how did banks clear checks and get funds from other banks before computerization?
In: 6540
Paperwork and human eyes. The bank would take your cheque and send it to the bank branch it came from with a request for the amount on the cheque to be transferred to them. This form would be filled out by hand and would most likely be for the total amount of cheques from that particular ban they received that day. The bank branch the cheque was drawn from, would then take that cheque, verify that there was enough in the account for it, deduct that amount, then send the money to the bank the cheque was deposited in. All by human eyes and usually an adding machine.
Though the actual cash money wouldn’t be transferred the day that the cheque is cleared. The bank would send confirmation that the money is there and then that amount would be added to the next regular armoured car shipment. That is until fractional banking and lending became a thing. At which point much of the money that was in circulation became entries in banking ledgers.
It’s basically the same way they do it now, but instead of computers it was humans.
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