El Paso herald. (El Paso, Tex.) 1901-1931, 1910-04-04
BANKING AS It IS CARRIED ON
IN LONDON AND SCOTLAND

| money market in their hands, and they
are also in touch with general move
ments that are taking place. They can
judge better than anybody else from
the state of the balances of the joint
stock banks how trade is in the coun-
try, whether there is a demand for
money, whether those balances show a
tendency to shrink. or whether they
show a tendency to accumulate.
1t is generally assumed that in times
of trouble il is the duty Of the Bank of
England to grant accommodation to
solvent parties who have good security
to offer. The Bank of England does not
openly acknowledge such a duty, which
has never been officially imposed upon
it, but it has always acted up to 1t, and
were it no tsO its strength and raison
d'etre as holder of the ultimate reserve
and bankers bank would be gone and
other arrangements would become i'm
perative."
This obligation of the Bank of Eng
land TO support the MARKET in emery
ercies was referred to by Sir Felix as
one of the implied duties of the BANK
In response TO the question: What
steps taken are most effective in at
tracing gold or in preventing its out
flow" Sir Felix replied thus:
THE raising of the discount rate. and
not only of the nominal Bank of Eng
land rate, but of the market rate as
we'll You often have a condition which
you describe as the open-market rate
that is l to 2 percent lower than that of
the bank rate, and in those conditions
the bank has no influence whatever.
What the banks have to do under those
conditions, If they wish to attract gold
and prevent its leaving. is to pay more
IN the market for money than other |
people would; they must artificia1ly |
raise the value Of money outside; they |
Immediately become borrowers and !
sweep up all the floating supplies at |
higher rate than a discount broker |
would pay us. They do not do 1t them |
selves. In one instance they have done |
1t direct, but in most cases they employ |
broker. They give security for those /
loans and In n short time they sweep
up the surplus funds, and that becomes !,
eIIectlve in raising the discount rate. |
mat again has(an influence on the for
elgn exchanges. 1t is the foreign ex-
changes that regulate the outflow or in
lux Of gold, and foreign exchanges can
only De regulated by the value OIL
money"
Royal Bank of Scotland.
Dependence of Scotland upon the
Bank or England for gold in case OF
heed was one Of the. salient features
brought out in the inquiries in regard
10 the Scotch banking system.
Inc circulation in Scotland is issued
,! elght banking institutions, the sur
'1vors Of 10 which we're In existence in
-S45, when the British Parliament for
'ade the creation of any more banks of
ssue and fixed the limit of the circula-
ION me amount of the authorized cir |
,uletlon OF the Scotch banks is only
2,616,350, or about sI3.OOO,000. Above
ms amount. however, notes may be is
ued without limit, provided they are
oVered pound for pound by gold. and .
ne actual circulation ranges up to '
bout f75OO,000. The Scotch law diff ,
ers from the English law in allowing /
otes to be issued as dow as fl sterling, |
Hhlle the minimum in England is f5.
'" nile che Scotch system Is organized {
pom basis independent of that of $
'ngland. its policies are governed / I
irgely by those of the big British t
ank- Sir George Anderson, general I
manager of the Bank of Scotland, who ]
aid: +
In common with most of the otherj Il
snks in London, all the Scottish banks a
epresented there keep accounts at the f
ank of England. on which operations o
re made as required, a minimum bal
nee being usually left in the hands of
lie Bank of England to recoup them for f
'ouble in keeping the account. An ar b
"S OiiAOHt cAIolS OelWeen the 6dIlh u | u
ngIand and the Bank of Scotland for c
rawing drafts on each other and col | Il
citing documents. and the former act as | r
caring agents in London for the Bank | 6
Scotland. o
The Bank of England is the banker n
the government; is the largest issuer | I,
notes, issuing its notes when re- g
Tired in exchange for gold bullion and n
aging notes in gold coin; and being the n
ankers' bank, the weekly returns as 4
Its position form the best possible