In reality, there are many banks, not just one. If a customer from Bank 1 pays a customer from Bank 2, Bank 1's liabilities decrease and Bank 2's liabilities increase, but Bank 2 hasn't received any money in return. This creates a problem of how to settle payments between the banks.

During the first half of the 19th century in America, when a bank received a cheque from a customer of another bank, they would tally up the cheques at the end of the day or week and issue a bill demanding payment from that bank. In turn, they would receive bills demanding payment from other banks to which customers of this bank had made transfers. To move reserves between banks, each bank would employ a porter, who ran the risk of making honest or dishonest mistakes in payments.

Dues are payments between banks that appear on both sides of a bank's balance sheet. They are similar to deposits or overdrafts, representing money that one bank owes to the other. When payments are settled, these dues are cleared from the balance sheets, and the money is transferred to each bank's reserves. In the next step, we will examine a better way of handling payments between banks.