[...]... tenders and the extent of the credit builds up on them After the crisis of 1890 Lord Goschen seems to have been strongly imbued with the conviction that the system had been carried too 26 The English Banking System He far therefore urged they should upon the London banks that make a monthly statement and this suggestion The result of their position, was adopted by the majority of them was that they published... repay 14 The English Banking System them by borrowing from the Bank ferring the credit raised with Bank at the England of it is of England and trans- to the bankers, whose cash This book thus increased entry takes the place in their balance sheets of the legal- tender cash that their customers have withdrawn, and is used as the basis for the increased deposits that have been created by the loans of the. .. in the form of advances for a few days holding of securities the other its is liability On one side of its account its expanded by on deposits this is amount and on similarly swollen when the Bank's weekly return was made up on December 31, and so At the end of 1902, the last occasion The English Banking System showed the at the extent of the extra credit provided by full end of the year, the other... and took the place of coin currency When the use of checks drove out the bank note, as hap- pened in their England, the bankers lent their customers not own promises to pay but the right to draw checks, The English Banking System involving a promise on their part to meet the checks on These checks drawn are paid demand banks, and the check currency of in to the other England thus consists to a great extent... cases The extent to which the banks can create credit by means of loans and discounts is regulated only by their prudence and by the rules which they apply to their business their credit at the Bank of If they advance too much, England will be diminished, owing to the fact that the claims against them clearing house will be heavier than the claims The have to present against other banks is which they... created by the loans of the bankers to their customers for ornamental purposes Similarly at the time of year when the transfer of the taxes to the Government's balance reduces the cash at the banks the gap is filled Bank of England held by the other by the loans made by the Bank of England to the customers of the other banks In short, by discounting and making advances the Bank of Eng- land can at any time... become part of the basis banks roughly base of credit in England, since the other their operations the Bank on their holding hand and of cash in Their cash at the of England Bank of at Eng- land has already been discussed above; their cash in hand consists of coin and notes, and since the latter have thus become part of the foundation on which the deposit the other banks are based, there liabilities.. .The English Banking System emergency currency with great and discounts which are used ease, by means of loans to swell the balances of the other banks, which thus show an increase of the cash at the Bank of England which they use as a basis The credit operations remarkable, system elasticity of the and the merchants and London can by taking approved bill is for thus brokers security to the of... reserves is the exist- that the banks themselves; but this very revolutionary change would deprive the system of its two great advantages, a centralized organization with a center which specializes on the duties involved by acting as center, and the extreme elasticity with At the same must be admitted that the system by which the other banks treat their balances at the Bank of England which the present... of the which the banks conduct their business Hence it that competition between the banks often impels make advances or discount bills when the Bank of England, as custodian of continue to gold reserve, thinks it all prudence with follows them to at low rates the English advisable in the interests of the The English Banking System This foreign exchanges to impose a higher level by borrowing some of the . to Commission. HG W77e TABLE OF CONTENTS. THE ENGLISH BANKING SYSTEM. By Hartley Withers. Chapter I. — The English System: Page. (A) The Bank of England 3 (B) The joint-stock banks 23 (C) The Scotch banks 41 (D) The private. and with the least possible dis- turbance to the financial community. By the fact that it keeps the balances of the other banks, the Bank of England is enabled to conduct the payment of the interest on. and that the Bank is always behind the other banks, and this feeling has certainly done much to foster the confidence of the British public in its banking system. A credit in the books of the Bank