The Clearing House is an organized system by which bankers effect, at one central establishment, the collection and interchange of their bills, checks and other obligations; the result is a great diminution of labor and of the cash balances required for settlement. There are clearing houses at all the important financial centers.

The word "boom" is frequently used of late in America and Britain and the colonies for a start or rapid development of commercial activity or speculation, as when shares go off, or prices go up "with a boom." The word is assumed to be suggested less by boom in the sense of noise, than by the rushing progress which often accompanies the noise.

In round numbers the total amount of life insurance written by the different insurance companies of the world is $12,000,000,000. Of this sum $5,500,000,000 is placed in the United States. Between the years 1880 and 1890 there was $2,500,000,000 new life insurance written in this country, and but $1,000,000,000 in the whole of the British empire.

A letter of credit is a letter addressed to a correspondent at a distance, requesting him to pay a sum therein specified to the person named, or to hold the money at his disposal, and authorizing the correspondent to reimburse himself for such payment, either by debiting it in account between the parties, or by drawing on the first party for the amount.

In 1600 the world had in circulation £29,000,000 gold, £102,000,000 silver and no paper; in 1890 these were £840,000,000 and £801,000,000, and £771,000,000 of paper money, a total of £2,402,000,000 - or nearly $12,000,000,000. This includes the money of Europe, the United States, and the colonies of Great Britain, France and Spain. No account is taken of the worthless currency of the South American states.

The employment of two metals, like gold and silver, of fixed legal relative value, is termed bi-metallism. Till 1873 this had been the custom for nearly two hundred years. One ounce of gold was then equal to fifteen and one-half ounces of silver. Up to 1873 silver was the standard of Germany, as it is still of India, China and Japan; but in 1873 gold was made the sole standard of Germany, and silver became a mere article of commerce and circulating counter, which varied in value according to circumstances. The relative value might be one ounce of gold worth twenty ounces of silver, or any other difference; and those countries which pay in silver pay more as the relative value of silver declines. Bi-metallists in the United States and elsewhere want to restore the fixed relative value of these metals.

Currency is a term signifying originally the capacity of being current, or, as Johnson defines it, "the power of passing from hand to hand." It is applied in practice to the thing that is so current, and generally to whatever, by being current among any nation or class of persons, serves as the money with which they buy commodities or pay their debts.

The term bankrupt originated in connection with the money-changers of Italy. They sat in the market place with their money displayed on a bench (or banco, as it was called) before them. When one of these financial gentlemen failed his banco (or bench) was said to be broken, and he was styled a banco-rotto, or bankrupt. The modern bank inherits its name from the unimposing money bench (banco) of mediaeval Italy.

The term bogus, meaning sham, forged, fraudulent, as bogus currency, bogus transactions, is said to be a corruption of Borghese, a swindler, who supplied the North American States with counterfeit bills, bills on fictitious banks, and sham mortgages. Some think the word a corruption of Hocus Focus, and say that it refers to the German "Hocus Pocus Imperatus, wer nicht sieht ist blind." The corresponding French term is Passe muscade.

Tontine is a kind of life-annuity, shared by the subscribers to a loan, the annuity increasing to the survivors as the subscribers die. The plan was invented by Lorenzo Tonti, a Neapolitan banker, who settled in France about 1650. The tontine was adopted by Louis XIV. and Louis XV., and also in England, for the purpose of raising government loans. The "Tontine Lafarge," opened in 1791, brought 1,218,000 francs to the French government in December, 1888. The same idea has been incorporated into life insurance by several of the leading companies in the United States.

Insurance is a contract under which one party, called the insurer or assurer, agrees, in consideration of a sum of money called the premium, to pay a larger sum of money to another party, called the insured or assured, on the happening of a designated contingency. Insurance has sometimes been said to be akin to gambling, but it is really the converse. The gambler seeks excitement and gain by the artificial manufacture of hazardous speculations. The prudent man resorts to insurance in order to secure peace of mind and immunity from the loss which might arise from contingencies beyond his control. The gambler creates or exaggerates risks; the insurance office equalizes them.

The Bank of England was projected by a Scotchman, William Pater-son and established 1694. It started with a Government loan of $6,000,-000 at eight per cent, secured on taxes. The charter appointed a governor and twenty four directors to be annually elected from members of the company possessing not less than $2,000 of stock. The South Sea Bubble (1720), the Jacobite Rebellion (1745), and the failure of a number of country banks (1792) seriously affected the bank. The Bank Charter Act of 1844 limited the note circulation to $70,000,000 against a like amount lent to the Government, unless a similar value in bullion were in hand. The Act was suspended during the panics of 1847, 1857 and 1866.

Sterling signifies money of the legalized standard of coinage of Great Britain and Ireland. The term, according to one theory, is a corruption of Easterling - a person from North Germany, on the continent of Europe, and therefore from the east in geographical relation to England. The Easterlings were ingenious artisans who came to England in the reign of Henry III., to refine the siver money, and the coin they produced was called moneta Esterlingorum - the money of the Esterlings.

The Darien scheme was promulgated by William Paterson, founder of the Bank of England in 1695, for colonizing the Isthmus of Darien. Two million dollars were raised in Scotland for the purpose, and in 1698-9 three expeditions set out. The settlements were not recognized by the English Government, and surrendered to the Spaniards in March 1700. The break-up of the scheme, like the South Sea scheme, John Law's Mississippi bubble, and the failure of the Panama canal, caused a great financial panic.

The "South Sea Bubble" was a ruinous speculation which arose in England at the same time as the Mississippi Scheme in France. The South Sea Company (formed 1710) offered to take over the English national debt on consideration of 5 per cent, and to advance $37,835,000 if the company were invested with the exclusive privilege of carrying on the South Sea trade; and these terms were accepted by the House of Commons. The shares, originally 771/2 per cent, rose by midsummer, 1720, to 1,000. The crash quickly followed; thousands were reduced to beggary. A parliamentary inquiry took place, disclosing fraudulent dealings, and Aislabie, chancellor of the exchequer, and others were expelled the House in 1721.

Usury now means iniquitous or illegal interest, but formerly meant interest of any kind on money lent. The Mosaic law forbade a Jew to tak usury from a fellow-countryman. Greek and Roman moralists mainly disapproved of any usury; the church fathers, the popes, the canon law absolutely forbade it; hence the Jews had a kind of monopoly of usury at the Reformation. Luther condemned interest, while Calvin allowed it. A long series of laws were passed on the understanding that usury was wrong, but admitting many exceptions, the usury laws thus doing much harm and multiplying legal fictions. The moral question is still debated, and moralists such as Ruskin wax fierce against the taking of interest. But it may broadly be said that modern civilization fully recognizes the admissibility of fair interest.

Five States - Iowa, Vermont, Michigan, Wisconsin and Illinois -have no interest-bearing debt, and there are six or seven other States whose bonded debts are mere bagatelles. Among the number are New Jersey, Nebraska, Kentucky and California. To a foreigner or any one else not familiar with the facts this would convey the impression that the Americans bear an extremely light burden of debt. Such an idea would be somewhat modified, however, by the knowledge that the Atchison, Topeka & Santa Fe pays interest on $500,000,000 or more, the annual interest charge exceeding $25,000,000 - almost as much as the entire interest charge of the federal government. The southern States have a bonded indebtedness of $144,000,000 in round numbers. The total bonded indebtedness of all the States in 1890 was $224,000,000, on which the annual interest charge was $10,000,000. The total bonded debt of the States is about one-third of the national intesest-bearing debt.

The Mississippi Bubble, or the "South Sea Scheme," of France, was projected by John Law, a Scotchman. It was so called because the projector was to have the exclusive trade of Louisiana, on the banks of the Mississippi, on condition of his taking on himself the National Debt (incorporated 1717, failed 1720). The debt was two hundred and eight millions sterling. Law made himself sole creditor of the debt, and was allowed to issue ten times the amount in paper money, and to open "The Royal Bank of France," empowered to issue this paper currency. So long as a twenty-franc note was worth twenty francs, the scheme was a prodigious success, but immediately the paper money was at a discount, a run on the bank set in, and the whole scheme burst.

During the civil war (1861-1865) the immense expenditure of the United States government led to the printing of an unprecedented number of bank-notes, bonds, and currency papers of various kinds. These documents, from the color presented by them, or some of them, obtained the name of Greenbacks, a designation which came to be loosely used for all United States bank notes. The first "demand notes" were issued in August 1861; the first greenbacks proper were of date March 10, 1862. Soon forged notes and bonds were in circulation, but by degrees a large establishment was organized at Washington, under the immediate control of the Secretary to the Treasury, and the precautions used were such as almost completely to baffle forgers. The paper currency, whose value had fluctuated greatly, was declared convertible into coin on 1st January 1879, and specie payments completely resumed.