Question 451. - Bank A goes to the Clearing House and remits to bank B a total of $200,000. Bank B in turn remits to Bank A a total of $150,000. How is the settlement of the $50,000 difference effected?

Answer. - While B may owe A $50,000, it may be owed the same sum by C. What it owes, or is owed, is the difference between the total amount that all the other banks deliver to it and the total amount that it delivers to them. All the banks who are debtors to the others on the balance thus shown pay the net sum due by them into the Clearing Bank. When all have paid in, the Clearing Bank pays out to the creditor banks the various amounts due to each. The amounts due to the Clearing Bank by the debtor banks aggregate the total sum which it has to pay to the creditor banks, and when it has made these payments the transaction is completed.

Question 452. - Will you kindly give an illustration of the working of Rule 14. The first sentence contains 150 words, and its meaning is not as clear as it might be.

Answer. - The rule referred to deals with exceedingly complicated conditions, but its meaning is clear, and we doubt if it could be simplified very much. It is intended to cover a case where for any reason the banks which have balances against a defaulting bank prefer not to have their items returned, but to get the benefit of the balances due the defaulting bank by other banks, a right which under some circumstances might be very important. The phraseology is affected by the fact that the defaulting bank does not owe, or stand as a creditor of, the several banks in the clearing house, but owes its debtor balance to the chairman of the clearing house (Rule 11, Clause c). This is necessary in order that some person or body should have a legal claim.

Question 458. - Bank "A," in Winnipeg, telegraphs its Calgary branch to deposit with bank "B," in Calgary, $200,000 for account of bank "B's" customer. Settlements in the Calgary clearing house are made by draft on Winnipeg. Is bank "B" entitled to a draft on Winnipeg on the date of the deposit, or may the Calgary branch of bank "A" tender its own cheque on itself, to be cleared in the regular way?

Answer. - The Calgary branch of bank "A" is justified in tendering its official cheque for $200,000 to be cleared in the regular way. It is assumed that no limit that would apply to the transaction has been established by rule of the clearing house or by usage amongst the banks, also that the question does not arise out of reluctance on the part of bank "B" to become a creditor of bank "A" to the extent of $200,000.