This section is from the "Practical Banking" book, by Albert S. Bolles.
The first proposition for the establishment of a Clearing-house in New York was made by Albert Gallatin in 1841. To Mr. Geo. D. Lyman, the first manager of the New York Clearing-house belongs chiefly the credit of systematizing its details and planning its records in its earlier history. Mr. Lyman thus concisely sums up the economy of time and labor effected by the Clearing-house:
"On the day when the Clearing-house began business, about twenty-seven hundred open, active accounts on the ledgers of the associated banks were balanced—the most of them for the first time,* and all of them finally. The business which had rendered necessary this large number of accounts was thenceforth accomplished more quickly, with less annoyance to bank officers, and with greater safety to all concerned. The results may be briefly enumerated as follows :
"First.—The condensation for each bank of forty-eight balances into one, and the settlement of that balance without a movement of specie.
" Secondly.—The avoidance of numerous accounts, entries and postings.
"Thirdly.—Great saving of time to the porters and of risk in making exchanges and settlements from bank to bank.
"Fourthly.—Relief from a vast amount of labor and annoyance to which the great army of cashiers, tellers and bookkeepers were subjected under the old system.
"Fifthly.—The liberation of the associated banks from all injurious dependence on each other.
"Sixthly.—The absolute facility afforded by the books of the Clearing-house for knowing at all times the management and standing of every bank in the Association."
* "The practice of the banks had been to draw settlement-checks on each other for even thousands of dollars near the balance due, and the account was never settled to a point."
Mr. Lyman remained manager of the Clearing-house until 1864, a period of more than ten years. On the twenty-second of August in that year he was succeeded by the present manager, Mr. William A. Camp, who has brought the details of the business to a perfection not previously attained. Mr. Camp was born at Durham, •Connecticut, Sept. 23, 1822, was appointed in 1855 discount clerk in the Importers and Traders' Bank of New York (his first banking experience), and was made first teller of the Artisans' Bank in 1856. In June 1857 he was made assistant-manager of the Clearing-house, so that he has now been connected with the establishment twenty-seven years, twenty years of that period as manager. To executive ability of a high order, he unites unusual accuracy and promptness in the despatch of business, as well as a wide acquaintance, both theoretical and practical, with financial subjects. It speaks volumes for the care and scrupulous accuracy with which the business has been conducted, that in the entire history of the Clearing-house, extending over nearly thirty-one years, its transactions have always balanced to a cent. The only instance on record of an error in any statement emanating from it occurred a few years ago in the weekly bank statement, and this was due to an error of one of the clerks in transcribing the figures. In making the entries, the officials at the Clearing-house and their subordinates use ink only. The clerks sent by the banks may at their option make their entries in pencil.
The first day's clearing at New York, October 11, 1853, was $23,938,182.25. The total of its gold and currency clearings to December 31, 1883, was $695,304,252,496.30, and of the balances, $30,250,800,308.61. The largest transactions (clearings and balances combined) in any one day were $295,821,422.37, February 28, 1881, when the clearings amounted to $288,555,981.58. The largest exchange ever brought to the Clearing-house by any bank was on the same day, $31,772,391.45, brought by the Bank of New York, its return exchange being $31,512,015.47. The largest balance paid by any bank was $10,585,471.31, November 17, 1868. The smallest balance ever paid by any bank was one cent, September 22, 1862. The smallest balance ever paid to a bank was ten cents, November 16, 1863. No bank ever came out exact without a balance either way. The largest amount ever cleared in one year was in 1881, $49,376,882,882.54, and the smallest in any whole year was in 1858, $5,376,151,036.92. Formerly bank notes were included in the clearings, though to a less extent after the establishment of the National banking system than before. The trouble of assorting the country bank notes gave general dissatisfaction. "The Park Bank then undertook, for a consideration of about five thousand dollars a year, to assort the country bank notes of all the other banks in the city, and this arrangement was prolonged for nearly two years, the plan of working meanwhile gradually improving in efficiency, when it was interrupted and superseded by the establishment of the Redemption Bureau in the office of the United States Treasurer at Washington, for the purpose of redeeming the notes of all National banks"* Bank notes may now be included in the exchanges, but, in practice, are not. The paper exchanged now consists of checks, drafts and certified notes.
Banks desiring to become members of the Clearing-house Association must apply to the committee on admissions, who make such examination of the bank as they deem necessary. The personal character and standing of its managers is also considered. The bank may be admitted to the Association by a three-fourths vote (by ballot) of the members present at any meeting, on such conditions as three-fourths of those present may deem expedient. The new member must assent to the Constitution and pay an admission fee, varying from $1,000, where the capital does not exceed $500,000, up to $7,500, where the capital exceeds $5,000,000. Any member increasing its capital must pay an additional sum corresponding with these rates. A bank may withdraw from the Association at pleasure, first paying due proportion of all expenses incurred, and signifying its intention to withdraw to the Clearing-house committee. The expense of printing for the several banks is apportioned equally among them. The other expenses are met by an assessment of $200 on each bank, and the balance necessary above that amount pro rata according to the average amount sent to the Clearing-house for the preceding year. A fine of three dollars is imposed on any bank not represented at roll call at any duly called meeting without reasonable excuse. Any member of the Association guilty of participation in any scheme for withdrawing legal tenders from use may be suspended from the Clearing-house.
* Kinahan Cornwallis in International Review for Sept.Oct., 1876.