s of checks properly recorded. In large
transactions the check, because of its economy, takes place of any other
form of currency. The bank must also deal in drafts, by which exchanges
can be made in different cities, and in bills of exchange, distinguished
from ordinary drafts by special reference to foreign trade. It may also
hold, as a part of its available machinery, clearing house certificates,
which are statements of balances due in the daily settlement between the
banks belonging to a clearing house association.

All these form a part of the machinery of every-day exchange, and together
with a complete system of book-keeping make the utmost facility in the use
of money.

They also greatly economize in the use of money by saving cost of counting
and of transfer, and by securing against losses. If the system offered no
more advantages than this safe and ready use of good money, the banks
would be practically indispensable. But they have a still greater use in a
safe extension of credit. The perfection of system in banking makes it
possible for one who habitually fulfils his promises to purchase anywhere
in the world on the shortest notice with the simple guaranty of credit in
the bank where he does business. A traveler wishing to have funds in
safe-keeping, and yet available on a journey around the world, may obtain
through a bank familiar with his business standing a letter of credit,
upon which he can draw, wherever he may be, against the deposit in his
favor, and his draft will be paid, through a series of banks, at the bank
near his business connections. Thus the credit of the world is bound
together by the banking system grown up to meet the necessities of trade.

_The clearing house._--All forms of credit referred to above, where dealers
are customers of a single bank, are easily brought together upon the books
of that bank, and will practically cancel each other. The customers of
many banks in large cities may have their checks and drafts brought into a
single system of book-keeping through a clearing house, which is simply a
bank of banks. At a certain hour each day, in the larger cities twice a
day, each bank of the city brings to the clearing house all checks and
drafts against any other banks. These are quickly sorted, charged to the
several banks against which they are drawn, and credited to the banks from
which they are brought. The balance of debit and credit is settled then
and there, either by tran