THE CLEARING HOUSES of the country do not even yet have any adequate conception of their own power. Clearing house government is still in the process of evolution. As a mechanism for the clearing of checks and the clearing house system is complete. But it is more than a mere machine. In a larger sense of the word it is Government, and it only needs further development to take the place of all police power so far as the world of credits is concerned, and credits really rule the world.
Take the events of the past year as illustrations of the growth of the clearing house power. In the hour of panic it was the clearing house far more than the Government that checked the tide of disaster.
The bank examinations of the Government being insufficient, the clearing houses are now beginning to institute examinations of their own. They are creating a system of regulation far more effective than that which the Government has instituted. They are providing a guarantee of solvency and payment far more powerful than any system of Government guarantee which Congress can devise.
But there are larger possibilities of development in the clearing house system than even these achievements disclose. This country needs such concentration and flexibility of reserves as would promote its financial stability; and what the Government has been unable to do it is within the power of the clearing houses to accomplish whenever they are conscious of their power and ready to exercise it.
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