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better to draw notes payable at a certain
fixed time, as, "I promise to pay on the 10th of March, 1897." The
common custom is to make notes payable a certain number of days or
months after date. A note made or issued on Sunday is void. The DAY
OF MATURITY is the day upon which a note becomes legally due. In
several of the States a note is not legally due until three days, called
DAYS OF GRACE, after the expiration of the time specified in the note.
[Illustration: A promissory note filled out on an engraved blank.]
The words VALUE RECEIVED, which usually appear upon notes, are
not necessary legally. Thousands of good notes made without any value
consideration are handled daily.
The PROMISE TO PAY of a negotiable note must be unconditional. It
cannot be made to depend upon any contingency whatever.
Notes that are made in settlement of genuine business transactions
come under the head of regular, legitimate business paper. An
ACCOMMODATION note is one which is signed, or indorsed, simply
as an accommodation, and not in settlement of an account or in
payment of an indebtedness. With banks accommodation paper has a
deservedly hard reputation. However, there are all grades and shades
of accommodation paper, though it represents no actual business
transaction between the parties to it, and rests upon no other
foundation than that of mutual agreement. No contract is good without

a consideration, but this is only true between the original parties to a
note. The third party or innocent receiver or holder of a note has a
good title, and can recover its value, even though it was originally
given without a valuable consideration. An innocent holder of a note
which had been originally lost or stolen has a good title to it if he
received it for value.
[Illustration: A special form for a promissory note.]
A note does not draw interest until after maturity, unless the words
WITH INTEREST appear on the face. Notes draw interest after
maturity and until paid, at the legal rate.
A note should be presented for payment upon the exact day of maturity.
Notes made payable at a bank, or at any other place, must be presented
for payment at the place named. When no place is specified the note is
payable at the maker's place of business or at his residence.
In finding the date of maturity it is important to remember that when a
note is drawn days after date the actual days must be counted, and
when drawn months after date the time is reckoned by months.
To DISCOUNT a note is to sell it at a discount. The rates of discount
vary according to the security offered, or the character of the loan, or
the state of the money market. For ordinary commercial paper the rates
run from four to eight per cent. Notes received and given by
commercial houses and discounted by banks are not usually for a
longer period than four months.
VIII. THE CLEARING-HOUSE SYSTEM
In large cities cheques representing millions of dollars are deposited in
the banks every day. The separate collection of these would be almost
impossible were it not for the clearing-house system. Each large city
has its clearing-house. It is an establishment formed by the banks
themselves, and for their own convenience. The leading banks of a city
connect themselves with the clearing-house of that city, and through
other banks with the clearing-houses of other cities, particularly New

York. Country banks connect themselves with one or more
clearing-houses through city banks, which do their business for them.
The New York banks, largely through private bankers, branches of
foreign banking houses, connect themselves with London, so that each
bank in the world is connected indirectly with every other bank in the
world, and in London is the final clearing-house of the world.
[Illustration: The advantages of the clearing-house system.]
Suppose that the above diagram represents the banks and
clearing-house of a city, and also the two business houses of Brown
and Smith. Brown keeps his money on deposit in Bank E, and Smith in
Bank B. Brown sends (by mail) a cheque to Smith in payment of a bill.
Now, Smith can come all the way to Bank E, and, if he is properly
identified, can collect the cheque. He does not do this, however, but
deposits Brown's cheque in Bank B, the bank where he does his
banking business. Now, B cannot send to E to get the money. It could
do this, perhaps, if it had only one cheque, but it has taken in hundreds
of cheques, some, perhaps, on every bank in town, and on many banks
out of town. It would take a hundred messengers to collect them. So,
instead of B's going