Interview with the Governor and Directors of the Bank of England
[155]Q. When does your present charter expire?
A. The bank's exclusive privileges of banking continue subject to one year's notice and to repayment by the Government of the debt of £11,015,100 and of all other public debt held by the bank at the time.
Q. What is the par value and present selling price of your shares?
A. The bank's capital is in the form of stock, £100 of which is at present quoted at about £267.
Q. How many stockholders have you?
A. There are at present over 10,000 accounts.
Q. Is the stock fully paid?
A. Yes.
Q. Have your shareholders any liabilities in addition to the ownership of shares?
A. Legal opinion is to the effect that there is no further liability on bank stock.
Q. Is there any limit to the number of shares which may be held by any one person, and is your approval required before a transfer of your stock can be made?
A. There is no limit—the bank's approval is not required.
Q. Does every share have a vote at shareholders' meetings?
A. To have a vote a proprietor must hold £500 of stock, but no matter how much additional stock a proprietor may hold he can not have more than one vote.
Q. Is there any custom restricting the class from which the directors may be selected?
A. There is no legal restriction as to the class from which directors may be selected, except that they must be "natural-born subjects of England, or naturalized," but in actual practice the selection is confined to those who are, or have been, members of mercantile or financial houses, excluding bankers, brokers, bill discounters, or directors of other banks operating in the United Kingdom.
Q. How many branches have you?
A. There are eleven branches—two in London and nine in the provinces.
Q. Is the business conducted at your branches of the same class as at your main office in London?
A. Yes.
Q. Do your branches have business relations with merchants, farmers, and all classes of people in their respective localities?
A. There are no restrictions of any kind as to the class of people with whom the bank has business relations.
Q. Is the Bank of England a member of the London Clearing House?
A. Yes; but "on one side only," as it is termed. The Bank of England presents, through the clearing house, all drafts drawn on clearing bankers paid in to it by its customers; but the clearing bankers do not present, through the clearing house, drafts on the Bank of England paid in to them by their customers. Such drafts are paid direct to the credit of their accounts at the Bank of England.
Q. Do you at any time allow interest on special deposits?
A. It is not the practice of the bank to allow interest on any deposit.
Q. Can you state approximately the average length of time and the average size of bills discounted by you?
A. Time, forty to fifty days; size, probably about £1,000.
Q. What is the distinction between what are known as "prime bills" and other bills?
A. A "prime" bill we should define as a bill accepted by a London or provincial bank in first-class credit or a merchant or merchant banker of the first class whose business it is to grant credits.
Q. Do you discount any prime bills?
A. Yes.
Q. Do you discount to any considerable amount for individuals and merchants?
A. The bank discounts all approved bills offered to it by persons or firms having properly constituted accounts.
Q. Is it your custom to employ surplus funds in purchase of bills from discount houses?
A. No.
Q. Do you rediscount bills for the joint stock or other banks?
A. The bank is always prepared to rediscount for other banks at its official rate, and does a large business from time to time with the colonial and foreign exchange banks who are from the nature of their business always sellers of bills.
Q. Would you charge a merchant house having a good account with you the bank rate or the market rate for prime bills?
A. The market rate.
Q. To what extent does bank rate govern your discount and loan transactions?
A. The rates for discount and loan transactions at the bank usually approximate more or less closely to the bank rate.
Q. Do you at times discount bills for parties having no account with you?
A. No.
Q. Are a considerable number of your loans on call?
A. None.
Q. When and under what conditions is the bank rate changed?
A. The bank rate is raised with the object either of preventing gold from leaving the country, and lowered when it is completely out of touch with the market rate and circumstances do not render it necessary to induce the import of gold.
Q. Does the bank sometimes borrow money in the open market for the purpose of raising the market rate?
A. Yes.
Q. Do you sometimes sell consols for the same purpose?
A. Yes; on rare occasions.