THE CLEARING HOUSE Facts covering the origin, developments y functions y and operations of the Clearing HousCy and explaining the systems, plansy and methods promulgated by the Clearing House Section of the American Bankers Association BY JEROME THRALLS SECRETARY OF THE CLEARING HOUSE AND NATIONAL BANK SECTIONS OP THE AMERICAN BANKERS ASSOCIATION PUBLISHED BY THE CLEARING HOUSE SECTION AMERICAN BANKERS ASSOCIATION NEW YORK *^^<5 ^-IZ^ Copyright, 1916, by JEROME THRALLS INTRODUCTION THIS book is based on practical experience and is designed chiefly for the purpose of conveying to the reader full and definite in- formation regarding the origin, development, functions and operations of the Clearing House. Only a limited number of persons, including bankers, realize the important part that Clear- ing Houses have played in the development of the United States. They have protected the finances of the gov- ernment at times when the credit of the nation was imperilled. They are the machinery that saved thousands of business concerns from ruin during panics and financial depressions. Their influences for good have permeated every line of industry from coast to coast. They are the chief factors that brought about the reforms in the banking and currency laws and the improve- ments in banking methods and practices, which in turn, have made the financial system of America equal to that of any nation. JEROME THRALLS iii 357345 Digitized by the Internet Archive in 2007 with funding from IVIicrosoft Corporation http://www.archive.org/details/clearinghousefacOOthrarich CONTENTS The Clearing House Origin Classes of Clearing Houses . Early Functions and Developments Objects and Purposes . The City Department • Clearing House Numbers . Preparing Items for Clearing Endorsements, etc. Statements and Records Form of Statement and Settlement Check Exchange or Clearing Room Making the Exchanges Records at the Clearing House Clearings Apportioning Balances Gold Depositary . Settlement of Balances Trading of Balances . Fines .... Loan Certificates . General Business Expenses and Assessments The Country Department Objects and Purposes . Origin .... PAGK I I 2 3 3 5 5 5 5 6 7&8 9 10 10 II IC 12 12 13 13 13 14 14 15 IS IS vi CONTENTS PAGE Operation i6 Making Arrangements and Rates . . i6 Endorsing and Preparing of Items . . 17 Due Bills 18 Handling of Items at the Clearing House . 18 Records ,19 Protested and Unpaid Items . . .19 Distribution of Returns ... .19 Pro-rating Expenses and Exchange . , 20 Savings Effected .21 Savings to Country Banks ... .21 The Examination Department • • 23 Limited Authority (of National and State Bank Examiners) .... .23 Supervision .24 Examinations .24 Reports 25 Moral Effect of Examinations . . .26 Check on Loans ..... ^ ^ Proposed Federal Examinations . . .28 Expenses and Assessments ... .29 Influence of the Clearing House 30 New Clearing Houses Necessary . . -30 Co-operation and Extension . . .31 Competition not Restrained ... .31 Articles of Association ... 32 Objects and Purposes 32 Officers ZZ Vacancies .33 Executive Committee 33 CONTENTS Vll Disbursements .34 Powers of Officers 34 Representation . . . . . .34 Authority of Manager 34 Clearing Hour 34 Settlements 34 Numbers .35 Default 35 Errors and Returned Items ... . 3<5 Hour for Returning Items ... .36 New Members .36 Suspensions 37 Withdrawals 37 Amendments Z7 By-Laws, Rules and Regulations . . 37 Additional Suggestions for Those Desiring to Organize a Clearing House -38 Maximum Interest Rates .... 38 Interest on Savings Accounts , . .38 Exchange Charges 39 Collection Charges 39 Public Deposits 39 Escrow Charges 39 Safe Deposit Rentals 39 Donations 39 Borrower's Statements . . . .39 Credit Information 39 Past-due Paper and Overdrafts ... 39 Hours and Holidays . . . . #39 Rotation of Managers .... 40 Meetings 40 Dues 40 vm CONTENTS PAGE Fines 40 Rotation of Officers 40 Data 40-41 Universal Numerical System • • 42 Various Plans 42 Explanation of the System . . . .43 How Numbers Are Assigned . . .43 Savings Effected .45 Endorsement Stamps .... .46 Transit Numbers on all Checks . . .46 Numbers on all Drafts ... ,46 Key to Numerical System ... .46 No-Protest Symbol Plan . . .48 Explanation of the Plan ... .48 Symbol Used ,48 Instructions for Cash Letters . . .49 Instructions Automatically Conveyed . . 49 Pian Universal in Scope ... .50 Plan Copyrighted .... .51 Uniformity Essential 51 Total Bank Transactions • • -53 Advertising Feature 53 Duplication in Clearings ... .53 What Total Bank Transactions Represent , 54 Method of Assembling the Figures . . 55 Form Used 56 Comparison of Clearings and Bank Trans- actions 57 CONTENTS « PAGE Federal Reserve Clearing System • 59 Gold Settlement Fund ... .59 Accounts Carried 60 Clearing by Wire 60 Balances and Settlements .... 60 Diversity of Methods Experimented With 61 Uniform Plan 62 Provisions of the Plan . . . , 62 Items Received at Par ... .62 Tentative Credit 63 Non-member Bank Checks ... .63 Expense of Shipping Funds . . .63 Liability .64 Service Charge .64 Penalty for Impaired Reserves . . .64 Burden of Expense ..... 65 Clearing House Section • • -6; Origin and Purposes 67 Membership .68 Expenses .68 Work Done 68 Executive Committee and Officers . . 68 Representation on Council of A. B. A. . 69 Officers and Committees • 7o Presidents 7o Vice-Presidents 7° Chairmen ....... 7^ Secretaries 7^ Members of Executive Committee . . 7^ Committee on Rates, Rules and Regulations 73 Committee Succeeding to Work of Confer- ence of Clearing Houses . . .74 X CONTENTS PAOB Numerical System Committees . . . 74-75 Committee on Codifying Collection Laws . 74 Committee on Country Gearing Houses . 75 No-protest Symbol Committee . . .75 Clearing Houses of the U. S. . • 76 Members of the Clearing House Section Clearing Houses Conducting Country De- partments 7^-77-7^79 Clearing Houses Conducting Examination Departments .... 76-77-7^-79 Non- members 79-80 THE CLEARING HOUSE THE idea of the Clearing House, like many important inventions and scientific dis- coveries, had its origin in an accidental way. In the early 70's of the seventeenth century, the banks of the City of London, England, employed walk clerks, or collectors, as they Origin would be termed in this country, whose duties were to go from bank to bank and collect the actual cash to cover checks, drafts and credits of a like nature that accumulated in the day's business. Two of these boys, representing banks located in extreme opposite sections of the City of London, met in a downtown coffee house, and while visiting and lunching together discovered that each held a like amount of checks and drafts against the other's bank. The thought of trading these checks and drafts, thereby saving them- selves a trip half-way across the city, suggested itself to these young men. They not only traded, but agreed to meet in the same place on the following day for the purpose of again trading. The news of what these two boys were doing spread to the other collectors, and within a very THE 'CtfiARING HOUSE Classes of Clearing Houses ^^ short while practically all of the collectors of the banks of the City of London were meeting in this coffee house, and making trades daily and pay- ing cash to cover the differences. Some of the officers of the banks of London, on hearing what these boys were doing, criticized them severely. Others saw merit in the idea, and it resulted in a conference at which it was agreed to hire a room in the down-town section, where the boys might meet each day and trade checks and drafts. Errors resulting from these trades made it neces- sary to install a system of records, and to place a man in charge; and from that developed the London Clearing House, which is one of the largest, if not the largest, Clearing House in the world. The idea came to America in the year 1853, at which time the New York City Clearing House was established. It was later taken up by Boston, Pittsburg, Philadelphia, Chicago, and drifted on westward to the Coast ; and now every city of any size or commercial importance has a Clearing House of some description. Clearing Houses are of two classes — incor- porated and voluntary organizations. Some authorities hold that all Qearing Houses should be incorporated, but under existing laws and con- ditions it seems there is little or nothing to be gained through incorporation, and the voluntary organization is accordingly the form of associa- 2 THE CLEARING HOUSE tion that prevails throughout the United States. One of the principal purposes of every Clear- Early ing House embodies the thought that permeated Functions the minds of the two English lads who met in , ^ , , . r 11.,- 1 velopments the coftee house — that is, of estabhshmg a place where representatives of the members may meet each day and trade or exchange items. In the early days banks operating through the Clearing Houses advanced large sums of money to the government, rendering a great patriotic service by protecting the credit of the nation at a time when it was imperiled. The rapid development in all lines of industry, and the great growth of financial affairs through- out the country, have made further co-operation necessary, and as a result many additional func- tions have been taken on by Clearing Houses. The objects and purposes of a modern Clearing Objects House Association might be stated as follows : ^^^ ^^^' (i) To facilitate the handling of business be- P°^*^ tween its members. (2) To facilitate the handling of business ^''*" between these institutions and banks and trust companies of other localities. (3) To foster and encourage conservative, safe and sound banking methods and banking practices. (4) To use its influence in matters of com- mon interest to its members, and for the general THE CLEARING HOUSE good of the community wherein it is located. (5) To perform such other services as are agreed upon by its members and which are not in contravention of Federal or state laws. The performance of such functions is gen- erally undertaken through three separate depart- ments, namely, (i) the City Department, (2) the Country Department and (3) the Examination Department. THE CITY DEPARTMENT THE original functions of the Clearing House, namely, the exchange of items and settle- ment of resulting balances, are conducted through what is commonly termed "The City Department." On organizing a Clearing House, Clearing each member is given a number, under which House its business is transacted. These numbers are Numbers generally assigned on the seniority basis — the oldest bank member being assigned No. i, the second oldest No. 2 and so on. When a new member is taken in it is given the next highest number not in use. Each member maintains in its office a depart- ment known as its Clearing House Department, and to which are charged by the several depart- ments all items drawn on or payable at the offices Preparing of the other members. These items are usually ^t^n^s for recorded in the department where they originate ®*""S and on reaching the Clearing House Department are inspected as to signature, dates, etc., and are endorsed with a rubber stamp, showing the name Endorse- and Clearing House number of the clearing bank «ient8,etc. and the date of clearing. They are next sorted — S THE CLEARING HOUSE all items drawn on or payable at the office of each member being placed in a separate pile. When the sorting is completed and the clearing hour approaches, each pile of checks is taken to an adding machine and a list thereof is made and a total is taken. The items are then done up into packages, the list covering each package being placed on its face, and the Clearing House numbers of the members on which the items are to be cleared are marked on the respective pack- ages with pen or pencil. The lists on the pack- ages are endorsed with the regular Clearing House endorsement stamp. The packages are then sealed or bound up with rubber bands. Statements Each member is supplied by the Clearing and Rec- House with statement blanks which are in dupli- ^^^^ cate form and which show at the top the name and number of the member using the same. The blanks used in different places are not uni- form, but essential features are indicated in the accompanying illustration. Along the left margin of each statement ap- pear, in regular order, the names and numbers of all the members. Immediately to the right of these names and numbers are several columns, the two principal ones of which are headed **On Clearing House" and "From Clearing House." The total shown on each package of items is entered in the column "On Clearing House" and 6 3 o 6Q U ;f - p^ en ■n- «n vO r>i 00 o\ i 2 1 .8u!«3|3 j 8uoj^ i 1 1 ON S)U3Ut3SJOp 1 1 1 , UI SJOJJ3 1 1 1 1 jsnui 1 1 1 CQ d 1 1 1 5 1 §0 1 1 1 llu i Mill 1 1 1 d . 00 0^ Z i 1 First National Bank Union State Bank Merchants National Bank Farmers Trust Co. City National Bank People's State Bank Town & County Bank Goldburg Bank Country Clearing House Post Office TOTAL Balance i 1 g 5 SI 12 4> 12^ C 2 O u CO < Id CO D O X o z IS u CO J5 {3 IJS -^ c CO o & cd § I- a ^3 C (d g 2 Ji ^ ^ s I « o -57: 1 S3 .2 "^ -g.2 :5 s H < i. i Q THE CITY DEPARTMENT directly opposite the name and number of the bank on which the items are to be cleared. When all totals have been entered, the statement is footed, and if the work has been correctly done the footings thus obtained will prove against the combined total of all charges made by the several departments to the Clearing House Department. Assuming they do so prove, the packages are placed in a satchel or chest and the Clearing House clerk and messenger take the satchel or chest and statement and make a mad rush to the Clearing House. The reason for this rush is that the clearing hour is fixed, and any member not represented on the dot is fined ; and if tardy over a certain number of minutes, the member is shut out of the clearing for the day. The exchange room at the Clearing House is Exchange equipped with a cage or desk for each member, rqqj^*""^ and a manager's desk. The cages are usually arranged in parallel rows and in numerical order with reference to the numbers of the members. On arrival at the Clearing House the clerks enter their respective cages and the messengers pass around and deposit their packages of items — packages No. i being deposited in cage No. i, packages No. 2 in cage No. 2, and so on down the line. When all clerks and messengers have arrived at the Gearing House and all deposits have been made, each clerk has on his desk a 9 THE CLEARING HOUSE Making the Ex- changes Records at the Clearing House package of items from each member, and he enters on his statement in the column headed "From Clearing House" and opposite the re- spective names and numbers of the members the amount shown on the package received from each. The packages when thus entered are dropped into a receptacle from which they are taken by the messengers, who rush back to the banks so that the items may be quickly distributed to the bookkeepers, who pass upon the genuine- ness of signatures, etc., all items being cleared subject to being returned at a certain hour if found not good for any reason. Each clerk foots his statement when all totals have been entered, and if he finds he brought a greater volume to the Clearing House than he received from the members he carries his "From Clearing House" footings to his "On Clearing House" column and makes his deduction, showing the amount due his bank from the Clearing House, or his credit balance, as it is termed. Should the amount received at the Clearing House exceed the amount brought to the Clearing House, the operation would be the reverse, and he would show the amount due the Clearing House, or his debit balance. A duplicate of each statement is passed to the manager, who enters on the Clear- ing House records the net debit and credit bal- ances and the "On Clearing House" and "From 10 THE CITY DEPARTMENT Clearing House" totals. He then foots the bal- ances and if they prove the clerks are dismissed and return to their respective banks. The state- ments are filed as a record of the transactions between the several members, and the manager foots the "On'* and "From" Clearing House columns; and if they agree it is conclusive evi- dence that the work has been correctly done. The "On Clearing House" column represents the Clearings items brought to the Clearing House and are the figures that are reported in the newspapers and financial journals as the bank clearings. Where an average of ten millons of dollars' worth of items are cleared daily the resulting balances run about six hundred thousand dollars; so by the operation the amount of cash necessary to handle ten millions of dollars' worth of business is reduced from ten millons of dollars to six hundred thousand dollars. The next step is the settlement of balances. Apportion- One plan is for the manager to draw checks ing Bal- against the debtor members in favor of the *"<^®* creditor members; the first check being drawn against the largest debtor, in favor of the small- est creditor, the second in favor of the second small creditor, and so on down the line until all the creditors have been satisfied. These man- ager's checks are payable in cash and generally must be settled at or before 2 o'clock P. M. of II THE CLEARING HOUSE Gold De- positary Settlement of Bal- ances the day on which drawn. In case of failure to collect any such check at or before the specified hour, all members other than the one against whom the check is drawn are released from re- sponsibility thereon. To simplify the payment of these checks a Clearing House gold depositary is usually maintained, in which members deposit gold of required weight and United States gold certificates, in lieu of which are issued Clearing House gold certificates in amounts of five and ten thousand dollars. These certificates pass current among the members, the holders thereof being the owners of the gold and United States gold certificates so deposited and which count as legal reserve. In settling balances of six hundred thousand dollars it is necessary to use only sixty ten thousand dollar gold certificates. This plan saves abrasion on the gold as well as the labor of carrying it back and forth and recounting it. It also eliminates the danger of street robberies. The manner of settling Clearing House bal- ances, and the forms used, vary slightly. In some cities the debtor banks pay the cash to the man- ager of the Clearing House, and he in turn pays it to the creditor banks ; while in other cities the creditor banks present the Clearing House man- ager's settlement checks to the debtor banks direct for payment. In some cities, in order to avoid congestion of work and to head oflf check kiting, 12 THE CITY DEPARTMENT informal exchanges are made by the members. Receipts are taken to cover items so exchanged and are passed through the Clearing House at the next regular exchange. Trading of balances Trading of is also in vogue in some cities, and since the in- Balances augu ration of the Federal reserve system many balances are settled by checks on Federal reserve banks. To encourage promptness, care and ac- curacy on the part of clerks, fines are imposed for errors in lists, wrong clearings, missing endorse- ments, errors in statements, misconduct, etc. These fines range from ten cents to five dollars. Fines and are assessed against banks whose representa- tives are the offenders. The proceeds usually go toward defraying the general expenses of the Association. To get an idea of the convenience and saving that result from the daily exchanges at the Clearing House one need only to consider the number of clerks that would be required to go from bank to bank and collect and handle the actual cash represented by ten millions of dollars' worth of items, then compare that process with the clearing of a like amount of items and the settlement of balances resulting therefrom. One of the important functions of the City Loan Cer- Department has been the issuance of loan certifi- tificates cates and scrip during times of stringency, but with the passage of the Federal Reserve Act it is hoped that this function is forever eliminated. 13 THE CLEARING HOUSE General Business Expenses and As- sessments It was by co-operation through this department that the banks of New York, Philadelphia and Boston were able to protect the credit of the nation during the early years of its existence. The City Department handles the general busi- ness of the Association. It is of a legislative and administrative character. Through it rules and regulations regarding exchange and collec- tion charges and interest rates allowed on bal- ances are formulated and enforced. It provides for uniform counter checks, uniform advertising, and looks after matters of common interest to the member banks, and the general good of the com- munity. Small banks that do not feel justified in joining the Clearing House arrange with some member to act as their agent and to clear for them. The expenses of this department are usually defrayed from a general fund arising from fines and from special assessments against the mem- bers based upon the clearings for the quarter preceding such special assessments. H and Pur- poses THE COUNTRY DEPARTMENT THE personal check has been a great factor in the development of all lines of industry throughout the United States, and with the un- Objects precedented growth of this nation there came an attending increase in the volume and number of such checks. The burden of labor and ex- pense involved in handling these items con- stantly increased, and in some of the large col- lection centers this burden grew to such enormous proportions that it consumed the earnings of the banks and jeopardized their existence. Boston, Mass., was the first center to feel keenly the ef- fects of the expense of handling out-of-town personal checks, and the weight of exchange that was being charged thereon. The Boston banks realized the important part that these checks were playing in the business world, and the necessity for their continued use, yet they were obliged to seek some means of reducing the burden of ex- pense incurred in their handling. They accord- Origin ingly created a "Country Collection Department" or "Country Clearing House," as it is generally termed. Kansas City, Mo., Nashville, Tenn., 15 THE CLEARING HOUSE Operation Making Arrange- ments and Rates Atlanta, Ga., and Oklahoma City, Okla., rapidly followed the lead of Boston. St. Louis, Mo., New York City, Richmond, Va., Detroit, Mich., and several other cities have organized similar departments. The Country Clearing House might best be understood by considering it as a co-operative bank owned by the Clearing House Association and with its functions limited to the collection of out-of-town cash items on a certain territory, and the performance of services inci- dental thereto, and with its depositors limited to the members of the Clearing House Association. The manager in charge is given full power to make arrangements with the banks in the ter- ritory covered, and proceeds very much along the same lines as does the officer of a bank in mak- ing connections for his institution. Strength, service and rates are the principal factors in de- termining as to what bank, or banks, the Country Clearing House will send its items on towns wherein there are two or more banks. A circular letter explaining the plan is sent to each bank in the district by the manager. This letter is followed by a card requesting certain informa- tion, including a list of the bank's correspondents, a list of the bank's officers, the time of arrival and departure of mails, the rate of exchange, if any charge is to be made on cash items, and a statement of the financial condition of the in- i6 THE COUNTRY DEPARTMENT stitution. These cards are filed for future refer- ence, and in case of doubt as to the validity of the information given thereon, it is checked up and further investigation of the character of the officers and the general character of the institu- tion is made through its correspondents and other sources. When the arrangements have been per- fected, each member of the Clearing House is furnished with a book giving a complete list of all banks to which the Clearing House has ar- ranged to send items and the rate of exchange that will be charged by each. Members are in- formed, from time to time, of all changes in and additions to this list. Each member of the Clearing House is pro- Endorsing vided with a combination endorsing stamp which and Pre- endorses the items to the Clearing House and P^^^S for the Clearing House at one application, and each member is also supplied with combination record-sheets-and-foreign-slips, which are of such form that when the items are being re- ^ corded thereon, they are through the means of carbon sheets entered on the foreign slips to which they are finally attached when brought to the Country Clearing House for deposit. Each foreign slip shows at the top, the Clearing House number of the member endorsing the items, the date of the endorsement and the name of the bank and town to which the items are to be sent, 17 THE CLEARING HOUSE Due-Bills Handling of Items at the Clearing House in accordance with the Country Clearing House list. This information is repeated on a perforated stub at the bottom of the slip. The amount of each item is entered on the body of the slip and a total is made and carried to the stub. The foreign slips thus prepared with items attached are sorted in alphabetical order and an adding machine list is made of the totals. The list is endorsed by the member, and the items are placed in a package with the list on its face, and are delivered to the Country Clearing House in this shape. A check or due-bill, payable through the Clearing House at a subsequent date, is issued to the member in lieu of the total day's deposit. The date these checks are clearable is fixed by the average time required to get returns for items on the district covered by the Country Clearing House. When the packages are opened at the Clearing House, the stubs are detached and filed. An add- ing machine list is made of the totals shown on the slips and is proved against the list which ac- companied the items. The slips with items at- tached are then distributed on the sorting tables in alphabetical order with reference to towns. When all the slips with items attached have been distributed, they are sorted further with reference to banks to which they are to be sent, so that when all deposits have been made and the sort- i8 THE COUNTRY DEPARTMENT ing is completed the items are ready to be run on the Country Clearing House letters of trans- mittal. (These letters and corresponding en- velopes are prepared in advance.) The totals shown on the slips and the numbers of the mem- bers are entered on the letters of transmittal by means of the adding machine and a sub-total is made on each letter and is carried to a stub at the bottom of the letter. These stubs are perforated and bear the date and addresses as shown on the corresponding letters. They are detached and Records filed as the record of the transit charges against the out-of-town banks. At the close of each day, a total is taken of all such stubs, and if the work has been correctly done, this total will prove against the total of all deposits made with the de- partment for the day, and is the charge to be made against the transit account. When letters are paid, the accounts are credited by eliminating or removing from transit the corresponding stubs. All returns are made direct to the manager of the Protested Clearing House, and all refused and protested ^^^ ^n- items, together with the fees charged thereon, P^^^-ttems are deducted and returned with draft to cover the balance of the letter with which they were originally transmitted. The Country Clearing House is represented as Distribu- a member in the daily exchanges at the Clearing *^^** °^ House, and in that way distributes the returns ®*"^"* 19 THE CLEARING HOUSE and secures credit for all returned items, and the members charge to the Country Clearing House the checks or due bills which have been issued in lieu of items deposited with the department for collection. In some Country Clearing Houses the estimated time required for getting returns is so close to the actual time that the due bills, as they become payable, just about offset the returns, and the small debit and credit balances that arise be- cause of their not being an exact offset, are car- ried over by the bank that falls heir to the same until the following day ; while in other places the amount due to each member is figured each day and new bills are issued for the exact amount Prorating due. The office or operating expenses of the department are pro-rated monthly on the basis of the total business and the total number of items handled through the department for the month. The exchange charges are assessed against the members at the close of each month, each member being charged with the actual cost of its items. These charges are taken from the letters as they are paid and are figured and totaled up each day. The plan is, therefore, fair and equitable to all Clearing House members. The Country Clearing House does not interfere with the individual ar- rangements of its members with their correspon- dents, but merely gives them the benefits of addi- tional facilities. It is a machine operated strictly 20 Expenses and Ex change .^^^ THE COUNTRY DEPARTMENT for economy and better service. It materially re- duces exchange charges, encourages more prompt ^ returns, and lessens every item of expense inci- dental to handling of out-of-town checks. Ten members have items on p^ certain town, the Savings minimum postage is 2c. each or 2:0c. for all, while, ■^"®*^*®^ were the items consolidated and sent from the Country Clearing House in one inclosure, the total postage would be from 2c. to 4c. and a sav- ing from 1 6c. to i8c. would be effected. The saving on two thousand towns would be from $32 to $36 per day on postage alone. In addi- tion there is a saving of nine remittance letters, nine envelopes, and a corresponding saving of labor in handHng the returns. The same is true with reference to tracing and correspondence, and from the standpoint of the country banker, it re- lieves him of considerable work, since he is re- quired to write one draft instead of ten, address one envelope instead of ten, and use 2c. in postage instead of 20c. One of the Country Savings Clearing Houses in handling items on 5,600 banks ^ ountry has effected a saving of more than 50 per cent, in the gross expense involved, and has reduced the time required for getting returns more than 25 per cent. The Boston Country Clearing House has succeeded in making arrangements whereby it receives par returns from 90 per cent, of the banks in the entire New England States, and 21 THE CLEARING HOUSE has reduced the cost of handling to the low mini- mum of yc. per thousand dollars or about one- third of a cent per item. Other Country Clearing Houses in operation have made corresponding progress. THE EXAMINATION DEPARTMENT ONE of the comparatively recent and most valuable functions of the Clearing House is that of conducting through its managing committee rigid examinations of the members and clearing banks (the banks receiving the privileges through the agency of some mem- ber). Federal and state bank examiners render Limited most valuable service, but under the customs and Authority I of N^3.~ laws they have little power that is of a remedial ^^^^^i ^^^ character. It is their duty to see that every bank state Bank which they examine is conducted according to Examin- law ; that its capital is unimpaired ; that the books, ers) records and accounts are properly kept and that the reports made to the Comptroller or Banking Department are correct. They must confine their criticisms practically to infractions of the law, and offences must reach the stage of capital im- pairment or insolvency before official action can be taken. At this stage the remedy is an assess- ment against the shareholders, in some form or other, or forced liquidation. Bank examiners cannot prevent bank failures, but their visits and the police power with which they are clothed, are 23 THE CLEARING HOUSE valuable influences in keeping banks in good con- dition. Some factor is needed, however, which will restrain, repair and correct minor irregu- larities, and unsound conditions, before they de- velop into the most dangerous stages. The Ex- amination Department of the Clearing House is Supervision such a factor. This department is under the supervision of a managing committee, usually known as the Clearing House Committee. This committee is generally elected annually from among the active officers of the member banks, and is authorized by rule to employ competent examiners and assistants, who in turn are em- powered, under the direction of the Clearing House Committee, to make examination at will of all banks having the privileges of the Clearing House. Careful consideration is given to the selection of the examiner and assistants. The success of the plan depends to a large measure upon the competency, faithfulness and fidelity of these men. They are generally required to sign an agreement not to engage in the business of banking or enter the employ of any institution under their jurisdiction within a period of three or five years after leaving the employ of the Clearing House. Examina- Clearing House examinations include, in ad- dition to verification of the assets and liabilities of the bank, a thorough examination into the 24 tions THE EXAMINATION DEPARTMENT workings of every department. They are not intended to be a careful audit of all the accounts. That is left to the bank's own auditor and to special auditors who are called in from time to time. Following each examination a duplicate Reports detailed report is made, giving a description of the loans, bonds, investments, and other assets. This report shows, under a special schedule, loans both direct and indirect, to officers, directors and other employees, as well as to firms and corpora- tions in which they may be interested. It further covers the conditions that are found in every de- partment of the bank. One copy of this detailed report is filed at the Clearing House, and is open to the examiner and manager only, except in special instances where it is necessary that it be brought before the Clearing House Committee. The other copy is filed with the President of the bank examined, and the directors are notified and requested to call at the office of the President and inspect the report. The examiner requires an acknowledgement of this notice from each di- rector, with a promise on the part of the director to call and go over the report. This encourages closer attention to the bank's affairs, and makes certain that every director has opportunity of knowing the bank's true condition. A skeleton of this report, setting forth in a general way the character of the bank's assets, and giving a list 25 THE CLEARING HOUSE Moral Ef- fect of Ex- aminations of the loans to employees, officers and directors, and to firms and corporations in which they may be interested — also giving a special schedule of all of the excessive and important loans, and making mention of the irregularities, bad condi- tions and dangerous tendencies and practices that exist in the institution — is brought before the Clearing House Committee by the examiner. The Clearing House Committee goes over the report carefully and considers fully the examiner's views and recommendations. Then the com- mittee calls in the managing officer of the bank examined, and gives him the benefit of its views, and makes such suggestions as may seem expedi- ent. The advice of the committee is generally heeded, and whatever the trouble may be, it is caused to be corrected. No law nor plan of bank examination can be devised which will prevent bank failures. This is because human judgment is not perfect, and the making of loans and investments depends upon human judgment; but greater care will be exer- cised by every banker in making his loans and investments if he knows they are to be subjected to rigid inspection and criticism by a competent committee of well-trained and well-informed bankers. The managing officers of every bank that is subject to Clearing House examinations will use their best efforts to the end that their THE EXAMINATION DEPARTMENT institution shall be kept in such shape as will in- voke compliments rather than criticisms from the committee. Pride and conscience are the two most potent factors in keeping bankers and busi- ness men within the bounds of law and reason. These, coupled with fear of detection and ex- posure, far outweigh the penalties that are fixed by law. The installation of the first Clearing House examination department was precipitated by a failure involving many millions of dollars, and most bankers who are acquainted with the facts believe that failure would have been averted had the bank been subject to Clearing House ex- aminations. Through the guidance and advice of the Clearing House Committee many bad situa- tions, which would have developed into failures, have been worked out in cities where Clearing House examination departments are maintained. In some instances bank Presidents have been re- quested to resign and dispose of their holdings in order that their respective banks might be freed from their influence, incompetency and bad judg- ment. The Clearing House examiner usually keeps a Check on card index of all loans of importance, and can Loans tell closely as to what is the total of the obliga- tions of any individual, firm or corporation to the banks under his jurisdiction. This is valuable information, and is not obtained by state or Fed- 27 THE CLEARING HOUSE Proposed Federal Examina- tions eral examiners. Where the aggregate of the bor- rowings of any firm, individual or corporation is in excess of what in the judgment of the ex- aminer and Clearing House Committee, such firm, individual or corporation is entitled to receive, the banks interested are so advised, and are thus given opportunity to call upon the borrower to reduce the obligations to a safe basis. Many con- cerns are headed off in this way, which if per- mitted to expand further, would be the victims of certain ruin, and would inflict heavy losses upon the banks involved. Clearing House examina- tions are a tremendous factor in encouraging careful, conservative and sound banking. Many improvements in the systems and methods of the various departments of banks are brought about through their influence. They hinder the de- velopment of illegitimate schemes, and make the financing of legitimate business easier and more certain. They have been characterized by a Comptroller of the Currency as being infinitely superior to state and Federal examinations. The framers of the Federal Reserve Act rec- ognized the value of Clearing House examin- ations, and sought to include in the Act provisions for the introduction of a similar plan in the Federal reserve districts, to be operated under the direction of the Federal reserve banks, but it is not likely that the system of Federal bank 28 THE EXAMINATION DEPARTMENT examinations will be changed to conform to this idea until the offices of the Comptroller of the Currency and the Federal Reserve Board are consolidated. In the meantime, the clearing houses in cities having a sufficient number of banks to justify the maintenance of examination departments will not measure up to the standard of responsibility they owe to their respective com- munities if they do not investigate the Clearing House examination plan with a view of institut- ing such departments. The expense of main- tenance is comparatively small and the benefits are many. The expenses of this department should be de- Expenses frayed out of a fund arising from an annual fee charged against each bank subject to examination and from special assessments based on total assets. and As- sessments INFLUENCE OF CLEARING HOUSES New Clearing Houses Necessary THE erroneous idea that Clearing House Associations are sort of monopolistic af- fairs, destined to foster and further the in- terests of big banks in reserve and central re- serve cities, at the expense and detriment of the banks in the smaller cities and towns, is being rapidly dissipated. Good bankers, whether oper- ating on a large, medium or small scale, have begun to realize that the permanency and success of their respective institutions are dependent, not only upon the prosperity of the farmers, laborers, merchants, manufacturers and general business interests, but rest to a large degree upon the condition and solvency of their competitors. There has been a greater improvement in the banks of this country from the standpoint of strength and efficiency during the past eight or ten years than during any like period of the life of this Nation. This improvement is not due so much to legislation as it is to friendly co- operation brought about through organizations such as Clearing House Associations. There was a time when good bankers would lie back and chuckle because of having unloaded un- 30 INFLUENCE OF CLEARING HOUSES satisfactory customers upon neighboring banks, but experience has taught that an accumulation of such risks brings ruin, and not only the bank directly interested is affected, but for years there- after every bank in the community sustains a proportionate loss of business. The growing ten- Co-opera- dency is to combine efforts and to co-operate on matters of common interest, and to the end that unsatisfactory individuals, firms and corporations, shall either reform their methods or be denied accommodations by the banks. Clearing House Associations using the Examination System af- ford a channel for exchange of information which greatly reduces the amount of unsatisfac- tory business. Co-operation through Clearing Houses does not eliminate competition. Compe- Competi- tition grows keener every year, but its form is be- ^^ *^?* , :• 1 I, A t!' u A Restrained mg entirely changed. It is now based on person- ality, strength and service. The Clearing House through evolution has become a tower of strength and a great instrument for service to its members and to the public. Such organizations should be formed in every city wherein two or more com- mercial banks are located. 31 ARTICLES OF ASSOCIATION Objects and Pur- poses THE following draft of Articles of Asso- ciation is suggested for use in organizing Clearing House Associations in small cities and towns. The details may be changed to meet local conditions. It will be found de- sirable in most instances for new associations to operate under temporary rules until experience has demonstrated as to what by-laws, rules and regulations may be required : 'The undersigned banks of hereby associate ourselves as a Clearing House Associa- tion for the purpose of effecting at one place the daily exchange of checks and other clearable items between the several members and of set- tling the balances with each other that arise from such exchanges ; also for the purpose of providing such safeguards, rules, regulations and con- veniences, as may be desirable and which are not in contravention of state or Federal laws, in and governing our relations with each other, with banks and trust companies of other localities and with the general public, and agree to be governed by the following Articles of Association : 32 ARTICLES OF ASSOCIATION Officers "(i) The name of this Association shall be the Clearing House Association. "(2) The officers shall be a president, vice- president, secretary and treasurer, who shall be elected from among the active officers of the banks that are members of the Association by ballot on the organization of the Association and annually thereafter on the second Monday in January at (fix hour), or failing at a meeting at that time, such officers shall be elected at a special meeting thereafter called by the president for that purpose, and shall hold office until their suc- cessors are elected, and shall perform such duties as usually pertain to their respective offices. "(3) Vacancy in any office of the Association Vacancies may be filled temporarily by the Executive Com- mittee by the appointment of an active officer from the member bank with which the retiring of- ficer was connected. "(4) The officers shall constitute an execu- tive committee to arrange for the place and manner of the exchanges and details of the same, and to enforce the by-laws, rules and regulations of the Association. They shall assess the cost of the maintenance of the Association upon the members in proportion to capital and surplus (or according to total resources or total clearings). The treasurer shall make a report of receipts and expenditures at the end of each fiscal year. 33 Executive Committee THE CLEARING HOUSE Disburse- ments Powers of Officers Represen- tation Authority of Man- ager Clearing Hour Settle- ments "(5) The treasurer shall be the custodian of the funds of the Association and shall disburse same by check countersigned by the President. "(6) The president shall call meetings of the Association whenever in his opinion its interests may require or whenever requested so to do by the executive committee, or upon request of any two members, and at all meetings each member shall be entitled to one vote. A majority of the members shall constitute a quorum. "(7) Members may be represented at any meeting of the Association by one or more of- ficers but shall be entitled to only one vote. "(8) The secretary (acting as manager) shall have immediate charge of the business of the Clearing House and his decisions concerning questions of practice and details at the Clearing House shall rule until modified by the executive committee. "(9) The hour for making exchanges shall be o'clock a. m. of each business day, when the Clearing House clerks from the sev- eral member banks shall report with their re- spective demands, separately made out against each member in detail and the totals summed up. The work of clearing shall not be delayed longer than five minutes after a. m. on ac- count of the failure of any bank to be represented at that time. At . . o'clock the settling 34 ARTICLES OF ASSOCIATION clerks shall return for settlement, when the man- ager shall issue his checks or warrants upon the debtor banks in favor of creditor banks for the balances, which checks shall immediately be pre- sented, and on presentation be settled by the debtors to the satisfaction of the creditors in whose hands only they are available. "(lo) A number shall be permanently as- signed to each member. These numbers shall be assigned on the seniority basis; the oldest bank a member being given number one and the sec- ond oldest number two, etc. "(ii) In case of failure on the part of any Default member of the Association to pay promptly the checks of the manager to cover balances arising from the exchanges, such checks shall be im- mediately returned to the manager, who shall call upon the other members to make up the sum for which payment has been refused in pro- portion to the amount of items upon the default- ing member sent into the Clearing House at the preceding exchange, which sums so furnished shall constitute a claim in the hands of the re- sponding members and all checks received from the Clearing House by the defaulting member shall be delivered, if required, to the members owning the same without mutilation. The agency of the Clearing House in the matter, it is under- stood, is only as trustee and in no case is the 35 THE CLEARING HOUSE Errors and Returned Items Hour for Returning Items New Members Association to be held responsible for any loss that may occur. "(12) Errors in the exchanges and claims arising from return of checks or from any other cause are to be adjusted directly between the members who are parties to the same and not through the Clearing House. "(13) Checks received through the exchanges and returned as 'not good' or 'mis-sent' shall be returned by . . p. m. direct to the bank from which received and said bank shall im- mediately refund to the bank returning the same the amount for which they were originally cleared. If not returned by p. m. the re- sponsibility of the bank which sent said checks through the exchanges shall cease. "(14) These articles of association shall be- come binding upon the respective members from the time they are signed by each respectively, pro- vided that at the time of such signature there shall be deposited with the secretary a properly certified copy of a resolution of the board of directors of such incorporated member, or a cer- tificate of assent of such unincorporated member authorizing the signing of said articles. New members may be admitted to the Association at any meeting by a two-thirds vote of all the mem- bers and these articles shall become binding on ARTICLES OF ASSOCIATION such new members when signed and assented to as above provided. "(15) Any member may be suspended or ex- pelled from the Association for cause upon a two-thirds vote of all the members. "(16) Any member may withdraw from the Association after giving thirty days' notice to that effect, provided no assessments or fines are due and unpaid. "(17) Amendments to these articles of asso- ciation may be made at any meeting by a vote of a majority of all the members. Notice of proposed amendments shall be given in writing to each member at least ten days previous to the day on which they are acted upon. "(18) By-laws, rules and regulations govern- ing the business of the Association in the making of exchanges, providing for the imposition of fines and other details (and also fixing exchange and collection charges and providing for examina- tion of members) may be adopted at any meeting of the Association by vote of a majority of all the members and may be amended by like vote. Notice of the proposed adoption of by-laws or of proposed amendments thereto shall be given in writing to each member, at least ten days previous to the day on which they are acted upon." Suspen- sions With- drawals Amend- ments By-laws, Rules and Regula- tions 37 ADDITIONAL SUGGESTIONS FOR THOSE DESIRING TO ORGANIZE A CLEARING HOUSE Maximum Interest Rates Interest on Sav- ings Ac- counts THE banks in every city, county, town and village in the United States will find friend- ly co-operation advantageous and profitable, not only to themselves but to the communities they serve. The following ideas are offered for considera- tion as a basis for co-operation and may be in- cluded to advantage in the by-laws, rules and regulations of any Clearing House Association located in a state where co-operation in this man- ner is not prohibited by law : a. Fixing a maximum of 3 per cent, on in- terest to be allowed on certificates of deposit and fixing the time of such certificates 3, 4, 6 and 12 months. No interest to be allowed after maturity or if cashed before maturity. b. Fixing the maximum of 3 per cent, to be allowed on savings accounts. Same to be com- puted and paid in July and January, allowing in- terest from the first of each month where the deposits are made within the first five days of the month. 38 ADDITIONAL SUGGESTIONS c. Fixing the fees to be charged for drafts Exchange sold over the counter. Charges d. Fixing a uniform charge for presenting Collection and collecting drafts and notes. Charges e. Arranging to pro-rate all deposits of public Public funds. This for the safety of the banks and the Deposits public. f . Fixing a minimum per transaction and per Escrow thousand dollars for handling matters in escrow. g. Fixing a minimum rental on safe deposit ^ . 1 posit h. Arranging for all requests for donations of _ o X 1. r J -1 Donations $15 or more to be referred to a special com- mittee. i. Requiring annual statements from all cus- Borrowers* tomers having a line of $1,000 or more and en- Statements couraging the procuring of statements from all borrowers. j. Exchanging credit information on all cus- Credit In- tomers who patronize two or more banks or who ^0""***°** seek to change their connections. Past Due k. Submitting to a special committee monthly P^P®^ ^^^ a list of all past due paper and over drafts. Drafts 1. Fixing the business hours and rigidly ob- Hours and serving legal holidays. Holidays CLEARING HOUSES IN THE SMALLER PLACES MAY FIND THE FOLLOWING SUGGESTIONS ADVAN- TAGEOUS : 1st. To designate a clerk in the employ of a 39 THE CLEARING HOUSE Rotation of Man- agers Meetings Dues Fines Rotation of Of- ficers member to serve as manager for a period of two months and during the period of his service hold all meetings and make the daily exchanges in the directors' room of that member. Designate the clerk in the employ of another member for the following two months and so on until all the members have been recognized. 2nd. To hold regular meetings of the Associ- ation on the second Tuesday of every second month at 7.30 P. M. 3rd. To arrange for a membership fee of say $10 and annual dues of a like amount. 4th. To fix a schedule of fines for errors, in- fractions of the rules, etc. 5th. To arrange for rotation in all offices of the Association. DATA The first clearing house in the United States was organized in 1853. The Clearing House Section work started in 1905. There are 233 regularly organized clearing houses in the United States. 191 Clearing House Associations are members of the Clearing House Section. 42 Clearing House Associations are not mem- bers of the Clearing House Section. 40 ADDITIONAL SUGGESTIONS 13 clearing houses maintain Country Collec- tion Departments. 20 clearing houses have examination depart- ments. THE UNIVERSAL NUMERICAL SYSTEM URGENT need for short methods of han- dling the ever increasing flow of checks and drafts, generally known as transit items, led ingenious bank transit men to devise va- rious schemes under which numbers and let- ters were assigned to banks and bank customers to be used in lieu of their respective names, in making record of transit items on collection let- ters, remittance letters, books, statements, etc. The first system of letters and numbers to be used in this way was inaugurated by the Ameri- can Bankers Association in the year 1908. Various These schemes were designed principally for local use, were successful in a measure, but con- fusion arising because of conflictions in numbers and letters assigned by neighboring banks, dem- onstrated the necessity for consolidation of the several plans under central control. On December 12 and 13, 1910, a meeting of transit managers from a number of the leading cities was held under the auspices of the Clear- ing House Section of the American Bankers Association for the purpose of devising a num- bering system that would be universal in its scope, 42 Plans UNIVERSAL NUMERICAL SYSTEM would overcome this confusion and be adaptable for the use of any bank, regardless of its size. The plan evolved at this meeting was approved Explana- and adopted by the Executive Council of the ^°^ ° American Bankers Association on May 2, 191 1, ^^^ and has since been known as the Universal Nu- merical System. It provides for the assignment of a number to every bank, banker and trust company in the United States that is authorized to do a general banking business; for the assignment of num- bers designating cities and states, also for the assignment of numbers to the treasurer and as- sistant treasurer of the United States, to certain postoffices, as well as to express companies, rail- roads and firms upon whom checks are drawn. The assignment of numbers to local bank cus- tomers, individuals, firms and corporations aside from those mentioned, was left entirely in the hands of the individual banks. Numbers used to designate cities and states How Num- are termed prefix numbers. ^^"^^ *^® Forty-nine of the leading collection centers, ^^^® including the reserve and central reserve cities and the cities of Buffalo, New York, and Mem- phis, Tennessee, were given the numbers ranging from one to forty-nine, same being assigned in the order of the population of these cities as shown by the government census of 1910. 43 THE CLEARING HOUSE In this arrangement Brooklyn is included with New York City, Kansas City, Kansas, is included with Kansas City, Missouri, and South Omaha with Omaha. The states were divided into five sections, Eastern, Southeastern, Central, Southwestern and Western. The state containing the princi- pal collection centers in each section was placed at the head of its section and the other states in each section were arranged in alphabetical or- der. Prefix numbers from 50 to 58 inclusive were assigned to the states in the Eastern Sec- tion ; 60 to 69 to the states in the Southeastern ; 70 to 79 to those in the Central ; 80 to 88 to those in the Southwestern, and 90 to 99 inclusive to those in the Western Section. Prefix numbers 59 and 89 were reserved to be assigned later to Alaska and the island possessions of the United States. The Clearing Houses in the forty-nine cities that were given the prefix numbers from I to 49 inclusive had previously designated their respective members by numbers. Numbers corresponding to these so-called clearing house numbers were assigned to the clearing house member banks in these cities and the other banks in each of these cities were ar- ranged in the order of their seniority and were so numbered. This same scheme was followed in assigning 44 UNIVERSAL NUMERICAL SYSTEM the numbers to banks in the largest city in each state, outside the forty-nine cities above re- ferred to. All other cities and towns in each state hav- ing two or more banks were arranged in the order of their population. The banks in each city or town were arranged in the order of their seniority and beginning with the lowest number not already used, the numbers were assigned to the banks in the order so arranged. The one- bank towns in each state were then arranged in alphabetical order and the banks in these towns were numbered in the order thus arranged, the bank in the town heading the list being given the lowest number not in use, etc. Blank num- bers were reserved in each city of 5,000 popu- lation or over, to be assigned to new banks and numbers are available for assignment to new banks in other locations. Through the use of this system in registering Savings transit items instead of writing out the names. Effected many thousands of dollars are saved annually in time and labor. This saving is participated in by every bank either directly or indirectly and in proportion to the volume of its business. The observance of the following suggestions by every bank will materially facilitate and expedite the handling of transit items and will insure the 45 THE CLEARING HOUSE Endorse- ment Stamps Transit Numbers on all Checks Numbers on all Drafts Key to Numerical System realization of the greatest possible benefits from the system. 1st. Endorsing all transit items with an en- dorsement stamp bearing in figures of bold and distinct type the transit number assigned to it. 2nd. Having printed in figures of plain and distinct type, immediately following its name on all checks drawn upon it, on all of its certifi- cates of deposit and all of its cashier's checks, the number assigned to it. If the title fills the space across the item (but in no other case), the number may be placed in the extreme upper left- hand corner. 3rd. Having its number printed in the same manner as in suggestion No. 2, on all drafts on or "payable if desired" at its correspondent, also having printed on such drafts and immediately to the right of the name of its correspondent the number assigned to said correspondent. (In cases where there is not sufficient space to right of the name of the correspondent for its number, the number may be placed immediately in front of the city where payable.) 4th. Drawing drafts to be sent in payment of remittances to the order of the banks instead of to the order of bank officers. The plan provides for the publication by the official numbering agents of a book, known as the UNIVERSAL NUMERICAL SYSTEM "Key to Numerical System of the American Bankers Association." This book contains a list of the banks in each state, together with the numbers assigned to each arranged in alphabetical order, also contains in a separate division a list of the numbers of banks in each state together with the banks to which they are assigned, arranged in numerical order. It is a convenient reference from which can instantly be learned the name of any bank whose number is given or from which the num- ber of any bank can be secured if the name is known. The cost of this "Key" is $1.50 and it may be had upon application to the Secretary of the Clearing House Section. Supplements thereto are published semi-annually, giving new numbers assigned, cancellations and changes. These sup- plements are distributed free to the holders of the "Key." ^ NO-PROTEST SYMBOL PLAN AN IMPROVED METHOD OF CONVEYING NO-PROTEST INSTRUCTIONS Symbol Used ANY bank that receives from its customer, corporation, firm, individual or bank, a check or draft on a bank which it desires to have handled as a "no-protest" item, can con- vey such instructions through several intermedi- ate banks to the final paying bank by means of an inexpensive rubber stamp. To do this an impression of the stamp should be made on the face and as near the right hand end of the item as is possible. The stamp should be 3^ x J^ of an inch in size, and should contain the letters "N. P." and the universal numerical transit number of the bank and should be of the following de- sign:* N. P. 83-164 * The number assigned to your bank under the Uni- versal Numerical System should appear on the stamp which you use. 48 NO-PROTEST SYMBOL PLAN The instructions on the cash letter accompany- ing the item should include the following:* Protest all items over $20 not Instnic- bearing this stamp or similar stamp tions for containing the transit number of a Cash preceding bank endorser. Letters The teller will place an imprint of his stamp * N. P. 83-164 on every item of over $20.00 that passes through his department and which is to be handled as "no-protest." When This Plan Is in Complete Opera- jngtjuc- TiON THE Clerks Who Handle the Incoming tions Au- AND Outgoing Mail in Subsequent Banks tomatically Will Be Relieved from Examining Care- Conveyed fully Such Items, and Comparing the Items With the Letters in Order to Determine What Items Are To Be Treated as "No-pro- test." If the cash letters read as above indi- cated the instructions will be automatically con- veyed through all hands to the paying banks. Tags bearing "no-protest" instructions pinned * The number assigned to your bank under the Uni- versal Numerical System should appear on the stamp which you use. 49 THE CLEARING HOUSE Plan Uni- versal in Scope or pasted to checks, as well as the numerous symbols now in use, together with all of their attending annoyances, will disappear. Some banks may for their own convenience want to continue the practice of making a spe- cial record on their outgoing cash letters as to what items are to be handled as "no-protest.'' This may be done by placing the letters "N. P." or such other notations as are satisfactory either to the right or left of the amounts of the items to which they apply. It Is Desirable to Make the Plan Univer- sal IN its Scope. It is simple and easy of appli- cation. Its installation causes little or no ex- pense. It is a great labor and time saver and is beneficial both to the large and small institu- tions. Where banks have a large supply of cash letters on hand, it will be necessary for them to procure a rubber stamp with which to change the instruc- tions on these letters. A stamp of the following form is recommended for this purpose:* Protest all items over $20 not bearing this stamp or similar stamp containing the transit number of a preceding bank endorser, * The number assigned to your bank under the Uni- versal Numerical System should appear on the stamp which you use. SO NO-PROTEST SYMBOL PLAN This stamp can be procured from the Clearing House Section of the American Bankers Asso- ciation at the actual cost of twenty-five cents. The other stamp will also be furnished at actual cost, fifteen cents, by the Clearing House Sec- tion, or it may be more convenient to procure these stamps from local dealers. A little co-operation means success. The plan pian is copyrighted and banks using it must use it in Copy- its entirety, observing uniformity in the follow- "S"*®** ing particulars : 1st. As to the style and size of the stamp. 2nd. As to place of affixing stamp to checks and drafts. ( Should be affixed as near as is pos- sible to the right-hand end of the face of the items.) 3rd. As to uniform instructions on remittance Uniform- letters, and ity Es- 4th. As to minimum amount (we have adopt- ^*^*^^^ ed $20.00 as the minimum). If banks that have not adopted this plan will communicate with the Secretary of the Clearing House Section, he will furnish such additional information as may be desired. 51 TOTAL BANK TRANSACTIONS Advertising Feature Duplica- tion in Clearings BY constantly producing and publishing sta- tistics which are universally regarded as the best barometer of growth and business activity, Clearing Houses have developed into highly val- uable advertising agencies for the cities wherein they are located. The figures which have been used most widely for this purpose are the bank clearings. They represent the total volume of items (checks and drafts) drawn on clearing banks which pass through the Clearing House ; or, in other words, are the sum total of all items that come into the possession of banks having the privileges of a Clearing House, through membership therein or by agency, and which are drawn on or pay- able at the offices of other banks that in turn have the privileges of a Clearing House. These figures, in some instances, include duplications in the form of cashier's checks, issued in lieu of items cleared and returned direct to members be- cause of payment thereon being refused ; also in- clude checks drawn against members by the Clearing House managers in settlement of bal- sa THE CLEARING HOUSE ances and which are not collected, but are car- ried over and recleared on the day following. There is no way of determining what is the total of such items, but were the total of these items known and the amount excluded from the clear- ings, the figures would not then represent the actual business transacted because a great pro- portion of checks and drafts are deposited with, or cashed at, the banks on which they are drawn. These do not pass through the Clearing House. It is estimated that about four or five per cent, of the business transacted in the United States is transacted through the means of actual cash or money. Checks and drafts are used in handling the other ninety-five or ninety-six per cent. In order that there may be available in addi- tion to the present valuable Clearing House statis- tics, figures which will show as nearly as is pos- sible the actual business that is transacted throughout the country, a plan of producing sta- tistics known as "Total Bank Transactions" has What To- been instituted by the Clearing House Section of the American Bankers Association. Under this plan it is hoped that the principal Clearing Houses throughout the United States will, in ad- dition to reporting their clearings, make a re- port on each Thursday of the total volume of business transacted by the members and non- 53 tal Bank Transac- tions Rep- resent THE CLEARING HOUSE member clearing banks through the mail, over the counter, and through the Clearing House for the week including the business of Thursday; that is, the grand total of all debits against the accounts covering individual, bank, general and savings deposits, also certificates of deposits and cashier's checks paid. The reporting of bank clearings has become almost automatic. The "Total Bank Transaction" figures can be assem- bled with but very little trouble. By furnishing them the Clearing Houses will be rendering a valuable public service and the information will prove of interest and value to every bank officer. Method of If the Clearing Houses will supply their mem- Assembling bers, and non-member banks with forms of the *^®_-^*^" accompanying design and have each bank charge some employee with the responsibility of posting thereon the information at the close of business each day, it will become an easy routine to handle. One hundred and twenty Clearing Houses are reporting bank clearings, while but thirty-one are reporting total bank transactions. The latter number should be increased within the year to include at least one hundred of the leading cities. Experience shows that the clearings represent less than fifty per cent, of the business trans- acted and that if one hundred leading cities would report weekly the total bank transactions an ac- 54 ures ■g 1 1 1 « M i 6 ■33 n S a. So Vi V!) «> M Grand Total. . . $_ ^e statement is correct. §J3 1 1 3oks for Week, ks for Week. It Paid for Week d for Week. . The abo\ 11 s on Individual B( s on Country Boo rtificates of Depos shier 's Checks Pai Ending Thursday i s u > 1 1 1 i Total Debit Total Debit Total of Ce i ) 5 I 5 Si 55 TOTAL BANK TRANSACTIONS curate idea of the growth and business activity of the country could be formed therefrom. Comparison of the Clearings and Bank Transac- tions OF THE Cities Reporting Both Bank Clearings for the Transactions 6 mo. Including 6 mo. Including June, 1916. June, 1916. Atlanta $414,708,108 $558,532,000 Cedar Rapids 47,192,454 223,425,000 Cincinnati 842,390,750 2,391,433,000 Des Moines 167,688,000 613,404,000 Detroit 992,936,453 2,423,210,000 Fort Wayne 36,304,718 175,899,000 Hartford 204,494,508 308,122,000 Houston 245,880,995 246,745,000 Indianapolis 264,375,501 81 1,438,000 Kansas City 2,103,968,578 3,721,752,000 Los Angeles 610,353,229 1,109,861,000 Memphis 192,065,000 804,045,000 Minneapolis 641,746,664 2,224,437,000 New Orleans 592,218,733 1,194,362,000 Oakland 104,805,000 267,687,000 Omaha 565,545,030 1,529,992,000 Portland, Me 60,138,201 172,542,000 Providence 248,509,600 504,930,000 Richmond 409,860,533 1,429,209,000 Sacramento, Cal 54,3 1 7,083 273,562,000 San Francisco 1,543,226,460 3,397,110,000 St. Joseph 242,053,000 1,267,451,000 Scranton 80,334,392 205,443,000 Seattle 350,348,000 846,426,000 56 THE CLEARING HOUSE South Bend $21,927,455 $48,914,000 Spokane 1 10,920,000 277,476,000 Springfield, Mass 108,291,000 101,083,000 Stockton 30,942,937 58,789,000 Tacoma 54,208,747 147,814,000 Toledo 222,534,594 970,479,000 Trenton 57,760,409 165,565,000 $11,623,046,132 $28,471,137,000 57 THE FEDERAL RESERVE CLEARING SYSTEM SECTIONS 13 and 16 of the Federal Re- serve Act provide that Federal reserve banks shall receive on deposit from their re- spective members and from other Federal re- serve banks checks and drafts drawn upon any member of a Federal reserve bank or upon any Federal reserve bank ; and, further, that the Fed- eral Reserve Board may require the Federal re- serve banks to perform the functions of a Clear- ing House. The Federal Reserve Board under authority conferred by these two sections has established a plan of clearing and settlement of balances through a central fund in the hands of the Fed- eral Reserve Board at Washington, D. C, known Gold Set- as the "Gold Settlement Fund." When this plan was established, every Federal reserve bank was required to deposit with the Federal Reserve Board gold, or United States gold certificates of one million dollars in excess of the net bal- ances then due from it to other Federal reserve banks and each Federal reserve bank is required tlement Fund THE CLEARING HOUSE to maintain a minimum balance of one million dollars in this fund. Each Federal reserve bank carries on its books, Accounts in its relations with each of the Federal reserve Carried banks, two accounts, *'Due To" and ''Due From," also an account known as the ''Gold Settlement Fund Account," and at the close of business each Wednesday wires to the Federal Reserve Board advice as to the amount then *'Due To" each of the other Federal reserve banks. The Board tabulates the balances so reported and effects a clearing, using the telegraphic ad- Clearing vices as a basis and upon the same principle as ^ ^^^ that followed by regular clearing houses in mak- ing their daily exchanges. The net balances aris- Balances ing from such clearings are settled by book en- and Set- tries in the gold settlement fund account. Theo- tlements retically transfers are made of certificates repre- senting the amounts of the balances involved. After each clearing the Federal Reserve Board advises each Federal reserve bank by wire as to the results. These telegraphic advices serve as authority for making entries against the accounts. All telegrams are sent in private code and are confirmed by official advices through the mails. The plan relieves the necessity of transferring immense sums of gold and other lawful money. The balances resulting from the clearings aver- age less than seven per cent, of the amount 59 FEDERAL RESERVE SYSTEM cleared. The plan is operated in the interests of economy, safety and better service. It is a big step forward and is the forerunner of a great universal clearing system. Diversity Prior to July 15, 1916, the Federal reserve of Methods banks operated clearing or collection departments ^^^' through which checks and drafts on certain mem- mented , '^ , , x- 1 , , , With ^^^^ ^"^ ^^ ^"^ Jrederal reserve banks were han- dled. These departments were operated under rules which varied widely. In one district items not bearing the endorsement of any bank located outside of that district were taken for immedi- ate credit, at par, when drawn upon a member bank or a Federal reserve bank; in other dis- tricts items were taken when drawn upon mem- ber banks that had, through vote of their respec- tive boards of directors, agreed to maintain with their Federal reserve bank balances in excess of their required reserves in sufficient amount to cover such items, and further to permit their Federal reserve bank to debit such member banks' accounts with the amount of the items on the day they are received by Federal reserve bank. Two of the Federal reserve banks took the po- sition that the law did not contemplate that they should actually clear or collect a large volume of items, but that they should serve only as regu- lators of exchange. Aside from the knowledge and experience 60 THE CLEARING HOUSE gained, little was accomplished through these operations up to July 15, 1916. > On that day, under orders from the Federal Reserve Board, a practically uniform plan of clearing and collection Uniform was established in all the Federal reserve banks. -^^^^ Under this plan each Federal reserve bank op- erates a clearing or collection department. In Provisions the announcement of the plan the provisions cov- °^ *^* J Plan ered were: First: That each Federal reserve bank shall It«"^s receive for collection and credit, from member banks and from other Federal reserve banks at par, so far as concerns exchange charges, checks and drafts drawn upon members of the Federal reserve system. Second: That each Federal reserve bank shall receive, from its members and from other Fed- eral reserve banks, for collection and credit, at par, so far as concerns exchange charges, checks and drafts drawn on any bank, banker or trust company when such checks and drafts can be collected by the Federal reserve banks through member banks or otherwise at par. Third: That each Federal reserve bank will receive for collection and credit at par so far as concerns exchange charges, checks and drafts drawn upon any Federal reserve bank. Fourth: Par lists covering non-member banks whose items can be handled at par, so far as con- 61 FEDERAL RESERVE SYSTEM Tentative Credit Non-Mem- ber Bank Checks Expense of Shipping Funds cerns exchange charges, through the Federal re- serve banks will be furnished by the Federal re- serve banks to their respective members. Fifth: Tentative credit for items referred to in provisions Nos. i, 2, 3 and 4 will be given by Federal reserve banks to their respective mem- bers, but the proceeds will not be available for use either as reserve or otherwise until the funds are actually collected. (Two Federal reserve banks have announced that balances represented by such tentative credit entries may be treated as optional reserves.) Sixth: The Federal reserve banks will for- ward items direct to the member banks upon which drawn, and will charge them to the mem- ber banks' accounts when advice of payment has been received, or when sufficient time has elapsed within which to receive advice of pay- ment. Seventh: Member banks will be given oppor- tunity to handle checks on non-member banks be- fore effort is made by a Federal reserve bank to secure direct par connections with non-mem- ber banks. Eighth: Where member banks do not have sufficient volume of items to offset at the Federal reserve bank items sent to said members by the Federal reserve bank, such members may ship lawful money or Federal reserve notes in pay- 62 THE CLEARING HOUSE ment at the expense of their Federal reserve bank. Ninth: In handling items for member banks, Liability the Federal reserve bank will act as agent only. It will require each member to authorize it to send checks and drafts for collection to banks on which they are drawn, and will assume no liability except for negligence. Tenth: The cost of clearing and collecting checks and drafts will be assessed against the Service banks depositing such items with the Federal re- Charge serve bank. This charge will be known as a ser- vice charge, and will be fixed at so much per item. (It is generally estimated by the Federal reserve banks that the cost will range from one and one-half to one and three-fourths cents per item.) Eleventh: The Federal Reserve Board will fix Penalty a penalty, as provided in Sec. 19 of the Federal . , " Reserve Act, to be imposed upon member banks Reserves for encroaching upon their reserves. Twelfth: Each Federal reserve bank will carefully analyze the accounts of the member banks, and will apply a penalty where reserves are impaired. A schedule of time required within which to collect checks and drafts will be furnished to each member bank in order to en- able it to determine the time at which any item 63 FEDERAL RESERVE SYSTEM sent to the Federal reserve bank may be counted as reserve and will be available to meet checks drawn against the funds represented thereby. If operated as it should be, that is, along the lines of economy and efficiency, this new plan will afford a means of greatly reducing the la- bor, expense and time involved in liquidating cash items. It has in it the possibilities of the greatest col- lection system the world has ever known, but the departments operated under the plan should be self-sustaining, and sections 13 and 16 of the Federal Reserve Act should be so amended and Burden of the plan so revised that the burden of the ex- Expense pense will fall upon the beneficiaries, namely, the parties whose debts are liquidated by the use of the checks and drafts that pass through the Fed- eral reserve banks. It would then be as the framers of the law intended. During the initial stages and so long as the majority of the banks are not members of the Federal reserve system keen competition will prevent lodging the expense upon the parties who draw the checks and drafts, and it will be borne largely by the so-called coun- try banks. Between twenty-five and thirty bil- lion dollars' worth of country checks and drafts are collected annually by the banks at a cost of many millions of dollars. The general business 64 THE CLEARING HOUSE public should benefit by any reduction that is made in that cost through the operation of the new clearing and collection system, but should not benefit beyond the reduction. 65 THE CLEARING HOUSE SECTION and Purposes T HE Clearing House Section is a subdi- vision of the American Bankers Associa- tion organized for the purpose of providing a channel through which questions of im- portance and of common interest to the Clearing Houses and to the banks generally may be dis- cussed and solved. It affords a means through which information and data may be gathered and disseminated in the interests of better systems, methods and practices. It is the outgrowth of Origin the Conference of Clearing Houses of the United States which in turn owed its birth to resolu- tions adopted by the Michigan Bankers Associa- tion in convention at Port Huron July 14th, 1899. This conference met annually and was quite ac- tive up to 1905, at which time its work was taken over by a committee representing the American Bankers Association. The constitution and by- laws of the American Bankers Association were then amended and under the provisions of the amendment the Clearing House Section was cre- ated and assumed charge of the work of this spe- cial committee. 66 THE CLEARING HOUSE All regularly organized Clearing House Asso- ciations are eligible for membership in the Sec- Member- tion. There are 233 such organizations in the *^^P United States and of these 191 are members. Membership is free and the expenses of the Sec- Expenses tion are defrayed by appropriations made semi- annually by the American Bankers Association. Through the influence of the Section dozens of new Clearing House Associations have been or- ganized and the functions of the existing Clear- ing Houses have been broadened and greatly ex- tended. It has fathered, evolved and developed many schemes and plans through the operation Work of which the banks of the country have saved Done many hundreds of thousands of dollars. These features include the Universal Numerical Sys- tem, the Country Clearing House, Clearing House Examinations, uniform counter checks, the no- protest symbol plan and the plan of the gold set- tlement fund now used by the Federal reserve system. The administration of the affairs of the Sec- tion is vested in the Executive Committee con- sisting of six members and three ex-officio mem- bers, namely, the President, Vice-President and Executive the ex-President, for a period of one year. Two Committee of the six regular members are elected for terms ^ of three years by vote of the official delegates present at the annual meeting of the Section THE CLEARING HOUSE SECTION Represen- tation on Council which is held during the convention of the Ameri- can Bankers Association. Temporary vacancies may be filled by the Committee. The Section is represented in the council meet- ings of the American Bankers Association by its President, who is a member thereof ex-officio. The Executive Committee selects its own chair- man and is authorized to employ a secretary of the Section who may or may not be a member of the committee and to use the funds appropriated in the interests of the Section, and is empowered to transact such business as may be authorized by the Section or as may be required in the fur- therance of the interests of Clearing Houses. 6g OFFICERS AND COMMITTEES, WITH TERMS OF OFFICE Presidents Walker Hill, St. Louis, Mo 1906-1908 August Blum, Chicago, 111 May to September, 1908 E. C McDougal, Buffalo, N. Y 1908-1909 Sol Wexler, New Orleans, La 1909-1910 E. R. Fancher, Cleveland, 1910-1911 Charles A. Ruggles, Boston, Mass 1911-1912 Ralph Van Vechten, Chicago, 111 1912-1913 John K. Ottley, Atlanta, Ga 1913-1914 A. O. Wilson, St. Louis, Mo 1914-1915 J. D. Ayres, Pittsburgh, Pa 1915-1916 Vice- Presidents Fred. E. Farnsworth, Detroit, Mich 1906-1908 E. C. McDougal, Buffalo, N. Y May to Sept., 1908 Sol Wexler, New Orleans, La 1908-1909 E. R. Fancher, Cleveland, 1909-1910 George Guckenberger, Cincinnati, O...1910 — June, 191 1 Charles A. Ruggles, Boston, Mass.. 191 1 — to Nov., 191 1 Ralph Van Vechten, Chicago, 111 1911-1912 John K. Ottley, Atlanta, Ga 1912-1913 A. O. Wilson, St. Louis, Mo 1913-1914 J. D. Ayres, Pittsburgh, Pa 1914-1915 W. D. Vincent, Spokane, Wash 1915-1916 69 OFFICERS AND COMMITTEES Chairmen F. W. Hayes, Detroit, Mich 1899-1903 W. T. Fenton, Chicago, 111 1903-1905 Walker Hill, St. Louis, Mo 1905-1906 August Blum, Chicago, 111 1906-1908 Sol Wexler, New Orleans, La May to Sept., 1908 E. R. Fancher, Cleveland, 1908-1909 George Guckenberger, Cincinnati, O 1909-1910 Ralph Van Vechten, Chicago, 111 1910-1911 John K. Ottley, Atlanta, Ga 1911-1912 A. O. Wilson, St. Louis, Mo ^ 1912-1913 J. D. Ayres, Pittsburgh, Pa 1913-1914 W. D. Vincent, Spokane, Wash 1914-1915 John McHugh, New York, N. Y 1915-1916 Secretaries Fred. E. Farnsworth, Detroit, Mich 1899-1911 O. Howard Wolfe, New York, N. Y June, 1911-1915 Jerome Thralls, New York, N. Y February, 1916 Members of Executive Committee (Alphabetical Order) Ayres, J. D., Pittsburgh, Pa 1911-1914 Beymer, A. S., Pittsburgh, Pa 1907-1908 Blum, August, Chicago, 111 1905-1909 Chamberlain, F. A., Minneapolis, Minn 1907-1909 Clarke, Lewis L., New York, N. Y 1912-1915 Cox, L. O., Louisville, Ky 1899-1903 Crane, A. A., Minneapolis, Minn 1915-1918 Devries, Christian, Baltimore, Md 1899 Donald, James M., New York, N. Y 1909-1912 Fancher, E. R., Cleveland, 1905-1909 Fenton, W. T., Chicago, Illinois 1905-1906 70 THE CLEARING HOUSE Fulton, J. H., New Orleans, La 1914-1917 Griffith, G. P., Cincinnati, O. To fill unexpired term of Mr. Guckenberger June to Nov., 191 1 Guckenberger, George, Cinn., O. . .1900-1905 — 1907-1910 Hulbert, E. D., Chicago, 111 1901-1903 Hutcheson, C G., Kansas City 1907-1910—1914-1917 Jess, Stoddard, Los Angeles, Cal 1913-1916 Keser, H. J., Philadelphia, Pa 1906- 1908 Lombard, I. G., Chicago, 111 1899-1903 McAdams, Thos. B., Richmond, Va 1915-1918 McHugh, John, Sioux City, Iowa — One year of unexpired term of Mr. Power (Deceased) 1912-1916 Mcintosh, C K., San Francisco, Cal 1909- 1912 Moore, Charles H., Kansas City, Mo 1906-1907 Ottley, John K. Atlanta, Ga 1910-1913 Power, Geo. C, St. Paul, Minn. (Deceased) 1910-1912 Ruggles, Chas. A., Boston, Mass 1908- 191 1 Russel, Geo. S., Cleveland, 1899-1903 Thorne, Gilbert G., Minneapolis, Minn 1899-1900 Van Vechten, Ralph, Chicago, 111 1908-1911 Vincent, W. D., Spokane, Wash 1912-1915 Wexler, Sol., New Orleans, La 1906-1908 Wilson, A. O., St. Louis, Mo 1911-1914 Members of Executive Committee {Date Order) Isaac G. Lombard, Chicago, 111 1899-1903 George S. Russell, Cleveland, 1899-1903 Christian Devries, Baltimore, Md 1899 L. O. Cox, Louisville, Ky 1899-1903 Gilbert G. Thorne, Minneapolis, Minn 1899-1900 George Guckenberger, Cinn., O. ....1900- 1905 — 197-1910 E. D. Hulbert, Chicago, 111 1901-1903 W. T. Fenton, Chicago, 111 1905-1906 71 THE CLEARING HOUSE August Blum, Chicago, III 1905-1909 E. R. Fancher, Cleveland, 1905-1909 H. J. Keser, Philadelphia, Pa 1906-1908 Charles H. Moore, Kansas City, Mo 1906-1907 Sol Wexler, New Orleans, La 1906-1908 A. S. Beymer, Pittsburgh, Pa 1907-1908 F. A. Chamberlain, Minneapolis, Minn 1907-1909 C. G. Hutcheson, Kansas City, M0.1907-1910 — 1914-1917 Charles A. Ruggles, Boston, Mass 1908-1911 Ralph Van Vechten, Chicago, 111 1908-191 1 James M, Donald, New York, N. Y 1909-1912 C. K. Mcintosh, San Francisco, Cal 1909- 1912 George C. Power, St. Paul, Minn (Deceased) 1910-1912 John K. Ottley, Atlanta, Ga 1910-1913 J. D. Ayres, Pittsburgh, Pa 1911-1914 A. O. Wilson, St Louis, Mo 1911-1914 G. P. Griffith, Cincinnati, O. — Unexpired term of Mr. Power June to Nov., 1911 Lewis L. Clarke, New York, N. Y 1912-1915 W. D. Vincent, Spokane, Wash 1912-1915 John McHugh, Sioux City, Iowa. (One year of unexpired term of Mr. Power) 1912-1916 Stoddard Jess, Los Angeles, Cal 1913-1916 J. H. Fulton, New Orleans, La 1914-1917 A. A. Crane, Minneapolis, Minn 1915-1918 Thos. B. McAdams, Richmond, Va 1915-1918 Committee on Rates^ Rules and Regulations 1899 F. W. Hayes, Detroit, Mich., Chairman. George S. Russel, Cleveland, O. Christian Devries, Baltimore, Md. L. O. Cox, Louisville, Ky. Gilbert G. Thorne, Minneapolis, Minn. Isaac G. Lombard, Chicago, 111., ex-oMcio. 72 OFFICERS AND COMMITTEES Committee Succeeding to Work of Conference of Clearing Houses 1905 Walker Hill, St. Louis, Mo. W. T. Fenton, Chicago, 111. August Blum, Chicago, 111. George Guckenberger, Cincinnati, O. E. R. Fancher, Cleveland, O. Fred. E. Farnsworth, Detroit, Mich. Numerical System Committbe 1910-1913 W. G. Schroeder, Chicago, 111., Chairman. C R. McKay, Chicago, 111. J. A. Walker, Chicago, 111. Committee on Codifying Collection Laws 1913 R. B. Cox, New York, N. Y., Chairman. Thomas B. Paton, New York, N. Y. Newton D. Ailing, New York, N. Y. W. M. Van Deusen, Newark, N. J. The Secretary of the Section. Numerical System Committee 1913-1915 C. R. McKay, Chicago, 111., Chairman. J. A. Walker, Chicago, 111. W. G. Schroeder, Chicago, 111. 73 OFFICERS AND COMMITTEES Numerical System Committee 1915 James A. Walker, Chicago, 111., Chairman. C E. Estes, Chicago, III. R. G. Danielson, Chicago, 111. Committee on Country Clearing Houses 1915 Richard S. Hawes, St. Louis, Mo., Chairman. L. F. Kiesewetter, Columbus, O. Alexander Dunbar, Pittsburgh, Pa. O. Howard Wolfe, Philadelphia, Pa. James Ringold, Denver, Colo. No-protest Symbol Committee 1915 W. D. Vincent, Spokane, Wash. 74 CLEARING HOUSES OF THE UNITED STATES — Indicates clearing houses that conduct country col- lection departments. * Indicates clearing houses that conduct examination departments. Members of the Clearing House Section Aberdeen, So. Dak. Adrian, Mich.., Akron, Ohig.'"' Albany, N. Y. Albany, Ore. Altoona, Pa. Amarillo, Tex. -Atlanta, Ga. -Augusta, Ga. Aurora, 111. Austin, Texas. Bakersfield, Cal. Baltimore, Md. Bangor, Me. Bay City, Mich. Beaumont, Texas. Beaver County, (New Brighton, Pa.) Billings, Mont. Birmingham, Ala. Bloomington, 111. Boise, Idaho. Boston, Mass. Brunswick, Ga. Buffalo, N. Y. Butler, Pa. Canton, O. Cedar Rapids, Iowa. Charleston, So. Car. —Chattanooga, Tenn. Chester, Pa. * Chicago, 111. Chillicothe, Mo. Cincinnati, O. * Cleveland, O. Coeur D'Alene, Idaho. Colorado Springs, Colo. Columbia, So. Car. 75 THE CLEARING HOUSE Columbus, Ga. * Columbus, O. Dallas, Tex. Danville, 111. Davenport, Iowa. Dayton, O. Decatur, 111. Denver, Colo. Des Moines, Iowa. —Detroit, Mich. Duluth, Minn. El Paso, Texas. Emporia, Kan. Ennis, Texas. Erie, Pa. Evansville, Ind. Fall River, Mass. Fargo, N. D. Flint, Mich. Fort Wayne, Ind. Fort Worth, Texas. Frederick, Md. Fremont, Neb. Fresno, Cal. Galveston, Texas. Gary, Ind. Grand Forks, N. D. Grand Rapids, Mich. Greensburg, Pa. Greenville, S. C. Grand Junction, Colo. Guthrie, Okla. 1^ Hagerstown, Md. Hamilton, O. Harrisburg, Pa. Hartford, Conn. Hastings, Neb. Hawkinsville, Ga, Helena, Mont. Holyoke, Mass. Houston, Texas. Indianapolis, Ind. Jackson, Mich. Jacksonville, Fla. Jacksonville, 111. Joplin, Mo. * Kansas City, Kansas. *-Kansas City, Missouri. Knoxville, Tenn. Lancaster, Pa. Lansing, Mich. Lawrence, Kan. Lawton, Okla. Lewistown, Mont. Lexington, Ky. Lima, O. Lincoln, Nebr. Little Rock, Ark. Long Beach, Cal. Lorain, O. *Los Angeles, Cal. ♦-Louisville, Ky. Lowell, Mass. MEMBERS — Macon, Ga. Mansfield, O. McAlester, Okla. Memphis, Tenn. Meridian, Miss. * Milwaukee, Wis. * Minneapolis, Minn. Mobile, Ala. Montclair, N. J. Montgomery, Ala. * Muskogee, Okla. *-Nashville, Tenn. New Albany, Ind. New Bedford, Mass. New Castle, Pa. New Haven, Conn. Newnan, Ga. * New Orleans, La. Newport News, Va. *-New York, N. Y. Norfolk, Va. Norristown, Pa. North Yakima, Wash. Oakland, Cal. Ogden, Utah. ♦-Oklahoma City, Okla. — Omaha, Nebr. Orange, N. J. Oshkosh, Wis. Owensboro, Ky. Pasadena, Cal. Peoria, 111. * Philadelphia, Pa. Pine Bluff, Ark. Pittsburgh, Pa. Portland, Me. * Portland, Ore. Providence, R. I. Quincy, 111. Raleigh, N. C. Reading, Pa. Reno, Nev. Richmond, Va. — Richmond Country C. H., Va. Rochester, N. Y. Rockford, 111. Sacramento, Cal. * St. Joseph, Mo. *-St. Louis, Mo. *St. Paul, Minn. Salt Lake City, Utah. San Antonio, Texas. San Diego, Cal. San Francisco, Cal. San Jose, Cal. Santa Rosa, Cal, Savannah, Ga. Scranton, Pa. Seattle, Wash. Sedalia, Mo. Sioux City, Iowa. Sioux Falls, S. D. South Bend, Ind. 77 THE CLEARING HOUSE Spartanburg, S. C. * Spokane, Wash. Springfield, 111. Springfield, Mass. Springfield, Mo. Springfield, O. Stockton, Cal. Superior, Wis. Syracuse, N. Y. Tacoma, Wash. Tampa, Fla. Texarkana, Ark. Toledo, O. Topeka, Kan. Trenton, N. J. Tulsa, Okla. Vicksburg, Miss. Washington, D. C. Waterbury, Conn. Wheeling, W. Va. Wichita, Kan. Wilkes-Barre, Pa. Wilmington, Del. Wilmington, N. C. Worcester, Mass. York, Pa. Youngstown, O. Zanesville, O. Non-Members Albany, Ga. Ann Arbor, Mich. Asheville, N. C. Atchison, Kan. Bartlesville, Okla. Belton, Tex. Binghamton, N. Y. Bowling Green, Ky. Charlotte, N. C. Cheraw, S. C. Connellsville, Pa. Cordele, Ga. ?8 Dubuque, Iowa. Elberton, Ga. Estherville, la. Eugene, Ore. Franklin, Pa. Gainesville, Fla. Hammond, Ind. Helena, Ark. Henderson, Ky. Homestead, Pa. MEMBERS Kalamazoo, Mich. Lebanon, Pa. Lynchburg, Va. Palestine, Tex. Passaic, N. J. Pittsburgh, Kan. Ritzville, Wash. Rome, Ga. Medford, Ore. Muncie, Ind. Saginaw, Mich. Santa Monica, Cal. Shreveport, La. Nebraska City, Nebr. Valdosta, Ga. Vidalia, Ga. Ocala, Fla. Oil City, Pa. Waco, Tex. Washington, Ga, 79 THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW AN INITIAL FINE OF 25 CENTS WILL BE ASSESSED FOR FAILURE TO RETURN THIS BOOK ON THE DATE DUE. THE PENALTY WILL INCREASE TO 50 CENTS ON THE FOURTH DAY AND TO $1.00 ON THE SEVENTH DAY OVERDUE. 331933 MAR 2 4 NOV 22 1933 >*"8 6 19J4 ^ ^^G 28 1940 ' JAN 1 3 1998 933 LD 21-50rn-l,'33 YB iol^o U. C. BERKELEY LIBRARIES CD57=llfill2 357345 H •Jtr^'