St. Paul daily globe. [volume] (Saint Paul, Minn.) 1884-1896, 1891-08-02

st. Paul clearing house, they know, is
the institution through which the sew
eral banks make their daily settlements,
but what they do not know is Just how
the clearing house is operated. 1t is a
very pretty piece of financial machinery
and simplifies vast amount of bust
ness. If John Smith gives William
Jones his check on the Bank of Mime
sofa. which Jones deposits to his credit
iii the Second National. there must be a
method of settlement between these two
banks, and this settlement is called a
clearing OF squaring of accounts. Every
day each bank receives for deposit
thousands of checks drawn Oh other
city banks, and each day there must be
a settlement. Formerly each bank sent
a messenger to every other bank, return
ing the checks on that bank and collect
ing its own checks. paying or receiving
the balance, as the case might be. This
was necessarily long and tedious OPP
Grafton, and to avoid it and simplify the
proceeding, the st. Paul clearing house
was established, where, in half an hour,
all the settlements are made. The
clearing house is in room set apart
for the purpose in the First National
bank, and there GLOBE reporter went
yesterday morning. and through the
courtesy Of Cashier Bailey was permit
ted TO inspect the proceeding.
Sorting Up Checks.
There are some twenty-three banks in
St. Paul and each has its clearing house
clerk or messenger. Early every morn
ing each bank asserts and collects to-
gether the checks it holds on all of the
other banks, which are arranged in sep
crate envelopes, each envelope contain
ing a slip of the checks with the correct
footing. Shortly after 10 O'Clock these
clerks or messengers meet at the clear
ing house and gather about a long, mar
row table, and the process begins. In
front of each clerk is a pile ofenVe-
lOpes and blank checking slip of pa
per. There is general eX-
change of checks. The Germania
bank, for instance, hands over to the
Capital bank all the checks on that
bank it holds, and receives in re-
turn all the checks the Capital holds
against it, and SO on throughout the
list. When this is completed each clerk
has before him a tabulated statement of
just how his bank stands with each of
the others. The foOtingS of his slip
snow whether his bank gains or loses in
the clearing. For instance, if the Ma
tiOnal German-American bank brings in
checks OIL other banks amounting to
500, eco and finds that other banks have
Its checks for $4,000, it makes a gain
of $4,000 in the clearingS and is Ell
titled to that much from the clearing
house. But if, Tor further Illustration,
the West Side bank brings in other
checks for 100000 and finds there its
own checks for $4,000, it loses $40, 900
in the clearing and must pay that
amount to the clearing house.
When the clerks have made their eX-
changes of checks and completed their
foOtingS, George W. James, the clerk
and deputy manager of the clearing
house, comes Unusually at 1890 a. IN.
prcmpt-aud takes his seat at the head
of the table. In a record book kept for
the purpose he cutters the statement of
each bank. showing the amount, of
checks brought in, as credit item, and
the number of checks against it, as a
debit item, and strikes the balance. If
the balance is due the bank it is cred
itOr bank, and he signs a voucher show
ing the amount due that bank from the
clearing house. If the balance is against
the bank it is a debtor bank, and re-
ceiYes a voucher showing the amount
it must pay the clearing house in settle
ment. Tie gains and losses must. of
course, exactly balance, so that the
money paid into the clearing house by
debtor banks is the exact sum paid out
again to the creditor banks. If any
discrepancy appears some clerk has
made clerical error, and the slips are
checked back until it is discovered,
when fine Of 81 is assessed against the
errng clerk. This. however, does not
frequently happen, as the clerks, though
young. are bright, active hustlers, and
seldom make an error.
Settlements III Cash.
All clearing house transactions are
strictly cash. The cleaTingS are made
at 1880 each day, and at 1880 all debtor
banks must hand over in cash the bal
ances due by them in settlement. AT
y the creditor banks receive In cur
rency the several amounts due them,
and the work of the clearing house is
over for the day. The total of the
clearingS of the several banks make the
clearings of the day. Yesterdays clear
ingS. for instance, were S60l, 424.9l, show
ing that amount to be the total of the
claims the several banks held against
each other. AS stated above, the clear
lllS bouoO bulailNNS III 0ts ou@ dlN al
paid in cash. In some cities cashiers
checks are given in settlement, and
these checks appearing in the clearings
of the next day swell the transactions
TO a larger though fictitious figure.
The clearing house totals do not rep
resent the volume of banking business
done, and are valuable only relatively
that is to say, If the clearings for July,
ISL, are In excess Of the elearlngs for
July, 1890, the presumption is fair that
the banking business IS greater for the