Front Page Titles (by Subject) Effects of the Cheque and Clearing System. - Money and the Mechanism of Exchange
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Effects of the Cheque and Clearing System. - William Stanley Jevons, Money and the Mechanism of Exchange 
Money and the Mechanism of Exchange (New York: D. Appleton and Co. 1876).
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Effects of the Cheque and Clearing System.
Far more important than these considerations is the fact that, where an extensive banking system exists, only a portion of the exchanges are actually effected by money. I do not lay much stress upon the use of bills of exchange as replacing money, because the degree in which they are so used must be comparatively limited, and they are rather articles bought and sold with money than money itself. But we have traced out step by step the way in which the cheque and clearing system enables debts to be balanced off against each other, so that the money is never touched at all, and only intervenes as the unit of value in which sums are expressed. Almost all large exchanges are now effected by a complicated and perfected system of barter. In the London Clearing House, transactions to the amount of, at least, £6,000,000,000 in the year are thus effected, without the use of any cash at all, and, as I have before explained, this amount gives no adequate idea of the exchanges a arranged by cheques, because so many transactions are really cleared in provincial banks, between branches, agents, or correspondents of the same bank, or between banks having the same London agents.
If our knowledge of the amount of transactions in England is highly imperfect, we know still less of the way in which payments are effected in other countries. The New York Clearing House transactions are very extensive, as we have seen, and there is an elaborate banking system extending over all the States of the Union; but it would require much investigation on the spot to enable any one to form a notion whether the correspondence between these banks enables them to economize currency as much as the English system of London agencies. In France and most continental countries the cheque and clearing system can hardly be said to exist except in some of the large towns. Paris has an incipient clearing house, and the Bank of France, moreover, makes transfers between clients to the extent of two or three millions daily. All banks will to a certain extent economize currency, and those of Amsterdam and Hamburg have for some centuries carried on a system of transfers, the true prototype of our system.
Considerable changes, it is true, are taking place in the mode of conducting business in some parts of the Continent. Professor Cliffe Leslie, who is well known to be intimately acquainted with the economical systems of the continental countries, attributes the rise of prices in Germany in a great degree to the quicker circulation of the money, and the freer use of instruments of credit. In the Fortnightly Review for November, 1870 (pp. 568-9), he says:—"The improvements in locomotion and in commercial activity which have so largely augmented the money-making power of the Germans, have also quickened prodigiously the circulation of money; and the development of credit, likewise following industrial progress, has added to the volume of the circulating medium a mass of substitutes for money which move with greater velocity. A much smaller amount of money than formerly now suffices to do a given amount of business, or to raise prices to a given range; and to the increased amount of actual money now current in Germany we must add a brisk circulation of instruments of credit. Were the circulating medium composed of coin alone, whatever the amount of the precious metals issuing from the mines, or circulating in other countries, and whatever the price of German commodities in markets abroad, no rise in the prices of German commodities at home could take place without additional coin to sustain it."
So different, then, are the commercial habits of different peoples, that there evidently exists no proportion whatever between the amount of currency in a country and the aggregate of the exchanges which can be effected by it. Even if we had reliable statistics of the amounts of currencies, such data should be regarded as indicating, not the comparative abundance or scarcity of money, but the degree of civilization, of providence, or of complexity of banking organization, in the country.