This section is from the "Practical Banking" book, by Albert S. Bolles.
The Detroit Clearing-house is conducted on principles similar to those of the Chicago Association. The clerks, as well as the manager, furnish bonds with sufficient sureties. The hour for clearing is 12.15 o'clock P. M. A fine of one dollar per minute is imposed for tardiness, and the clearings are in no case delayed more than five minutes by the absence of a member. Fifteen minutes are allowed for the proof, but the average time occupied is only ten minutes. Fines are doubled in thirty minutes, and quadrupled in one hour. The debtor members pay their balances to the manager between 1 and 1.30 P. M. in coin, legal tenders, National bank notes, Clearing-house certificates provided for by the rules of the Association, or New York exchange. At last accounts the practice, since the Association was formed, has been to pay balances in New York exchange only. At 1.30 P. m. the creditor banks receive their balances. The exchange is in trust, and vouchers remain the property of the member presenting them until balances are paid, and in case of default must be returned to the Clearing-house unmutilated by 1.30 p. m. The defaulting bank is also entitled to receive back the vouchers it has presented, and the exchanges with it are cancelled. If the New York exchange given in settlement of balances is dishonored, the deficiency is assessed upon the banks having debit balances against the defaulting member in proportion to such balances. To provide for expenses the members each pay $50, and an equal share to the cost of printing. All beyond this is provided by an assessment on the banks in proportion to their exchanges sent to the Clearing-house. The paper cleared consists of checks, drafts and certified paper. Some of the members affix some distinguishing mark to paper cleared, but this is not required by the rules of the Association.
At Cleveland the clearings are made at one o'clock P. m. Balances of more than $1,000 are settled by New York exchange. When balances are under $1,000, a balance check is given which is put through the clearings of the next day. Consequently, no cash is handled in paying balances. Checks cleared are marked with a Clearing-house stamp.
At St. Paul the regulations are modeled after those at Chicago and Milwaukee. The clearings are made at 10.30 o'clock, a. m., and the average time occupied is seven minutes. Checks only are cleared. A clerk of the First National Bank of St Paul, where the clearings take place, acts as manager. The "paid " stamp of the sending bank is the only distinguishing mark affixed to checks passing through the Clearing-house. Balances are payable in coin, National bank notes, legal tenders, and gold or silver certificates. No silver dollars are ever offered by mutual understanding.
At Indianapolis the manager receives at the room of the Association from members, between 12 o'clock noon and 12½ p. m., the checks, drafts and notes to be exchanged, and immediately afterwards collects from or pays to each bank at its place of business the balances resulting from such exchange. No member is allowed to receive in payment a check on any Indianapolis bank not a member, and no paper payable at any bank not a member is allowed to pass through the Clearing-house. All checks received by members after one o'clock must be certified. All paper cleared must bear the endorsement of the sending bank, either in writing or by stamp, as an acknowledgment of payment and not as a guarantee, except as to the genuineness of other endorsements. The maker of a check dishonored for want of funds is discredited, the members are all notified, and no uncertified check of such a person is allowed to pass through the Clearing-house until his credit is restored by vote of the Association. All notes and acceptances must be certified before passing through the Clearing-house. The manager takes up the checks delivered to and by any defaulting member, and returns them. Expenses, except as provided for by fines, are paid by the banks in proportion to their capital and deposits. The manager is to be a notary and has the privilege of protesting such paper as the members have for protest, his fees being his only compensation.
At Hartford the business of clearing is done by the members in turn, each for one month at a time, some officer of the clearing bank being manager. The hour for clearing is 10 o'clock and 5 minutes, and the time occupied averages fifteen minutes. The debtor banks pay their balances to the Clearing-house at or before 11½, A. M., in checks on New York, except balances of less than $100, which may be paid in currency. The creditor banks receive their balances at 12 P.m. The matter cleared includes notes, drafts and checks, also bank notes of the members to a very limited extent. All paper cleared must bear the written or stamped endorsement of the bank sending it. In case of default the other banks make up the deficiency as at New York and Boston. All checks not good must be returned to the sending bank by 12 o'clock noon.
At Minneapolis the clearings occur at eleven o'clock a. m. The constitution is not printed, but the routine appears to be in general similar to that at New York.
At New Haven, as at Hartford, the banks take turns, each bank acting as the Clearing-house for three months. The exchanges are made at 9.15 A. M., and include checks, acceptances, notes certified the day before, and in fact everything in the form of an order on any member. Balances are to be paid by noon in drafts on New York.