Nashville union and American. [volume] (Nashville, Tenn.) 1868-1875, 1873-10-16
CLEARING HOUSES.


Whaf'They Are and HOW They work.
The Clearing House, as it exists in most
of the large cities and in each of the com.
mercisl centres of the country, is an asso-
citation of banks for the purpose Of settling
in the most speedy and accurate method,
the accounts which daily arise between
these banks. In every city each bank is
continually receiving checks and drafts on
the other banks in the same city. In the
great cities formerly, and in the small enes
now, the practice is to send messenger
from each bank to each bank, and thus col
lect or pay the difference. Thus the clerk
of the First National would take the check
which Jones deposited, and go to the Sec
ond National and get The money. Then
pursuing hiss travel, he would go
round to each of the banks on
which the Podunk bank had drawn
or sent drafts, and get either
the money or collections on the First Ma.
tional therefor. Bat perhaps when he ar
rived at the Third National he would find
in that bank collections against his own
amounting to more than the money he had
with him. he must then either 90 back
and get the money to pay the amount, or
else the Third National must send the col
lections by its own messenger to the First
and thus get the amount due. In practice,
this latter method was adopted, and In ev-
cry urge city there was travelling through
the streets an endless succession Of bank
messengers, crossing each others paths and
hindering each other and other customers
at each bank counter. In New York and
other cities where much bank business was
done on the old "gold basis" system, the
business was further complicated By the fact
that nearly every city bank was the redeem
ing agent of one or more country banks, so
that each country bank sorted its de-
posts of paper money, and when a reason
able sum was accumulated on any country
bank which had q redeeming agent in
New York, or when like sum was
gathered on any New York bank
it was shipped to the correspon-
dent in New York. Then each bank in
New York also sorted its deposits into SIS
many piles as there were other banks In
New York, and daily sent to each, and got
the gold. This process consumed so much
time and produced SO many mistakes and
so much confusion, that finally it was
agreed by the banks in New York TO settle
among themselves but orce week, instead
of every day. So then each bank sent out
its exchanges every day, and on Friday
would settle the balances. But as the bust
ness increased, this plan also produced
trouble, and the least of which was that it
gavespeculative and cunning bank officers
on opportunity to keep always IN debs TO
others, upon which deCt they did part of
their business. Finally, on Oct. 1. 1858, a
plan was adopted by which the first clear
ing-house in this country was established,
aud it has been in successful and beneficial
operation ever since. The plan then adopt
ed has been extended with slight and un.
important variations to every other city
where clearing. house is established, and
works as follows:
Every day at The day agreed upon BY the
rules, each bank sends to the clearing house
a messenger with ali the checks and drafts
on every other bank in the association.
Each clerk delivers TO the manager of the
clearing house a statement showing how
much each of the other banks should pay
his own, and the footing of this statement
shows Of course how much sll the banks
shout pay his own. The amount of each
of these statements the messenger enters on
q blauk prepared for that purpose, so that
it shows when completed the exact amount
which each bank should re GIVE, and the
total shows the amount which all should
receive. Then each clerk gives TO each OF
the others the checks and drafts TO be paid,
with statement of the amount; thus the
First National clerk gives to the Second Ma
tional the check Jones deposited, together
with the drafts from country banks. The
Second National clerk gives to the Fist Ma
tional clerk statement OF the sum be de-
sires to collect and the checks or drafts which
90 to make up the sum- These statements
are copied by each clerk for himself, 30 each
in a very short time knows whether his
bank has TO pay out or will receive money
on the whole bulk of the exchange for that
day, and the manager, by the use of his
duplicate statement, can tell at glance
the whole of the amount Of the exchange
for the day, the whole amount due all the
banks, the amount due each, and the
amount due from each, and these duplicate
amounts, in the hands of the clerks and on
the desk of the manager, must be balanced
before any clerk leaves the room, 80 that
all mistakes are prevented from getting into
the banks. If any occur in the clearing
house, they are discovered, and in some as
sociations the person making them is fined
q small amount. When the statements
are completed and proved, each clerk
goes back 10 bis bank, bearing with
him q statement Of average correctness
showing the total amount the bank
owes ali the others and the amount owed
each, or as the case may be, the amount
drawn from each. Later in the day, at 1
p. NJ. In New York, the debtor banks be-
gin to send to the clearinghouse the
amounts they severaly owe, as shown by the
statements, and these are sant in single
sum, so that the First National sends in one
package all the money 1t owes all the other
banks. The clearinghouse manager receipts
for each amount, and then distributes it, so
that, when, an hour later, the clerks Of the
other banks arrive, each receives In single
pile the amount due his bank from all
others. Thus it happens that for the time
being the Clearinghouse is the
common debtor and common cred
itor of all the banks. 1t owes the Grad
itor banks the balance due them, and the
debtor banks owe the clearinghouse q
sum sufficient to liquidate their balances
due all other banks.
The great advantage Of the system Is
shown by the avoidance OF errors between
banks, and by the saving of time. The
amount of money to be transferred from
the banks to the clearing house is very small
compared with the bulk of the exchanges.
SEWING MACHINES.
Thara IL a rrosnact that the sewing ma