This section is from the "Practical Banking" book, by Albert S. Bolles.
At Pittsburgh the hour for clearing is nine o'clock A. M., and the average time occupied is twelve minutes. The checks to be exchanged are put up in large, unsealed envelopes. The debtor banks pay their balances in cash, inclosed in sealed envelopes, between 10½ and 11 o'clock A. m., and the creditor banks receive them between 11 and 11 ½ o'clock a. m., a receipt being given in each case. All checks sent to the Clearing-house are marked with the stamp of the bank sending them. The manager compiles periodical statements showing the condition of the associated banks and of the banks which clear through them.
At Providence, where there is no regularly organized Clearing-house, nineteen banks clear through the Merchants' National Bank, and fifteen through the National Bank of North America. The routine, as stated by Mr. John W. Vernon, Cashier of the Merchants' National Bank, is as follows: Each bank, instead of assorting the checks and other clearing matter it holds, and depositing the packages made up against every other bank, deposits its exchange in bulk with its clearing bank, and the latter assorts the checks and notes, making up new packages against each bank. When the two clearing banks have finished assorting the checks and other items and making up the packages, they exchange with each other, settling the balance in New York or Boston funds. The time required for assorting and exchanging the checks and notes is such that, although the exchange is to be deposited at 10½ o'clock A.M., the clearing banks are not ready to settle balances until about one o'clock. Between one o'clock and three p. m. the clearing banks pay the creditor banks, and are paid by the debtor banks in cashiers' checks on New York or Boston banks, at the option of the payee. The banks clearing through the National Bank of North America stamp all the checks deposited by them with a circle containing the clearing number of the bank. Each bank clearing through the Merchants' National Bank stamps the checks it deposits with a triangle containing its clearing number. National bank notes as well as checks are included in the exchanges.
At. Milwaukee the hour for clearing is 10½ o'clock a. m. The various stages of the work occupy about an hour. Debtor banks pay their balances to the Clearing-house at two o'clock P. m., either in lawful money, National bank notes, or such Clearing-house certificates as may be agreed on from time to time. At 2¼ o'clock p. M. the creditor banks receive their balances. In case a bank defaults in the payment of its balances the other banks are to make up the deficiency on the manager's requisition in proportion to-their balances against the defaulting member, and until the settlement is completed the exchange is in trust only, and the vouchers remain the property of the members presenting them and are to be returned if required. Checks not good are to be returned before I2½ o'clock to the member sending the same, which is to reimburse the holder by one o'clock. The expenses (about $850) are borne by assessment to be fixed by the Clearing-house committee, and to be paid quarterly in advance. The members are required to keep uniform hours, and are not allowed to receive on deposit checks upon any banks or bankers in Milwaukee which are not members, unless such banks or bankers clear through some member. The banks stamp checks sent to the clearing-house. Any member may be subjected to examination, or required to furnish, security, upon representation that its capital is seriously impaired.
At Kansas City the hour for clearing is 12.30 o'clock p. m., and the manager's certificates are issued in settlement of balances as soon as the proof is made. They are, in form, identical with that used at St. Louis, except that recourse may be had on the other members up to 2½ instead of 2 p. m. The Constitution is almost word, for word identical with that of St. Louis, and checks cleared are stamped in the same manner. The hours of the members are to be uniform, as regulated by unanimous vote. Proper matter for clearing, according to the by-laws, consists of checks, drafts, certificates of deposit, demand or matured, and any other matter specially agreed upon, and any bank clearing paper not proper is subject to-a fine. The manager makes monthly or quarterly statements, showing the clearings and balances of each member for the month or quarter, the amount of fines imposed upon each member, and the causes thereof. Only National and State banks having a capital of $50,000 or more are eligible as members.
The Louisville Clearing-house is modeled mainly after that of Cincinnati. Checks only are cleared; balances are settled by manager's check, which must be collected on the same day, or the holder loses recourse.