The Manitowoc tribune. [volume] (Manitowoc, Wis.) 1866-1878, 1873-10-30
The Clearing House System.

Much is said in the papers about the
operations of the Clearing House, in the
large cities. Very few people who are
not engaged in business know what Clear.
ing Houses are, or what agencies they
perform The following from an exchange
will f6rnish the desired information
The Clearing House system is now just
100 years of ago. 1t was introduced in
London in l773. 1t was not until 1853
that New York adopted the system
Boston adopted it in 1855, and Chicago
IN 1853
The same principle of commercial COL
| yenience, amounting to necessity, which
called banks into existence underlies the
| Clearing Houses. Only very small per
cent. of the drafts and checks drawn
against deposits are presented at the
counter Of the bank in which the funds
are kept. Those checks are sometimes
certified By the bank on which they are
drawn as representing actual funds
Their payment is in that case guaranteed.
Usually, however, they are simply in
dorsed by the person in whose favor they
are drawn, thus made payable on demand.
Prudence dictates that the validity of
every check should be determined with
certainty as soon as possible. If there
are two or more banks in a city. they
balance accounts every day. The carrying
OF specie, or negotiable paper in large
sums on the street was a great incon-
venience, and involved some danger from
robbery. The larger the number Of banks
in any one city, the greater the incon-
venience and danger. The clearance
system is, in brief, an arrangement by
means of which the banks can exchange
their checks upon each other which they
have received from their customers for
collection and settle the difference between
their respective accounts.
The plan cannot be better explained
than by showing its operations in Chi
cago.
the Clearinghouse is located on Clark
street IN d small, plain room. Its MANAGE
ment is intrusted to Douglass r. Hale,
Esq, who has for assistants one settling
clerk and repress entative of each bank:
1t is opened for business at ii in the
morning, At half past II the debit
balances are paid. and at As minutes past
tho aradit ba lone ORC naiI
Ordinarily the Clearing House is fire.
quented only by messengers, At time
like this the Cashiers and Presidents
throng there at the business hour. Each
messenger makes up statement of the
checks he has to offer and the checks on
each bank are presented in a package by
themselves. The manager compares the
list and the packages to see if the foot
ings are correct. If an error has been
made, he notes the fact on the list and
hands it back for correction When all
the statements have been handed in and
verified, the balances are struck. 1t a
bank has handed in checks On its neigh
boring banks &c larger amount than has
been passed in by them against itself, it
is entitled to currency to that amount
1t it has been 'beat, as the phrase is,
it must bring in currency enough to
square its account. Consequently as
soon as the situation has been ascertained
the messenger reports the same to his
bank. Sometimes the 'beaten" banks
draw on the currency in their vaults to
make up the difference. but the usual
method is to sell to other banks enough
exchange, especially New York exchange
to meet the demand. If the discount on
exchange is thought to be too great, the
money is taken from the vaults, and cur
rency is ordered by express from n. Y.