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Bank Return

department, amount, issue, securities, gold, england, notes and act

BANK RETURN. By the Bank Charter Act, 1S44 (7 & S Viet. c. 32), Section (3, it is provided that the Bank of England issue a weekly return as to its financial posi tion : " An account of the amount of Bank of England notes issued by the Issue De partment of the Bank of England and of gold coin and of gold and silver bullion respec tively, and of securities in the said Issue Department, and also an account of the capital stock, and the deposits, and of the money and securities belonging to the said Governor and Company in the Banking Department of the Bank of England, on some day in every week to be fixed by the Commissioners of Stamps and Taxes, shall be transmitted by the said Governor and Company weekly to the said Commissioners in the form prescribed in the schedule hereto annexed marked (A) and shall be published by the said Commissioners in the next suc ceeding London Gazettr. in which the same may be conveniently inserted." The Return is published on Thursdays, and is made up to the close of business on the previous day.

The weekly Return issued by the Bank of England on September 7. 1844 (that is. shortly after the Bank Charter Act was The Bank of England is divided into two parts, the Issue Department and the Bank ing Department. In the return for June 23, 1909, the Issue Department section shows on the one side the total amount of notes issued from that department, /57,706,245 ; and on the other side the manner in which they are secured, that is by the Government debt, /11,015,100 (the amount of the debt at the passing of the Bank Charter Act) ; other securities, /7,434,900 ; gold coin and bullion, 139,256,245. When the Bank Charter Act was passed the combined amount of tho debt owing by the Government to the Bank and of other securities was /14,000,000, and as the amount is now /18,450,000, an in crease of /4,450,000 has taken place, due to the Bank having taken advantage of the privilege granted to it under the Act of increasing its issue against securities to the extent of two-thirds of the issues of country bankers which have lapsed. The Issue Department does not hold any silver bullion, although the Bank has power under the Act to issue notes against silver bullion to the extent of one-fourth of the gold. (See BANK OF ENGLAND.1 The first item in the Banking Department of the Return is the proprietors' capital. £14,553,000. The original capital of the Bank, when it was established in 1694, was £1,200,000, and it was increased from time to time until it reached the amount of /14,553,000 in 1816, at which figure it has continued ever since. The next item is the

Rest or Reserve Fund, /3,107,086, which has been accumulated from profits and to which the profits are added from time to time. The dividends to the Bank proprietors are paid out of this account, but the amount of the Rest is never allowed to fall below /3,000,000.

Public deposits, /13,409,696, represent the moneys paid in to the Bank by the Government Departments, " including Ex chequer, Savings Bank, Commissioners of National Debt and Dividend Accounts." In the March quarter the figures in this item increase very considerably owing to the income tax and other taxes which have been credited to the Government accounts.

Other deposits, /44,890,022, include the accounts of the ordinary customers of the Bank in London and at the branches of the Bank, and also the balances of the London clearing bankers and other London banks, and of many country banks. The Bank of England is thus the Bank upon which all other banks would rely in a time of pressure. In ordinary times when money is abundant and not in demand, the amount of other deposits increases, owing to bankers keeping larger balances in the bank, but when the demand for money becomes stronger the bankers' balances diminish and the amount of other deposits therefore decreases.

Seven day and other bills, /47,660, include Bank Post Bills (see BANK POST BILL). The other side of the Banking Department Return, the assets side, shows how the funds have been invested. The first item, Govern ment securities, /15,368,812. are those (e.g., Consols, Treasury Bills, Exchequer Bonds) which are guaranteed by the British Govern ment. The next item is " other securities," /30,707,163—that is, other than Government investments. It includes general invest ments, also bills which have been discounted for customers and bill brokers, and loans against securities.

The " Reserve " is formed of the next two items on the Return, notes unemployed. /28,328,680, and gold and silver coin, 11,602.809. The notes on hand are part of those shown by the Issue Department as notes issued to the Banking Department. According as gold comes into the country or leaves it, the amount of the Reserve Nvill increase or decrease.

When the Bank Rate is raised it tends to prevent the outward flow of gold and encourages an inward flow. On the other hand. a reduction of the Bank Rate has an exactly opposite tendency.