Deseret evening news. [volume] (Great Salt Lake City [Utah]) 1867-1920, 1899-05-20
Operations Of the Salt Lake Clearing House
Explained.
HOW EXCHANGE IS CONDUCTED
Checks MoncyBetwcen Gold Siycr-orgn
system-riethods During Currency
Famine.

how much COZ. would have % BE- trans.
fcrrcd every DAY but Tor the banking
ana clearing buHlncvr.
WHAT cLEAniNus SHOW.
BANK cioafings show the mutual bust.
ness transacted through the medium
of The banks Tor the previous a hour.
They show only the amount that each
hos transacted for the others. They do
not nhuw tile business 81 each bank
with It's own dspuHlturr, hut the bust
ness each hiss transacted with the de-
posiiora uf other banks. The amount u
those cirnringa " a good. though not
an infalliblc. Index of the volume u
business.
bank clcarinEu," remarked Cashier
! Geo. ~, Cannon, do not accurately r..
present the actual bunineaH transacted
IN any place, The oleaHngr ar' usually
REGARDED nH a barometer % the amount
~ buflncHs carried on. but they may
be made 10 show far more transactions
than actually occur Perhaps this u
done sometimes In periods " imitation.
ana during boom times In ambitious
'''rhc mannt. In which the bank
civaHnEa could BE- made a. show "a
fictitious total ~ business" said Hank.
- Mccormick, would BE- this suppose
upon balancing up u were found that
aus bank owed another bank 80 90.
and that the bank owing this amount
should simply give a check fof the sum
due. In such event the creditor bank
could either draw the money ur turn
~ tho check 10 the clearing house next
day, ana uEain receive credit Tor the
amount IN the clearing house returns.
once more this debt might be- paid BY
check from the debtor bank. In this
way the $1,000 might figure for each ~
several days az an additional transac-
ti0n. Whereas. u n only one iicm or
bona fide exchange repeated from day
10 day"
on tho other hand. In many eases
chcchn cashei Tor other banks DO not
always. 30 through ~ clearing hotiae.
come In after the days cicarlnFs have
been made. the bank that caahen them
may az once present them Tor payment
60 the banks on which they are drawn.
and those checks DO not 20 through the
clearing house.
returns might be- misleading nn an In
dicator Of the business done. me- shown
By the total clcafinFn Tor any day or
week" remarked Manager Howard
u the clearing house. This ~
due a. the practice N transferring cur.
rency tor eastern ,xchnnge, A hank
which has much money due a. u IN
omaha. for example. may 70 tn bank
which desires tn make payments In
omaha ANA has uu money there, aud
sell 20 that bank eastern exchange Cor
money IN omnhal for money IN Salt
Lake city. This transfer ~ credit, a.
avoid TN handling ~ the money ltaoif.
h. one ~ tn principal convenience
% the banking System, one bank,
which has holdings In omaha, might
riyr o. the other draft on the Omaha
bank for tio0ooli aud the other would
pay Tor this money In omaha by Eiy-
iuF Cashiers check. which IL pfar.
ilcally bank check used between
banks themselves. This cashiers check
would then no through tho clearing
house and would look like trannnr.
tlun ~ 10000, while n II only an ox-
change ~ ~ credit In omaha Tor a
credit In Salt Lake Of that amount II
does not represent a business deal of
iiVp.pQQ but only shows the method u
bankers In transferring their money
from one city 10 another"
This does not. aa q rule, afect the
relative showing. TOT such transactions
are entered perhaps ~ much IN one
year ~ N another. aud In all clearing
houses alike.
eMorcoyrr." said Merchant Cutler.
the clearing house rrturns do not AZ
all show the total business done. A
great number % merchants, especially
the smaller ones, do not use checks IN
making payments, but pay money ana
receive money over the counter IN most
or their transactions"
ORIGIN or EXCHANGE,
Men had not traded with one another
very long, In TN early ages Of man
kind, before they found out. 40 political
economists assure Us, the inconyrni-
encca of barter. 50 they invented
money, "a medium of exchange, Ana
those who frequently traded with each
other since the use uf money became
general, soon discovered that ID was
absurd 10 pay a sum 81 money Tor what
was bought and then 10 receive II back
for what was sold. II was found 10 be-
better 10 estimate IN terms OF money
the value ~ the articles exchanged and
only pas the difference In actual cash.
Originally the metallic money was de-
poHltod with the goldsmltha and bank.
err. ordvra 10 pay this money 90 per-
sons named In tho order would be
written by the owners Of H. and the
request would be- compiled with by the
bankers. Then came the discovery
that these written notes could be- sold
IN N they were money itself. ana that
u persons traded with the same banker
they need not handle the money az am.
but simply write out orders on their
banker. who would honor tho checks 40
written ana mako the proper transfer
In his books. Finally, the bankers
themselves arranged their accounts
with each other 50 as 10 avoid tho ln.
convenient transfer ~ money from day
10 day 10 each other, and there has
arisen what n called the clearing nya.
tom, which In the subject OF this article
orders 20 banker 10 pay money.
mean that he IN % pay metallic money
or something else that can al once aud
without cost be converted into metal.
He money. Paper money IN as acccpta-
Bile, often more 10, than gold or silver
money, because Of It's lightnoss ana
small bulk. orders 20 banSn serve the
same purpose as money In a limited cir
cle,--among those who know that the
an order iapued by the government.
which viii be honored by any bank Ia
the country. because Of the faith men