SUMMARY OF WEEKLY RETURNS OF BANKS OF ISSUE FOR FOUR WEEKS ENDING SEPTEMBER 23rd, 1882.

Average Weekly Circulation of these banks for the month ending as above:-
Private Banks

..

..

£1,626,898 1,644,335

. £3,271,233

On comparing these amounts with the Returns for the previous month, they show:

Total Increase on the month

And, as compared with the corresponding month of last year:-
Increase in the notes of Private Banks

Increase in the notes of Joint-Stock Banks

Total Increase as compared with the corresponding period of last year £168,478 The following is the comparative state of the circulation as regards the Fized issues:

SUMMARY OF IRISH AND SCOTCH RETURNS TO SEPTEMBER 23rd, 1882.

The Returns of Circulation of the Irish and Scotch Banks for the four weeks ending as above, when added together, give the following as the Average Weekly Circulation of these banks during the past month, viz.:

On comparing these amounts with the Returns for the previous month, they show

And as compared with the corresponding month of last year—
Increase in the Circulation of Irish Banks
Increase in the Circulation of Scotch Banks

Total Increase as compared with the corresponding period of last year £1,103,417

The Fixed Issues of the Irish and Scotch Banks at the present time, are:-
Ireland, 6 Joint-Stock Banks
Scotland, 10 Joint-Stock Banks

£6,354,494

2,676,350

Together 16

..

£9,030,844

The Actual Circulation compared with the above gives the following results:--
Irish Banks are Above their fixed issues
Scotch Banks are Above their fixed issues

£753,878 2,944,108

Total Above fixed issues

£3,697,986

Being an Increase of £54,332 on the part of the Irish Banks, and an Increase of £630,899 on the part of the Scotch Banks as compared with the Return of the previous month.

Average amounts of Gold and Silver coin held by these banks during the past month :

CIRCULATION OF THE UNITED KINGDOM TO SEPTEMBER 23rd, 1882. Average Weekly Circulation for the month ending as above, as compared with the previous month:

(From Wetenhall's Stock Exchange List.)

THE BANKERS' MAGAZINE

AND

Journal of the Money Market.

DECEMBER, 1882.

THE DROP IN THE RATE OF INTEREST ON INVESTMENTS.

THERE has been for some years past, as is well known to all our readers, a gradual rise in the market value of all securities of a permanent and dependable character. Consols, which have rarely been below par for a considerable time, are at the present date quoted at a fraction over 102. Other securities of a solid description follow Government securities closely in this rise. If peace is maintained and this country remains prosperousand there seems, fortunately, no anxiety on either of these two heads-there appears to be no reason to doubt that the present scale of quotations will be continued, at all events for a considerable time to come. As a natural consequence, the yield obtainable as dividend drops in a corresponding proportion. It is difficult to obtain 4 per cent. on an investment in any really sound security. At no very distant date it was possible to invest money in very substantial securities, such as those which many of our Colonial Governments issued, to return 5 per cent., and even more. But an investment on these terms is no longer possible.

The fundholders and those who place their money in securities of a similar character, are, as a rule, persons to whom the amount of the return from their capital is of less importance than the certainty of that return and the security of the capital itself. Even among smaller investors the same reasons for seeking an investment of that class frequently are found. They place their money where they believe it will remain safe till 66

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the time comes when a use for it is found. The constant flow of accumulation in fractional sums, which takes place through the agency of the savings banks, provides means for the purchase of amounts in the public funds which are large in the aggregate, and thus continually acting on the market, tend to maintain prices at a high point. The fact that Consols are held up in price in this manner assists to keep other securities on a proportionate elevation. The amount of Government stock at any time floating in the market is believed to be comparatively small. So much stock of that description is absorbed by various public bodies, banks, and others, that the balance available for sale is but a narrow one.

Apart from these causes, it is worth considering the more general subject as to the rate of interest payable on securities, and how far it may not be likely to drop at the present time. Such a drop in the return from new investments would naturally tend to raise the selling price of all older ones, especially those whose stability is undoubted. The question is often asked whether there are laws which govern the rate of interest, and further, if such laws exist, what their effects may be. This is a practical question. It may be answered, in the first place, that such laws undoubtedly exist. We may begin our endeavour to find their basis by stating in a general way that the rate of interest on money, that is to say, the price which is paid for the use of it, is fixed, like the price of any other article, by the operation of the wider law of demand and supply; but this truly is only a part, and indeed a small part of the question. The rate of interest depends on three causes: the abundance of capital relatively to the demand for it-that is to say, as previously mentioned, on the law of demand and supply-and beyond this, on the productiveness of the employments in which it is used, and the stability-or rather, perhaps, on the opinion which exists of the stability-of the investments in which it is placed.

Let us take the influence of the causes just named. In all young countries, in all new colonies, which are peopled by emigrants from older civilized communities, the rate of interest is always very high. The causes which render the rate of interest thus high under these circumstances are not so much the insecurity of the capital-though it may, perhaps, be not quite as secure as in the mother country-but rather because capital under such circumstances is relatively smaller to the employment for it, and that it finds unlimited channels for use which are also singularly productive. The period during which this