Private Clearinghouses and the Origins of Central Banking
Before 1850, banks cleared checks with a daily exchange and settlement-each bank went a porter to make the rounds to all of the other banks. The porter carried a ledger book, checks drawn on other banks, and bags of gold. At each stop, the porter turned over the checks drawn on that bank and picked-up checks drawn on his bank. If the value of the checks he presented exceeded the value of those he picked-up, he collected the differences in gold. If the balance netted out against his bank, he paid in gold.
Eventually, banks created clearinghouses, which eventually grew into a central bank known as the Federal Reserve in 1914.
Clearinghouses devised the method to safeguard member banks against panics and bank runs, but not until the FDIC was created in 1933, did panics stop.
Then there was 2007.
The system the clearinghouses used is strangely similar to the securitization and repo markets of today. Not exactly the same, but there are a lot of similarities.
Interesting read.