Before describing the process of clearing checks, mention should be made of the preparations at the bank. During the day as checks are received, those drawn upon city banks are placed in pockets or pigeon-holes marked with the clearing house number of the several banks. At the close of business each day these checks are entered or listed on a "settlement sheet." Items received in the early mail the following morning are added to this sheet and the totals are entered as debit items on the settling clerk's statement which he takes to the clearing house. The checks are put up in envelopes for the respective banks on which they are drawn and these are arranged in consecutive order corresponding to the clearing house numbers of the banks. A "delivery sheet" is prepared on which each of these envelope totals is entered opposite the name of the bank on which the checks are drawn. This sheet also has a column for the amount of checks presented for settlement and a space for the signature of the settling clerk of each bank. The footing of the settlement sheet showing the total amounts of the checks against each bank is entered on a "credit ticket" which the settling clerk delivers to the clearing house manager.
bank no. 3 Chicago,-----------------------------------
Cont'l & Com'l Nat. Bank $_
Amount of Exchanges to Clearing House this day per Messenger.
The settling clerk and the delivery clerk now proceed to the clearing house and take their places at the desk belonging to their bank, the settling clerk inside the inclosure, the delivery clerk outside. In the larger cities each of these clerks may have an assistant to facilitate the work. Generally the arrangement of desks is oval or circular to permit of easy passage from one desk to another. At the appointed hour the manager appears at his desk and rings a bell as a signal to begin. Instantly the line of delivery clerks outside the cage or oval begins to move. The clerk of bank No. 1 steps forward to the desk of No. 2, delivers the envelope marked No. 2, and places his delivery sheet in front of the settling clerk who receipts for it by writing in the proper place his initials or name. No. 1 clerk passes on to No. 3, and so continues the operation until he has delivered all his envelopes and reaches his own desk again. In the same way the other delivery clerks follow, delivering their packages and getting their sheets receipted. In some places it is the rule to deliver a blank ticket to any bank against which any other bank may not have collections on a particular day. This may simplify the correction of errors as it shows that no item has been lost or mislaid. The delivery clerk having completed his deliveries is now free to return to his bank taking with him the envelopes containing the checks which have been presented against his bank by the other banks.
As soon as the deliveries have been completed each settling clerk enters on his settlement sheet the amounts of the checks presented by each of the other banks and ascertains the total. Where the volume of exchanges is large the settling clerk has an assistant, in which case the entries are made at once upon delivery of the envelopes and the settling clerk can begin his additions immediately upon receipt of the last envelope. The settling clerk already has upon his sheet the total of the checks brought by him to the clearing house. As soon as he determines the total amount of the checks brought by other banks against his bank, he strikes a balance. This balance is the actual amount to be "settled."
If this is a credit balance it will be paid over to his bank by the clearing house; if it is a debit balance his bank must pay it into the clearing house before a certain hour of the same day. Each settling clerk makes out a balance ticket, showing the amount brought to the clearing house, the amount received and the balance. These tickets go to the desk of the manager where the proof clerk enters all the debits, credits and balances of the several banks. His balance totals should correspond to those of the settling clerks, and the balance for each bank should correspond to that appearing upon its ticket; otherwise there is some error which must be found and corrected. The manager calls off the balances of the several banks for verification and for the information of the banks. If there is an error the clerks go over their sheets again to discover the mistake. In most clearing houses a certain time, thirty or forty-five minutes, is allowed for completing the proof, and, usually, fines are imposed upon the clerks responsible for error or delay.