WHERE ALL BRITISH CHEQUES GO.

Dunstan Times, Issue 3360, 15 August 1927, Page 2

WHERE ALL BRITISH CHEQUES GO.

LONDON'S GREAT CLEARING HOUSE. v (By Hamilton Fyfe.') When a shopkeeper looks at his day * i!.., i.e »viil iina. il liu is ni a lairiy large way, of business, that he has among them several cheques. One may be on Barclays Bank, Lombard street. one on the Midland Bank, Newcastle: another on the Westminster, Plymouth ; two more on Lloyds, Birmingham. His own bank is the' National Provincial. To it he sends the cheques. How does it collect the. money which they represent? It cannot send a messenger to each bank to receive cash across the counter. That would be far too cumbersome a method. It would involve delays that might have dangerous ends. The shopkeeper wants to know as quickly as possible that he can draw against the cheques, or that he can send goods ordered.,-which he may hesitated to do until the cheque was honored. What his hank does is to send the cheques at once to the Bankers' Clearing House, a building in Lombard street, with a system which works so rapidly and competently that no payment is delayed longer than three days. A cheque when it goes there is merely a piece of paper. It may have value ; i-. may not. Here, is the machinery which either proclaim it money jr throws it out as a ''dud." Mair. cheques are cleared the day they go in. These are the "town" cheques, drawn on banks in the City of London. Settlement of transactions in Greater London (the County Council area) follows the next day. Country cheques are all dealt with by the third day. Thus there is no waiting for money, there i" no burdensome collecting to be done by the banks. The whole business of checking and regulating the hundred:of thousands of cheques which pass every day from one hand to another, and which really form the greater part of our currency, is accomplished by :i ic-\v peonle, in a small space, with the least possible amount of friction and expense. . ' . A great deal has been written about the Bank of England. Very little has been written about the Bankers' Clearing House. Yet if the Bank of England were to disappear to-day, other banks could to-morrow take its place, discharge all its functions. Were the Bankers' Clearing House to disappear the whole business of the country would come to a standstill. Payments that are made in money are very small to-day alongside those which are made by cheque. The latter steadily grew all through last century; they have further increased enormously during this century. Fifty years ago the value of the cheques passed through the Bankers' Clearing House in 12 months was 5000 millions". Now it is 40,000 millions. Tn 1877 the daily average of clearing was 16 millions. Now it is 130 millions. ' And of those 130 millions 115 are represented by ''town" cheques. After making allowance for a large portion of this amount as representing purely financial operations, there remains a very large total to show what a vast proportion or the business of the country is transacted in the city of London. Country cheques are lessi than 10 millions a day. "Wonderful thing, confidence," says Mr Salt, the chief inspector at the Clearing House. "Seems to be a peculiarly Anglo-Saxon characteristic, too." T look at him inquiringly. "All this reliance on cheques, their use as currency, is the result of confidence," he explains. "Confidence in the banks, confidence in one another. You don't find the system anywhere else." "Except in America," I interject. "It is coming along pretty fast there." "Yes." Mr Salt agreed, "yes, in America, and that supports my contention, doesn't it?" There are three inspectors. That - the whole staff of the Clearoing House. "Who then." 1 flsk, "are these hundreds of men and women whom 1 see busy with cheques?" Some are sorting, some comparing, some making up the total of big bundles with the aid of adding machines. Room after room we walk through, all buzzing with activity, for the early morning is the busiest time of the day. "These are all people employed by the banks," Mr Salt tells me. "They come here; they 'agree' the cheques, as we call it; we look over their totals. ko much due from this bank to that, so much the other way. strike a balance. Balance correct. Off they go." No money passes. The whole business is an affair of bookkeeping. What surprises one is that it can all be clone so quickly. Within a very short time the moms begin to empty, the tapping of the machines dies down to a faint rattle, Hie bundles of cheques have all gone to the banks they are drawn on. -Some days there are a million cheques, sometimes more, sometimes three or four hundred thousand. However many there are, they all leave the place the same day. If a bank is under the painful necessity of dishonoring a cheque, putting on it "Refer to drawer." or some othcij such unpleasant remark, it comes back at once. Every evening a complete record of the day's work is drawn up. Nothing is left over. The system, of course,' grew from simple beginnings to its present perfection. The start, was probably something like this:— Two bank'messengers meet in 1750. "Ha," says one, "T have something for your shop." "And I am going to yours," says the other. "Let iis exchange now. and each save himself a journey." The next step, perhaps, was for' several messengers to meet at a coffee house and make their exchanges. Then the banks took the business in hand, and have kept it ever since. The Clearing House belongs to them, and it does them credit. Tt is unpretentious, it does its work quietly, .few people have even heard of it._ But it seems to me one of the most efficient institutions T ever saw.