This section is from the "Practical Banking" book, by Albert S. Bolles.
The regulations of the San Francisco Clearing-house are very similar to those at New York. As at Philadelphia, there are two clearings daily, these being the only Clearing-houses in the country having more than one. The hours of clearing are for ordinary days ten o'clock, A. M., and two o'clock, P. M., precisely. At half-past two o'clock, P. M., the debtor banks pay their balances to the Clearing-house, and at three o'clock, P. M., the creditor banks receive their balances at the same place. On Saturdays the exchanges occur at eleven and half-past eleven o'clock, the settlements being made at twelve. About ten minutes are occupied in getting the proof, about thirty minutes in receiving debit balances, and about twenty minutes in paying credit balances. United States certificates began to be used in paying balances March 5, 1883, and Clearing-house certificates June 5, 1883. Formerly the gold balances were paid in gold coin, the silver in silver coin, and the currency in currency. This was the case before the resumption of specie payments. There are no fines or penalties other than suspension or expulsion. If a bank defaults in the payment of its balances, the amount of that balance is furnished to the manager in memorandum checks by the banks to which the defaulting bank is a debtor, in proportion to the amount due each, and the claims of the banks which have balances against the defaulting bank, and the claims of the defaulting bank against banks which may, in that exchange, have exchanged with it, shall be placed in precisely the same position as before the exchanges commenced. New members must pay an initiation fee of $500, as compared with $200 for the original members. To provide for the annual expenses, each bank also pays an annual subscription of $150, any balance required being made up by a pro rata assessment according to the amounts cleared by each bank. The work at the Clearing-house is in charge of the manager and one clerk.
At Baltimore the banks make their exchanges daily at the National Union Bank of Maryland, which is the depository of the associated banks. The hour for clearing is 8.45 o'clock, A. M. The balances are paid by the debtor banks at ten o'clock, either in legal-tender notes or certificates, and are received by the creditor banks at noon.
At New Orleans the hour for clearing is nine o'clock, A. M. At 11.30 o'clock, A. M., or as soon thereafter as the amounts can be made up and proved, the creditor banks receive from the manager at the Clearing-house in settlement of their balances checks on the debtor banks, which checks are not transferable, and are to be in no case sent through the exchanges. The liability of the associated banks on such checks ceases at two o'clock, P. M., on the day of their issue. Any bank unable to pay its balances is required to notify the manager and other members of the Association, and if any bank fails to respond to the manager's checks before one o'clock, P. m„ such checks are to be returned to the Clearing-house. The manager at once notifies the other associated banks, and strikes from the lists the exchanges of the defaulting member, which is required to hold in trust for the other banks the checks received from them until called for by them. The manager then makes a supplemental adjustment between the other banks, without recalling the checks already issued by him upon the responding banks. He charges back to them the checks brought by them against the defaulting bank, and credits back to them, 1st, the checks brought against them by the defaulting bank, and, 2d, the amount of the manager's checks issued to them upon the defaulting bank. He then issues supplemental manager's checks for the settlement of the balances which result from these debits and credits. The defaulting bank ceases to be a member of the Association, and can only be readmitted by a three-fourths' vote of the Association as in the case of new members. Each member of the Association is required to keep on hand in coin, United States legal-tender and National bank notes and sight exchange on New York, twenty-five per cent, of its net liabilities subject to check as they appear each morning after the exchanges, and twenty per cent, of such liabilities in coin, legal tenders, and National bank notes. Every member of the Association is required to furnish to the Association every Saturday morning a report of its average condi tion for the week ending Friday morning, showing, 1st, specie (coin); 2d, United States legal tenders and National bank notes; 3d, cash items; 4th, sight exchange on New York; 5th, foreign exchange; 6th, due from distant banks and bankers; 7th, loans and discounts; 8th, other cash assets; 9th, circulation; 10th, deposits (net, after exchanges); 11th, due distant banks and bankers, subject to check; 12th, other liabilities to banks and bankers; 13th, other cash liabilities. Members are required to pay an admission fee, and the expenses (except printing, which is shared equally) are apportioned according to the average amount of the clearings. No exchanges are made with members before a-quarter to ten o'clock, A. M., except through the Clearing-house. The exchanges are delivered at the Clearing-house in sealed envelopes. The clerks, as well as the manager, must give bonds with sufficient sureties. Minute rules prescribe the manner in which bundles of currency must be assorted, wrapped up and sealed for greater security when designed to be used in paying balances.
At Cincinnati the routine is substantially the same as at St. Louis, the former having served as the model for the St. Louis, Louisville and Columbus Clearing-houses. At all of these, except St. Louis (as formerly at this, also), the official statements of clearings and balances represent (or lately did) the total of both sides of the Clearing-house proof, and must be divided by two to get the true clearings. The same was formerly the case at Kansas City, Milwaukee and St. Joseph. The hour for making the exchanges at Cincinnati is two o'clock p. M. At half-past two the manager, in settlement of balances, issues his checks or warrants upon the debtor members to the creditor members, which must be promptly paid to the satisfaction of the latter. If payment is not made before four o'clock on the same day the Clearing-house must be notified immediately, otherwise the other members are free from responsibility on such checks. In case of default the other members must make up the deficiency in proportion to the checks they have cleared on the defaulting member on that day, and the latter is required to return the checks it has received unmutilated, and in case it refuses or cancels such checks, the same are treated as if returned.