7. Organization And Expense

The organization of a clearing house is simple. It may own a building; if so, the money therefor is subscribed by the members. Primarily the fund for sustaining a clearing house is a tax, or annual sum paid by every member. This is large enough to pay the salary of the manager, his assistant, and any other force that may be necessary, besides the rent of a loom or building or any other incidental expenses growing out of the operation of the work. Sometimes the annual dues are sufficient to pay the running expenses and ac-cumulate a fund for ultimate use in the purchase or construction of a building for the exclusive purpose of a clearing house.

The expenses are not very heavy. The salary of a manager of a clearing house in a huge city, though adequate for his liberal support, bears no proportion to the salaries received by the presidents of the larger banks.

And though the position is one of honor and responsibility, vet his duties are not so exacting as those of a bank president.

A clearing house has no capital. Obviously it needs none. For as its business is simply to exchange checks and pay over the balances due from the debtor to the creditor banks, when its day's work is over it has no funds on hand belonging to anybody. It is true that the New York clearing house has become a great depository for its members, but the gold stored there has no connection with the proper work of the clearing house.

Nevertheless, as the manager has the custody of the balances paid by the debtor banks until they are paid over to the creditor banks, and it is possible for him to make a wrongful disposition of them, he is required to give a bond like a cashier or other bank officer.

8. Duties Of Members

The members of the clearing house have several duties to perform, and to that end are divided into committees. There is a governing or clearing house committee, another on admissions, another on nominations, another on conferences or arbitrations. Of these, the first is the most important.

9. Meetings

The meetings for clearing or exchanging checks in the large cities are held daily; in Philadelphia two meetings are held, one in the morning before the banks open for business, and another at 11.30, which is known as the runner's exchange.

10. Preparing Checks

Before checks are sent to the clearing house, several things are done. First of all each member opens all the letters it has received by the morning's mail for the purpose of extracting from them the checks that ought to go through the clearing house. Then they are properly indorsed or marked to indicate their ownership. Next they are put in packages for the respective banks on which they are drawn, and these are arranged in consecutive order corresponding with the numbers of the banks at the clearing house. When these things are done, a slip is prepared, called an exchange slip, on which is entered the amount of checks against each member of the clearing house, which are to be sent for clearing. As there are ninety-five banks belonging to the New York clearing house, there may be ninety-four entries. These are footed up and form the amount of the checks or exchange to its credit in the day's exchanges.

With this slip and an assistant the settling clerk starts for the clearing house. Every bank has a desk which is known and numbered. The desks are arranged in various ways in different clearing houses; often in a circular or oval form, so that a person can readily pass from one desk to another.