buyer'sandSeller'sTitle toGoods FraudulentUseorNegotiationofBills Statutory Limitationson Loans andDiscounts
1. Loans onBank's Capital Stock
2. LoansofBankExaminers
3. LoanstoOfficersandDirectors 4. LimitsofBorrower'sLiabilitiestoBank DeterminationofBorrower'sLiability LoansonReal EstateSecurity
InvestmentsinReal Estateand Mortgages UsuryLaws
XLVII The Credit Department 935
XLVIII
GeneralFunctionsofthe CreditDepartment NeedforCreditDepartment
Effect ofFederalReserveSystem onCredit Department SummaryofDepartmentalWork
InternalOrganizationofthe Credit Department Passingupon Loans andDiscounts
ToWhomCreditInformation IsFurnished CreditFiles
SourcesofCredit Information
1. InterviewswithBorrowers UtilityofFinancialStatements
2. MercantileAgencies—Organization Services ofMercantileAgency
3. InterchangeofCreditExperience
4. CreditExchange Bureaus
5. Other SourcesofInformation
The Financial Statement as a Source of Credit
Information 956
TheNatureofaFinancialStatement Classification ofAssetsand Liabilities RatioofCurrent AssetstoCurrentLiabilities
TheAnalysisofCurrent Assets TheAnalysisofCurrentLiabilities
TheAnalysisofFixed Assets TheAnalysisofFixedLiabilities AncillaryItems
XLIX Commercial Paper and the Discount Market, TheCash DiscountSystemand Single-NamePaper Two-NamePaper
TheTradeAcceptance—Natureof
TheAcceptanceComparedwithCommercialDraft RelativeValueofTwo-Nameand Single-Name Paper Basis of Security ofCommercial Paper
969
Chapter
CONTENTS XXV
Page The OpenAccount andthe DiscountMarket
Open-MarketBorrowing
FactorsofDevelopmentofOpen-MarketBorrowing KindsofOpen-Market Paper
TheNote-Broker—CommissionRates
PurchasesThroughBrokers—RisksandGuaranties
AdvantagesofBorrowingThroughNote-Brokers Effect ofOpen-Borrowing on Banks
ObjectionstoOpen-MarketBorrowing VolumeofOpen-Market Borrowing
TheRegistration ofPaperSoldm OpenMarket
TheAssignment, Hypothecation,and GuarantyofAccounts Receivable
Borrowing from Commission House
SimultaneousBorrowing from DifferentSources
The Trade Acceptance and the American Acceptance Council
AdvantagesofTradeAcceptanceto Buyer AdvantagesofAcceptancetoSeller
AdvantagesofAcceptancetoBanking System
L Commercial Paper and the Discount Market (Con-
tinued) 996
BankAcceptances
Origin oftheBankAcceptance
DevelopmentofUseintheUmted States
DifferenceBetweentheBankAcceptanceand OtherCom-
mercialPaper . r^ -,..
FactorsWhichInfluenceGrantingofAcceptanceCredits LimitationstoAcceptanceCredits
AcceptanceProvisions ofFederal ReserveAct UseofDomesticBankAcceptancesIllustrated FunctionsandPurposesofBankAcceptances Eligibihty ofBankAcceptancesforRediscount ForwardTransactionsinAcceptances
Factors RequisiteforCreationofDiscountMarket Acceptance Dealers -r, , • r, ^
AdvantagesofDiscountMarkettoBanking System Rediscounts with the Federal Reserve Banks NeedforStandardizationofDiscountPaper
RediscountofPromissory Notes andAgricultural Paper Open-Market Purchases
LI The Bond Department i°2i
General Functions and Organization oftheBond Depart- ment
BankInvestmentsin Securities
PowersofCommercial Bankswith Respectto Securities PowersofNationalBankswith Respectto Securities Powersof StateBankswith Respectto Securities TransactionsinBonds—StockExchangeProcedure
Chapter Page
ExecutionofOrders
TheAccounting, Recording,and CustodyofBonds Bought The BondLedger
The BondEarningsBook
OtherBooksoftheBondDepartment
Syndicates, Participations,andtheDistribution of Original Issues
LII Operations or the Bankas Transfer Agent, Regis- trar, Fiscal Agent, Trustee, and Savings
Institution 1040
Functionsofa TransferAgent andRegistrar
TheRegistration of Corporate Stocks Procedure and Functions ofRegistrar
TheTransferandRegistration ofBonds The PaymentofRegisteredInterest TransferAgentforCorporate Stocks TheStockBooks and Transferof Certificates ProcedureinTransferof Certificates TransfersinFiduciaryCapacities
TheDeliveryoftheNewCertificates
TheStock Ledgers Taxationof Transfers Proxies
Subscriptions toCapitalStock CompensationofTransferAgent TheNatureofa Paying orFiscalAgency MethodofHandlingtheCoupons
TheTrustDepartment—LegalRequirements DevelopmentofaTrustDepartment TheSavingsDepartment