CLEARING HOUSE. When business houses or firms en gaged in the same kind of activity have large dealings with each other it is an obvious convenience and economy to establish a mutual institution to enable them to set off their transactions with each other and to clear them, thus making it necessary to pay to each other at agreed times only such balances of account as are revealed by the clearance. Such institutions are called clearing houses, and they have been established in all great commercial nations for many branches of industry. The chief of them are Bankers' Clearing Houses (q.v.) and Railway Clearing Houses, which are described under RAILWAYS.
The London Stock Exchange Clearing House deals with trans actions in stock, the clearing being effected by balance-sheets and tickets ; the balance of stock to be received or delivered is shown on a balance-sheet sent in by each member, and the items are then cancelled against one another and tickets issued for the bal ances outstanding. The New York Stock Exchange Clearing House does similar work. The settlements on the Paris Bourse are cleared within the Bourse itself, through the Compagnie des Agents de Change de Paris.
For details concerning clearing house operations in the United States see Theodore Gilman, A Graded Banking System Formed by the Incorporation of Clearing Houses under a Federal Law (Boston, 1898) ; Jerome Thralls, The Clearing House (1916) ; Harvey White Magee, A Treatise on the Law of National and State Banks, Including the Clearing House (Albany, N.Y., 1921) and Walter Eaton Spahr, The Clearing and Collection of Checks (1926).