CLEARING HOUSE RETURNS OF THE UNITED STATES.
By R. W. BARNETT, Associate of the Institute.

THE returns of the transactions of 1883 at the Clearing Houses of the United States have now been published, and the following figures are given in continuation of the tables contained in a former article in this Journal (Vol. III., p. 551, &c.) They are in part transcribed from a recent paper in the "New York Banking Magazine," the dollar being converted at 5 to the £1.

The foregoing table gives the particulars of the number of members of each clearing and their aggregate capital, so far as it can be ascertained; whilst in the following table will be found their total clearings during 1882 and 1883, the ratio of increase or decrease, the amount of balances resulting, and their proportion to the clearings:

Only one new clearing house has been established in 1883, that of Detroit, but particulars are for the first time given of the clearing at Minneapolis, which was commenced in 1881. These two associations consist together of twenty-five banks, and there has been a general increase in the number of the members of the other associations, so that they now include in all four hundred and ninety-four banks. This, however, is only the number of subscribing members. In many cities it appears that other banks clear through one or other of the members, and it might fairly be expected that, as with ourselves, the whole of the bankers in each city would be practically represented in the clearing. For this reason it may be considered that the amounts given as the capital of the members are hardly representative of the position of the associations; and that the total banking capital of each city, and more particularly the total banking deposits would be a better index to the situation.

The returns of transactions as a whole show a considerable decrease; but, leaving out the exchanges at New York and Boston, the remainder show an increase, even after deducting the totals for the two clearings not previously reported. This, too, is a continuance of steady progress, as may be seen by the following comparative statement :

In some individual instances, where the exchanges show a very considerable rate of increase, the figures for 1882 were also in advance of those for 1881.

The returns from New York and Boston alone show any important falling off, and of these the last named is perhaps not more than might fairly be expected from a dull trade year and a low range of prices.

Various causes have been suggested for the decreased amount of clearings at New York, but the real cause appears to have escaped notice, and is to be found neither in diminished transactions nor the decline of prices. It is due mainly to a change in the manner of doing business on the part of certain of the New York banks.

The certification of cheques for the transaction of stock business has been noticed before in this Journal,* and also the legislation to which it gave rise. Upon the passing of the law of 1882, making the over-certification of cheques a misdemeanour on the part of the official certifying them, some of the National banks engaged in that class of business adopted the expedient of "accepting" them instead, and claimed that such acceptance did not come within the provisions of the law. The opinion of the Attorney-General to the contrary was followed by prompt action on the part of the Comptroller of the Currency, and resulted, in a particular instance, in the voluntary liquidation of a bank and its reorganization as a State bank; and, further, in the adoption generally by the banks interested of a practice of withdrawing such cheques from the clearing, and exchanging them amongst themselves.

How large are the amounts thus eliminated we cannot say. The whole amount of cheques certified must have been enormous, and the withdrawal of the business entirely would account for a far larger decrease in the clearings than they show. On the 3rd October, 1882, the amount of these cheques in the hands of nine banks was twentyone millions sterling. On two days in 1881 they held respectively ten and fourteen millions; on two days in 1880, eleven millions and nine millions. None of these days were specially selected for examination, they were merely the days appointed for the simultaneous reports of the National banks.

The accounts of some of these New York banks taken individually show a still more remarkable state of things. In 1880, when this class of business was not even fully developed, but which is the latest year as to which any information is available here, four banks having deposits reported at eight millions sterling, held on the same day about one-half that amount of clearing exchanges, whilst in the accounts of five other banks, the clearing exchanges in hand bore the following ratio to the whole deposits :-two of 60 per cent., and one each of 75, 80, and 87 per cent. In all these cases it may be presumed that the clearings were somewhat higher, as we may expect that morning remittances would be cleared the same day as received.

The value of clearing-house returns depends on their correctness, their uniformity and continuity; and their consideration requires some knowledge of the special circumstances of each case. No better illustration of these necessities could be desired than is furnished by these United States returns. The New York clearings for 1882 showed an increase of 28 per cent. over 1881, and the last named year an increase of 32 per cent. over 1880. It is more than probable that these movements were largely, if not altogether, due to the increase in this special class of business, which certainly more than trebled itself in the period 1877-1882. In 1877 the New York

Vol. III., pp. 400 and 495.

clearings amounted to less than one-half of those of 1881, being four thousand five hundred millions and nine thousand nine hundred millions respectively. In 1877, too, values were at currency prices.

In the case of five of the provincial clearings, returns were for years made by including both the amounts brought in and taken away by the banks, and were thus, as was first pointed out in this Journal, given at double their true value.

With regard to the table on page 276, the most useful method of study would be in connexion with the average banking deposits of the various cities. In the case of New York alone, is sufficient information as to the latter point available here. The whole banking deposits of New York City, including those of the National Banks, State Banks, and private bankers, are about one hundred millions sterling. This is not an estimate, but may be gathered from the Government reports. It includes the deposits of 48 National banks, of 26 State banks, and of upwards of 500 private bankers, whilst the members of the clearing are 64 only. It includes also twenty-eight millions sterling, being the balances. of the banks in account with one another. And yet the daily turnover in the clearing is nearly 25 per cent. of these deposits. It should be observed, too, that owing to the fact that the clearing closes for deliveries at the time that it opens, namely, 10 a.m., the deposits are actually swollen by nearly the whole amount of the next day's clearing. In the returns from which the figures are taken, these exchanges in hand averaged twenty-one millions sterling. Leaving out of consideration then the point that might be raised as to the bank balances, and including them in the deposits, there appear the following results for the three years :

A similar comparison for the London clearing and deposits would show very different proportions. The daily average of the clearing in each of the three years was the same, namely, about twenty millions sterling. Of course, as to the amount of deposits, estimates must be in part relied on, but it will be recognised as a moderate amount to put them at one hundred and eighty millions sterling, and even on that basis the ratio of daily clearings is only 11.1 per cent. The real proportion is even less than this, for whilst we have taken the