Citi Prepares for 200th Anniversary

by Shirley Brady

In the lead-up to its 200th anniversary on June 12th, Citi's bicentennial campaign celebrates such milestones as helping fund the Panama Canal in 1904.

In the bank's words, "For 200 years, Citi has been helping people and their ideas move from ambition to achievement. The next great idea could be yours.

1812: Founded in New York

1866: Transatlantic Cable

1904: Panama Canal

1948: Marshall Plan

1977: ATM

1995: Space Shuttle Program

2010: Citi Smart Banking

It's been our privilege to back ideas like these and the leaders behind them."

In celebration of Citigroup's 200th Anniversary, we are sharing stories from our rich history here on this blog new.citi.com. The third installation below covers our role in the development of the New York Clearing House. Read the second installment about our contributions to transportation here.

Bank shields clients from panics

Sixty banks cooperate in setting up the New York Clearing House, underpinning the strength of the financial system

Former U.S. Treasury Secretary Albert Gallatin called for a clearing house for New York banks as early as 1841. According to him, the absence of an arrangement similar to that adopted by British banks and the Bank of England "produces relaxation, favors improper expansions, and is attended with serious inconveniences." After considerable disagreement, the banks finally set up the New York Clearing House in 1853.

Under arrangements based on the London Clearing House, each of the 60 New York banks had a settling clerk and a specie clerk (who handled money in the form of coins or gold) to clear transactions at set hours daily. The settling clerk from City Bank would receive gold from the specie clerks of the 59 other banks and the City Bank specie clerk would pay gold to the settling clerks of the other banks. Other banks set up clearing houses in Boston in 1856 and Philadelphia in 1858.

To help stabilize the banking system during crises, the New York Clearing House developed a form of emergency currency based on loan certificates secured by sound assets that were temporarily illiquid. If that did not work, the banks would impose a small fee on those wishing to convert their deposits into cash during a crisis.

The role of the New York Clearing House in countering potential instability was passed to the new Federal Reserve system in 1913.

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