Wood River times. [volume] (Hailey, Idaho) 1882-1915, 1893-10-07
Clearing HUuses.
\. 7. Engineering and Mining Journsl.1

IN institution 10 which mutual claims
arc settled by tho payment IL the
difference or balances. This system,
which originated in London about
one hundred years ago, probably had
its beginnings i" the exchange OF
checks and drafts between . lev Of
tho most important banks. The al
vAntsges arising from it were a. 6rst
but slowly appreciated, but there
came = time early in the present cen
fury when the increasing volume OF
transactions OF the metropolitan hank.
rendered thu use of some such method
OF handling checks absolutely inpera
tive.
The first proposition t. establish q
clearing house in the United STATE.
came from Mr.. Albert Gallatin, who
published in l84l u pamphlet entitled,
"Sux9estions on the Banks aud Cu,>
rency," in which he strongly urge.
the establishment of . general cash
off q in which each bank should place
sum to it, credit proport,onste t.
ITS capital. Each hank WAS to h+
daily debited OF credited for the
balance of its account with oil the
other banks. and it might At any tim
withdrew the excess of its credit
This contains the germ Of the pre- sent
system of the Clearing House in til.
country. Later, in 1853. the New
York banks appointed q committee
on organization and in that same yea,
the present association was formed
Since then tho syst-m has bee,
adopted by the banks OF other cities.
aud at present there is one in every
large city Of this country and Europe
More than that its advantages, among
which may be mentioned division OF
responsibility and saving of time, ar,
30 great that the sys.en has been ap
plied in q modified form to transac
lions other than those of money, such,
for Instance, as the clearing oil
stocks.
The system Of clearing differs con
side'ably in detail among the differ
mt associations. but the principles it,
volvrd are the same for all. Eacf
bank member sends daily to the Clear
ing House two clerks, one designate d
q" . settling clerk. who receives tn,
exchanges from the other banks, and
the other delivery clerk, who d.stri,
hutes the exchanges.
At . fixed hour the operation is
made in the presence of the manage;
his assistant and proof clerk, and the
exchange Of balances is rapidly made
After they are completed the proof
SHEET can be at once made.
1t 10 es.i'y nders,ood that tn.
credits and debts on the proof .h.e,
should be- thu same, and should lik. =
wise the balances, and it is checked
by the footines Of clerks of each hank.
Various means arc taken to discove,
and correct errors, bu, Of these i, i.
unnecessary TO speak here.
The proof sheet shows Which are
creditor hanks and which cehto,
banks. These latter then pay into the
Clearing House tho amounts owed by
Them. following which the creditor
banks receive the sums due them.
The great convenience of thi.
method of paying balances is at once
seen when the magnitude of the ex
changes effected If understood. For
some years pas, in New York about
1000 packages of checks have been
daily exchanged and receipted for i,
about 10 minutes without loss q,
error. Tho amount Of ex hanges q.
handled averages about $4,000. OOt
daily. all settled by the payment o
only $5,O00,O0O to 81 600, 900, or ss,
8 per cent. OF the actual amount of
the transactions. From the orga.iz.
ton OF tho associs.ion up to 1890, the
total exchanges amounted to SS7S.
6O2,a22,O O7; tho total balances paid
amounted to $39.OS6, 454,2O5, or
abou. As per cent.
There arc certain features of the
New York association which ara of
particular intes~s, in connection with
the formstion of an international