Watertown republican. [volume] (Watertown, Wis.) 1860-1906, 1875-05-19
STORY OF A CHECK.

DIVh1 vi "A
<s65Eears''-The Operations and Machinery
ssf che New York Clearing House-A Vast
.EdDaneial system.
From the New York Telegram.
There. is probably no institution in
&sne country where the business transact
sd aggregates such enormous sums, OF
WATCH the general public knows sc
little, as the New York Clearing
House.
The average stock speculator knows
st Is a place where the banks of New
York settle their difficulties daily, and
from which emanates the weekly bank
statement, which he awaits with fear
and trembling in view of the possible
influence it may exert on ''the market, y
but shat is about all. AS rule, the
tFoc6or, the lawyer OF the merchant is
totally ignorant of the internal workings
VI the association, and it is in view of
this fact that the following sketch will
he found of particular interest:
There are in the city of New York
seventy-four banks, many of them at
remote distances from each other.
Each in the transaction of business daily
receives large numbers of drafts and
checks on other banks, SO that at the
close Of the days business each bank
holds IN it's drawers various sums due
AroR other banks. Before the estab-
Eshment of the clearing house it was
necessary for each bank every morning
to- make 10 it's account with every other
bank and send its porter to present bills
anzd checks from debtor banks for pay
xmspt The balance of their indebted
ness, for that was in the days of hard
ssaney, was adjusted In gold. This
aae4lsed, however, was, SO laborious,
complicated, and dangerous that it be-
came necessary to make balances only
dnce week on Friday, instead of every
morning, course fraught with much
evil Gibbons, in his interesting book
on Ssae Banks of New York, in speaking
a6 this mode of making settlements
says: The weaker and speculative
banks took advantage of this system by
borrowing money on Thursday, which
restored their account for Friday,
and IFS return on Saturday threw them
asaln into the debtor column. In this
say banks distant from Wall street
z.xzsr aged 10 carry an inflated line of dis
soulfts based on debts due to other in
ssSitutions. It became an affair of cum
ming management by some to run a
credit up two or three thousand dollars
with each of thirty or more banks, max
mig total of 800, 600 with which they
discounted bills; consequently the Fri
asy settlement was in reality no settle
sE>ent at all, but simply an aggravation
and an annoyance. The plan Of send
ing porters with the checks and drafts
end to pay and collect balances results
In many plumbers and much confusion. :"
In the work above referred to there is
an amusing illustration OF number of
hank porters collected on the street cor
ner with bags of gold settling their diff
ferences. The following complete his
tory of the establishment Of the Clear
ing House Association, its progress and
the manner in which the business is
conducted. compiled from official sour
ees. will be found of interest, not only
20 professional fnanciers, but to the
general reader.
1t meeting of bank officers, held
August %, 1853, a committee consisting
1uf Messrs. T. W. Edmunds, of the Me-
e.aanics' Bank, A. G. Stillman, of the
Merchants Bank, James Punett, Bank
of America, Richard Berry, of the
eFxadesman's Bank, and J. L. Everitt,
af the Broadway Bank, were appointed
q committee to devise plan for simpli-
fying the mode of making exchanges
and settling the daily balances. This
was done, and on the 18th of October
at the same year the first exchanges Of
fhe Clearing House were successfully
made, and have continued to be made
ever since without interruption. The
gentlemen above-named were appointed
a regular Clearing House Committee
and performed the duties Of their office
for SIX years.
BANK ASSOCIATION.
ON the 18th of May, 1854, Mr.. George
CS1rtiss submitted plan to the bank
officers for the organization of bank
association with constitution for then
government, which was on the 9th Of
June of the same year adopted by fifty
banks. Mr.. Thomas Tieston, Presi.
dent of the Phoenix Bank, was elected
chairman, and held Office for five years
Mr.. Shepherd Knapp, President of tine
Mechanics Bank, was next elected anO
acid office for one year. On October
). 1860. Mr.. Caleb 0. Halstead, Presi
dent of the Manhattan Association, was
elected chairman. but his death occur
ring only six days after, MIR. Ti lie s
uas again chosen, and continued III OF
ace for three years. On his res1gna
tion Mr.. John Q. Jones was elected his
successor and held office until October
@. 1871, when Mr.. y. ID. Vermilye was
excited. At that time resolution was
passed limiting the term of office to two
yeara, and on the expiration of Mr.. Yer
HaIlye's term, Mr.. Charles F. Hunter
President of the Peoples Bank, the
present chairman, was elected.
But in the minds of the readers unac
guainted with the manner of conduct
ing this business the question naturally
arises, what is Clearing House We
answer, that it is system by which {
large number of bank ledger accounts
with numerous entries are closed, ano
which enables banks to settle daily will