MONEY AND THE MECHANISM OF EXCHANGE 167
held for its redemption, while some systems dispense with
any holdings of metal, or require only the most meagre
reserves. Thus instruments of exchange representing a
greater value than could be replaced by metal in hand are
actually circulated, and serve as media of exchange for
values expressed in terms of the metal which they represent.
Cheques and bills are more extreme examples of instruments
 of exchange, created in a volume which appears to
have no relation to the metallic reserves which are held, as a
provision for meeting the requirements of such holders of
these documents as exercise their right to demand the money
their claim to which is attested by these documents. The
habits of modern commercial communities permit the circulation
 of such credit documents with great facility. Ina
community where there was but one banker, the cheques
drawn by purchasers in payment for goods would be,
practically, orders to deduct sums from what stands to the
credit of the accounts of the drawers of the cheques, and to
add them to the amounts standing to the credit of the
recipients of the cheques. So far as payments took place
between the members of such a community, having accounts
at the bank, there would be no need to handle actual money.
The payments would be balanced by receipts, perhaps on
dther days and from other persons, but not therefore involving
 anything but book-keeping to satisfy the needs of the
case. If several bankers exist in a community, the customers
of each would present their claims on the others through
their bankers, and the same bankers would have to meet
claims on behalf of the same or other customers. To settle
accounts between bankers, only the differences between
claims and obligations need be paid in money. Where the
magnitude of the business is sufficient to justify it, clearinghouses
 are established to facilitate the presentation and
settlement of such claims between bankers. The amounts of
the balances are, naturally, various. When numerous banks
with large transactions are concerned, the balances fall to 5
Per cent, or less, of the amounts paid or received, while they
May rise to 20 per cent, or more, where commerce is less
active. The balances are not necessarily paid in money.