In addition to the clearing of city and country checks, principally the former, and the settlement of balances, which may be called the primary clearing house functions, there are others not quite so much in general use but which nevertheless are of great importance. Many clearing house associations exercise a close supervision over their members, through the medium of the clearing house system of examination under the direct supervision of a clearing house examiner. The clearing house examiner supplements the work of Federal and State examiners. The National and State officers are limited in their powers of criticism to actual infringements on the law, and before they can take steps to correct such infringements capital has often become impaired and failure is threatened. Most bank failures are due to the gradual acquirement of undesirable assets over a period of years, and if some authority exists with power to make recommendations of a remedial character, with the further power to enforce such recommendations, if necessary, there is little doubt that many bank failures would be averted. The examinations include, besides a verification of the assets and liability of each bank, so far as is possible, an investigation into the workings of every department and are made as thorough as is practicable. After each examination the examiner prepares a detailed report in duplicate, describing the bank's loans, bonds, investments, and other assets, mentioning specially all loans, either direct or indirect, to officers, directors, or employees, or to corporations in which they may be interested. The report also contains a description of conditions found in every department. One of these reports is filed in the vaults of the Clearing House, in the custody of the examiner, and the other is handed to the examined bank's president for the use of its directors. The individual directors are then notified that the examination has been made and that a copy of the examiner's report has been handed to the president for their use. In this way every director is given an opportunity to see the report, and the examiner, in every instance, insists upon receiving acknowledgment of the receipt of these notices.

The detailed report retained by the examiner is not submitted to the Clearing House committee, under whose direct supervision he operates, unless the discovery of unusual conditions makes it necessary. A special report in brief form is prepared in every case and read to the Clearing House committee at meetings called for that purpose. The report is made in letter form, and describes in general terms the character of the examined bank's assets, points out all loans, direct or indirect, to officers, directors, or employees, or to corporations in which they may have an interest. It further describes all excessive and important loans, calls attention to any unwarranted conditions, gross irregularities, or dangerous tendencies, should any such exist, and expresses, in a general way, the examiner's opinion of each bank as he finds it. The examiners enter into an agreement not to enter the employ of any member or non-member of the association, or any other bank, banking institution, firm, or individual engaged in the business of banking, within a radius of miles, for a period of years after the expiration of services with the association. The Clearing House examiner is a very valuable man to the small bank or new institution. The officers of these banks very often do not have the facilities or experience necessary to pass upon paper which is submitted to them for sale or discount. They are apt to become loaded up with credits which have been rejected by their larger or better informed neighbors and must pay dearly for their lack of knowledge. The bank examiner is in a position to make valuable suggestions which often save failures and liquidations. Towns which are too small to be able to afford the services of a skilled examiner can combine with two or more other cities and thus secure a proper official. A great many associations have rules for the conduct of their members. These rules provide for uniform exchange charges on out-of-town checks, uniform maximum interest rates on balances, regulations regarding hours for business, advertising, etc. Most associations publish a weekly statement of condition of the members, and cooperate in every possible way for the general good of the members of the association and the community in which it is located. There are not enough clearing house associations in America today. Nearly every town and city having three or more banks could probably form one to advantage and the Clearing House Section of the American Bankers Association will be glad to furnish all information desired.