Bank of England Annual Report 1950
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BANK OF ENGLAND REPORT FOR THE YEAR ENDED 28TH FEBRUARY 1950 Issued by Order of the Court of Directors, 20th lllly, '950. COURT OF DIRECTORS FOR THE YEAR lll'mEO 28TH FRBIl.UARV. 1950. entERON FROMANTEEL COBBOLD, ESQ., GOVERNOR. DALLAS GERALD MERCER BERNARD, ESQ., DEPUTY GOVERNOR. SIR GEORCE L EWIS FRENCH B OLTON, K.C.M.C. THE RT. HON. LoRD BRAINTREE. *RALPH ELl.IS BROOK, ESQ., 0.11.£. LAURENCE J OHN CADBURY, ESQ. tSIR GEORCE CHESTER, C.B.E. S IR PATllICK ASHLEY CooPER. :t:GEOFFREY CECIL RyvES ELEY, EsQ., C.B.E. S IR CHAR LES JOCELYN HAMBRO, ".B.E., M.C. S I R JOHN COLDBROOK H ANBURy-\VILU AMS . THE H ON. H UCH KEN1'ON M OLF.SWORTH KINDUSLEY, C.B.E., M.C. H UMPHREY CHARLES B ASKERV ILLE MYNORS, ESQ. § A NDREW NAESMITH, E SQ., C.B.E., I.P. SIR OITO ERNST NIEMEYER, C.B.E., K.C.lI. S I R KENNETH OSWALD PEPI'IATT, K.B.£., M.C. THE RT. HON. LoRD PIERCY, C.B. E. B ASI L SANDERSON, EsQ. HA RRY A RTHUR SIEPMANN, EsQ. MICHAEL JA)I£5 BABINGTON S MITH, E SQ., C.B.E. *R~sign~d. loth November, 1949. *Appoint~d. 25th Nov~mbe r . 1949. tDi~d, 21St April, 1949. §Appoi nt~d. 30th Sept~mbe r . 1949. BANK OF ENGLAND. Report for the year ended 28th February, 1950. The following Report summarises the operations of the Bank of England during the year ended the 28th February, 1950, and ce rtai n selected developments in internal and external finance. Note Circulation and Issue Department. The total of Notes Issued and Paid in recent years is shown in the following table: NOTES ISSUED, P AID AND IN C IRCULATION. £ millions. YEAR ENDED FEBRUAR Y, 1939. 1947. 1948. 1949. 1950 . Iss ued during the year ~ 927 961 I , IIO 815 Paid during the year ... 968 872 1,105 1,111 797 In circuLation at end of year 478 1,377 1,233 1,232 1,250 The fall in the totals of Notes Issued and Paid during the year ended February, 1950, was the result of arrangements made for the banks to extend the re-issue to the public of notes in a suitable condition to be put again into circulation. NOTES IN CIRCUUTION BY DENOMINATIONS. L thousandt. ENO OF FEBRUARY 1939. 1947. 1948. 1949. 19 50. IOS. 53,338 9l!,9!)6 91,171 88,854 86,164 [< 283,646 1,11 3,279 976,955 968.719 975,762 £5 38,283 83,962 97,000 1(>],,161 120,618 £w '4.596 2,°79 1,634 1.3°6 1,139 £20 4>436 9l!5 755 595 5'0 £50 12,305 2,168 1,627 1,257 ' ,0&; [<00 26,518 4,8 10 3,414 2,558 2,1I3 boo ' 9 9 9 8 8 £500 3,6s4 493 393 344 304 £1,000 23.199 1,209 839 524 386 O ve r b ,ooo (a) .. 18.455 69,030 59,585 60,560 61,950 478,449 1,377,020 1,233.382 1,231,886 0 02 -- 1,25 , 3 The issue of £10, £20, £50, boo. £500 and £1,000 notes was discontinued in 1943. that of £ 200 notes in 1928. (a) Used by the Bank of England for internal purposes, c.g ., as cover for excess Scottish and Irish note issues. The total value of lOs. notes in circulation again declined and their proportion feU bdow 7% , as compared with over 11 % of the total in 1939. On the other hand, the total of £5 notes in circulation rose by £ 13.4 million out of a total increase of £ 18.1 million thereby reRecting a continuing increase in the use of this denomination by the public. ' ( I ) Fiduciary Issue. At the beginning of the period under review the circulation, at £ 1,232 million, was slightl y less than that at the corresponding date in 1948, A heavy outflow of notes before Easter raised the circulation to a higher figure than in the year before, and for the rest of the period it remained at a level somewhat higher than that of the previous year. In consequence, although the summer holiday demand was less than in 1948, it was necessary to increase the Fiduciary Issue by £50 millton to £ 1,350 million on the 4th July , Following a reduction in the circulation from the August peak of £ 1,308 million the Fiduciary Issue was reduced to £ 1,300 million on the 27th September, Although the Christmas demand for notes was slightly lower than a year earlier, it was nevertheless necessary to increase the Fiduciary Issue again by £50 million on the 12th December, The highest circulation of the year. £ 1,322 million, was reached during the period of Christmas demand but the usual inflow of notes thereafter made it possible to reduce the Fiduciary Issue to £1 ,300 million on the 10th Janu ary at which figure it stood at the end of the period , The circulation was then some £18 million in excess of the corresponding figure for 1949. Changes in the Fiduciary Issue have been as follows during the past three years:- TOTAL l millions. FIDUCIARY DATE . CHA NCE. ISSut.. 7th January, 1948 50 1,400 4th Fc= bruary, 1948 50 1,350 3rd March, 1948 - 50 1,300 21St December, 1948 + '5 1,325 4th January, 1949 - '5 1,300 4th July, 1949 + 50 1,350 27 th Septt:m ber, 1949 50 1,300 12th Dt:ct:mber, 1949 + 50 1>350 00 lOth January, 1950 50 1,3 ISSUE DEPARTMENT. £. thousands. 1950, Change, E ND OF F EBRUARY. 1949. Nott:s in Circulation ... 1,231,886 1,250 ,023 + 18,137 Notc=s in Banking D c= partmt:nt 68,362 5°,334 - 18,028 1'ott:$ Issuc=d 1,300,248 1,300,357 + '09 Government Debt Il,Ol5 11 ,015 Otht:r Go\·t:rnment Securitit:s r,288,167 1,288,27 1 + >04 Otht:r Sc:c uritic=s 8"7 704 '03, Coin otht:r than Gold Coin .. n <0 Fiduciary Issue 1,300,000 Gold Coin and Bullion 357 + '09 1,300,357 + '09 The Gold Coin and Bullion in the Issue Department, previously valued at 172,. 3d. per ounce fin e, was revalued at 2481. per ounce fine on the 21st September, 1949, ( 2 ) Banking Department. The assets and liabilities of the Banking Department at the beginning and cnd of the year were as follows:- £ thousands. END OF FEBRUARY. 1949. 1950. Change. Capital 14,553 14.553 Rest 3,903 3,905 + 2 Public Deposits 9,922 7.422 2,500 H.M. T reasury Special Account '7,605 135,976 + lIB.37! Bankers' Deposits 308,810 300,439 8,37 1 Other Accounts 91,23 2 Ilg,291 + 28,059 Total Deposits .. 427,569 563. 128 + 135,559 446,025 581,586 + 135 ,561 = Government Securities 322,034 472 ,139 Discounts .se Advances 23,579 19·45° 4, 129 Securities 28,228 34,566 + 6.338 Other Sccuritic:s ... 51 ,807 54,016 + 2,209 Notes 68,362 50.334 18,028 Coin 3,822 --5,0<)7 + 1,275 446,025 581 .586 + 135.561 = = The increase in the total assets and liabilities of the Banking Department is mainly attributable to the H .M. Treasury Special Account, opened under the Economic Co-operation Agreement of 6th July, 1948 (Cmd. 7469) and referred to in the Report fo r the year ended the 28th February, 1949. After the middle of September funds accumulated on the account, with a corresponding increase in the holding of non ~ interest bearing Treasury Notes included in the figure for Government Securities. For a just appraisal of movements in the Bank Retu,rn, allowance should be made for this item. The increase in Other Accounts is to a great extent the result of an increase in the balance of the International Monetary Fund arising from the implementation of the exchange guarantee thereon. Half-yearly payments of £873,180 were made to H .M. Treasury on 5th April and 5th October, 1949, in pursuance of Section I (4) of the Bank of England Act, 1946. The Bank Rate remained unchanged at 2%. Floating Debt. The outstanding total of the Floating Debt, as given in the Exchequer Return for the date nearest to the end of February in each year, showed a decrease of £188 million, made up as follows:- £ millions. Treasury Bills + 365 Ways & Means Advances 28 Treasury Deposit Receipts ... 525 - 188 ( 3 ) FLOATING DEBT OUTSTANDING. 1. million/. 4th m"r. 1st Mar. 28th Feb. 26th Feb. 25th Feb. 193{). 1947. 1948. 1949. 19.50. Treasury Bills ... 856 4,741 4,503 4,495 4,860 Ways & Means Advances: by Public Departments --- 4' 53° 493 4" 4'3 by Bank of England 6 '5 , , Treasury Deposit Receipts ... 1,473 1,201 1,01"9 --494 6, 199 9"- 6,759- -- 5,947 5,759- During the year there were several special movements affecting the total of the Floating Debt, apart from the normal incidence of excess or deficiency of revenue as against ordinary expenditure or net expenditure" Below the Line" in current Government finance . Mention may be made of a fall in Floating Debt at the end of March, 1949, which partially reRected a reduction in Floating Debt held for the Savings Banks Funds accompanied by a purchase on the part of the National Debt Commissioners of £89 million 3% Terminable Annuities.