Definition of CLEARING HOUSE


CLEARING HOUSE

com. law. Among the English bankers, the clearing
house is a place in Lombard street, in London, where the bankers of that
city daily settle with each other the balances which they owe, or to which
they are entitled. Desks are placed around the room, one of which is appropriated
to each bankiug house, and they are: occupied in alphabetical order. Each
clerk has a box or drawer along side of him, and the name of the house he
represents is inscribed over his head. A clerk of each house comes in about
half-past three o"clock in the afternoon, and brings the drafts or cheeks
on the other bankers, which have been paid by his house that day, and deposits
thein in their proper drawers. The clerk at the desk credits their accounts
separately which they have against him, as found in the drawer. Balances
are thus struck from all the accounts, and the claims transferred from one
to another, until they are so wound up and cancelled, that each clerk has
only to settle with two or three others, and the balances are immediately
paid. When drafts are paid at so late an hour that they cannot be cleared
that day, they are sent to the houses on which they are drawn, to be marked,
that is, a memorandum is made on them, and they are to be cleared the next
day. See Gilbert"s Practical Treatise on Banking, pp. 16-20, Babbage on
the Economy of Machines, n. 173, 174; Kelly"s Cambist; Byles, on Bills,
106, 110; Pulling"s Laws and Customs of London, 437.

Source: Bouviers Law Dictionary 1856 Edition

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