ities and towns not so designated and ordinarily receive on deposit
the major part of their reserves plus surplus funds not needed for
local purposes. Banks in the central reserve cities act as reserve
agents for the banks in the reserve cities as well as for country
banks, and on account of their importance as commercial and investment
centers receive and hold in the form of bankers' balances a large part
of the reserve funds as well as the surplus investment funds of the
national banks of the entire country.

State banks and trust companies manage their reserve and surplus
investment funds in substantially the same manner as national banks,
using national banks in the reserve and central reserve cities as
their reserve agents. State laws usually allow approved state banks
and trust companies also to act as reserve agents for the banks and
trust companies under their jurisdiction, but these approved banks are
generally located in the reserve and central reserve cities, and
themselves employ the national banks there located as their reserve
agents, thus forming simply an additional conduit through which the
reserve and surplus investment funds of state banks and trust
companies reach the central money reservoirs administered by national
banks in the central reserve cities.

National banks in the reserve and central reserve cities are also
clearing centers for the enormous volume of checks and drafts which
the administration of the checking accounts of the banks and trust
companies of the country bring into existence. They act as
correspondents as well as reserve agents for these other banks and
trust companies, and in this capacity collect out-of-town checks and
drafts and conduct checking accounts for them. Within these cities, as
well as in hundreds of others, clearing house associations conduct the
local clearings and also act as agencies through which national and
state banks and trust companies cooperate in the promotion of common
interests.

The center of the entire system is in New York City. The clearing
house association of that city, consisting of over fifty national and
state banks and trust companies, includes the banks the vaults of
which constitute the central money reservoir of the country and which
constitute the center of the country's clearing system. Through the
New York subtreasury pass the greater part of the receipts and
disbursements of the government, and the chief assay office in the
country