The less expense your bank incurs in collecting, the less it will have to charge you. The depositor should understand that the bank's charges for these collections are figured at about cost. It is a fact that an examination of this account on the books of any city bank almost invariably will show that it is a source of loss rather than profit. In other words, the city banks really charge their depositors less than it actually costs for collections on other towns. The "clearing" items, that is, checks on banks in your own town, are passed to the Clearing House clerks. The collection of these checks through the Clearing House, and the operation of that institution, are next explained. VIII THE CLEARING HOUSE The Clearing House is simply a meeting room for the convenience of the different banks in a city; a place in which to swap checks. Small towns have none. Ordinarily no figuring is done here except addition and subtraction. Its operation is simple. Suppose you owe Brown $10.00, and you owe Jones $5.00. Then suppose Brown owes you $5.00, and owes Jones $4.00. Then suppose Jones owes you $3.00, and owes Brown $5.00. Now, instead of each of you going around to two other places, you three meet in a certain conveniently located room to square, or clear up, accounts. This saves time and steps. A clerk is in this room to do the sums for you. With a little addition and subtraction he has the following: You owe Brown and Jones together $15.00 Brown and Jones together owe you 8.00 ------ Therefore, you owe Brown and Jones together $ 7.00 You and Jones together owe Brown $15.00 Brown owes you and Jones together 9.00 ------ Therefore, you and Jones together owe Brown $ 6.00 You and Brown together owe Jones $ 9.00 Jones owes you and Brown together 8.00 ------ Therefore, you and Brown together owe Jones $ 1.00 The clerk then announces that you owe $7.00 here; Mr. Brown is entitled to receive $6.00, and Mr. Jones is entitled to $1.00. Then he gives Mr. Brown an order on you for $6.00, and Mr. Jones an order for $1.00. Nothing complex about this if you know how to add and subtract.