A Specimen Clearing

To illustrate this, two examples are given of a clearing in which seven banks participate:-

Bank "A" sends out to Bank "B".........

$10,236 14

" " "C".........

7,426 18

"D".........

9,174 30

" " " "E".........

2,361 70

" " " "F"

3,462 81

" " " "G".........

1,411 10

$34,072 23

And receives from Bank "B "

$ 8,426 10

" " "C"

9,Il6 II

" " "D"

3,276 I4

" " "E"

1,823 10

" " "F"

4,163 08

" " "G"

I,Oio 8l

$27,815 34

Balance....................

6,256 89

$34,072 23

In that clearing Bank "A" would receive $6,256.89. In the next illustration the shoe would be on the other foot, viz.:-

Bank "A" sends out to Bank "B".........

$ 7,562 10

" " " "C"

2,740 81

" " " "D"

4,176 20

" " "F"

3,650 01

" " " "F"

1,746 22

" " " "G"

1,000 II

$20,875 45

Balance

2,600 33

$23,475 78

And receives from Bank " B"

$ 8,726 14

" " "C"

3,265 71

" " "D"

4,276 93

" " " E"

2,216 70

" " "F"

3,174 10

" " "G"

1,816 20

$23,475 78

A glance at the first illustration shows where the economy is effected through using the clearing house.

All the exchanges are made at the central place instead of being made separately with each institution. Under the old system Bank "A" would have had to settle differences with each one of the other six banks - it would have had to collect from "B," "D," "E" and "G," and to pay to "C" and "F." Through the clearing house it has merely to collect the one balance of $6,256.89.