Evening star. [volume] (Washington, D.C.) 1854-1972, 1927-07-17
CHAPTER VIII.

Paris ana william "A. MearneS. Ike
view copy furnished by Charles Howe
of the American Security & Trust Coz
CHAPTER VIII.
The Washington Clearing House
Association was not organized until
May II, 1887. Up to that time the task
of making settlement between banks
must have been more or less serious
matter. There was no common meet
ing place for the exchange of checks.
Other cities were operating clearing
houses, and the methods in vogue in
these cities must have been thorough.
ly familiar to our bankers. Seven
banks united in forming the first clear
ing house, namely: Riggs & Co., Citi-
zens, Central, Columbia, Metropolitan,
Republic and Second.
Organization was effected by the
election Of Gen. A. j. Creswell presi.
dent, George H. B. White secretary
and manager and Messrs. Creswell,
Riggs. Bradley, Swain and Ruff as
the first standing or clearing house
committee.
Between 1887 and 1900 two banks
went into liquidation and five others
joined the clearing house, so that in
1900 there were ten members in good
standing. Probably then, as now, the
member banks undertook the daily
clearings for the non-member banks.
In like manner non-member banks
may take advantage of the Federal
Reserve system through a member
bank. but the latter must assume re.
sponsibility. Member banks protect
themselves in both instances through
| insisting on non-member banks carry.
ing satisfactory balances on deposit
with the members.
#. r.. Wallace Manager.
F. r. Wallace was elected manager
of the clearing house in 1892 and held
the position through 1900. The stand.
ing committee at that time was com.
posed of Thomas Hyde (chairman) and
Messrs. Ruff, Corson, Eckloff and
Moore.
By the old method of making settle.
mentS messengers made the daily
rounds carrying the cash needed to
settle their banks obligations. At the
same time they collected all payments
due to their banks and in this way fire..
quently found themselves in possession
Of intentionally large sums of cash.
The clearing house at once did away
with much Of this work. Each mem.
Der bank sent messengers to the daily
clearings with all checks drawn on
funds in other banks In envelopes with
totals appearing on the outside. These
are confirmed then checks are bal.
anced. One bank may have $50, 200 in
Riggs checks and the latter may have
$4,000 in checks drawn on the same
institution. Simply offset $4,000 and
the Riggs still owes $4,000, and this is
all the actual cash that figured in the
transaction. This. is settled by pay
ment Of currency or exchange. Checks
would be taken to the home bank and
the bookkeepers would make entries
and return to the bank responsible any
checks marked, Returned for proper
endorsement" mot sufficient funds"
mo such account here" or any other
reason. Debtor banks pay debts to the
manager of the clearing house. who
then pays the bank.
Non.Members.
1t is mentioned that in 1900 three
trust companies, two of the largest ma.
tional banks and several private
banks were not members Of the associ.
alton. Then, as now, the daily clear.
ings meetings were held at the Ma.
tional Metropolitan Bank
Now. however, proceedings are en-.
tirely different. Balances are reached
In the same manner and debts are
settled by debts and credits to the
member banks through the Treasury
Department direct with the Richmond
Federal Reserve Bank, Of which our
national banks are members.