Lexington weekly intelligencer. (Lexington, Mo.) 1871-1887, 1873-10-22
CLEARING HOUSE,

EtTara
Tho prominent pnrt taken by The
clraring houses at the country In
finanriui m~aiters.ince lilo suspension.
a.,d The frequency wifi wllich they
MentioScl IN the now pirers, has
curiosityin regard otiiem
aud the question is frequently asked,
What is II clearing housc2 What are
it's functions, aud what relation does
It sustain to the bnnksi? The follow
sng article from n Chicago piper, is
both historical and explanatory and
viii DO resd with interest by all who
desire information.
THE CLEARING HOUSE,
as Il exists IN most of the large cities
and IN each of the commercial centres
OF the country. is NH association ut
banks for the purpose OF settling In
the most specify amt accurate method
the accounts which daily arise be-
tween these banks. None of these
associations nrc, SO far rs Is Known.
Incorporated by either general on
special nets OF tho state legislatures,
Which fact must he a u interesting II
to those who argue that no great cn-
trnnrise carried on successfully. On
rcptb by the art OF corporate puWcrs.
Daring the pnuie which Is now, as is
hoped. subsiding, the action of the
clearing houses ia the various cities
has had II greater effect upon public
confidence and upon the credit OF in-
divicual banks than has the action of
the government or all other agencies
acting together. Tho UNION of the
banks in the Q associations has
strengthened the individual banks,
aud has Cnablrd each To enjoy u pov-
! ton of the aid which the whole have
been ablc IL give. So much has this
been the case that in smaller cities.
where competition, local ~jealousics
and petty Guarrvls exist to III extent,
and with Il viruienre unknown III
Chicago, the hauk officers have been
obliged for II time To !oim sl allcr
societies, which enabled them 10 resist
more or less successfully The paGic.
In every city each bank is continually
receiving checks und drafts on the
other banks in the same city. Thus,
| John Jones ''uucs business with the
! First National, and Il customer pays
the uloun owing to Jones with a
check on the Second National. Jones
does not send his check to the Second
National for the money, but nc rn-
durscs the check and sends ii with
the rest of his deposit 10 the F.rsi
Natioual, where he gets credit tor il
1T once; also
TIL roDUNK NATIONAL HANK,
The president of which keeps q ccun-
try store, while the cash cr is tccdin"
il ..littlc bunch of cattle" has the First
National for its correspondent in
Chicago. The Podurk receives in
,icp0si! drafts on other banks of Chi
ca.o, aud li:csc are all sent TO the
FIRST National for collection, the
amount to be credited TO The balance
.p"m which the podunk itself will
draw when Scllin. Chicago exchange.
Now nothing would appear more
simple ahd easy than tor the cashier
of Tie First Nstioral to put in his
pockets these c!.cl.s and drafts, and
70 go round to The Second and other
baiiks, anil get The money for them.
Bat there are many banks in Chicago,
each OF which have many ucpo-itors,
and many country banks ana brof;crs
for correspondents, and c:rh of these
city banks has or may have collections
to make OIL each of the others, so there
is in fact an imtcfnninab!e system ui
cross accounts between all the banks
i'll good standing in every large city.
In the great cities formerly, and III:
the small ones now, the practice Is to
send a mcsscnsar ii ON each bank TO
each baHk, and thus collect or .iy tie
difference. Thus the First National
wuLiu take the check which Jones dc
post, Il, and so 10 The Second Ma
iiona! and get the money. Then
pursuing his travel, he woull ="
round to enc!. of the banks on winch
the Poduuk bank had drawn OIL sent
drafts, and get either the money OF
collections on the First Nationa!
therefor. But perhaps When he ar
rived Mt the Third National lie would
find i'll til 1t bank collections against
his own mounting TO more than lc
had money with him. He must then
either go back and get the money Ia
pay the amount, or else tie Third
National must send the collections ry
its W m.ssungcr TO the First, anu
thus get the mount due. In nruc,
tice, this latter Mnciiiou was adopted,
and in every large city there was
travelling through The streets
AN ENDLESS SUCCESSION
of bank messengers, crossing cacl
others p ,tl:. and lIimderIng each Other
and others Customers at each ba.tk
counter. In New York and Other
cities where much bank business Was
done Oh the old gold Dusis' system
tI!c business was further coinpiica,c.
by the TACT thai nearly every city bans
was the rctlccmili. agent Tor one III
mere country banks, SO that c.Cl
country hank sorted its deposits .
paper money, aiid when Il reasonable
slim was accumulated Oh amy couhlrl
lrHuk w'i,ict, had I, retlCcnii;ig agent !,
New York, or when IL Ike STUN wa.
. gathered on ary New York bank, il
was shipped 10 the correspondent i.
, New York. Thea each bank in New
York also sorted It's deposits Into Il;
many piles rs there were other bank:
i'll New 70 X, AID daily seat them [,
each and g 1t the gold. This process:
Consumed SO much time and pro
diced 50 iIIany mistakes and so muri
Confusion That finally it was a-rcu,
!. by tie banks i'll New York To scttl,
anon. themselves but once :: week
, i.isIcad Of every day. so then cacl
bank sent out its exchange every day
and on Friday would settle The bui
al.ccs. Bat II, the business iErr. a>c,
this plan also produced trouble, an,
{ the ict>I Of w..ich was thai it CAV,
:. speculative and cunning bank Iii ,cr!
: am opportunity to keep always i,
debt to others, upon w.ich debts The,
y, did Il part Of their business. Finally
on October /, 1853, Il plan was :lol.
ell by which the first cirarip. lloust
III THIS C untry was cs:abli he'd, ul,t
;. il Las Deem ln successful and ben, iicia
operation ever siEce. The plan ii.cl
adopted has been extended, Will
4 slight and uiimporiani variations, 1,
every other city where Il clra.il in:
housr i, cst"biisht a., and
WORKS AS FoLLows:
Every d:y at The hour agreed apo,
u bv tie rates, each bank sends TO II,
ciruri"" lrUGsr messenger with II!
Ii check. and drafts OH every oIlc
:. bank in The association. turi, rirri
= delivers / o the manager of tie clear
y ing liotse Il statement showing how
mUrl, each Of ll.r other Lai.ks shvu,,
pay his own, and the footing of hi
statement shows, of cour-c, Hou
!, much all the u::,ihs should pay III
4 p,vu Tho uluu1iri of carl, re h.