CLEARING HOUSE

Hokitika Guardian, 4 November 1929, Page 2

CLEARING HOUSE

THE WONDER OF THE CHEQUE. Housed in an unpretentious building off Lombard Street, London, known by name to fewer still, the Clearing House has a financial turnover of almost be wildering proportions. The grand total of cheques passing through i. 1928 was £44,204,723,00J. Like man; other great institutions, says a write in the London “Spectator,” the Bank ers’ Clearing House owes its origin t chance rather than to any preconceiv cd idea. ]n the eighteenth century i was a laborious matter for a banker t< obtain the proceeds of the cheques ] received during the course of the day A clerk was sent to the various bank.' and cashed each cheque over the < oun ter, receiving payment in notes o gold. One day, in the 1760’s it happened that two clerks, each bound fo: the other’s bank to cash a cheque, hap pencil to meet in a tavern, and piompted by laziness rather than In any desire lor efficiency,, agreed t exchange their cheques and settle an. marginal difference with coin. The experiment seems to have worked satisfactorily and the call at the tavenbecame part of the daily routine of the originators of this novel but pleasanttnehod of performing banking duties. Their methods were soon copied b; other clerks and the inn—the Fivi Bells, near St Mary Woolnoth Churcl —came to be recognised as a renclez i vous for “walk” clerks, who met, t< exchange their cheques. For so:r,< years, these meetings were quite un authorised, although the banker: must certainly have had early knowledge of their existence. About ].77( these unofficial transactions bad growi to such an extent that the bank. 1 e.penlv recognised the method and took a private room in the tavern where the clerks could meet and exchange tiie:i- cheques with greater comfort and security than in the puldi part of the home. The business, however, continued to be quite informal and apparently it was not until sonn forty or fifty years later that am rules were drawn up. The methods adopted in the London bankers’ clearing house differ little in principle from those of the clerks in the. tavern. Even morning the head office receives by post from its branches throughout thr country the cheques to be cleared. These are sorted into bundles accord ing to the banks drawn upon, and then they are taken over to the clearing house to be handed to represent atives’of the. banks concerned. Similarly each bank 'receives cheques drawn muon itself. Scores of addin' machines soon produce totals, and these are agreed. Settlement, however, does not take place between two banks alone, but at the end of the day a comprehensive balance is struck According to the result-, each' bank then either makes or receives payment through its account at the Bank of England, «