Branch Accounting and Procedures
Depositors' Department
Part 1: The Cash Book
The Bank's 1919 General Regulation 17 specified that 'Two or more officers of the Bank shall be parties to every transaction of the depositor, so as to form a double check on every such transaction'. In the early days of the Bank, this regulation was strictly interpreted with (for example) a cashier counting a cash deposit, initialling the deposit slip, and passing the latter to a second officer for the amount to be entered in the depositor's passbook, and the Bank's records.

This labour intensive system was replaced by the routine described in this article, which continued largely unchanged until it was replaced by the computerisation of the Bank's accounting system in the early 1970s.

At branch level, the accounting book of prime entry in the Bank's system prior to computerisation was the Cash Book. For each cash holding, at every branch, a separate Cash Book was maintained. This substantial, foolscap-sized book, with a hard cover securely binding its 100 pages, was pre-printed to enable cashiers to record the receipts (ie credits) on the left-hand page, and payments (ie debits) to be recorded on the right-hand page. Pages of the Cash Book were numbered sequentially to prevent removal, substitution etc. Each Cash Book was numbered so as to identify it with its related cash holding, which was secured overnight in a locked bag or box. In addition, a separate Cash Book was maintained by the Branch Manager to record movements of cash in the Reserve Cash Holding (known as 'The Reserve').

The pre-printed columns of a cashier's Cash Book reflected the Bank's current products. Therefore, in the early 1960s, the credit side of the Cash Book would have columns headed as below. A later version of Cash Book column headings is reproduced in the topic of Decimalisation.
                 No 1 Dept                                   No 2 Dept                         Deposits for Clearing           Mortgage Repayments
 Account No
for this
 Account No
for this
 Account No
 Account No
                           No 1 Dept                                                No 2 Dept                                  Payments for Clearing              
 Account No
 Account No
 Account No
The right-hand side (debits) would have columns headed:
An entry into a Cash Book would be generated by a depositor completing a transaction slip, and handing it to a cashier with the relevant passbook, and in the case of a credit transaction, with the cash, coupon card, cheque, or postal order being deposited.

Deposit slips (form number MB143), which were available on the depositor's side of the branch counter, were completed by the depositor to show:

    - an analysis of the deposit by notes, coin, cheques etc - to give the total value;
    - the account number;
    - depositor's name;
    - the date
After checking the amount of the cash to the slip (but not placing any part of it in the cash drawer until the total was verified), the cashier:
    - initialled the slip;
    - entered the transaction in the depositor's passbook;
    - spiked the slip (ie pushed it down onto a spike kept on the cashier's desk);
    - copied the details of the transaction (account number; amount) from the passbook entry to the Cash Book;
    - returned the passbook to the depositor.
The columns of the Cash Book that were utilised for the transaction reflected the Department (deposit slips for the No 2 Department were stamped by the cashier accordingly - see Rubber Stamps) and the Branch that the account was held in. All deposits for branches other than the one taking the transaction were entered in the column 'Deposits for Clearing'.

A deposit transaction would not always require the cashier to refer to the customer's ledger account, but would be necessary where the depositor asked for the passbook to be made up (eg for an expected credit from an employer, or for payments made under a Standing Order) or the cashier noticed that annual interest credits had not been entered into the book. These type of transactions were referred to as 'Not In Pass Book' items (abbreviated as 'NIPB' or 'NB'), and would be recognised as such by a variety of methods, eg savings credits would be posted in red ink at hand branches; a special rubber stamp ('Credit Advice S/D') would be inserted against the amount in the depositor's passbook. On entering a 'NIPB' item into the passbook, the cashier would indicate that this had been done by marking the relevant transaction in the ledger.

In the case of a mortgage repayment, the passbook would be referred to the mortgage ledger to ascertain the amount of the interest charge (monthly for reducing mortgages; annually for equated mortgages), and any other debits - such as a charge for buildings insurance. In other respects, the processing of a mortgage repayment was the same as a deposit to a savings account; the transaction slip was similar to an MB143, but was coloured pink.

Withdrawal transactions always required the cashier to refer to the ledger. To make a withdrawal, the depositor completed a Withdrawal Form (MB13), which was in the style of a receipt, the amount to be withdrawn being specified in both words and numbers. The cashier initialled the slip to confirm (a) that the passbook had been compared with the ledger account, and (b) that the signature on the MB13 agreed with the specimen in the branch's records.

After agreeing with the customer as to how the withdrawn cash should be made up, the cashier entered the transaction in the passbook; copied the entry into the Cash Book; counted the cash, placed the cash inside the passbook, and handed both to the customer. An analysis of the cash paid out was then entered onto the reverse of the MB13, the form initialled again, and the form spiked.

As an alternative to receiving cash, the depositor could request the funds in the form of a cheque (known as an 'M Account' cheque). These were cheques drawn on the Bank, and were popular for large transactions, such as a car purchase, as they were readily accepted by motor-car dealers and others as the equal of commercial bankers' drafts. The depositor paid a standard fee for the service, and signed an acceptance that the cheque could not be 'stopped' except for reason of loss or theft. At first, all 'M Account' cheques were drawn by Head Office, but the system was later delegated to branches, when they became known as 'B Account' cheques.

In addition to handling transactions related to customer accounts, a cashier's duties included dealing with ancillary transactions such as the receipt of utility bills, the sale of national savings, and the payment of allowances on behalf of Birmingham City Council. The value of these transactions was summarised in the 'Clearing' columns at the end of the day, when the cashier balanced the till's cash to the Cash Book.

After totalling each cash column in the Cash Book, the cashier summarised the day's transactions in a two-column 'Receipts and Payments' format. The Receipts column commenced with the value of cash at the start of business, to which was added the individual credit totals. The Payments column similarly summarised the individual debit totals, and was completed with the cash in hand. This latter total was achieved by summarising the cash in hand in the Cash Book (eg): 5 notes; 1 notes; 10/- notes; silver; bronze; copper.

If the 'Receipts' column equalled the 'Payments' column, the cashier 'balanced'; the cash was locked in its bag or box for safe keeping overnight in the branch's strongroom, and the Cash Book passed to whoever was summarising all the Cash Books in the Summary Cash Book.

If the cashier did not balance, a routine to find the cause commenced with other members of staff shouting questions such as "How much are you out?"; "Are you over or short?"; "Have you sold any Savings Certificates?". The third question would follow a reply from the first two that the cashier's cash was over by a round pound sum that equalled a standard certificate sale. One individual cashier was infamous for regularly denying, in this situation, that he had sold any certificates until the evidence was produced from the National Savings Certificate Sales Book. A difference that was divisible by 9 was usually the result of reversed figures eg 72 entered as 27.

A shortage equivalent to a small coin would often result in a male cashier 'finding' it in his trouser turnups, rather than having to report an error to Head Office; after about 10 such reports, a critical warning letter would be received from the General Manager. The ladies, of course, had no trouser turnups, but small coins often found their way to the space beneath the heating pipe that ran along the foot of the counter at most branches. The attitude of Branch Managers to small differences varied - some insisting that even a one penny error be shown; others were more tolerant.

 If none of these 'short-cuts' resolved the difference, a methodical checking of additions ('casts'), the cash count, and examination of the transaction slips followed - the cashier's analysis on the reverse of the MB13s being given special attention. A continuing unresolved difference would result in the Branch Manager supervising the search, and a large difference (particularly a shortage of cash) would result in the attendance of one or more Branch Inspectors. If necessary, the Cash Book would be balanced by following Branch Instruction Number 20 (g) - an 'Over' being credited to Head Office Suspense Account (X305 - 'Unders & Overs'), a shortage entered in the Summary Cash Book (known to staff as the 'Big Book'). In the 1970s, a system of Nominal Account slips allowed both credits and debits to be made to A/c X305; later, computerisation also allowed both credits and debits to be more easily made between branches and Head Office administration accounts. In all cases, it was necessary to report in writing to Head Office that a cash difference had occurred.

This thoroughness in attempting to track down an error was not only a conscientious attempt to protect the Bank's assets, but an essential part of the accounting procedure. Except for the coincidence of compensating errors, a balanced Cash Book proved that all transactions had been recorded correctly in the book of prime entry, without omissions or duplications. Thus, the next stage of the process (updating the branch's ledgers) would begin from a known position.

(A more modern trend in banking generally has been to pay little attention to cash differences, on the basis that time (thus cost) is saved, and the error will turn up in due course, eg by the customer raising a query. This approach inevitably led to poorer standards of cashiering; a decreased customer perception of banking standards; and the elimination of the first basic step in the accounting process. A more useful 'improvement' was the changing of the practice of passing the Cash Book and related Cash to another cashier, from a daily to a weekly basis.)
Part 2: The Ledger
The 'Big Book' referred to in Part 1 was the name branch staff used to refer to the means of summarising the Cash Books for an individual day. The totals produced by this Summary Book were then used for two purposes, to:

   - complete the Daily (later Weekly) Return to Head Office; and
   - provide the means of calculating the total departmental branch ledger balances that resulted from the day's transactions.
The next stage in the branch accounting process was the posting of the individual transactions to the customer's accounts in the Ledger. The method of doing this depended on whether or not the branch had a mechanised system of posting transactions. Larger branches (known as 'Machine Branches') had one or more National Cash Register (NCR) or Olivetti machines that worked with ledger cards. These cards were kept in account number order (within departments) in lockable ledger bins, the cards grouped into manageable sections. Posting was done in two runs for each department - deposits and then withdrawals. After the previous day's transaction slips were sorted into account number order, the relevant cards were extracted from the bins (most of the cards for withdrawal transactions would already have been extracted, a part of the routine when the cashier verified the payment). Interest adjustments for the transaction would be calculated (and independently checked) with the assistance of a chart, written on the transaction slip, and the transaction (principal and interest) then posted to the ledger card. The machine operator picked up the card's existing balances of principal and interest, posted the transaction's values, and the machine posted the transaction to give new balances. The machine accumulated totals for each ledger section, and overall totals. These totals - deposits and payments, for each department, were then agreed to the figures in the Summary Book; this latter task normally performed by the Branch Manager. Both the machine operator and the Branch Manager would initial the posting sheets produced by the NCR/Olivetti, thus proving that the 'two or more officers of the Bank shall be parties to every transaction' requirement of the Regulations had been complied with.

The Ledgers at smaller branches ('Hand Branches') consisted of individual account sheets bound into ledger books. These books had a hard cover, very old ones being leather covered, the more modern ones made of a hard plastic. The binding system enabled individual sheets (when full, or an account was closed) to be replaced; a winding-key inserted into the edge of the ledger loosened the binding straps sufficiently for sheet replacement.

Overnight security for the Ledgers consisted of carrying them into the strongroom, where they resided on shelving. One of the first tasks of the day for a 'Hand' branch was to take its Ledgers out of the strongroom, and place them in account number order on the wooden desks that dominated a large area of the branch immediately behind the cashier's positions at the counter.

Posting transactions by hand was a more flexible system than machine posting, as it did not necessarily have to be done in a single run through the Ledgers. At quiet periods, it would be possible to post the current day's transactions. Otherwise, posting was done in two runs for each department - deposits and then withdrawals. After the previous day's transaction slips had been sorted into order, a clerk would work through the Ledgers, locating the correct sheet by the account number, verifying the correct account had been found by comparing the name or signature on the slip with that on the Ledger sheet, posting the principal amount, calculating the interest adjustment from a chart, and then (if necessary) calculating a new account balance; the last calculation being done when a withdrawal transaction had been posted, or where a series of deposits to one account had been made since a balance was last calculated. The clerk would initial each slip after each posting.

Checking the correctness of the posting was also done in two routines - deposits and then withdrawals. This process (known as 'extracting') was generally performed by two separate officers: deposits being extracted by a senior cashier; withdrawals by the Branch Manager. Forms known as 'Extraction Pads' (official name 'Daily Check Sheet' - see below) were utilised for this exercise: a white-coloured pad with black printing for deposits; red printing for withdrawals. Separate pads were required for each Ledger within each Department. 
The pads were initially completed by copying the account numbers for the day's transactions from each of the Cash Books; in larger branches, this process was done by one member of staff 'calling' the account number to another. The posted transaction was then located in the Ledger by reference to the account number, the principal that had been posted 'extracted' to the pad, the interest calculation checked, and any new balance calculation verified. When all the day's transactions had been extracted, the amounts of the transactions listed on the pads were totalled, in order that:

- the postings could be balanced to the Daily Summary;
- a new balance could be established for each Ledger;
- a new balance could be established for each Department.
The officer extracting the transactions would initial each pad, and another officer would independently verify the casts on the pads and initial accordingly - this latter verification being a precaution designed to prevent a fraudulent entry in the Ledger being 'hidden' by a false total on the extraction pad. As with the 'Machine' system, the Bank's Regulations were complied with, as shown by the initials of the posting clerk and the extracting officer, in addition to those of the cashier.

A similar process was followed for the Mortgage Ledger, the extraction pad, however, was straw-coloured.

In due course, a 'Hand-card' system was introduced as a half-way measure between machine and hand branches. Posting of transactions was made by hand to a numbered card instead of a sheet in a bound ledger, but extraction could be made and totalled by a small, electrically-operated machine, albeit with the same double-checking safeguards as the ledger system. At the Annual Balance, the balances could also be machined instead of being hand-written on to special balance sheets.
Two types of transactions called for different treatment to that referred to above: account closures and account transfers. On closure of an account, the amount of interest accrued on the account since the beginning of the financial year would be due to the depositor. This capitalised interest (known as 'Closing Interest') would, in effect, increase the total credit balance of the ledgers and needed to be taken into account when balancing a particular ledger. Accordingly, a separate note was kept of the cumulative total, by ledger, through the financial year. To accomplish this, withdrawals to close accounts were marked on the Daily Check Sheet (MB 72 - see above) in a column headed 'C', and the amount of Closing Interest noted.

When a depositor chose to transfer their account from one branch to another, the accrued interest on the account was not capitalised, but transferred along with the principal. The customer would complete a two-part Transfer Request form which would be acted upon by the transferor branch, often on the day of receipt unless a transaction was pending, although some branches treated transfers as a once-a-week routine. The transferor branch would write-off the account balance in its ledger, and in the depositor's passbook, marking both 'Account Transferred to XXXXXXXX Branch'. Any associated records would be dealt with (eg Home Safe; Nomination) and the passbook plus the larger part of the Transfer Request posted to the transferee branch, the counterfoil of the Transfer Request being retained for the branch's records. The transferee branch would then open a new account in its ledger and issue a new passbook, the latter being retained until the depositor called and provided a new specimen signature. Both transferor and transferee branches maintained a Transfer Register to record the value of principal transferred, so as to be able to balance their ledgers. These non-cash transactions (ie Closing Interest and Transferred Principal) were not entered in any of the branch's cash books; the specific records maintained for them acting as Journals.

Periodically, at intervals at the Branch Manager's discretion, the total balance of an individual Hand Ledger was verified by a listing of all the account balances within it. This was done with the aid of an add-listing machine; often a purely mechanical device that required the operator to pull a handle after inputting each account's balance - a few fortunate branches would have the benefit of an electrically powered machine that merely required a button to be pushed after each input. But not every branch would have even a hand-cranked adding machine - two small branches would share a single machine, and therefore be required to co-ordinate their ledger balancing exercise.
To accomplish the Ledger balancing operation, it was necessary to ensure each account was totalled - usually done immediately prior to the balances being listed, but sometimes as part of the listing operation. The total of the Ledger would then be compared with the theoretical total as shown by the extraction pads. A discrepancy would result in the individual account sheets being 'called' by one officer to another who would tick the corresponding item on the adding machine list - a cautious Branch Manager would require this check to be made even if the Ledger balanced. The next routine to find an error would be checking the Ledger's arithmetic since the last balancing exercise, and this usually identified the mistake.

The frequency of the Ledger balancing routine quickened as the Bank's Year End at March 31st approached. This annual formality (the Annual Balance) concentrated the balancing exercise for all the branch's Ledgers into a single day.

Part 3: Returns to Head Office
For many years after the Bank's commencement, each branch was required to submit a Daily Cash Return (MB21) to Head Office. This summary of the day's transactions was amended to become a weekly return (weeks ending on a Wednesday) in the late 1960s. Additional returns were also required at each calendar month end, and at March 31st. The Returns were then summarised by the Head Office Accounts Department to produce Bank level totals.
Deposit Slips & Withdrawal Receipts