Cash payment

“ Cash-payment is not the sole nexus of man with man,—how far from it! ”

“ The Cash Credit is always for a limited sum, seldom under £100, given upon the customer's own security, and that in addition of two or three individuals approved by the bank, who become sureties for its payment. ”

“ The custom of keeping the spare cash reserved for immediate use or against contingent demands, in the hands of a banker, and making all payments, except small ones, by orders on bankers, is in this country spreading to a continually larger portion of the public. If the person making the payment, and the person receiving it, keep their money with the same banker, the payment takes place without any intervention of money, by the mere transfer of its amount in the banker's books from the credit of the payer to that of the receiver. ”

“ When we receive the cash for the men’s notes at pay day, we credit “Mr. Bills Receivable” with the amount taken in, thus clearing him of this amount and making him no longer responsible for it. We have previously, of course, entered this amount on the debit side of the Cash Book, for the same reason noted above. When the coupons are presented by the men in payment for articles purchased by them, we credit “Merchandise” (or the proper department of the Exchange, if departments are used) with the amount taken in. ”

“ No bank could escape failure if a large percentage of its note holders and depositors should simultaneously demand cash payment.*28 The paradox of a panic is well expressed by the case of the man who inquired of his bank whether it had cash available for paying the amount of his deposit, saying, "If you can pay me, I don't want it ”

“ A business firm would hardly pay car fares with checks and liquidate its large liabilities with cash. Each person strikes an equilibrium between his use of the two methods of payment, and does not greatly disturb it except for short periods of time. He keeps his stock of money or his bank balance in constant adjustment to the payments he makes in money or by check. Whenever his stock of money becomes relatively small and his bank balance relatively large, he cashes a check. In the opposite event, he deposits cash. ”

“ Fifty per cent. of the actual net amounts was to be paid in cash upon acceptance of the accounts; and the remainder, with specified deductions and additions, was to be paid immediately upon payment of the accounts. ”

“ If the cheque is paid into a different bank, it will not be presented for payment, but liquidated by set-off against other cheques; and in a state of circumstances favourable to a general extension of banking credits, a banker who has granted more credit, and has therefore more cheques drawn on him, will also have more cheques on other bankers paid to him, and will only have to provide notes or cash for the payment of balances; for which purpose the ordinary reserve of prudent bankers, one-third of their liabilities, will abundantly suffice. ”

“ And it is true, as we shall see, that in communities where banking is largely practised, the use of deposits as currency by transfer from hand to hand is so extensive, that a bank in good credit can rely upon their being withdrawn so slowly, or rather to so small an extent, as to make it unnecessary to have cash in readiness for the payment of more than a small proportion at any given moment. ”

“ But if a man happens to have an account running with Mr. Leask, do you say that the payment is made to him in cash rather than put in to the account?-No, I don't say that, because the man might make no difficulty in applying it to his account, if he had one; but we are applying for men from different parts of the country who have no account with us, and in these cases the money is paid over at once. ”

“ Here a second sense of priority is involved: when cash becomes available to pay off outstanding claims only over a period of time, the claimant with 'priority' in this second sense receives his cash first in time; the nonpriority claimant may receive full payment, but receives it later. ”

“ A Cash Book is a book of original entry containing records of all transactions which involve either the receipt or payment of cash. The records in the cash book are in fact a complete account with cash. We debit cash for all money received, and credit cash with all money paid out ”

“ The cash discount allowed is usually so large that a purchaser can ill afford not to take advantage of it. Two per cent. discount for cash within 10 days, for example, with "60 days net" is equivalent to a return of 12 per cent. per annum on one's capital. In actual practice the allowance is often even more liberal. Hence where competition is at all keen the business man is practically forced to adopt the system of cash payments, depending upon his bank to advance to him, on his own notes, the necessary funds. ”

“ O reader, to what shifts is poor Society reduced, struggling to give still some account of herself, in epochs when Cash Payment has become the sole nexus of man to men! ”

“ A balance sheet should therefore be so arranged that the condition of [Pg 25] the business, viewed from the standpoint of its ability to pay its debts, will be clearly and easily determinable. Cash is usually the only medium used for the payment of debts. In the regular course of business, debts are incurred which come due at different dates. Hence it is not necessary to have on hand at a given time cash sufficient to pay all of the debts of the business. Certain classes of debts will not wait. The sums owed employees for services must usually be paid when due. ”

“ A payment of $25,000 in money to the First National Bank will be all the cash required to pay checks representing $175,000. The economy in the use of money is still better illustrated by the following statement of an actual transaction. ”

“ A man who pays cash daily needs to keep cash for daily contingencies. The system of cash payments, unlike the system of book credit, requires that money shall be kept on hand in advance of purchases. Evidently, if money must be provided in advance, it must be provided in larger quantities than when merely required to liquidate past debts....
But we have seen that to increase the rate of turnover will tend to increase the price level. Therefore, book credit tends to increase the price level....
1 (c) . The habit of using checks rather than money will also affect the velocity of circulation ”

“ In the system of cash payments, a man must keep money idle in advance lest he be caught in the embarrassing position of lacking it when he most needs it. With book credit, he knows that even if he should be caught without a cent in his pocket, he can still get supplies on credit. ”

“ Would a system of cash payments be an insuperable obstacle in the way of a man of steady and respectable habits and good repute, obtaining advances in provisions from any merchant in his neighbourhood?-I believe it would help him very considerably. I consider that if it system of cash payments was introduced, [Page 418] a man would find a great deal more facility in getting goods at the lowest possible price from any person who might wish to put up a store in his neighbourhood. ”

“ Number 71, Local Governmental Powers (the “Local Governmental Powers Law”) .
24) “Line items” are the payments specifically itemized in the budget law.
25) “In kind” means a transfer or exchange in which payment takes the form of tangible
property, intangible property, or services rather than cash.
26) “Liability” is a present obligation arising from past events, the settlement of which is
expected to result in a future payment in cash or in kind.
27) “Outlay” means a payment to liquidate an obligation other than borrowing. ”

“ It can only consist of receipts and expenditures, and so it is said to have two sides, a debtor and a creditor side.
All accounts are kept in money. If goods be bought, they are estimated by the money paid for them. If a debtor give a bill of exchange, being a promise to pay a certain sum at a certain time, it is put down as worth that sum of money. All the tools, furniture, horses, &c. used in the business are rated at their value in money. All the actual coin, bank-notes, &c., which are in or come in, being the only money in the books which really is money, is called cash. ”

“ The claims against customers, both on note and open accounts, constitute an intermediate step in the conversion of merchandise into cash. At the time credit is extended to a customer it is expected that he will pay the amount due. The experience of every business man shows, however, that during each period there is a shrinkage in these claims due to some customers failing to pay the amounts they owe. ”

“ The whole $200,000.00 of bills are not discounted in a lump, but gradually, so that some are always maturing and bringing money in to meet the checks of customers, in an endless chain of deposits and discounts. It is found in practice that $200,000.00 of loans and discounts may be easily carried on $50,000.00 of cash. Thus, the loans of all the National banks in the United States in October, 1894, were $2,000,000,000.00, and their cash (including silver certificates and silver dollars) was a trifle less than $400,000,000.00, or only one-fifth of the amount of the loans. ”

“ A private individual usually feeds his purse from his bank account; a retail commercial firm usually feeds its bank account from its till. The bank acts as intermediary for both.
In a given community the quantitative relation of deposit currency to money is determined by several considerations of convenience. In the first place, the more highly developed the business of a community, the more prevalent the use of checks. Where business is conducted on a large scale, merchants habitually transact their larger operations with each other by means of checks, and their smaller ones by means of cash. ”

“ I could have been paid in gold had I wished, but I had preferred a weekly cheque, and I took care never to cash this cheque at our own offices in Waterloo Place. I did not wish it to be known that I had no banking account. As a matter of fact, I now had one, though I should not have [Pg 10] liked to disclose it to the Income Tax Commissioners. The reason for this reticence lay in the smallness, not in the largeness, of my balance. I had learned that in certain circumstances it pays you to appear better off than you are. ”

“ Formerly, when credit was a considerably less important factor than now in commercial transactions, book-keeping was frequently limited to an account of receipts and payments of money; and in early times, before money was in use, to an account of the receipt and issue of goods of different kinds. Even now what may be called the “cash system” of accounts is almost exclusively used by governments, local authorities, and charitable and other institutions ”

“ They have ultimately to pay for no more credit than they actually use, because the drawer will pay back to the payee, in case he has bought and paid for the entire credit drawn, the cash difference; while on the other hand, arrangements can always be made beforehand, by which money need not be deposited with the banker at home any faster than it is actually called for abroad; and while also a good customer of the bank drawing the credit, one who keeps ordinarily a good line of deposits, may pay for whatever credit he has used when he returns from his trip. ”

“ If I should deliver to the American jobber my check today, and he should send his check to the American importer and the American importer should send a draft to the English exporter, and the English exporter should deliver his check to the wholesaler, and the wholesaler should send his check to the manufacturer, debts amounting to $88,000 would have been paid and credit amounting to $88,000 would have been canceled; and yet not a single cent of cash in the form of coin or currency has been used. ”

“ A dealer who has sold goods, for which he is to be paid in six months, but who desires to receive payment sooner, draws a bill on his debtor payable in six months, and gets the bill discounted by a banker or other money-lender, that is, transfers the bill to him, receiving the amount, minus interest for the time it has still to run. It has become one of the chief functions of bills of exchange to serve as a means by which a debt due from one person can thus be made available for obtaining credit from another. ”

“ Paper currency, it may be said, was authorized by that act, which is undoubtedly true; and it is also true that the bills or notes of the bank were made receivable in all payments to the United States, if the same were at the time payable on demand, but the act provided that the corporation should not refuse, under a heavy penalty, the payment in gold and silver, of any of its notes, bills, or obligations, nor of any moneys received upon deposit in the bank or in any of its offices of discount and deposit. ”

“ Economy of Redemption Money.—It is thus evident that the employment of $200,000 cash as a banking reserve has made possible the existence of a more than sixfold volume of circulating medium—currency. Against each $1,000 of deposit liability there need be only $150 of actual cash. The bank customer, however, thinks of his deposit claim as money, and it really serves him all the purposes of money. The right to have the money when desired is as good as the actual money, is more convenient, and is as readily and as serviceably transferred. ”

“ It enables the banks to sell their credit and make a gain, to use a part of their money deposits to buy mercantile paper with, and so get a bank interest on them; it enables dealers in commodities [302] to realize in cash minus the discount the sum of what they have sold on time; and by means of accommodation notes or bills, which only differ from the others in that there is no actual debt between the parties, business men may swell the volume of their business temporarily, and non-business people may borrow small sums for convenience or emergencies. ”