Provision is made for the admission of new members by the vote of three-fourths of the members; to be eligible a bank must have a capital of at least $r,000,000. Admission fees are $5,000 for banks having a capital less than $5,0oo.000, and $7,500 for those with capital over that amount. The federal reserve bank was admitted as a special member November 13, 1914. It was not required to sign the constitution and has no vote; it is not required to furnish a weekly report, nor is it subject to the rules governing collection charges. Otherwise it is expected to conform to the methods and rules of the clearing house.
According to the common practice throughout the country the members of the clearing houses are numbered on the basis of seniority.
The most important departments of a clearing house are: 1. The city department.
2. The city collection department.
3. The country department.
4. The examination department.
All these are well developed in the New York Clearing House. Of the clearing houses of the United States in 1918, 13 conducted country departments, 20 had examination departments, and I had a city collection department. It is, therefore, quite evident that the city department is the sole department of most, and the main and original department of all the clearing houses. It is the department which conducts the daily balancing of city items among members. The country department is itself a member of the city department of the clearing house and adjusts its balances with the other members as do the others, through the city depart ment. This relationship will be explained below in the pages on the country department.
The Process of Clearing The checks for the clearing house are prepared at each bank on the assembly rack, in packages, one for each member bank; the amounts are listed on the exchange slip attached to the package, and the packages are despatched by messenger to the clearing house. The bank has two representatives at the clearing house: the messenger who delivers the packages, or the delivery clerk, and the one who receives the return packages from the other banks, or the settling clerk.
The time of making the exchanges varies with the clearing house and depends upon local conditions, the hour chosen being the one that gives greatest convenience to the members. The hour in New York is to o'clock, in Chicago i 1, in St. Louis io:3o, in Philadelphia ro, but in some cities it is as early as 8:3o and as late as 3 :15 ; some houses provide for two regular ex changes, forenoon and afternoon. Besides the principal clearing at To o'clock in New York, there is provided a clearing at 9 o'clock. This early clearing reduces the congestion in the fore noon in the large banks, and also gives them an opportunity for knowing more exactly their position at the clearing house before business has proceeded far during the day. Whatever hour is
fixed for the exchanges, it is highly important that every bank's representatives be on hand promptly, and fines should be imposed for tardiness.
Using New York practice for illustration, on their arrival at the clearing house the settling clerks hand to the proof clerk a "first ticket," giving the amount brought. This is copied by the proof clerk on the clearing house proof sheet under the head, Banks' Credit. Each settling clerk takes his seat at his desk in side his cage; the delivery clerks form in line before the cages in the consecutive desk order, with their packages on their arms. The delivery clerks have delivery clerks' receipts, which contain the amounts for each bank arranged in order and upon which, when a package is delivered, the settling clerk signs for receipt. Exactly at the hour of exchange, upon signal from the manager, the delivery clerks, successively from desk to desk, deposit the proper package and get their receipt initialed and deposit a "small ticket," which contains the amount of the package and agrees with the amount on the exchange slip. The complete circuit of the desks takes about ten minutes. The delivery clerk carries back to his bank at once the checks received by the settling clerk, who stays to help make proof.
The settling clerks, as soon as all the packages are received, sum up the amounts entered on their statements under the head, Banks Debit, and make out a "second ticket" containing the debit, credit, and balances, for the proof clerk. The proof clerk then enters the debit exchange and the balance on his clearing house proof sheet and strikes a balance of the debits and credits and balances. The settling clerks meanwhile check the amounts on their tickets" and those from the exchange slips. If the proof clerk finds that his proof sheet balances, the manager at once calls off, in thousands of dollars, the balances, which are copied by the settling clerks to take back to their cashiers re spectively; the cashier is then informed, in rough amounts, how much his bank is to pay or receive. If the proof sheet does not prove, the difference is announced and a search begun by the clerks; exchange of sheets, calling back of entries, and other de vices are employed to locate the error. The record time for per forming the whole clearing operation is 35 minutes; 45 minutes' time is allowed, after which fines are imposed upon the clerk making the error, the fines varying with the nature of the mistake.