Waiting in the Wings: The Bankers’ Clearing Mechanism

Abstract

The system of clearing practised by the banks lies at the heart of their powers of monetary creation. It is carried out each day in the bankers’ clearing houses of all the main financial centres. The most important of these clearing houses in France is located in Paris, in the Rue Caumartin. The mechanism is the same, more or less, in all countries. Here is a description of how the New York clearing house works, taken from Mr Martin Mayer’s book, The Bankers:¹

The room itself is nothing enormous — perhaps fifty feet square, three stories high. The exchange floor is slightly depressed, and surrounded by a wall of pulpit-like desks, each with two seats behind it, each the property of a clearing bank. Everything is very plain: unadorned white granite walls, marble floor, birch pulpits, almost Scandinavian in feeling. (Upstairs there is a certain amount of Victoriana, portraits, original board table and chairs and desks from the old Clearing House half a mile uptown; and downstairs there is a gigantic Burroughs computer installation.) Two doors lead from a modest entrance foyer guarded by one uniformed man an an old plaque, gold letters etched in marble:

Visitors not admitted unless introduced by parties known to the manager