Everybodys Guide to Money Matters | Page 7

me have £23 10s. to pay her with."
Miss Smith is told that there is no need of incurring the risk of carrying
the money through the streets, as a cheque in favour of Miss Tucker
will equally answer the purpose; and again he fills up the blank spaces
in a second cheque, which appears thus:
--------------------------------------------------------| No. 10902. | No.
10902. ! ! MarchI, 1898 | | | ! ! | | March I, 1898 | To the Blank!hir!
Banking Company, | | | !Bla!ktown. | | | ! ! order J.S. | | MissTucker |
Pay to __MissTucker_____ or ====== | | | ! ! | | | the sum of
Twenty-threepounds10/- | | | ! ! | | £2310/-____ | £2310/-___! !
JaneSmith_ | | | ! ! | --------------------------------------------------------
"You see," says the cashier, "I have struck out the word 'bearer' and
substituted the word 'order.' This will oblige Miss Tucker to sign her

name on the back of the cheque (technically, to 'endorse it') before it
can be paid. Your initials are required to confirm the alteration.* I
have also drawn parallel lines across the cheque, which makes it what
is termed 'a crossed cheque,' and a crossed cheque cannot be cashed
direct, but must be paid into an account at a bank. So you see you will
have the signature of Miss Tucker, proving that she has been paid her
bill by means of this cheque; and it is obvious that by crossing the
cheque, should it be lost and made an improper use of, there would be
no difficulty in tracing through whose hands it passed."
(* Banks also issue cheques with the word "order" printed instead of
"bearer.")
Miss Smith soon learns that all her tradesmen's bills may be paid in the
same way, without going to the bank to draw the money, and with the
advantage that the cheque is not only a proof of payment, but that she
has also a record of her accounts in the bank pass-book.
It may here be mentioned that should a banker cash a cheque with a
forged endorsement, he is not responsible, and the loss falls on the
drawer of the cheque.* The crossing of a cheque, however,
necessitating its being paid to a bank account, would facilitate the
discovery of the culprit. An additional security is given to a crossed
cheque if it bears the words "not negotiable" written underneath the
crossing. This means that it cannot legally be used as a means of
payment to a third party. In the event of such a cheque going wrong,
the loss would fall upon a bank negotiating it for a customer. The bank
could be called upon to make good the amount to the payee.
(* If, however, he pays a cheque with a forged signature he is
responsible, as he is supposed to know the handwriting of his own
customer.)
It is illegal to post-date a cheque, the reason being that bills of
exchange, which are obligations to pay money at a future date, bear a
much higher stamp duty than cheques. It would, therefore, be a fraud
upon the revenue to make cheques do duty for bills of exchange.

CHAPTER II.
THE BANK ACCOUNT.
THE manner in which Miss Smith had left her money on what is
termed a current account at the Bank is convenient to herself and
profitable to the Blankshire Bank, for they have the use of it free,
paying nothing for that use in the way of interest.
She will have other money coming to her in the shape of rents, and the
interest on money invested, as represented in those documents in the tin
box - all which money can be handed over to the Bank in the same way
that the £500 was. There is, however, no reason why she should leave
so much lying idle without obtaining any interest upon it. She will
reckon up how much she will require for, say, the next six months, for
house expenses and personal use, and also how much, on the other
hand, she will be paid in rents or interest, and will then find that there
will be a sum of; at least, say, £300 over and above all she desires to
spend.
If she is wise, she will draw out this sum by cheque from her current
account and have it placed on a deposit account. In this case the bank
will give her a deposit receipt or interest note, somewhat in this form:
--------------------------------------------------------| No. 23975 26th June,
1897. | | | | Blankshire Bank, Blanktown. | | | | RECEIVED from Miss
Jane Smith the sum of Three | | Hundred Pounds, to be accounted for
with interest at | | 2.5 per cent per