Hammond Times, Volume 10, Number 52, Hammond, Lake County, 14 January 1922 — Page 3

3"aimary 14, 1922.

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THE TIMES.

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N the first article of this series was sketched in rough outline the origin of the London Clearing House,

prototype of all similar institutions now in existence. In a succeeding article it will be shown that the Clearing House Association of any city now performs functions of broader value to the civic welfare of the community than is rendered by the fulfillment of its primary purpose, that of striking a daily balance in cash between various banks, after mutual debits and credits have been cancelled, 'the present article will deal entirely with the process for which the first Clearing House was founded and which is still the definite reason for its being. , - , i If Bank A has accumulated, in a clay's business, $100,000 in checks and 'drafts on Bank B, and Bank B in turn has paper payable by Bank A amounting to $90,000, the simple way of coming to a balance is for each to present the debits to the other at a common meeting-place and for Ban!: B, in addition, to present Bank A with cash for $ 1 0,000, to settle the difference. Easy enough. But when there are many banks involved, as, for instance, the nine regular and affiliated members of the Hammond Clearing House Association, the procedure would become exceedingly laborious without a highly developed, time-saving method of controlling detail. Such a method is in operation every business day of the year in the Clearing House.

The clearing actually begins when a check is presented at the receiving teller's window of any member bank in the city. All checks so received are sorted according to the banks on which they are drawn. Checks on out-of-town banks are forwarded to the correspondent in those towns for collection by the Clearing House there.- Local checks are listed and entered on statement sheets. Both checks and the listing are enclosed in a package for presentation at the Clearing House next day. The statement sheet bears the name of each bank in the Clearing House, with the amount of debits opposite each. A credit ticket is made out showing the total amount of all items brought in for clearing, and this ticket is given to the manager of the Clearing House for entry on his balance sheet. Clearing begins each morning at ninethirty o'clock. These preliminaries are all disposed of before the opening hour. The "settlement clerks' ' are seated at a table. Clearing does not begin until all the banks are represented, and there is a fine for tardiness. Each clerk hands to each other clerk an envelope containing the checks on. his bank, promptly on the hour, The manager then enters in his settlement book the amount of the checks and the name of the bank presenting them. The entire operation-involving about $ 1 00,000 daily is completed in three minutes.

- Meanwhile each bank's clerk proves his work. By comparing the totals of checks received from other banks and of checks presented to them, he learns whether his bank owes the Clearing House or has a balance due from it. He hands his result to the manager. The manager, who has absolute charge of the clearing operations from beginning to end, now makes the general proof and the amount on each side of the balance sheet verified, then the manager either gives to or receives from each clerk a draft in settlement. Through this process the amount of actual cash employed is reduced to its proportionate place in modern business. A fair average of Hammond s daily clearings is about $ 1 00,000.00. To clear this huge amount, no cash is required. Time, labor and cash reserves are saved by this highly systematized method. The check for $1 0 or $1 00,000 grinds through the mill with equal efficiency. The small customer or the small bank receives the same service as the large customer or the large bank. AH is devised for convenience to the member banks and to the entire business community. Once business was conducted without checks and without the Clearing House. Once, also, wre knew nothing of the telephone. In our day we demand the quickest safe means of doing business.

embers of the Hammo

earing House Association

First National Bank 4 Citizens National Bank First Trust & Savings Bank

Hammond Trust & Savings Bank American Trust & Savings Bank W. Hammond Trust & Savings Bank

Northern Trust & Savings Bank Standard Trust & Savings Bank State Bank of Hammond

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