BANKERS' CLEARING-HOUSE. The working of the cheque system is greatly facilitated by the establishment of a clearing-house which enables bankers readily to adjust their ac counts with each other. As long ago as 1775 the London bankers doing business within the City of London arranged a common meeting place in Change Alley where their clerks set off against each other the various cheques and bills which had been presented for payment, thus economizing time and avoiding the risk entailed in collecting money from each other. In 1854 the Joint Stock Banks were admitted to the clearing-house, and ten years later the Bank of England joined the institution.
The system of the clearing-house is exceedingly simple. As each bank has an account at the Bank of England, the daily balances of the clearance are settled by transfers at the central institution. The vast amount of labour saved may be gathered from the fact that the daily clearances of the London Bankers' Clearing-House, including the cheques of country banks which clear through their London correspondents, often amount to as much as £ 12 5,000,000. In the United States the New York Clear ing House established in 1853 clears the immense exchanges of Greater New York City which are 55% to 6o% those of the country. A comparative view of the growth of business at the London Clearing-House and the New York Clearing House in the 42 years of 1885-1927 is shown in the following table:— Provincial clearing-houses have been established in a number of British towns, including Manchester, Liverpool, Birmingham, Leeds, Sheffield, Newcastle-on-Tyne, Edinburgh and Glasgow. In the United States in 1926 there were 362 clearing-houses beside the one in New York, operating in as many cities, most of them unincorporated co-operative institutions. Next to New York city the largest in order were those at Chicago, Philadelphia, Boston, San Francisco, Los Angeles, Pittsburgh and Detroit, their clear ances in 1927 varying from $3 2,000,00o for Chicago to $8, 733,000,00o in Detroit. The cheque system is much more highly developed in Great Britain and the United States than in any other country, but there are bankers' clearing-houses at Paris, Berlin, Hamburg and other large centres. (See BANKING AND CREDIT.) See W. E. Spahr, The Clearing and Collection of Checks (1926).