banking business. Now, B cannot
send to E to get the money. It could do this, perhaps, if it had only
one cheque, but it has taken in hundreds of cheques, some, perhaps, on
every bank in town, and on many banks out of town. It would take a
hundred messengers to collect them. So, instead of B's going to E,
they meet half-way, or at a central point called a clearing-house, and
there collect their cheques. B may have $5000 in cheques on E, and E
may have $4000 in cheques on B, so that the exchange can be made--that
is, the cheques can be paid by E paying the difference of $1000, which
is done, not direct, but through the officers of the clearing-house.
Now Bank E's messenger carries Brown's cheque back with him and enters
it up against Brown's account. This in simple language is the primary
idea of the clearing-house.

The clearings in New York in one day amount to from one to two hundred
millions of dollars. By clearings we mean the value of the cheques
which are _cleared_--that is, which change hands through the
clearing-house. Usually once a week (in some cities oftener) the banks
of a city make to their clearing-house a report, based on daily
balances, of their condition.

[Illustration: The route of a cheque.]

To illustrate the connection between banks at distant points let us
suppose that B of Media, Pennsylvania, who keeps his money on deposit
in the First National Bank of Media, sends a cheque in payment of a
bill to K of South Evanston, Illinois. K deposits the cheque in the
Citizens Bank of his town and receives immediate credit for it upon
his bank-book, just the same as though the cheque were drawn upon the
same or a near-by bank. The Citizens Bank simply sends the cheque,
with other distant cheques, to its correspondent, the National Bank of
the Republic, Chicago, on deposit, in many instances in about the
same sense that K deposited the cheque in the Citizens Bank. The
National Bank of the Republic sends the cheque, with other cheques, to
its New York correspondent, the National Park Bank. It may possibly
send to Philadelphia direct, or even to Media; but this is very
unlikely. The National Park Bank sends the cheque to its Philadelphia
correspondent, say the Penn National Bank. Now the clearing-house
clerk of the Penn National carries the cheque to the Philadelphia
clearing-house and enters it, with other cheques, on the First
National of Media. Custom, however, differs very greatly in this
particular.