11. Clearing

Each settling clerk, after giving the statement above described to the manager of the clearing house, takes his place at the desk belonging to his bank. At a given signal the messengers, who are arranged in an order corresponding with that of the desks of their banks, start on the circuit. Messenger of bank No. 1 leaves his first package of checks drawn on bank No. 2 at its desk, and at the same time receives from the settling clerk of that bank a package of checks drawn on bank No. 1, for which the messenger gives a check or receipt. The messenger then passes to desk No. 3, and' repeats the operation, and thus continues until he has completed the circuit. In like manner the other mes-sengers follow, delivering their packages and receiving others. This operation in New York consumes only ten minutes, and in clearing houses with fewer banks still less time.

As soon as the package of checks is delivered to the settling clerk of bank No. 2, he puts down the amount in a statement that is prepared for that purpose.The amount of the second package Is put down in the same manner, and soon after the delivery of the last package: the amounts arc entered on the slip, and he forthwith ascertains the total. As he knew before coming to the clearing house the amount of the checks he brought with him, the balance is at once struck between this amount and the amount brought by other banks against his own. This balance, if in favor of his bank, is a credit balance which it will receive during the day; if a debit balance, one which his bank must pay before a fixed time to the clearing house, and by it in turn to the creditor banks.

While these settling clerks have been busy, the manager of the clearing house has begun the preparation of his proof of the day's business. This consists of four columns, two inner and two outer. The two inner ones are respectfully Dr. and Cr.; the two outer are, the first, the amount due the clearing house, the fourth, or last, the amount due to creditor banks. A part of a clearing house proof is herewith given to make this explanation clearer.

As we have stated, as soon as every settling clerk comes to the clearing house he hands a statement to the manager of the amount of his checks on other banks. These totals are entered in the third or credit column, and are footed while the messengers are delivering their packages to the clerks and receiving other checks drawn against their respective banks.

As soon as they have footed the checks presented against their banks, the amounts are also footed and the balance is struck. If the amount taken to the clearing house is greater than the aggregate of all the checks taken by other banks drawn against it, such a bank is a creditor, otherwise it is a debtor bank. This footing and the balance, each settling clerk hands to the manager. The amounts thus presented against all are entered in column No. 2, and the aggregate of them, supposing there has been no error in the calculation, will balance those in column No. 3.

The balances are entered in the two outside columns. If a balance is a credit balance, or in favor of a bank, it is put in the fourth column; if the balance is a debit, it is put in the first column. If these operations are correct, the first and fourth columns will balance, for the aggregate amount due the creditor banks must be exactly the same as the aggregate amount due from the debtor banks. The final operation of settling, therefore, consists in all the debtor banks paying to the clearing house the balances they owe between the amount of checks they took to the clearing house and the aggregate amount of(hecks all other hanks took against them, and these balances are paid to the creditor banks. This completes the clearing.

Some other explanations, however, are needful. As soon as all the packages have been delivered to the set-tling clerks of their respective banks, and each clerk has made his addition and ascertained whether his bank is a debtor or a creditor hank, and to what amount, the messenger returns to his hank with the checks handed to him drawn thereon for examination. As this settlement is in truth a payment of its checks, the work of examining them belongs nominally to the paying teller. In the larger banks, however, he has but little if any time that he can give to this work. There are several things to be done in a comparatively short time, because the final settlement must be made during the day. So others take the work in hand; the checks are carefully examined, the signatures, indorsements, the balances of depositors, if there is any doubt about a sufficiency to pay them, and they are charged to the drawers. Assuming that they are all right, the messenger then goes back for his final work. When his bank is a debtor, he must take the means to pay the indebtedness; when it is a creditor bank, he goes to receive the amount due.