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London City & Midland Bank The Gold Question Plea for Royal Commission. SIR EDWARD EOLDEN'S PROPOSALS. Tha acuaal general inaetiug of the Lmdon, City & Midland Bank, Ltd w.is h*ii on Fntliy at the Cunaon Street Hotel, Loudon, E.G. Sir Edward Holden, Bart. (Chairman) presided. In moving tha adoption of tho report', he roviewed at the outsat the valua of money i:l 18"1:3, and then went on to survey the conditions which hs.Li prevailed, and the developments which had occurred, in some of the leading monetary centres abroad during the past year, which he said had been of all exceptionally interesting character, demonstrating in striking fashion the necessity for the consideration oi certain vitvtl problems in the London Money Mirk ?t. In a review of tha currency system of Canada he detailed har borrowings and siid, judging from the facts, it would appear to be the obvious duty of Canada to go Blow!v, to cxpwd less, and to borrow less, but it wouid be a mistaken )icy for in lessors in this country to buttfm up their pockets against further Canadian Loans so long as the securities. were of a first-class character. CJoming to the United States ami reviewing their cur- rency system he commented on the new law passed by the Senate iu December I i.it, then detailed the advantages which would accrue to the United Spates from the creation cf the new Central Banks, and how their forma- tion would assist th.i genera! position. The real object of these tanks was to establish a market where Xational Banks would be able to re-discount tht-ir bills or to obtain special !?a.us in a manner imilar to that of the Joint Stock B?nbs in France and Germany, and also to meet the demanvl for emergency currency during the seasonal periods or tha year. He went on to sav that he had purposely concluded the survey of ha world's money markets by examining the effect of the new Currency Law in the United States on thb domestic position of that country, because there was in that Act a clausc which had au important bearing on Loudon. That clause empowered the new Central BiJlk to oppn agencies in London and, further, it empowered every Xational Bank hiving a capital and surplus of not less than £OO,()Où to estabiuh. with the consent of the Washington Board, branches in Loudon. These agencies and branches .would no doubt, create here a considerable amount of naw credit. We have at the present time carrying on banking operations and creating credit in London no less than 120 Foreign and Colonial banks. Thq credit created h ;re by the operations of these banks was really based on the small gold reserve iu the Bank of England, which worked between a minimum of 26 millions sterling and a maximum of 10 miilions sterling.. The gold in the Issue Department was largely contributed through a portion of the reserves of the Joint Stock Banks being held in the Bank of England, and also through the notes which wars held by the banks and by the public. The total liabilities on currant aud deposit accounts of the Joint Stock Banks of this country, excluding the Banks in Scotland and Ireland, amounted approximately to 830 millions sterling, while tha total amount due to depositors in Post Office and Trustee Savin- Banks was about 250 millions sterling. Iu faee of these great liabilities and the smaii amount of gold held in the Bank of England, few would deny that the position was unsound, but it was not so unsound that it could not be remedied if taken aeriousiy in hand. Therefore, it would be wise or this country to prollt by the example set by the United States and not to wait until he have ia this country a break in credit with ail the concomitant calamities such as occurred in the United States in 1007. In this country at the present time, we were trying to produce some scheme for the issue of emergency currency which would carry us over the critical period shoulu a break in credit at any time occur, and as in Germany and in the United States, nnder the now Act, such emergency currency should be based on at least one-third of its amount in gold, and not exclusively on securities. Our Ceutral Bank system came into operation in 1S14. Of course great changes had taken place in this country both in respect to our trade and our banking system since that p jriod, and, in view of this, one could not refrain from wondering whether our system was as efficient as the French, or even as the German system. Under our system, njtes are issued on the security of a Government Debt of about 11 millions sterling ami securities of the value of about 7i- midions, and t!:is was independent of the Banking Department. These items were fixed, and to that extent gold was prevented from accumulating. From 1844 to the present time the Bank of England had never been able to accumulate at one time more than about 42 miilions 3terhng of gold, and during the last 13 years, the gold has fluctuatecl between 42 and 26 millions sta-liu?,. Th3 aggregate ci our foreign trade in IS")4, ten ye?rn ?fter the establishment of our present system and the earliest year for which complete returns were agitable, was about 2?"? millions sterling, while for 'ha year 1Vb, our total trade had amounted to aojut 1,400 millions sterling. Imports had exports were liuancecl by bills of exchange. Coose- quently, the toral bills in 1913 in respect of these transactions, m"3t have bean greater by about 1,132 millions than they weie in 19oi, or about 422 por ceut larger. la addition to this, there had also been a luge increase in the bills m respect to other international financial transactions. In order to keep the gold 111 the centza! lesjrve since 1;191 fluctuating between 2G millions and 12 millions, the Bank Kate had ranged between :2i and 7 per cent, and the; number of fluctuations bad been ou an average about five pdr annum compared with a range of between 3 and 4 per cent, and an average annual fluctuation of about 1 iu the Bank of France. In 1844, when ::3:r Iiobert Peel's Bank Act W1.i! parsed, the average amount of gold held by tho Bank of England and in lS:íJ, when complete returns of our imports and exports were urst available, the average amount of gold was £ 13,300,000. In 1354, the bills of exchange representing our international trade were worked with a gold base in the bank of England of about .5 per cent, whereas at the present time, such bills repre- sented our imports and exports and exclusive of other financial trausilctioDi3 are working on a gold base of only 2 V per cent, and even it the present fiduciary issue of the Bank of England were substituted for gold, the percent- age of gold would would only be about 4 per cent, thus showiug that the Is3iie Department of the Bank of England had not been capable of retaining sufficient gold to keep pace with the increased credit created by the growth of our imports auct exports, leaving out of con- tlideratiof1 thn largo mcroase of bank deposits. There were practically three reservoirs of gold in this country. The one held by the Bank cf England, the one held by the J oint Sock Danks, and the one comprising the gold which came iuto the market every week from South Africa. In order to give better security to their deposi- tors and also to makci their shareholders more secure, it was necessary that tho Banks should hold a certain pro- portion of their liabilities in gold which should be kept in possession in their own vaults and under their absolute control. As far as their own Bank was concerned he was authorised by the Directors to say that they regard this subject as of such great importance that unless some such arrangement be concluded during the next 12 months, they would publish in the balance sheet for December next the amount ot gold held by this Bank. The total deposits of the Government Savings Bank now amounted to about 1S5 millions sterling, and, up to a few years ago, a proper balance sheet was published. The late Chancellor of the Exchequer, finding the position in regard to the depreciation of securities becoming intoler- able, had a Depirtmontal Committee appointed to consider the question. Tho conclusion they came to- and a most unsound oae-wtq that no further balance sheet should ba published. There was practically no reserve held against these deposits, and if hsavy with- drawals took place the Bank of England would have to be relied upou, and the Bank of England would be unable to respond to any great extent were it not for the balances of the Joint Stock Bank3 which it held. There was a debt of 11 millions sterling due by the Government to the Issue Department of the Bank of England. If that deb: were paid oil and gold accumulated in its place, the Government would only be doing their duty in facili- tating the provision cf an increased amount of gold to meet their liabilities. The second question which might be taken into consideration concerned the branches of I Foreign banks doing business iu this country. In his opiuion, as the latter could and did accept deposits in this country, they should each be compelled to publish a balance sheet showing the liabilities and assets of their Euglish Branch and showing separately the amonut of gold they held against their liabilities in this country. The third subject which might engage the atten- tion of the Commission was the construction of some scheme for the issue of emergency currency should a breakdown in credit ever occur iu this country. As to thair own affairs, taking a retrospective view of the whole of the amalgamations carried through they had not had a single instance of failure or dis- appointment. The results had been in every way satisfactory. They had written off from profits during the past year in respect to the depreciations in securities no less a sum than £;)C.OOO, and inasmuch as the capital value of those particular assets had been written down by that amount since the meeting, while they held the same securities and received tbe same income in respect to them, the Bank was really stronger to that extent. Moreover, when money became cheaper, the prices of those securities would rise. it appeared to them that during the whole of the present year they should have cheaper money than they had last year, and it would be a matter of surprise if the aecuritn-s which depreciatad to such a large extent up to December last should not silow a much higher value by next December. Th- balance sheet for lJlo was thoroughly sound m every respect. They had a cash balance on the night of December :31st, of close upon I ï mil-K>ns sterling, or IS 4 per cent of their liabili. ties, and he believed this would meet with the approbation of everyone. In addition to this they had nearly 12 millions sterling at call and short notice, three-quarters of which was practically repay- able to them on demand. Their profits for the year amounted to £1,2:3.),1.5, and the amount brought forward from last year was £1:32, 992. Their dividend for the year amounted to a little over £ 750,000. If they had declared IV: per cent less income tax, they would still only be receiving 18 per cent which they obtained at present. TLey had placed £jO.O(JU to their Bank Premises Redemption Account. They had given to their staii as a bonus £ 30,000, and also £20,000 to their pension fund, carrying forward to the next account about £HS,ü,)'). They had been considering for the past,two. years the question of the division of their shares, and they recommended that theii £ 00 Shares, each with £12 10s paid up, be divided into S12 Shares, each with X2 103 paid np. The amount uncalled would then be £ 9 103 per share, of which 17 would be liability. By this division they would extend their market, thus giving to those who desire a le-s liability, greater facilities to distribute their shares. He moved the adoption of the Report which was carried unanimously. The retiring Directors, Messrs H. Simpson Gee, and Arthur T. Kieu were reappointed, also the auditors, Messrs Vv mnney, Smith & Whinney.

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