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Banking Department

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BANKING DEPARTMENT.

Proprietors' capital . £14,553,000 Government securities . £18,022,000 Rest . 3,791,000 Other securities . . 27,158,000 Public deposits . . 10,874,000 Notes . . 23,309,000 Other deposits . 41,204,000 Gold and silver coin 2,077,000 Seven-day and other bills 144,000 £70,566,000 £70,566,000 Before proceeding to consider the reserve, there are seven out of the thirteen items set out in the banking department of the return which may be con veniently explained. The item Proprietors' Capital, £14,533,000, represents the amount of Bank of England stock held by the stockholders in, or in other words the proprietors of, the bank ; this of course has to be included in the liabilities of the bank as against its assets, which are set out in the other column. The next item, Rest, represents the amount which the bank always holds in reserve for the payment of dividends to the proprietors, and which is never allowed t8 go below three millions, the surplus above that sum being the amount actually paid every half-year as dividends. This reserve is not the one held against the liabilities of the bank to the public, to which we have already alluded, and propose later on to consider more carefully. A stockholder in the bank has, accordingly, in the return an opportunity to forecast the amount of dividend which he will in due course receive. The item Public Deposits represents the national money on deposit by the Government with the bank. This amount varies from time to time ; increas ing as taxes and payments on account of Government loans are received by the Treasury, decreasing as payments are made to contractors and others, and dividends on Government loans paid to the public. Thus, omitting the 00,000's, in the corresponding week of 1891, this item was represented by 4,8; in 1898, Iv 8,2 ; in 1899, by 10,6 ; in 1900, by 6,3 ; and 1901, as above, by 10,9. By a comparison over these years it would seem that the Public Deposits were, during the week now claiming our attention, in a very satis factory slate. But this week was one of the very many weeks of the Boer war, and the item did not in any way lead the financial expert to believe that the Government had begun to save money. On the contrary, adverse criticism prevailed. The public deposit was certainly comparatively large in amount, and showed a decline of only from the amount of the previous week ; yet this wns so, notwithstanding the fact that the disburse ments of the Imperial exchequer during the last nine days of September had exceeded its receipts by no less than X4,600,000! It would appear, conse quently, that some of the cheques sent out at the end of September had not on Wednesday evening been presented for payment ; and inferentially it would appear that, like many of its patriotic supporters, the Government had in fact either overdrawn its account, or left arrangements for a further credit until very late in the day. And thus may even the politician find something

to interest him in the bank return, and the victim of impecuniosity some thing by way of consolation.

We will now turn to the item Other Deposits, X41,204,000, which represents the money deposited by other banks and by private customers. The latter do not count for much, but the remaining portion of this item comes ultimately from the public as represented by the customers of the other banks. In the money article the item is generally termed "the market s supply of cash," and in connection herewith it should be noticed that the Public Deposits and the Other Deposits have a considerably important re lationship to one another. When dividends on public funds are paid, the source thereof, the Public Deposits, shrinks, whilst the resources of the public, as represented by Other Deposits, are duly increased. On the other hand, when income - tax is generally payable, a converse result may be recognised. In the amount of Government securities, which figures first on the credit side of the return, is found the investments for the time being of the bank in Government stock, or in bills given by the Government to secure overdrafts. In the above return there is an increase in these securities of .E1,339,000 over the amount held in the previous week ; this may indicate that the Government had been borrowing to meet its liabilities for the time being, or that the bank had paid further instalments in respect of its own holdings of Government stock, or that it had bought Consols in the open market, or that more than one of these operations had conic into play.

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