PROGRESS OF BANKING AND CAPITAL AND RESERVE FUNDS IN THE UNITED KINGDOM 1876, 1877, 1878, 1879, 1880 AND 1881. DERIVED FROM THE STATEMENTS IN THE "BANKING ALMANAC" FOR THOSE YEARS. Increase in Reserve Fund 924,693 853,448 766,764 308,832 1,390,943 £1,817,610 £1,383,152 £1,102,193 £1,198,226 £2,988,001 427,861 £471,840 £124,585 £164,093 £19,375 £26,255 £104,763 £188,416 and Wales Increase in Banking Decrease in Banking Capital, Scotland, 1878 and 1880.. Decrease in Banking Capital, 1878 .. Decrease in Banking Capital, Ireland 1876 and 1878 Increase in Banking Capital, Ireland, 1877, 1879, 1880, and 1881 £1,817,610 £1,383,152 £195,527 £1,198,226 £2,988,001 £471,840 Net Decrease in the country generally, 1878 £946,783 Decrease in Capital £146,988 .. 361,000 Net Decrease in Capital Increase in Reserve Funds Deduct Decrease in Reserve Funds £214,012 £144,452 119,452 £94,560 Net Decrease in Metropolitan and Provincial Banking Capital PROVINCIAL BANKS. Increase in Capital £610,598 Deduct Decrease in Capital 566,622 £43,976 Increase in Reserve Funds .. £571,381 Deduct Decrease in Reserve Funds 143,517 427,864 Net Increase in Provincial Banking Capital 471,840 Increase in Banking Capital £630,931 Deduct Decrease in Banking Capital (Metropolitan and Pro vincial Banks noted above) 94,560 Net Increase in Banking Capital-England and Wales.. £536,371 BANKERS' PROFIT MARGINS IN THE PAST HALF-YEAR, AND IN 1881. WHEN six months ago this magazine dealt with the question of the "profit margins" in the first half of 1881, the situation of affairs was admittedly altogether exceptional. There had been temporary pressure in January, but from that time onwards until June, there had been a steady influx of deposits to London, mostly in payments upon new securities, while Paris, for a Bankers' Profit Margins in the past Half-year, and in 1881. 17 considerable period in the early part of this year, was sending gold to London, sufficient to counterbalance the outgoings to America. This caused a large floating supply of funds in Lombard-street, which the great activity in the stock markets was only in part able to employ. Hence, though our commitments were increasing in many directions, and though the Bank reserve at no time reached 50 per cent. of its liabilities-not even after the new Order in Council-from April until August best bills were at all times to be discounted under 2 per cent. For the entire six months, the average Bank rate was only £2. 18s. 5d. per cent., and the average market rate for bank bills was 98. 5d. per cent. below that figure. For a time after July had turned, the money market even appeared to be growing weaker, and for a fortnight after the Italian loan was brought out, bills were taken in Lombard-street at 1 per cent., though the official rate was 2 per cent. Then came a rapid change. Gold was taken for Italy and also for America in payment for securities taken up here, and the result was an advance in the Bank rate to 3 per cent. on August 17, and to 4 per cent. on August 24, movements in which the outer market fully partici pated. This checked the gold withdrawals, and because money was fairly cheap for the moment, in the third week in September the market rates were beaten down to 24 per cent. Yet the Bank went to 5 per cent. at the beginning of October, and the outer market within per cent. of that rate. Since then the Bank quotation has remained unaltered at 5 per cent., but Lombard-street has fallen to 3 per cent., risen to 4 per cent., fallen again to 3 per cent., and is now 4 per cent., just prior to the, turn of the year. The absorption of money throughout the second half of 1881 has been steadily progressing. What people remitted to London early in the year has since then in a great measure been returned to the provinces, or has been remitted to the colonies or abroad, not of course so much by direct cash shipments as by exchange operations which have obviated the necessity of remittances being made to us. The hosts of loans and new companies brought out before August have involved large orders for machinery and British manufactures, and doubtless much of the present increase in our exports is the direct result of our subscriptions to new securities six months ago. But it follows that London banks no longer retain in their deposits such a large amount of public companies' money as they did in June, and such being the position of affairs, it does not appear improbable that the great increase under the head of deposit VOL, XLII. 2 and current accounts indicated by our analysis of the London joint stock banks in July, may by the 31st December be followed by a partial reaction. It is, of course, impossible to speak with any certainty upon this point, for the normal position of a bank is progress in the matter of deposits. But, if we may judge from the condition of the other deposits in the Bank of England, which in their turn vary so much in sympathy with the condition of the bankers' balances, this reaction may in a measure be inferred. From the foregoing remarks, it may be gathered that we regard the dividend prospects of provincial banks, or rather their net earnings accrued, as more satisfactory than they were for the first half of the year, and such may very likely prove to be the case. But as regards the London banks there are other considerations which will enable us to take a clearer the view upon the subject. Below will be found a comparison of average official and market rates current in London in the past four half-years: Average Bank rate Average market rate (best three months).. First half of Second half of First half of Second half of 1881. % per annum. % per annum. % per annum. % per annum. |