This section is from the "Practical Banking" book, by Albert S. Bolles.
At Chicago all checks and vouchers exchanged at the clearing are held in trust only by the member receiving the same until returned, or the amount thereof paid. In case of failure on the part of any bank to pay its balances at the proper hour, it is to return such checks or vouchers, without mutilation, to the Clearing-house before one o'clock P. M., and it is to receive back the vouchers it sent. Elaborate provisions are made for the protection of the associated banks in such cases. The work of clearing, in its various stages, occupies about two hours. Thirty minutes .are allowed for the proof. The paper exchanged is stamped "Paid through the Chicago Clearing-house to" (name of member clearing same to be here inserted), with the date, in lieu of written endorsements, and the bank using such stamp thereby makes itself responsible for all items so stamped by it, and for all informalities of endorsements thereon. The business hours of the different members must be uniform, and are regulated by the Association. Each member of the Association is required to furnish to the manager, as often as five times yearly, and at such other times as may be required by the Clearing-house committee, a sworn statement of its condition, in the form and manner prescribed for the statements of National banks, such statements to be open to the inspection of the members, but to be otherwise confidential. The scale of fines shows some peculiarities, among which may be mentioned those for being late at the morning exchanges. For the first five minutes, or part thereof, late, the fine is $3; for the second five minutes, or part thereof, $10, and for being over ten minutes late, $25. Creditor banks are also fined $3 in case of failure to take away their balances by 12.45 P.M. All fines are collected by the manager at once. The manager may require from members the signatures of such persons as are authorized to receipt for balances. The expenses of the establishment are about $8,000 per annum, assessed upon the banks in a manner similar to that at New York.
At St. Louis the hour for making the exchanges is ten o'clock A. M. Each clerk must report the debits against his bank within twelve minutes after commencing; for failure to do which the bank is fined $2, with two dollars more for every five minutes' additional delay. The time required for completing the morning settlement varies from fifteen to thirty minutes. At eleven o'clock the manager issues his certificates of indebtedness by the debtor on the creditor members, the form of which has been already given, each creditor bank receiving, on an average, two certificates. The payment of balances, which are not handled at all by the Clearing-house, but are settled wholly between the banks, occupies from one to one and one-half hours. As at Chicago, the exchange and delivery of checks at the Clearing-house is in trust only until the debit balances are paid, and such checks must be returned unmutilated by any defaulting member. All checks sent to the Clearing-house must, in lieu of written endorsement, bear the impress of a uniform stamp, showing the name and number of the bank sending it, and the date, with the words, "St. Louis Clearing-house." The by-laws define proper clearing matter as follows:
1. All checks or drafts upon, or certificates of deposits, demand or matured, of any member of the Clearing-house or any bank clearing through any member.
2. Any other matter specially agreed to by any member, or bank clearing through it, until notice is given to the contrary.
3. Mercantile or other paper payable at any bank shall not be cleared against such bank unless authorized by the same.
4. All unstamped checks will be considered improper matter for clearing.
5. Any bank clearing paper not proper, as aforesaid, shall be fined for disregard of instructions.
Clerks duly authorized may return at the Clearing-house matter not authorized according to the foregoing to the clerk of the bank clearing it, who must receive and charge his bank with it in his debit list. The initiation fee is only $25, and the expenses, amounting to about $6,000, are paid by the members in proportion \o their clearings. To be eligible as members, banks must have a paid-up capital of $150,000. Instead of a "settling clerk's statement" all on one blank, each clerk has two statements. One called a "Credit
List," begins "St Louis Clearing-house........................1884,
from....................Bank No-----," and contains the exchange
brought by the bank. It corresponds with the debit column in the "settling clerk's statement," as already given. The other statement is called the "Debit List," and begins "St. Louis Clearing-house,
..........................1884, on...................Bank No....."
It corresponds with the credit column in the settling clerk's statement. The manager compiles periodical statements showing the condition of the banks from returns made by them. While the method of paying balances employed at St. Louis saves one handling of the funds so paid, it must usually happen that another great economy effected by the Clearing-house is lost, namely, the settlement of the whole debtor or creditor balance in one item. It would be a very remarkable circumstance if the balance due from any debtor bank should be exactly the same as the balance due to some creditor bank. Whenever it is otherwise, the demand due to the one, or from the other, must be divided into two or more payments. The relative advantage of one or the other method of paying balances must, however, be determined by the circumstances of each Clearing-house. What might be most convenient under certain conditions, might be quite inconvenient or impracticable under different conditions. The manager and a porter have charge of the Clearing-house.