Clearinghouse

Clearing-house, a word used in connection with banks and also with railways to denote a central office where the respective claims of different banks or railways, as the case may be, are entered, compared and adjusted, the banks paying or receiving the balance. The object of the institution is to save the labour which would be caused to a bank or railway by the continual running backwards and forwards which their fluctuating relations would otherwise require. And the same cause holds good in the case of railways that run over each other's lines and use each other's rolling or other stock, and whose mutual claims and obligations, become greatly complicated. A certain bank A may during a day accumulate various claims amounting, say, to £50,000 upon the bank B. Daring the same period the bank B may accumulate claims upon A to the amount of £56,000. These claims are all sent into the clearing-house, and at the end of the day, or other agreed period, B will receive its balance of £6,000. The business transacted by the London clearing-house is gigantic, and enormous sums are dealt with. Besides the ordinary daily clearances there are special ones, such as the 4th of each month, the Consols settling day, and Stock Exchange settling day, and the transactions of some of these settling days have an importance as showing the general condition of the financial world.