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Page 12 - Wednesday, october 10.1979 Record Keeping Necessity Of od Banking [791- 1836 Bookkeeping Department: from the left-Lillian Calrnt, Heisler, Sue Jordan, Marge R lordan, seated-Sandy head bookkeeper and assistant vice president; Debbie Rekenthaler and Sharon Sehmltt. B ookkeeplng Department: from the left-L Inda Abraham, Agatha Lelcht. Debbie Turner, Loralne Sehmltt, Sue Wanta, and Barb Hennlngfleld. Record keeping is an essential but not necessarily a glamorous part of banking. Thirteen full time workers' keep track of the average daily 14,000 transactions occuring in 12,700 checking accounts at McHenry State Ban$. And head bookkeeper Lillian Calftis, assistant vice president in charge of the department guides the activities of her fifteen employees. E leven bookkeepers constantly handle checks and documents on a "Cardveyor" using daily microfiched reports from the data center to verify balances. A microfilming machine establishes permanent record of the bank transaction. Their work is tied with that of the proof department who verify and roolo the transactions to either clearing houses or to Inbanco, McHenry State's computer center , Mrs* Cairns said. When the local checks are returned the bookkeeping dep artmentfiles and accumulates the items with records of deposits. When the periodic customers' statements are received from Inbanco, the checks and statements are combined, verified and mailed to the customer hopefully, notes Mrs. Cairns, for his own recone iIiation. Three of the girls work in customer service to assist Patrons in thf reconciliation of their checking accounts, accepting and maintaining address changes for the records, and prgramming the occasional stop paym ent orders for the computer. M rs. Cairns notes that on busy days 20,500 items are processed through her department. And in addition, she adds, her people are responsible for gefleral book posting which involves prfparing and summarizing a daily statement of conditions of the accounts under the department's coOtrol. T hey also maintain records of B ookkeeplng Department: from the left - Julie Brooks, Lillian Cairns, head bookkeeper> assistant vice-president and Julie Miller. Not pictured Julie Gaylord... real estate payments and of transactions for the trust department. • Problems with customers are few with her department, Mrs. Cairns acknowledges, but any of the situations which they have to correct are due to an omission by the customer. When a patron seeks to make a deposit without his preprinted deposit slip for his account a teller will print one for him at the window. But frequently he will furnish the wrong account number and the computer then credits the wrong account with the deposit. As a result the customer possibly faces an overdraft situation. Then the girls have a com plaint to resolve. "U se the preprinted forms or give the teller the right number," Mrs. Cairns urges. Mrs. Cairns recalls that she started with McHenry State Bank at its Main St. location 25 years ago and has worked up through the ranks. Her education in banking has been in the practical world of actual experience, working with the new developments as they are introduced. », •• 1.- - The story of American banking from the end of fhe R evolution to 1836 centers around the efforts of the F ederal Government to impose more influence on banking through establishment of the first and second Banks of the United States. When the new Government was organised in 1789, financial problems were the main concern. These included the question of what to do about the indebtedness incurred during the R evolution and how to provide adequate credit for commerce. Secretary of the Treasury Alexander Hamilton undertook to get the country's financial affairs in order. The First Bank of the United States One of the big needs was a soundly based currency. Continental currency had ceased to circulate and notes issued by the states during the R evolution were greatly depreciated. Under the provisions of the Constitution, the states were forbidden to issue paper money after 1789. A national bank, Hamilton believed, would serve several purposes. It would provide a much needed paper currency. It would benefit government and business by providing sound credit. In addition, it would act as the Government's fiscal agent and provide a facility for the safekeeping of Government funds. Congress approved Hamilton's proposal, and in 1791, the first Bank of the United States was chartered for a term of 20 years. At the time, there were only four banks in existence, and these largely served local needs. The Bank of the United States was essentially a private bank operating under Federal charger. The Government, however, was a part owner. It subscribed for one-fifth of the Bank's $10 million capital; the rest was raised by the sale of stock to the public. The Bank of the United States had its opponents from the start. Opposition arose not only from the state banks but from others who shared Jefferson's belief that control over banking should be in the hands of state governments. When the proposal to renew the Bank's charter was advanced in 1811, it was defeated. The Bank was liquidated and its assets were ?old to Stephen Girard of Philadelphia. The Girard Bank subsequently merged with other institutions to form what is today the Philadelphia National Bank. Second Bank of the United States E conomic problems again beset the country after the War of 1812. In 1816, a second Bank of the United States was established. After a poor start, the Bank operated successfully for several years, and its notes circulated at face value. Again, opposition forces were strong. The Bank became known in many quarters as "the Monster," a name coined by Senator Benton of Missouri. When Andrew Jackson became President for a second term in 1832, he considered his reelection a mandate to "kill the B ank," which he regarded as a dangerous monopoly. So vehement was his opposition to it that he ordered the removal of Government deposits from the Bank and placed them in selected state banks, which his political opponents called "pet banks". The demise of the second Bank of the Upifed States was certain even before its charter expired in 1836. However, the era of the United States Banks did not end as a total loss. The principles of sound currency and good banking were understood more clearly andr in the older sections of the country, they were embodied in general practice. T H E E R A O F S T A T E B A N K I N G When the restrictions imposed on state banks by the first and second Banks of the United States ceased to exist, the way was open again for as unbridled expansion of the state banks. The push westward and the great need for capital and credit to devolop the country fostered their growth. Many local banks were hastily organized by profit-minded prmoters. The deposit of Government funds in the "pet banks" was an added inducement to the establishment of state banks and helped them to expand credit. Many, loans were made to finance land speculation. The outstanding volume of bank notes rose sharply as lending increased. As is generally the case when the money supply is increased excessively, prices rose. A severe panic ensued in 1837. Within two months, 250 bank failures occurred. F ollowing the business collapse, the Independent Treasury System was established. Under this arrangement money of the Federal Government was stored in Treasury vaults in Washington and at subtreasuries throughout the country. The Federal Government and banking were now c o m p l e t e l y s e p a r a t e d . Conlnued Growth of State Banks The panic of 1837 was a temporary growing pain. The number of banks continued to mushroom. (n 1820, there had been 300. By 1840, the number had grown to 1,000. By 1860, there were nearly 2,000 banks. About 1,500 of these were organized under state charter. The rest were private nonincorporated banks which carried on a deposit business but usually did not issue notes. R egulatlon of Banks From the very beginning, banking in the United States was subject to governmental regulation, although the regulation was often quite inadequate. Indeed, the banking industry has always been regulated to a far greater extent than most other businesses and professions because its money and credit functions so im portantly affect the com m unity and the national economy. As we have seen, the Federal Government exerted greater influence on banking than did state governments between 1791 and 1835. The states dominated the field between 1836 and 1862. Free Banking In early America, persons desiring to start a new bank generally had to ask the state legislature to enact o' special law granting them a charter. This system encouraged political favoritism and also led to the charge that banking monopolies were being created in some areas. To remedy these conditions, many states passed general banking laws permitting anyone to apply for a bank charter on meeting certoin conditions. T his was called the "free banking system" because it was designed to make banking a "free trade," open to all. F ree banking proved popular, but it did result in the establishment of too many banks in some areas. Today issuance of charters is more scientific and more carefully restricted. Persons desiring to set up a bank generally must demonstrate to the Federal or state regulatory authorities that they are financially responsible and that there is a public need for a new bank in the particular community. Deposit and Check Activity 3anks in the 1850's particularly those in large cities, were becoming active in the acceptance of demand deposits. The growth of cities and development of communications was bringing about an increased use of checking accounts. Checks were in common use by shopkeepers and merchants. In New Your City, so many checks were written that each day it took 60 clerks to run from bank to bank to clear checks. To speed up the processing of checks, the New York Clearing House was established in 1853. By 1855, checks surpassed bank note currency as a means of payment for the nation as a whole. Checks were not used to any great extent by the average person. Wage earners were paid in bank notes and coin, which in turn were used for c o n s u m e r p u r c h a s e s . Savings Accounts Savings by individuals at commercial banks were small. Accumulated funds of individuals and businesses were quickly absorbed by the country's capital needs. Investment opportunities were many and the wealthy were not inclined to keep their funds in savings accounts for long periods of time. Farmers, particularly in the remote western regions, had little need for savings facilities. Their money gains were usually small and were immediately plowed back into land, livestock and equipment. In the E ast, however, where many areas were becoming more urbanized, there was a growing number iif~ laborers and wage earners- To encourage thrift among the working class, savings banks were organized. By 1860, there were 278 savings banks with 694,000 depositors and $149 million in savings deposits. The first savings banks, established in 1816, were the Philadelphia Savings Fund Society and the Provident Institution for Savings in the Town of Boston. These banks are still in operation. Care Is Watchword In Safe Deposit Recalling Early Bank History Tqken from the files of Oct. 14, 1920 iOCAL B A N K M A K E S C H A N G E F ox Valley B ank in New Horn e * Started B usiness under new name organization, This Thursday morning. Influential Men Stock . Holders F ox R iver Valley State B ank is the nome under which the banking establishment formerly known as the H6y Banking Company started doing business here this (Thursday) morning, the institution having changed from private ownership to a stpte bank immediately after the clmeof business yesterday afternoon. Fremont Hoy and Cashier J.C. Hilly were in Chicago Wednesday - they m «t-S t ate Aud ii Rjussell and other public official and on their return to McHenry yesterday afternoon the two gentlemen brought with them a state charter, granting tt|em permission to carry on a bonking business under the above n#me. *€ ver since the passing of the recent I fw, which provides that all banking houses must be operated under state o£ national supervision, the former owners of the local bank have been giving the matter their earnest and most careful consideration, with the r{pultthat they have banded together a') tot of stockholders which are classed among the best and most influential residents in this community, and under the careful guidance of the splendid set of officials and board of directors the banking house cannot help but flourish. Yhe history of the local bank dates b#ck to 1888, when same was ozonized by James B. Perry and Oliver N. Owen, who at the time also conducted a general store in the village. T he store and the bank were v i * at that time located in the building now owned by Albert L allinger and conducted as a bakery. At the start the bank was nothing more than a side issue with the two men who launched the enterprise. Time however, brought more and more business, until in theearly nineties they decided to give up the merchandise establishment and thus enable them give over all of their time to the banking business. Their next step was the erection of the building which is still housing the institution. Here the Bank of McHenry, as it was known in those days, continued to thrive until same had come to be known as one of the most reliable institutions of the_kind to be found in northern Illinois. P erry & Owen continued the business until the fall of 1913 when same was sold and taken over by F remont Hoy and son, Clarence F . Hoy, since which time it has been known and conducted as the Hoy Banking Company, a co­ partnership. Having been connected with banking interests more or less during his entire life, the senior member of the firm soon won the confidence of the people of this community and with his son's assistance the business of the institution has experienced a steady and substantial growth ever since and the latest change will, no doubt, bring a larger patronage than has ever before been experienced. The new bank is incorporated for $50,000 and, as previously stated, has the backing of some of the com munity's very best and wealthiest citizens. The officers are as follows: Fremont Hoy, president; James B. Perry, vice-president; Clarence F. Hoy, vice-preisdent; Joseph C. Holly, cashier. The board of directors is composed of the following well known .and esteem e< Carey, O.B. Oberstadt, Wiliam J. Welch, N.H. Petesch, Fremont Hoy, Joseph C. Holly and Clarence F. Hoy. The business will be conducted in the future along lines which will be as liberal as is consistent with safe banking and the public may rest assured that all business entrusted to the new banking institution will receive careful as well as courteous attention. Drive-In and Oper at long R Ichmond R d. located at the corners of Pearl St. and Care is the watchword of the Safe Deposit Department. Protection of the valuables (value unknown) entrusted by customers to the bank is the primary concern of Edna Olson and her assistant Betty Weincouff. Precautions over and above those prescribed by law guard against deprecation, loss by accident or by misrepresentation to users of this service. When customers ask to open their individual boxes, they must be identified and match the signature on file and have in their possession their key. Employes are not permitted to be alone while in possession of the customer's key, Mrs. Olson notes, and both must go together into the vault to obtain the box. When the customer has finished his or her business with the box in the assigned booth, this booth is locked and not used again until vault employes examines it for anything that might have been dropped or left behind. In her 13 years duty in the vault •B-otfy-Welncootf on the left, and t aha Olson, supervisor. M r * . Olson recalls no important loss or incident regarding mislaid articles. She adds that there has been no instances of unauthorized persons either trying to force their way into the vault room or bluffing their way into the opening of a box. She has learned to handle unusual requests where the death of a boxholder has resulted in no one bfeing authorized to enter the box, but permission is needed to get a document needed for burial or handling of a will. She emphasizes that there are always two employes on duty to safeguard against incidents. The bank presently offers 3,800 boxes available for safekeeping of valuables for married couples, individuals, businesses, associations, churches, and other organizations. Mrs. Olson notes that additions to vault capacities since the service was removed from the first floor in 1965 has Increased the number of available boxes for the growing population. In addition, space for adding more boxes exists in the vault, enough to take care of demand for a long into the future, Mrs. Olson estimates. Presently, though there are occasionally slow days, an average of 60 to 70 persons come in daily to visit their valuables. And over the years embarrassing or amusing events do occur. Vault attendants are wary of one boy who accompanies his mother to the vault area and who feels he must close a vault access door after his mother comes out and traps the attendant in the secure area. Relief is obtained by calling vio the phone for someone outside to unlock the self locking door. Another menacols a 13year old who picked up his mother's box keys and wandered off in other areas of the bank. When she finished, she found she couldn't leave the booth because with no keys she was unable to put the box away.,. An all points announcement over the banks p.a. system finally located the boy, Mrs.i Olson remembers. f