The morning journal-courier., 1908-01-01
CLEARING HOUSE
It's Genesis and Its Manner of Settling Balances Among
 Banks.
SIMPLE AND YET PROFOUND
The Work as It Is Now Done at the New York Clearing
 House.

the form in which the fathers or the clearing house system knew it. a clear ing house is mgrely a centrally located place where/checks, drafts, bills, notes or other ,Ikinds of credit instruments coming into the possession of the banks are brought to be exchanged flor their equivalent in other similar credit instruments or for cash. Just as in the old original "EXchange," where merchants met to buy and sell commodities, so do the banks through clerks meet to exchange checks or money for other checks or obligations they owe or owed To illustrate we must compare the old system of eX- changing claims against the respective banks with that now in vogue in near ly all the cities of the world having any pretension to financial importance. Under the old system a porter chos- en for his strength perhaps as much as for his known honesty took all the 1 checks upon other banks that came | into his own banks possession and went the rounds from bank to bank 1 collecting his claims in the form of cash, whether bank bills or gold. The result was the carrying of large sums of money through the streets, with the consequent danger of loss by robbery or carelessness. As the banks increased l in number an informal meeting of the porters at one central point to ex- -change checks for cash was a natural evolution. This, however, was cumber- some and oftentimes unsatisfactory be- cause of the lack of knowledge in ad- vance of the claim that would be pre- scented and of the sums necessary to meet them. Finally the banks took cognizance of the necessities of the case and arranged for a central place of exchange, with a manager and clerks to supervise and conduct the exchanges. This was the genesis of the clearing house as 1t exists to-day, and it may be said also that a great many clearing houses are to-day merely places of exchange for items held by banks against other banks.
 As to the present method of clear ing at, say, any of the larger clearing houses, the system in vogue at the New York Clearing House may be cit ed as eXemplfying the modern plan of action. Two clerks come from each bank that is member of the clearing house each business day at 9:30 Ex- changes are made at 10 a. m. Each bank has desk assigned 1t, behind , which sits one of the clerks, prepared to receive checks or other claims against his bank The other. or deliv. cry clerk, has a bag filled with check. against other banks At the stroke o bell the line of delivery clerks move. slowly down and around the room stopping at each other bank desk il turn, laying down the respective bun dle of checks, getting receipts there for, and passing on until they hay, made the round of all the bank desk! and return to their own desks. Wher the delivery clerk returns to his owr desk he finds it piled high with check. left by other delivery clerks. After comparing the totals of these cheeks with his fellow clerks list he takes them to his bank. The clerk remain. ing adds his totals of checks received from other banks and compares it with his original list of checks against other banks which he made up before he Jeff his own bank. The difference between his two totals of checks for and against his own bank is the amount oi balance his Lank owes or is owed Ii l... |. from the other banks he fills out 2 debit slip and hands 1t to the manager If the total he receives is less thar what he has brought from his banl he fills out a credit slip.
 The clerks of the clearing house have memorandum of what hC brought and what he received, and footing them up, the manager knows what each bank owes and what i should receive. The totals Of what 1. owed by all of the banks are tn, clearings, and the differences then ar, alone to be settled for. Usually tn, clearing house sheets are finished anC proved by 10:45 a. m., and fines arr levied for any mistakes made in foot
 
 settle for balances they owe at tn, clearing house. Shortly after 1:30 tn, clerks whose banks are owed sum collect and return to their banks. Diff ferences due are paid, if the sums ar, large, in certificates representing gol, deposited in the vaults of the clearin, house. Small balances are settled il bankn0tps legal tenders and rilvor n copper coins. All balances due at tn New York Clearing House are, there fore, settled in cash.
 Other clearing houses throughou the country pursue very much tn same plan, some of them paying bal ances in cash or it's equivalent, som giving New York exchange, and som cashiers checks, which are later ore scented at the banks issuing them O are passed through the Clearing Hous the next day, and others still have
 variety of ways satisfactory to them selves for settling the differences : There are fully 115 clearing houses i this country and Canada reporting th total of their exchanges each week an , month, and Representing as they q 3 the payments on account of all kind of financial transactions going on a . over the two countries each day, weel ! month and year, they costitute a statis , tical measure of the business of thes countries which is in high degree val | uable.-Frank Greene in Review [ , Reviews.
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