Doctor Adam Smith says that the advantages to be derived from the establishment of banks may be compared to the profit which would be obtained from converting our highways into corn fields, and procuring a road through the air.

The most important addition to the facilities which banking institutions have invented for themselves, to enable them to adjust their mutual indebtedness without the trouble of presenting separately for payment the cheques or bills which one bank may hold payable at another bank, was the Clearing-house, which was established by the principal bankers in London in the year 1775. The system pursued is so simple that, suffice it to say when the clerks of two different banks wish to exchange the cheques one may have upon the other, the balance - in whosesoever favour it may be - is paid by a cheque on the Bank of England, where all the leading London banks keep an account. In the beginning the banks with the aid of the Clearing-house were enabled to adjust several millions sterling of mutual indebtedness, employing only a few hundred thousand pounds; the mode of settlement, however, has now become so simplified that neither paper-money nor coin is required at all.