New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1913-02-03
FINANCE { INVESTMENT
The Clearing House.
FOURTEENTH ARTlCLE)
BY Marc M. Reynolds.

is the New York Clearing House Associa"
ton. Its Official career began On OCTOBER
IS, 1853. 1t is a voluntary organization
but members hold the shares OF the cor
poration which owns the building, DO
signed and erected for the institution III
1896. and since then occupied By IT. Menu
bcrship is restricted at present 10 ihcor-
porated banks, national or state eacn
having a minimum Of 10000, capitai ana
surplus.
Trust companies organized under the
New York State laws may also pecome
members by subjecting themselves 10 the
requirements of the Clearing House con-
stitution. Before any oank or trust com
pany can be admitted the applicant is
examined thoroughly as to solvency by
committee.
Membership in the association - var
liable asset. though the membership fee is
comparatively nominal-s5,nJ for banks
having 100000 or under and $500 fo-
those In excess of 100000 capital. En-
penses are paid by an annual assessment
of 500 each, or more II there be deiicit
There are a great many banks ana
trust companies not members or inc
Clearing House Association, but many oi
the non-member banks and all the trust
companies keep accounts with the clear
ing banks. so the volume " business is
largely reflected In the Clearing House
balance sheet. All the important ciues OF
the United States have clearing houses
and approximately the process OF clear
ing is the same as adopted by the New
York Clearing House Association, which
is as follows
Each bank asserts its checks and drafts
received by It up TO around9:So o'clock each
morning and lists them OH slips printed
for the purpose, giving names of banks
against which they are drawn and their
Clearing House numbers, together with
date and name of bank presenting the
checks. There are also included checks
Of non-member banks which clear through
some regular bank member and postal
and express money orders. The total OF
these slips is entered en- the credit side
of the settling clerks sheet, which con-
tans a list of all the members, and this
total is the sum demanded by the bank
presenting it,
The settling clerk takes this sheet 10
the Clearing House. and just before ~
o'clock the manager OF the Clearing
House mounts the rostrum, with each
settling clerk and delivery clerk before
him. At 10 o'clock sharp the gong rings,
and each delivery clerk with the checks
of different banks all in envelopes or
packages, with slips made out for each.
passes between rows Of desks and hands
the parcels TO the settling clerks, who re-
Ccipt for them on a sheet. The settling
clerks then. after all the deliveries have
been made. total all the slips on the debit
side OF their sheets. and the difference
between the debts and credits is easily
ascertaincd As speedily as possible the
delivery clerks and helpers take the
checks 10 the respective banks on which
they are drawn. where they are examined
as to gcnuneness correct Endorsements.
etc, and the hurry is over. For the pur-
pose Of facilitating the Clearing House
force in reaching a proof banks furnish
one another with small verihcation tickets
showing the total amount OF checks PIE
scented. which the settling clerks use TO
verify the debit entries on their sheets.
Before the managers clerks is a large
sheet having the name of each bank
printed OH il. There are columns TO show
the total debts or credits. As soon IS
the settling clerks come 10 the Clearing
House each one reports his credits Oh
slip: then. as soon as he has satisfied
himself that the amount OF the debts IS
correct, he reports them, and the man
ayers clerks are able To verify the cor
rcctness Of these reports BY the total or
cross operations which naturally must
balance. When 10 errors are found the
business is usually completed by 1913
O'Clock. Experience has evolved simple
methods of discovering errors, aud there
is never much delay in making correc-
lions should errors appear. Is an IN
centive 10 accuracy fines arc imposed
against those making errors; these fines
start at 81 and run 10 SO, graded accord
ing TO the extent Of the mistake. In IN
stances OF unusual delays caused by care
lessness provisions are made for doubling
and quadrupling the fines. When the
managers clerks have completed these
compilations and additions the result OF
their work Is announced by the manager,
who calls off the debit and credit pal
ances in thousands of dollars, and the
provided for that purpose Each bank
having debit balance is required to pay
to the Clearing House manager IN"
amount OF his debit in cash prior 10 10
O'Clock of the same day, and receipt Is
given. After 30 O'Clock the creditor banks
are paid the sums due 10 them and they
give receipt to the manager. This closes
the transactions OF the day. Should
debtor bank he unable or fail TO pay the
amount due as shown on the balance
sheet the other banks which had trans
actions with the defaulting one must
make up the deficit, pro rata Of their
transactions Tho contributing banks
then have claims against the defauitng
one. which IS, Of course, technically sis-
pended. In case Of a forgery or check
not being good. owing to lack OF sufiicicnt
funds or having been mlssent, the item
must be returned TO the sending bank the
same day and the amount refunded. If
only an informality makes the check
irregular the matter may 20 over until
the clearings on the day following, but
the item must be certified first by the
returning bank. The forms OF cash used
i'm settlements of balances are United
States notes, gold certificates, gold coin or
Clearing House certificates for gold on
deposit there, except that for fractional
amounts. for which other moneys are ac-
cepted.
Clearing House gold certificates were
introdl ced before the government Issued
such a form of money. Cold Is held In
capacous vaults of the Clearing House.
and certificates are issued In $500 and