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Ko- API, Nora&iBEB 28, 185?.] THE LEA BE...
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THE BANK CHAHTER. 'vl have the strongest...
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Note: This text has been automatically extracted via Optical Character Recognition (OCR) software. The text has not been manually corrected and should not be relied on to be an accurate representation of the item.
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India—The Progress Of Affairs. Theeb Ste...
lation be monopolized by that- ' topic . ? The policy of tlie Conservative Whigs seems to be that of postponing Reform ! until it is demanded by violence , not by opinion . "We trust that , for the credit of British statesmanship , a steadier course will be followed by lord Palmerstok-. It is his own position , not that of Ueforni , which is critical . If the literal members of Parliaoient are firm and united they will move the question , and the constituencies will support them . We must liave no further compromise , no new capitulation . The pledge of the Grovernment was not conditional . It was a serious engagement contracted by JLord Pjllmebston with , the Beforni party , and if he fails to fulfil it , lie should be made a political bankrupt . The . Brighton public have set an example , byauthorizing their energetic representative , in their names , to insist that the promissory declaration of last session sliall not be dishonoured . N " ow is the time for other constituencies to act ; but now is the time , also , for those politicians wliose voices were so loud upon the hustings at the general elections to present themselves before the Grovernment and prove their strength and determination . A great Reform . Banquet in London has been suggested , we believe ; it might confidently be announced , for we are convinced it would result in a demonstration which would surprise some Reformers , and encourage all .
Ko- Api, Nora&Ibeb 28, 185?.] The Lea Be...
Ko- API , Nora & iBEB 28 , 185 ? . ] THE LEA BE R . Tt ^ Q
The Bank Chahter. 'Vl Have The Strongest...
THE BANK CHAHTER . ' vl have the strongest o-pinion . " said Sir Robert Peei / , in introducing the Bank Charter Act , " that nothing would better conduce to the credit ; of the Bank itself and to the prevention of panic and needless alarm , than the complete and periodical publication of its accounts . " It cannot be said that the proposed end has yet been fully attained—the accounts , indeed , are published weekly , and in the shortest and most comprehensive form—but their full import is not yet generally understood . Having disposed in our last impression of the ' Issue Department , ' which we have shown . to be purely mechanical— -governed , not by the IBank Directors , but by the action of the public—we proceed to explain the . second portion of the weekly account , viz ., what is ealled the ' Banking Department . ' We reprint both accounts for the week ending November 11 . Having commenced our illustration with that week ' s account , we think it will conduce to clearness to continue it . ISSUE DEPARTMENT . £ £ £ Notes issued ... 21 , 141 , 065 Government debt 11 , 015 , 100 Other Securities" 3 , 400 , 900 14 , 475 , 000 Gold coin and bullion G , CC 6 , 0 G 5 21 , 141 , 005 BANKING DlcrAUTMENT . £ £ £ Proprietors' en- Government sopital 14 , 553 , 000 o . uritiea 9 , 444 , 828 Host ... 3 , 804 , 356 Other securities 26 , 118 , 453 17 , 917 , 356 Notes 957 , 710 Public ilepo- Gold and Silver sits .... 5 , 314 , 059 coin 504 , 443 Privnto depoeits ... l 2 , 935 , 844 Post bills 853 , 075 19 , 103 , 078 37 , 020 , 434 37 , 020 , 434 Commencing on the debit , or left hand Bido of tho account , wo have iirst the capital of tho Bank , 14 i , 553 , 00 OZ . ; then , what is called the rest , or surplus accumulations ot undivided profit , 3 , 304 , 1150 /' . These , added . together , make a total of 17 , 917 , 3507 ., which
is the security the Bank of England affords to the Government and to its customers . The three next ; items explain themselves , and present a . total of 19 , 103 , 0782 . liabilities . On . the other side , we have , first , Government Securities ; next ,. ' Otber Securities , ' which include a certain , but it is understood not very large , sum lent on mortgages . It is mainly made up of advances to the commercial world , as the Bank never hold any
foreign btocks ;—and the two other items , ' notes' and ' coin , ' form the Till , or amount which the Bank of England ( acting as bankers ) keep to meet any demands that may be made upon them . Now the two main features of this account are , first , the amount of ( unemployed ) ' notes ' in the banking department , and next , the amount of what is called ' Other Securities '
The practised eye of the money-dealer lights immediately on these two items ; , the first tells him whether the demand for accommodation has increased or diminished ; the second denotes what the power of the Bank is to supply the commercial world . The first is an index of the demand , the second of the supply ; and these two elements being given , he knows readily what combination may be expected to result . In the above account it will be seen that the ' Other Securities' amount to twenty-six millions . This is by far the largest sum that had appeared on the account since Peel ' s- act was passed . It baa been as low as eight millions , and only a little more thaai a twelvemonth ago it stood at fourteen millions . In this twenty-six millions we have an accurate representation of the necessities of the comniereial world , and of the immense amount of promissory paper afloat . This gradual increase of loans on ' Other Securities ' has been diligently noted by the prudent banker , who finds in this weekly account an accurate gauge of the monetary pressure ; it has been carefully marked by the merchant , who knows well that so large an increase of bills denotes a feverish commercial activity , an undue and dangerous extension of credit . Concurrently with this excessive demand for accommodation we see a diminished power of supply . The ( unemployed ) ' notes' stand lower than they ever liave been—the demand is excessive—the supply almost exhaustedit is under a million . It was very low this time last year , but it stood then at three and a half millions—in November , ' 55 , it stood at five millions—it has been as high as thirteen and a half millions .
The management of the Bank ' slleserve ( the item ' Notes' in the l Banking Department' ) is the great point upon which the Directors ' attention is fixed . This reserve is fed mainly by securities falling due daily , by sales of stock , by f ' resh arrivals of gold . Nothing permanently diminishes it but a drain of bullion . The' simount of the rcservo is tho guide to the rate of interest—as the reserve falls , tho rate rises—and , as a rule , the higher th / 3 rate is tho greater the amount of ' Other Securities . ' In the account before us the privato securities are twenty-six : millions , tho reserve under one million , the x * atc of interest ten per cent . In November , 1852 , tho private securities were eleven and a half millions , the reservo cloven and a . half millions , tho rate of interest two per cent . The amount of accommodation was then loss than one-half of what it now is , the reserve twelve times as great , and tho Bank rato was for six months two per cent . only . Here , then , is tho key to the whole accounta—the amount of ' Notes' in tho bunking department . II' it fall below live millions tho prudent man looks serious , and contracts his engagements , just as certainly as ho takes
sured . Assuming that the nation is convinced that it is absolutely necessary thab bank-notes should bo convertible ( and few really practical men deny it ) , it appears to ns that the only question at present to' be discussed is , shall we issue more than fourteen millions and a half of notes upon securities ? Can we safely , and without endangering tho whole fabric of the currency , make the amount sixteen , seventeen , or eighteen millions , and is it expedient so to do ? Let the question
his great-coat and umbrella when the glass marks much rain . Before we dismiss the subject , we think it desirable to snow an abstract of the accounts m another form : — By a reference to the weekly statement printed above , it will be observed that the liabilities of the Bank are as follows : For notes issued . ......... £ 21 , 141 , 065 For deposits and post bills ... 19 , 103 , 078 Total liabilities ......... £ 40 , 244 , 14 = 3 Its assets are : — ¦ Issue department .. ..... £ 21 , 141 , 065 Banking department ........... 37 , 020 , 434 Total assets .............. £ 58 , 161 , 4 : 99 showing a surplus of 17 , 917 , 356 ? . after discharging every liability of every kind . Amongst its assets are about twenty-four millions of British Government Securities , and upwards of seven millions in . the precious metals . It lias abundance of gold in exchange for all the notes that can possibly be presented for payment ( for , as we showed last week , the public cannot transact their daily business with less than from fourteen to sixteen millions of paper ) ; it has Government Securities for twenty-four millions against deposits for nineteen millions . Is it possible to conceive any institution founded on a surer basis—any paper circulation more amply secured ? Our whole commercial fabric is founded upon Our gold currency . Every contract made is an undertaking to pay so many pieces of gold of a certain , weight and of a certain fineness . A . paper circulation lias been introduced , partly for convenience and partly for economy—for convenience , for wh o would carry a thousand sovereigns if a little piece of paper can be made to serve the same purpose ' . ?—for economy , because the fourteen and a half millions of paper money issued on securities is so much capital actually saved , which , at four per cent , interest , gives an annual return of 580 , 0 OOZ . But in order that a small piece of paper may serve the same purpose as gold in ordinary transactions , it is absolutely necessary that it should at all times be convertible into specie at the will of the holder . This convertibility Peei / s Act was intended to ensure—and this it has
enbe brought to a distinct issue , and it will soon be perceived that to alleviate the present pressure requires something more than an issue of additional bank-notes—something more than the creation of further promises to jpay—that many of our merchants have been entering into speculations far beyond their depth—that they have mado engagements immeasurably beyond their means — that several of them have ' gone in to win , ' having really but little of their own to lose—that
they havo built upon tho sand of credit instead of upon the rock of capital—and that great has been their fall wheu t ] ic floods of adversity camo ( as conic they must ) , sweeping away with resistless force * houses fair to look upon , but entirely wanting in solidity ; substantial to the eye of the unwary , but dangerous , not onlv to tlioao who unwisely coulided in their apparent security , but also to all who were unfortunately oxposed to tho crash attending their fall .
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Citation
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Leader (1850-1860), Nov. 28, 1857, page 11, in the Nineteenth-Century Serials Edition (2008; 2018) ncse2.kdl.kcl.ac.uk/periodicals/l/issues/cld_28111857/page/11/
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