Capital ....... £14,553,000 Government Securities ...... £56,768,000
Rest .......... 3,363,000 Other Securities ........... 92,278,000
Deposits-- Notes .......... £30,750,000
Public £41,416,000 Gold and Silver 1,143,000
Other 121,589,000
----------- 163,005,000 ------------- 31,893,000
Other Liabilities ... 18,000
----------- -----------
£180,939,000 £180,939,000
Ratio of Cash Balance to Liabilities = 19.6 per cent.
RECONSTRUCTED BALANCE-SHEET OF THE BANK,
JANUARY 16, 1918.
Capital £14,553,000
Rest 3,363,000
Notes Issued (circulation) 45,325,000
Deposits 163,005,000
Other Liabilities 18,000
___________
£226,264,000
Gold £58,768,000
Currency Notes 11,015,000
___________ £69,783,000
Government Securities 56,768,000
Other Securities 7,435,000
_________ 64,203,000
Other Securities 92,278,000
___________
£226,264,000
Ratio of Gold to Notes =129.7 per cent.
" " Cash Balance to Liabilities = 33.5 "
It need not be said that these proposals have aroused the liveliest
interest. At the Bank Meetings held since then several chairmen
have been asked by their shareholders to express their views on Sir
Edward's proposed revolution. Sir Felix Schuster pronounced cautiously
in favour of the revision of the Bank Act, and said that he had
advocated it seventeen years ago. Lord Inchcape, at the National
Provincial Meeting, thought that the matter required careful
consideration. Most of us will agree with this view. There is
certainly much to be said for a reform of the Weekly Statement of the
Bank of England, giving, it may be added, a good deal more detail
than Sir Edward's revised balance-sheet affords. But concerning his
proposal to reconstruct our system of note issue on a foreign model,
there is certain to be much difference of opinion. In the first place,
owing to the development of our system of banking by deposit and
cheque rather than by issue and circulation of notes, the note issue
is not nearly so important a business in normal times in this country
as it is in Germany and France. Moreover, the check imposed upon our
banking community by the need for an appeal to the Treasury before it
can extend its note issue beyond a certain point often acts with, a
salutary effect, and the view has even been expressed that if that
check were taken away from our system it might be difficult, if not
impossible, to maintain the gold standard which has been of such
enormous value in building up the prestige of London as a financial
centre. I do not think there is much weight in this argument, since,
under Sir Edward's plan, the note issue could only be increased
against discounts, and the Bank, by the charge that it made for
discounts, would still be able to control the situation. From the
practical point of view of the present moment, a strong objection
to the scheme is that it would open the door to fresh inflation by
unrestricted credit-making just when the dangers of this process are
beginning to dawn even on the minds of our rulers.