Definition
Entering short is a banking practice in which a bank, upon receiving bills (promissory notes, drafts, or similar instruments) deposited by a customer, does not immediately credit the full face amount of those bills to the customer's account. Instead, the bank makes a preliminary notation recording receipt of the instruments — their existence and particulars — while reserving the actual credit until the bills are paid or otherwise realized upon. The deposit is thus entered in a provisional or abbreviated form, hence "short."
The practical effect is that the customer's account does not reflect the deposited bills as available funds until the bank collects on them. Only upon payment of the bills does the bank complete the entry and post the full credit.
Common Confusion
The phrase "entering short" might suggest short selling, short positions in securities, or shortfalls in account balances — none of which are related. The term is a term of art from deposit banking practice, not securities or investment law. Researchers encountering it in commercial or banking contexts should not conflate it with "short" as used in securities transactions or in descriptions of deficient payments.
Why It Matters in Research
This term appears almost exclusively in nineteenth-century and early twentieth-century banking and commercial law materials. Researchers working in that period should be alert to several navigational points.
First, the practice had direct legal consequences for disputes over when a deposit was complete, when interest began to run, and whether a customer could draw against deposited instruments before collection. Courts examining a bank's liability — or a customer's rights — often turned on whether an entry was "short" or full, making the distinction legally operative rather than merely bookkeeping convention.
Second, the term appears under multiple headings in historical sources. Black's Law Dictionary indexes the practice under adjacent terms (the relevant passage appears in the vicinity of entries on bills and banking) rather than under a dedicated "ENTERING SHORT" headword. Rapalje & Lawrence cross-references it as "SHORT ENTRY" with a citation to Rhode Island authority. Researchers should search both formulations.
Third, the term belongs to a cluster of historical banking concepts — float, collection, provisional credit — that have modern analogs in funds availability law (Regulation CC in the United States). When tracing doctrine forward, researchers should look for how the underlying problem (delay between deposit and credit) migrated into statutory and regulatory frameworks governing holds on deposited funds.
Fourth, because the term is nearly absent from modern legal usage, a researcher who encounters it in older pleadings, banking agreements, or case records may not find it in modern dictionaries at all. Historical dictionaries and period treatises on banking are the appropriate first resources.
Historical Dictionary Support
Black's Law Dictionary does not give "entering short" its own headword entry but describes the practice in the course of a longer discussion of banking customs surrounding the receipt of bills. The relevant passage explains that it was "the custom of some bankers not to carry the due amount of the bills directly to his credit, but to 'enter them short,' as it is called, i.e., to note down the receipt of the bills, their" particulars — the entry as reproduced in the source material breaks off, but the sense is clear: the bank records receipt without posting full credit.
Rapalje & Lawrence treat the practice under the inverted form "SHORT ENTRY" and supply a citation to Rhode Island authority (11 R.I. 119, 121), suggesting the term was sufficiently established by the late nineteenth century to appear in reported decisions. The inverted headword form is a reminder that historical legal dictionaries often alphabetized compound banking terms by the operative noun rather than the verb phrase.
Neither source situates the practice within a broader statutory framework, which is consistent with the period — banking regulation in the United States was largely common-law and custom-driven before the Federal Reserve era. Researchers should not expect legislative definitions of the term in nineteenth-century sources.
Jurisdictional Note
The Rapalje & Lawrence citation points to Rhode Island, and the practice described in Black's reflects English and American banking customs that were broadly shared. There is no indication that "entering short" was a term of art unique to any single jurisdiction, but the legal consequences of the practice — particularly questions of when a deposit became effective — were worked out on a jurisdiction-by-jurisdiction basis in reported cases.