Frostburg mining journal. [volume] (Frostburg, Md.) 1871-1913, 1891-03-21


t IT,, emt meeting in New Orleans. The
I'll irct of national clearing house has
'HturalIy attracted much attention of
late years, in view of the great efficiency
of the clearing houses at the financial
enters. The effect of the local clearing
houses has been to enable Il larger
amount of business to be safe,y done
upon a smaller proportion of cash, and,
apart from this, the banks have been
brought closer together and made more
willing to extend mutual support to
each other in time of need If all the
banks If the country, by means of a
national organization, could be led to
p ace more reliance on each other than
they do now, the dangers of financial
crises, rs far as they affect the banks,
would no doubt be very mucl obviated.
In this respect, however, the present
status is a great improvement upon what
formerly existed.
In times of financial apprehension the
country banks do not hasten to harass
their correspondents at the centers, as
they did i'll the past They are not as
likely to give way to unreasoning panic
and draw wildly for their balances for
no other reason than to lave them in
cash in their own vaults. Increasing
forbearanCe in this respect may be traced
through tie panics of 1857 1860, 1878,
1874, and 1890. The habit of associating
and consulting together in clearing
houses in the American Bankers Asso.
citation and in State associations of bank
hax l,,1t IL fl,o
peated proofs of the strength of the
associated banks at the money centers,
given during the stress of the panics
mentioned. AS it is now, the New York
Clearing House Ass, citation comes near
to being national clca ing house. AL
most every bank in the country of any
importance keeps an account in some
institution in New York, and the checks
drawn by them on their New York cor
respondent form a very large share of
the clearings.
But on the other han d, an immense
number of checks drawn on banks, not
only in other financial centers, but also
i'll all parts of the country, however re-
mote or isolated, are deposited in the
New York banks. These, of course, can
not be handled in the clearing house.
but have to be sent to the drawee bank
for collection. Such of these last men,
toned checks as are drawn on banks in
other important money centers, whic'l
have amounts due them from banks in
New York, are the ones that seem most
fitted for clearing operations, and it has
been suggested that step toward
national clearing house might be taken
by uniting, by some organization, the
banks in the cities of Boston, Provi-
dence, New York, Philadelphia, Albany,
Baltimore, and Washington.
All these cities lie within few hours
journey of each other, and it seems
quite feasible to es ablish i'm New York
city clearing house to effect exchanges
between these cities. New York lies
centrally, and doubtless the exchanges
could be effected every day with great
reduction of the cash now used in max
ing collections between these places.
For centers more distant, such as Chi
cago, St Louis, 0 naha. Kansas City,
Cincinnati, Cleveland, New Orleans,
Pittsburg, Charlie ston, Richmond, Buff
falo, some central point equidistant be-
tween the E st aud West II light be Sc
lected where the mutual collections
could be sent and exchanged Whether
lesser centers or sing lie banks could prof
itably be included i'll such an arrange
ment would be question.
Whatever point in the country, how
ever central, were selected for the Local
of r ri.
house, of which all banks alike could
become members, it would be, for some,
on account of distance, disa(lvantageous
to send checks to. Probably the most
feasible plal would be to establish a
clearing house in New York, the natural
financial center, of which any bank
might become member. To this place
all checks might be sent either for COL
lection or exchange, from all parts of
the country. the balances when paid
being deposited with the New York COR
respondent of the bank entitled to the
balance. The work of such national
clearing house would doubtless be i'm
mense, but it can be easily carried out
if the banks agreed to it, and its opera
tions would be entirely independent and
not interfere in the least with those of
local clearing houses.
The utility of it, in all respects, over
present methods is not so certain, and
therefore the greatest difficulty would
be to get the banks in all the important
centers to agree to organize for such a
purpose. In fact, there does not seem
as yet to be the pressure of necessity
that, as rule, exists when radically
new methods are adopted, however val
liable they may be in themselves.
[Rhodes'S Journal of Banking