The exchanges having been made, the banks now prepare to settle the balances. There are various ways of doing this, depending upon the size of the city and the number of banks in the clearing house. In the smaller towns the manager of the clearing house may draw drafts upon the debtor banks, which he gives to the creditor banks, who then present them and receive either the cash or its equivalent. Or the manager may deposit the drafts of the debtor banks with one of the members and draw his own checks against this deposit in favor of the creditor banks. A general method is to make payment by draft upon the Federal Reserve bank of the district, or some other depository. In the larger cities settlement was formerly made in cash or its equivalent, payment being made by the debtor banks to the clearing house, which acted as agent in paying over the money to the creditor banks. To avoid the handling of even this money, many clearing houses conduct a depository where deposits of gold and currency are received, and certificates in large denominations, $5,000 and $10,000, issued. Settlements made with these certificates are upon a cash basis, yet the danger of loss or error in handling the actual money is avoided. A general method in use in many large cities is to adjust the net balances by book entries on the books of the district Federal Reserve bank, those members of the clearing house which are not members of the Federal Reserve System maintaining balances there for just this purpose.

Suggested Form Of Settlement Check

............................Clearing House Association No........

................................................................ ..........................

City Date

In the settlement of the balances arising from the exchanges made between the members of this Association this day there is due and payable on demand to

No........the.................................................$.................

..................Thousand..........Hundred................... and 00/100 Dollars.

This check is not transferable and is without recourse upon any other member of this

Association after......P. M. of this day.

Due from No.......

............................................................. ........................................................................

Manager.

Daily Report Of Bank Debits

........................Clearing House Association

..............................................Bank

Trust Co,

................................192...

Debits in settlement of Clearing House Balances, Cashiers Checks, Corrections and similar charges, must not be included in these figures.

"Each member (and non-member) bank shall deliver each business day, before 11 o'clock A. M. to the Manager of the Clearing House, through the exchanges or by messenger, on forms provided by the Clearing House, a statement of the total amount of charges against deposit accounts, whether commercial, savings, or trust on the previous business day. "A fine of one dollar shall be imposed on member banks for each failure to furnish the figures by the hour mentioned."

The above statement is correct

................................Treasurer

Cashier