The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1933-03-17
BRITAIN HAS NO
BANK FAILURES
IN 43 YEARS
Record Is Clear Since 1890;
10,484 in America in
1920-32 Period.
BY MORRIS GILBERT
MA Service Writer

ID AAOIAAeA0
NEA Service Writer
WASHINGTON, March 17.-Bank
failures in America, 1920 to 1882
10,484
Bark failures in Great Britain
since l890-None.
If you rise to inquire why, the
experts will give you triple an
sWer:
/. The peculiarly adequate struc-
ture of Brtain's central bank, the
Bank of England. to meet special
needs.
2. Branch banking.
3. The experience, the custom, and
well, yes-the morals of British
bankers.
The effect is so solid that ap-
parently nothing but national
eclipse could shake it. Solidarity
and power flow from the national
central bank to the five huge Joint
stock banks which blanket the
United Kingdom with their
branches. Almost all the capital
there is in Britain is at the dis
posal Of this combination.
Dominating Old Lady
The combination is pretty hard
to beat-granting the third element
mentioned above. In city circles in
London they call the Bank Of Eng
land THE Old Lady of Threadnee-
die Street" Bankers and financial
writer's call her that with the same
holy awe and human affection that
causes the British tommy Of the
nineties to speak of the venerable
Victoria as the Widow"
There is something of the old
lady about the Bank Of England
A dominating old lady, very firm,
very straitlaced very strong in her
convictions, very unapprOachable.
The Bank Of England is a private
corporation, yet it issues the cur
rency Of Great Britain.
The Bank Of England pays no in
terest on money deposited. 1t seeks
no deposits from business or private
persons. It seeks no profit beyond
an easily earned dividend which has
been stabilized if not by law, at
least by custom. Profits beyond this
dividend go to strengthen its re-
serve.
Controls Financial Machine
Working in the closest collabora-
ton with the British treasury it
serves as agent and bank of issue
for government securities, concen-
trates on regulating the supply and
flow of currency and credit, and
controls the whole policy of the
British financial machine, with all
the worldwide power which that
implies
Thus Great Britain has a virtu-
ally on-profit-seeking institution,
national if not disinterested in its
purpose. at the heart of its economic
organism.
The British banks progressed to
the point they have now reached
by trial and error, just as, no doubt
American banks are doing. A
century ago British banking was
just as individuaistic as American
More arrogant, probably More spec
ulatiVe.
AmalgamatiOns Bring Strength
In the middle of the century,
however, amalgamations began
The have continued ever since, un-
til today there are but sixteen Joint
stock banks in England, and IS per
cent of British banking is in the
hands of the Big Five"-the Mid
land, Lloyd's, Barclays, the Ma
tional Provincial and the Westmin-
ster-whose branches are nation
wide
A year or so ago, the Midland
bank had more than 1000 branches,
Lloyd's 1,70O Barclays 1000, the
National Provincial LOO, and the
Westminster 900.
The principal use these great in
situations make of the Bank Of
England is to deposit their reserves
with her, keeping only COMPARE
lively small amount on hand for
current needs.
That accompliShes two aims.
Debts due between these banks be-
come largely a matter of bookkeep-
ing-two entries in the Bank of
England's ledgers, no cash trans
ferred. Simple and inexpensive. AL
so it permits the Bank of England
to keep its finger on the pulse of the
whole British financial system.
Bank Rate Is Weapon
Hence, the Bank of England can
concentrate on its principle OBJ
jectiveS, which are to regulate the
amount of currency in use and to
regulate internal credit. which many
authorities consider the more i'm
portant.
1t does this largely through the
weapon of the bank rate, which
has a far greater effect in British
financial circles than the American
bank rate has here, for various
complicated reasons connected with
the fact that the Bank of England
is not so deeply in the field of lend
ing money as the federal reserve
system is.
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