This section is from the "Practical Banking" book, by Albert S. Bolles.
At Memphis the exchanges occur at nine o'clock a. m., and the time consumed by the manager in the adjustment of balances is about thirty minutes. In settlement of balances the manager draws his check on the debtor in favor of the creditor members in the following form:
Pay to G. in settlement of balances this morning Six thousand five hundred and fifty - dollars. $6,550 25.100 ........................Adjuster.
Instead of writing the name of the payee in full, the initial letter or letters simply are used. The amount of checks brought by each bank is entered on a credit slip, and the amount taken away on a debit slip. This latter also contains additional rulings to show the balance due to or from the bank, and against the initials of each bank is written the amount of checks drawn upon it or in its favor to settle this balance. Balances must be settled in current funds. Checks only are cleared, and they are delivered in sealed envelopes designated on the outside as follows .
Memphis Clearing-house, July 1, 1884. U. $10,000 from Commerce.
That is Union and Planters' Bank $ 10,000, from the Bank of Commerce.
At Peoria the clearings are made at 11.30 o'clock a. m., and occupy about half an hour. The clearing matter consists of checks. Members are to report upon balances resulting from the exchanges before one o'clock, after which hour the balance becomes the debt of the bank. Balances must be paid by the debtor banks at the counters of the creditor banks before three o'clock, in currency, unless arrangements have been made before that hour for payment in exchange on other points. Checks not good must be returned before 1.30 p. m.
At Portland the six National banks, without being formally or ganized as a Clearing-house, settle daily at ten o'clock a. m. The time occupied is about fifteen minutes. Portland checks only are included in the clearing. Balances are paid in legal-tender notes, or checks on Boston or New York.
The Worcester and Lowell Clearing-houses are organized on the same plan. Each bank belonging to the Association is required to make a deposit fixed by vote of the Association with the Clearing-house Committee as its proportion of a clearing fund. This fund is deposited with one of the banks selected as the clearing bank, free of interest, as a compensation for services and expenses. The clearing bank is changed each year at Lowell. The cashier of the clearing bank is, ex officio, the manager of the Clearing-house. No bank is allowed to make the clearings of a bank that is not a member. At Worcester the hour for making the exchanges is 12 o'clock noon, and the time occupied is about fifteen minutes. At Lowell the hour of clearing is eleven o'clock, and the time occupied is from seven to ten minutes. The clearing matter of both consists of checks, drafts and notes. At Worcester paper cleared is marked as follows: "Pay only through Worcester Clearing-house to........." At Lowell no distinguishing mark is affixed. At the latter balances are paid by drafts on New York or Boston; at Worcester by checks on Boston.
At Springfield the exchanges occur at eleven o'clock at the Chicopee National Bank, and occupy about twenty minutes. One clerk for each bank performs the duties of messenger and settling clerk. All kinds of paper are cleared, each item being stamped with the stamp of the sending bank. Balances of less than % 200 are paid in currency; if more than that by New York or Boston drafts.
At Columbus, Ohio, the representatives of the banks clear at the Board of Trade Rooms in City Hall at two o'clock p. m. The exchanges occupy ten minutes, the adjustments twenty. Clearing matter consists of checks to which no distinguishing mark is affixed. Balances are paid by manager's checks on the debtor banks.
At Norfolk the banks select one of their number to be the Clearing-bank for one year, and the cashier of that bank is ex officio manager of the Clearing-house. The hour for making the exchanges is eleven o'clock precisely. At 12½ o'clock the debtor banks pay their balances at the Clearing-house in currency, and the creditor banks receive their balances at one o'clock. Checks not good must be returned by 12 m. to the bank sending them, and must be satisfied by 2.30 p. m. All checks presented in payment of notes and drafts (except when presented by the runner) must be certified by the bank on which they are drawn. Although the rules require the payment of balances in currency they are, as a matter of accommodation between the banks when exchange is plentiful, often paid by checks on New York, Philadelphia, or Baltimore.
At Syracuse the exchanges take place at 10.20 a. m., and occupy five minutes, the paper cleared being checks, certified notes and accepted drafts. No distinguishing mark is affixed to paper cleared. Balances are paid as convenient within two hours following the clearing in drafts on New York.
Notwithstanding the space given to the foregoing particulars in relation to the various Clearing-houses in the United States, many matters of interest have been necessarily omitted, while others of importance, familiar to those connected with Clearing-house business, may have been overlooked. In the collection of such a variety of data from so many different sources, errors, both of omission and commission, are liable to occur. Enough has, however, been brought together to furnish material for suggestive comparisons as to the methods in use at the various Clearing-houses. When all the Clearing-houses, however unimportant their operations may seem, shall preserve full and accurate records of their business in its various details, such comparisons will shed increased light upon the movements of our internal commerce, and, still better, repay careful study.