The Issue and Banking Departments Combined.
In the preceding chapter the Issue and Banking Departments of the Bank of England have been discussed separately. Strictly speaking they can, of course, only be so treated, as each division stands alone; yet the notes in the Banking Department undoubtedly form a connecting link between the two divisions, seeing that they make the one department by far the largest single creditor of the other. Therefore it is intended in this chapter to discuss the return as a whole, to place the totals in the Issue Department back in the Banking Department, and to ascertain the Bank's exact state of preparedness to meet all its liabilities. The following table will enable us to do this:
£ | £ Capital 14,553,000 |Specie and Bullion 35,842,414 Rest or Reserve Fund 3,816,736 |Government Debt 11,015,100 Notes in Circulation 30,401,185 |Other Securities 7,159,900 Public Deposits 10,025,973 |Government Securities 15,826,080 Other Deposits 42,695,526 |Loans, Bills Discounted, Seven-Day Bills 188,590 | Securities, etc. 31,837,516 ----------- | ----------- £101,681,010 | £101,681,010 =========== | ===========
============+============+=======+============+ | Ratio % of | | | Ratio % of |Investments |Total |Ratio % of | Specie and | and |Liquid |Capital to | Bullion to |Government |Assets.|Liabilities.| Liabilities.| Debt to | | | |Liabilities.| | | ------------+------------+-------+------------+ | | | | 43·02 | 40·81 | 83·83 | 17·46 | | | | | ============+============+=======+============+
============+========+=============+ | | Ratio % of | Ratio % of | Total | Loans, | Rest to |Working |Bills, etc., | Liabilities.|Capital.| to | | |Liabilities. | | | | ------------+--------+-------------+ | | | 4·58 | 22·04 | 38·21 | | | | ============+========+=============+
It may be urged that as the gold and securities in the Issue Department are mortgaged to the holders of Bank of England notes, they cannot be treated as ordinary assets, and that is true enough; but when we remember that upon the day in question the Banking Department could have exchanged notes to the value of £21,000,000 for gold, the objection loses much of its force.
However, assuming the Banking Department made the exchange, then specie to the extent of over £12,000,000 and the second and third items on the right-hand side of the balance sheet would be mortgaged to the holders of the notes in circulation, and the Bank, were it in need, could legally neither sell the securities nor apply the £12,000,000 in question to the liquidation of any other debt.