The functions and organisation of the Bank of England

As the central bank of the United Kingdom, ties and other assets with which it is backed; the Bank of England act as bankers to the the net profit of this Department is paid over Government, in the widest sense. In this role, to the Government. The remainder of the it is necessary for the Bank to examine and to Bank's activities are accounted for under the try to anticipate the banking and financial heading of the Banking Department; and from problems that are likely to arise, and to under­ this Department's profits a half-yearly payment take the appropriate operations in the money, is made to the Treasury. capital and foreign exchange markets: conse­ The Bank's functions may be described quently the Bank have a major responsibility broadly under four main headings, although, for advising the Government on the formulation as will be seen, some of the Bank's operations of monetary policy and for the subsequent may fall within more than one heading. Two execution of policy. The Bank are also bankers of these cover the Bank's day to day role as to the commercial banks and to overseas bankers and the work which they undertake central banks; they are the note-issuing author­ solely as agent for the Government. The ity, the registrar of government stocks, and other two are concerned with the Bank's the agent of the Government for a number of operations in the financial and foreign exchange financial operations, including the management markets and with the way in which they of the Exchange Equalisation Account and the implement the Government's monetary policy; administration of exchange control. and with their advisory role in financial and Although in some of these functions the Bank other matters. This article now examines these act as agent for the Government, they are not functions. Some of them have already been a government department. Their position is described in detail in earlier issues of this determined by the Bank of England Act 1946, Bulletin: the principal articles-off-prints of under which the Bank ceased to be a corpora­ which are available on request-are those on tion owned by private stockholders-in whom the management of money day by day and on was vested the power of appointing the the Bank's work as registrar (in the March 1963 Governors and Directors-and became a public issue); on the Bank's branches (December corporation, the capital stock passing to H.M. 1963); on the note circulation (March 1965); Treasury. and on official transactions in the gilt-edged The Bank Charter Act of 1844 separated the market (June 1966). note-issuing function from the Bank's other activities by dividing the Bank into two Departments-the Issue and Banking Depart­ ments. The division does not affect the internal The Bank's role as bankers organisation of the Bank, but serves for In their capacity as bankers the Bank provide accounting purposes only. The accounts of the a wide range of services analogous to those Issue Department are concerned solely with offered by commercial banks to their customers. the note issue and with the portfolio of securi- The Bank's main customers are the Govern-

233 ment, the commercial banks, and overseas holdings in the form of balances at the Bank, central banks and international organisations­ from which they settle their daily cheque and although there remains a small amount of credit clearings with each other. These balances private and commercial business. fluctuate with changes in the total of the banks' deposits: they are also drawn upon as the banks Bankers to The Government's main acquire notes from the Banking Department the Government accounts are held with the for their tills-and similarly increased as the Bank. A large number of subsidiary accounts banks pay in surplus or worn notes to the Bank. are kept with the commercial banks, because From time to time the Bank may call upon the Bank have few branches outside London. the clearing and the Scottish banks to place But wherever government revenue may be Special Deposits at the Bank in addition to collected initially throughout the country. in their normal working balancesP) These Special due course it normally passes through the Deposits do not count as liquid for the pur­ central Exchequer account at the Bank; for to poses of the minimum ratio of liquid assets to this account virtually all the Government's total deposits which the banks customarily receipts are ultimately credited and from it observe; a call for Special Deposits thus government payments originateJ1) reduces the banks' liquidity. Direct control of credit has been achieved through the Governor's Although the Bank acquire large amounts of requests to the banks (including the accept­ government securities in the general course of ing houses and overseas banks) and to other their business, they do not make short-term financial institutions-imposing a quantitative advances to the Government. except to finance ceiling on credit, or recommending or dis­ the Government's residual requirements over­ couraging certain categories of lending. night and then only on a modest scale. As The Bank of England Act 1946 em­ explained in the article " The management of powered the Bank to ". . . request informa­ money day by day", the Government's need for tion from and make recommendations to funds is met by borrowing in the market. This bankers ..." and. if so authorised by the borrowing. both short term on Treasury bills Treasury, to " . . . issue directions to any and longer term on stocks, is managed by the banker for the purpose of securing that effect Bank. Sales of Treasury bills are made to the is given to any such request or recommenda­ market either through the weekly tender held tion ...". There has been no necessity for such in the Bank(2) or from official portfolios. directions to be issued. Longer-term government finance is provided through official transactions in the gilt-edged market. Bankers to other The Bank have about ninety The bankers' The Bank of England are central banks accounts for overseas cen- bank bankers to the commercial tral banks and for such bodies as the Inter­ banks and, as described later. act as lender national Monetary Fund. the International of last resort to the discount houses, and thus Bank for Reconstruction and Development. the to the whole banking system. Nearly all the International Development Association and the domestic commercial banks have an account Bank for International Settlements. Many with the Bank, as do the discount houses and central banks. particularly those in the sterling accepting houses and a few of the overseas area. hold the bulk of their external reserves in banks in London-making nearly one hundred London. and others keep substantial working in all. The most important accounts are those balances in sterling. Most of these funds are of the London clearing banks who. by custom, placed with the Bank. which may arrange and keep a substantial part of their total cash advise upon their investment.

(1) !vi0vements of f�nds between the Exchequer and other government departments-whose accounts are also In many cases with the Bank-and their relation to the published statistics of central government financing were explaIned In the March 1966 Bulletin. (2) The role of the Treasury bill in government finance and the organisation of the tender were described in September 1964. (3) The procedure of Special Deposits was described in December 1960.

234 Private Although a central bank, governments. In round figures, the Bank man­ customers the Bank still keep a few age nearly two hundred stocks with a combined accounts for individuals and for private and nominal value of over £20,000 million held on public companies-a legacy from the days when two and a half million accounts; in each year the Bank were active in general banking; they this involves over five million dividend pay­ also provide banking facilities for members of ments and nearly three quarters of a million their staff. This small private business has the stock transfers. merit of giving the Bank direct experience of some of the banking problems that other banks face. Agent for the Government The Bank act as agent for the Government in administering exchange control; a staff of The note The Bank are the central about 340 is currently engaged on this work­ issue note-issuing authon.tyJ1) one quarter of the peak figure reached in the The Bank of England's note issue is almost early 1950's. The Bank also administer the entirely fiduciary i.e. backed not by gold but voluntary arrangements introduced in May by government and other securities; the amount 1966 to limit investment in the more developed of the fiduciary issue is authorised by Parlia­ countries of the sterling area. In addition, they ment. As already mentioned, the profits of manage, on behalf of the Treasury, the issue-the Issue Department's earnings on its Exchange Equalisation Account, which holds holdings of securities less its operational costs the official reserves of gold and foreign -go to the Government, being paid over to exchange. Operations in the foreign exchange the E.E.A. in accordance with the Currency and gold markets, both for the E.E.A. and and Bank Notes Act 1939. for central bank and other customers, are The amount of notes in circulation depends among the Bank's principal tasks and are in practice on public demand : the authorities described later. are less concerned with the total note circulation than with the money supply as a whole­ broadly defined as bank deposits plus notes Exchange The chief object of and coin. Servicing the note issue is a major control exchange control is to pro- undertaking; in terms of staff, note printing is tect and conserve the gold and foreign exchange by far the Bank's greatest task. New notes are reserves. The legal basis for exchange control issued, and worn notes are withdrawn, in very is the Exchange Control Act 1947 and statutory large numbers each day, and there are heavy instruments issued under this Act. Exchange seasonal fluctuations in the circulation around control is not applied to transactions between the main holiday periods. In an attempt to U.K. residents and residents of the sterling area. reduce the number of notes that have to be Permission must, however, be obtained for all printed, and distributed throughout the country, transfers to residents outside the sterling area the Bank have recently sought, with the although, except for travel, payments in respect co-operation of the commercial banks, to of current transactions are allowed freely. encourage the public to accept, more readily, The Bank have delegated powers to deal clean used notes rather than new ones and to with many types of exchange control applica­ make more use of the higher denominationsP) tion to most of the commercial banks in the United Kingdom (both British and foreign): such banks are known as 'authorised banks '. Registrar of The Bank act as registrar In addition, more limited delegation has been government stocks of government stocks and made to others in connection with transactions of those issued by the nationalised industries; in securities-such as stock exchange firms and and they also manage stocks of some local solicitors (' authorised depositaries ')-and to authorities, public boards and Commonwealth travel agents.

(1) Although the Scottish and Northern Ireland banks issue their own notes, their issues are comparatively 'small and are largely backed by these banks' holdings of Bank of England notes. (2) March 1966 Bulletin, page 37.

235 The Bank's operations in the markets Bank have recently introduced the practice of By their market operations-and. through lending overnight when to do so suits the their various contacts, in other ways-the Bank pattern of their operations. On loans for seven seek to implement the Government's monetary days or more, and for discounts, the rate policy. charged is Bank rate (or occasionally above In the money market. the amount of Treasury Bank rate), which is expensive in relation to bills offered each week at the tender is usually the average rate at which the discount houses fixed (after making allowance for expected can borrow in the marketP) Borrowing at this government receipts and disbursements-includ­ penal rate will thus tend to increase the average ing the repayment of maturing Treasury bills cost of the discount houses' borrowing, and -and for other known transactions during the they will therefore be encouraged to lower the following week) at such a level that over the price at which they tender for Treasury bills week as a whole the market will be somewhat (raising the rate of discount): this in turn will short of cash with which to take up the bills tend to raise other short-term interest rates. allottedP) Such a cash shortage will generally The new technique of overnight lending is have its first impact on the London clearing capable of flexible use. It was first employed banks, who maintain cash holdings amounting in June and July 1966, when conditions were to a conventional proportion of their deposits. such that the Bank's aims were to keep money The banks. however. are able to restore their tight and short-term interest rates firm. The cash to the required proportion by drawing first aim can be served by using overnight back some of the money that they have pre­ lending to transfer a shortage of funds from viously lent at call to the discount houses; so one day to the next, so that such a shortage that a shortage of money in the market is felt can make its weight felt repeatedly if necessary. ultimately by the discount houses. The second aim can be promoted by applying Having succeeded in making the market Bank rate to such lending. This not only has short of cash, the Bank are free to choose the the effect of directly raising the average cost method by which they will relieve the shortage of the discount houses' borrowing, but it also -in the light of the effect they wish their encourages other lenders to the houses to stand actions to have on short-term interest rates. out for high rates at the end of the day's They can relieve it directly, by buying Treasury business. In less difficult conditions, overnight bills from the discount houses, or indirectly by lending could be used simply to balance out buying bills from the banks-who in turn will a shortage of funds on one day against a relend the money to the discount houses, or prospective surplus of funds on the next; and will use it to buy bills from them: these methods could be made virtually neutral in its effect on -which may involve bill purchases of £30-40 interest rates, if that was desired. by the appli­ million, or even more, in a day-will have little cation of a rate below Bank rate which would effect, and may indeed be so applied as broadly reflect the normal level of overnight to have no effect, on the Treasury bill rates in the market. rate. If the Bank choose not to take the The Bank may also influence interest rates initiative to relieve the shortage in these ways, more directly through a change in Bank rate. however, the discount houses will have to raise Changes in Bank rate are agreed between the the cash they need through the Bank's Discount Governor (acting under standing authority Office-the lender of last resort. Sometimes delegated to him by the Court of Directors) they will do so by offering bills for discounting and the Chancellor of the Exchequer; the but, more usually, they will seek an advance decision is announced by the Court. The London against the pledge of securities. clearing banks' rates for deposits and advances Discounted bills must have an average of normally move in fixed relation to Bank rate; not less than twenty-one days to run to while the rates for Treasury and commercial maturity: advances are normally made for a bills, and indeed virtually all other short-term minimum period of seven days-although the rates, are strongly influenced by it.

" (1) The procedure was explained in detail in the article" The management of money day by day . (2) Advances to the discount market, for periods of seven days or more, are shown in Table 6 of the statistical annex.

236 Through their dealings in government stocks, ticular the South African Reserve Bank, the the Bank seek to achieve two main objects. The largest single regular seller of gold-and also principal object, as described in the article on behalf of the gold pool,(3) whose object is " Official transactions in the gilt-edged market", to prevent unnecessary and disturbing fluctua­ is to sustain, in the long run, the demand for tions in the market price of gold. government stocks-so that longer-term finance is available, and will continue to be available, to meet the Government's borrowing require­ Financial advice ments. The Bank's market operations are Daily operations in the money, gilt-edged largely done through the Issue Department. and foreign exchange markets provide the Bank The general aim is to sell stock, either outright with the technical knowledge of, and practical or against purchases of relatively short-dated experience in, these markets which together stocks, when there is a demand for this in the contribute greatly to the Bank's ability to give market; but the Bank may also buy stock back financial advice. Close contact with �he com­ from the market when that seems desirable. mercial banks and other financial institutions, Deals take place at prices which reflect official and with the industrial and business world in policy on interest rates and the need to pre­ general, and observation of financial and serve a healthy market for the sale of govern­ economic conditions at home and abroad, also ment stock in the future.l1) From time to time contribute. It is these operations and con­ the Department's portfolio is replenished by tacts which bring the Bank into the field of new issues of government stock: these issues policy, and into taking part in the preparation are normally made in large amounts, of which of official forecasts of the economic situation only a small part is usually taken up by the and of the balance of payments. Close co-op­ pUblic-the rest is taken up by the Issue eration with the Treasury is maintained at all Department, and gradually sold. Similarly, the levels, both in day to day affairs and through Issue Department seeks to buy up a stock near­ participation in official committees. ing maturity, so that on the redemption date The Bank's relations with the rest of the relatively little has to be paid off in cash to City have always been close, and the Bank other holders. All purchases and sales are have long provided the main channel of com­ made through the Government Broker, who is munication between Whitehall and the banks in constant contact with the Bank. and other financial institutions. The City The Bank's operations in the gilt-edged representative on the National Economic market also influence the money supply and Development Council is helped by a liaison the commercial banks' liquidity: the payment committee-originally formed at the Bank's for government securities bought by the banks' suggestion-consisting of representatives from customers reduces the volume both of bank the principal organisations of the banks and deposits and of the banks' liquid assets. other financial institutions, and including an In the foreign exchange market, the Bank use Executive Director of the Bank. the resources of the E.E.A.: their intervention As noted above, the Bank's activities and is designed to prevent undue fluctuations in the contacts are not limited to the London exchange value of sterlingJ2) The Bank deal markets and to the City. The Bank have not only in the London market but also direct operational experience in many specialised with many other central banks, their operations fields, both domestic (for example, in questions in this field being helped considerably by their concerning the capital structure and financing extensive contacts abroad. The Bank also deal of companies) and foreign; and, when occasion in the London gold market, on behalf of the arises, they advise government departments E.E.A. and of central bank customers-in par- on such matters.

(1) The amount of stock transferred through the gilt-edged market during 1965 was some £8,000 million (Table 15 of the annex): about a quarter of this was attributable to the Issue Department. (2) The way in which the E.E.A.'s operations affect Exchequer financing was described in an article in the March 1966 Bulletin, while the day to day effects on operations in the domestic money market were touched on in the earlier article on the management of money. (3) The London gold market and the gold pool were described in the March 1964 Bulletin.

237 The Bank's direct relations with industry Organisation for Economic Co-operation and and commerce are of very long standing. These Development and other international bodies. connections stemmed originally from the Bank's • commercial banking activities. Later. in the inter-war period. through their establishment Such are the Bank's functions. Before turning of the Securities Management Trust and the to the organisation of the Bank it may be Bankers' Industrial Development Company. the helpful to set out more fully the distinction Bank became a leading participant in schemes for accounting purposes, already mentioned. for the financing of industrial reorganisation/I) between the Issue and Banking Departments. Contacts are now maintained through members of the Court. through the Bank's Agents at Issue and Banking The division into these two the branches. and through periodic visits to Departments Departments is reflected in industrial centres by Directors and senior the Bank Return which is published each week officials. This Bulletin provides an opportunity -as required by the Bank Charter Act of 1844. for the Bank to publish. each quarter. a review In terms of financial analysis, however. the of the financial and economic scene. Issue Department is treated as part of the public On overseas affairs. the Bank have developed sector, for it is mainly used for operations in close contacts with central banks and monetary connection with debt management which bear authorities and with many other banks and no relation to commercial banking: the Banking financial institutions abroad: such contacts are Department is part of the banking sector. The not only of assistance in the Bank's dealings Issue Department's liabilities are the notes in in foreign exchange. noted earlier. but also issue-which are held either by the public contribute to their knowledge of overseas (including the commercial banks) or. as a financial matters. Visits are exchanged at reserve, by the Banking Department. Its assets, frequent intervals. particularly with other to the extent of the fiduciary issue, are holdings central banks-both for policy discussions and. of government debt, largely stocks and by more junior staff. for training purposes. Treasury bills, a small portfolio of commercial The Bank have responded to many requests for bills, and some coin other than gold coin. It advice and assistance in the creation of new also holds a token amount of gold coin and central banks. principally in the Common­ bullion, dating from the days when the note wealth, and have frequently made members issue was backed chiefly by gold. of their own staff available to help establish The Issue Department issues notes only to them. the Banking Department, which passes them to its customers (principally the commercial banks) Membership of the Bank for International as required : old notes return along the same Settlements, which the Bank of England path. Apart from a reserve of notes. and of helped to found in 1930, has also been of coin, the assets of the Banking Department are considerable assistance in the Bank's mostly government securities (again. largely operations on behalf of the E.E.A. In stocks and Treasury bills) and bills discounted addition, the B.l.S. have played a very large part in the development of inter-central bank for, and advances to, customers. Its liabilities are mainly its customers' deposits, notably co-operation; and the monthly meetings in Basle, attended by central bank Governors, those of banks; government accounts (which afford regular opportunities for discussions. form the greater part of the" public deposits ") The Governor of the Bank of England is the are relatively small. present United Kingdom Governor of the LB.R.D. and the Bank have usually provided the United Kingdom Alternate Governor and The organisation of the Bank Alternate Executive Director of the I.M.F. The The departmental organisation is shown dia­ Bank regularly take part in U.K. consultations grammatically on page 245. As already noted. with the LM.F. and in discussions within the the work of some of the departments has been

(1) It is perhaps interesting to note that twice in little over thirty years the Bank have come to the aid of the. same shipbuilding company.

238 described more fully in earlier issues of this that of a Director four years; all are eligible Bulletin; it is proposed to cover some other for reappointment in the same or any other departments individually in future issues. capacity. Directors retire in rotation; four at the end of February each year. A member of History The present organisation the Court must be a British subject, and may has developed from the original Act of Parlia­ not be a member of the House of Commons, ment and Royal Charter of 1694-under which a Minister of the Crown, or a person serving the 1,268 subscribers to the capital stock of the in a government department and being remun­ Bank were incorporated as "The Governor and erated out of moneys provided by Parliament. Company of the Bank of England ". In addition The powers of the Court are defined by the to the Governor and Deputy Governor there Charter, which also requires the Court to meet were twenty-four Directors. Business com­ at least once a week: this is traditionally on menced on 1st August 1694 with a staff of nine­ Thursdays. Standing committees of Directors teen, the three senior officials being the " First meet regularly, while special committees are Cashier ", the "First Accomptant " and the appointed when necessary. The principal stand­ "Secretary and Sollicitor ". These appoint­ ing committee is the Committee of Treasury, ments settled the organisation of the Bank for which normally meets every Wednesday. It more than two hundred years. consists of the Governor and Deputy Governor At first the Court of Directors met daily, ex-officio and five other members of the Court assuming responsibility for many of the admini­ chosen by ballot. It is the policy-making com­ strative decisions that were later dealt with by mittee of the lBank and reports directly to the the three senior officials. Soon, however, the Court; and it receives the reports of all other Court adopted the present practice of meeting committees before they are submitted to the weekly and of appointing committees from Court. The other standing committees are con­ amongst their own number to deal with and cerned with internal administration; one deals report on specific matters. As the Bank's with the administration of the Bank's Printing operations and responsibilities grew so the staff Works, and the others with matters such as increased: by 1734 it numbered 96; during the staff, premises and domestic expenditure. Napoleonic Wars it rose to about 900; and by The Governor and Deputy Governor and the the First World War it had reached 1,500. Executive Directors, of whom since 19'46 there In 1932 a special internal committee recom­ have always been four, are required to render mended changes that laid the foundation of their exclusive services to the Bank. Broadly the present organisation. The increasing speaking, the responsibilities of the Executive variety of the Bank's activities, both at home Directors are divided into home finance, over­ and abroad, had imposed heavy responsibilities seas finance and exchange control, economic upon the Governor and Deputy Governor, and and statistical services, and the ,Bank's internal full-time Executive Directors were appointed affairs. to assist them. In addition, the policy-begun The other twelve Directors have a wide in 1926---of appointing Advisers was con­ variety of interests-in industry and commerce, tinued, and their number gradually increased. trade union affairs, and in banking, both at Finally, the departmental structure was modi­ home and overseas. In addition to their attend­ fied. In 1946 the Bank of England Act, ance at Court and their work on the standing mentioned earlier, brought the Bank into public committees, they may be called upon by the ownership; and a new Royal Charter was Governors for advice on any problem in which granted. their special qualifications or experience would be helpful. The Court of The Act of 1946 lays down Directors that the Court of Directors shall comprise the Governor, Deputy Governor and sixteen Directors, all of whom shall be Senior The day to day administra- appointed by the Crown. Not more than four officials tion of the Bank rests pri- Directors may be employed as full-time Execu­ marily with the Heads of Department. The tive Directors. The term of office of both the senior Head of Department, and chief executive Governor and Deputy Governor is five years, officer of the Bank, is the Chief Cashier.

239 There are at present two Assistants to the tions on behalf of central bank or other Governors, whose duties are largely concerned customers, and the settlement for them. The with foreign exchange policy and overseas office supervises all the overseas central bank matters-where the burden of work has recently accounts, employing surplus funds or making been exceptionally heavy. There are also funds available to execute payment orders e.g. Advisers to the Governors, who are not by purchasing Treasury bills of a suitable attached to any department: they tend to maturity or arranging for them to be dis­ specialise in particular fields, but their work is counted. It prepares the daily books of the not limited only to those subjects in which they Bank for the Governors and the Bank Return specialise. In addition, there are a number of for publication each Thursday. It is responsible Advisers. The first Advisers were recruited for claiming the necessary funds from the bor­ from outside the Bank because of their special rowing body to meet dividend or redemption knowledge and connections. Today, most payments in respect of loans managed by the Advisers still have specific responsibilities: Bank, and for ensuring that these funds are some are concerned with the study of economic available by the due dates. It handles transfers and financial conditions in a particular of government stocks for the National Debt country or group of countries, to which they Office-the Chief Cashier and his deputies make regular visits-representing the main acting as attorneys to the National Debt Com­ point of contact below Governor level with the missioners. On Fridays it receives applications central banks of those countries; others are for the Treasury bill tender and calculates the chiefly concerned with the state of trade and basis of allotment. It is responsible for all industry in the United Kingdom, with the advances to customers, other than to the dis­ balance of payments, or with various aspects count market (see below), and for securities of the financial markets. But most of them are held for customers in the names of the Bank's now appointed from the Bank's own staff; and nominees. all are attached to particular departments. Day to day contact with the money market is through the Discount Office, where the dis­ count houses apply when they wish to discount The There are eight depart- bills or to borrow. Sample purchases of the departments ments, most of which are commercial bills discounted by the market are divided into a number of offices. The principal made regularly for the Bank's own account, department is the Cashier's, which deals with thus making it possible to check, and in some the banking functions, manages the E.E.A., measure control, the quality of such bills and is responsible for all the Bank's operations circulating in the market. The office also dis­ in the money, gilt-edged, foreign exchange and counts bills for other customers, and handles gold markets. Information about the economy enquiries from them on credit standing. In and the balance of payments, and about addition, it maintains contact with the City'S developments overseas, is provided by the financial community as a whole. Economic Intelligence and Overseas Depart­ The Dealing and Accounts Office carries out, ments; the latter also covers the administration and accounts for, the Bank's operations on of exchange control. The note issue is the main behalf of the E.E.A. in gold, foreign exchange concern of the Printing Works, while the and foreign securities. It executes customers' Accountant's Department maintains the register orders for the purchase and sale of foreign of government and other stocks. Finally, there currency and gold. The physical handling and are those departments which are concerned custody of gold, both bullion and coinage, for with the internal administration of the Bank­ the E.E.A. and for customers, principally over­ Secretary's, Establishment and Audit. seas central banks, is carried out by the Bullion Office. This office also holds the Bank's store Cashier's The principal office in the of coin; but it does not supply coin to the Department department is the Chief commercial banks, whose requirements are met Cashier's Office. Here is handled the accept­ direct from the Royal Mint. The supply of ance or delivery of stock or bills resulting from notes to the commercial banks, however, is the Bank's market operations, or from opera- maintained through the Issue Office, which is

240 also responsible for the withdrawal of worn handles exchanges between registered stock notes and for dealing with forgeries and with and bearer bonds. claims for the recovery of the value of mutilated Finally, a small office known as the Treasury notesP) provides joint security control over assets and The Branch Banks Office is the link between valuables. Head Office and the branches. These are at Birmingham, Bristol, Leeds, Liverpool, Man­ chester, Newcastle and Southampton: in addi­ Economic The Economic Intelligence tion, there is a branch close to the Law Courts Intelligence Department provides in- in London, which is a convenient centre for Department formation about events its special work for the Public Trustee and in and prospects in the domestic economy and in connection with the High Court. The branches the balance of payments. It is also respon­ facilitate the distribution throughout the sible for the publication of this Bulletin and country of new Bank of England notes, and the Bank's Annual Report. Much of the work the withdrawal of worn notes from circulation; involves the collection and analysis of and they conduct a banking business, with both statistical and other information, supplied government and private sector (including largely by banks and other financial institu­ banks') accounts. In addition, the Agents in tions, both for use within the Bank and for charge of the branches outside London estab­ publication. The Bank compile several of the lish and maintain close personal contact with series of financial statistics which appear in the business community in their areas: they the annex to this Bulletin and in official publi­ thus help to provide the Bank with an up to cations. date assessment of the state of affairs in the The department is not divided into offices, industrial centres, which is supplemented by but for administrative convenience the work periodic visits by the Governors, Directors and is separated into five 'divisions '. These are senior officials. concerned with banking, which also covers In their respective oities the branches outside some of the monetary movements in the balance London also operate the provincial clearings of payments (such as the gold and convertible and administer exchange control. currency reserves and short-term external The normal banking business of Head Office liabilities and claims); capital markets and customers is the concern of the Drawing Office, government finance; balance of payments; which keeps their accounts. There is a close commodities; and the national economy. There link with the Bill Office, whose main function is also a mathematical analysis group, which is to deal with the daily clearing of cheques and serves all the divisions, and a group which credit transfers through the London Bankers' produces charts and drawings for the Bank as Clearing House. This office, as its name implies, a whole. also holds commercial bills for the Bank and Close liaison is maintained with the Treasury for customers and collects them on the due and other government departments, and with dates. Records of customers' securities are the Central Statistical Office; one object of this kept by the Securities Office, which also is to avoid overlapping in the collection of provides ancillary services such as the collec­ information. The volume of statistical work tion of coupons on bearer bonds, the exchange has expanded greatly in recent years; increas­ of allotment letters for stock or shares, and the ing use is being made of computers. In taking up of rights. addition, the range of work connected with The Dividend Pay and Loans Office pays the development and structure of financial the interest and redemption warrants (issued institutions, and with surveying their position in by the Accountant's Department) in respect of the economy, has also grown. Closely bound stocks managed by the Bank. It deals with up with these information and analytical new issues of stock; issues and redeems services is work designed to assist judgment Treasury bills and tax reserve certificates; pays on the future developments that are to be coupons and bearer bonds on redemption; and expected.

(1) Articles on the withdrawal of notes from circulation and on mutilated notes appeared in the Bulletins for September 1962 and 1963.

241 The Bank's Reference Library, which is Printing The Printing Works are attached to this department, is used mainly for Works under the control of a financial and economic studies; it contains General Manager and are responsible for some 30,000 volumes and provides world printing Bank notes;(l) for general printing for coverage of financial matters, currently other departments (such as this Bulletin, as receiving 2,300 periodicals. well as dividend warrants, prospectuses for new issues, cheques, account books, and forms); for the purchase of all stationery; and for the examination and destruction of Bank notes as Overseas The Overseas Department they are withdrawn from circulation. The Department is concerned with develop­ Works are administered through six offices; ments overseas, relations with other central two are concerned with printing and with used banks and the administration of exchange Bank notes, while the remainder deal with control. general organisation and staff. The Overseas Office provides information Printing of all kinds is the responsibility of about economic and financial conditions abroad the Production Office, whose main task, how­ and developments in the international monetary ever, is the production of notes-about eight field-and seeks to assess the implications that million each day-and their delivery to Head these may have for the United Kingdom. The Office and the branches. The examination and office is divided into about a dozen groups; most destruction of a similar number of used Bank of these concentrate on geographical areas, but notes is carried out by the Paid Note Office. one deals with the affairs of the international The offices concerned with organisation are monetary organisations. such as the I.M.F. and the Accounts Office, which keeps all the Works' the I.B.R.D., and another with development aid accounts and organises costing and budgetary and export credit. A section translates foreign control; the Engineering and Maintenance language documents and publications for the Office, which is concerned with maintaining Bank as a whole. A large number of visitors the machinery and premises; and the Staff from abroad-including many students from Manager's Office, which is responsible for an other central banks for whom study courses are industrial staff of some 800 men and 1,200 arranged-are received each year by this office. women. Nearly one-third of the women are The General Office. Exchange Control and employed part time. Ancillary services the Capital and Securities Office. Exchange attached to this office include a welfare Control, dealing respectively with current and organiser, and a medical officer and nursing capital transactions. are responsible for the staff. Responsibility for security at the Printing general administration of the Exchange Control Works is undertaken by the Security Office. Act 1947; as already mentioned, powers to deal In addition to these six offices there is a with many exchange control applications have Production Preliminaries Section concerned been delegated. These offices are also respon­ with Bank note design and engraving. the sible for keeping other sterling area countries investigation of counterfeiting methods, ink informed about relevant exchange control formulation and manufacture, and plate mak­ matters and for providing guidance and help ing; and another separate section, under the to the authorities in some of these countries. supervision of the Deputy General Manager The Overseas Investment Office administers (Research), responsible for Research and the voluntary arrangements, introduced in May Development. 1966. designed to limit D.K. investment in the more developed countries of the sterling area. The Glasgow Office administers all aspects Accountant's The work of the Accoun- of exchange control in Scotland and Northern Department tant's Department does not Ireland. The Principal of this office also keeps differ basically from that of many company in touch with industrial developments in registrars. Unusual features, however, are that Scotland and Northern Ireland in a similar the registers are not closed prior to the payment manner to the Agents at the branches. of interest and that income tax is not deducted

(1) An article on Bank note printing appeared in the September 1961 Bulletin. from all interest payments. Preparations are Dividend Pay and Loans Office in the Cashier's being made to place the registers on magnetic Department. tape, when alterations to them and the printing Finally, two offices are concerned with the of stock certificates will be effected by com­ preparation and issue of dividend warrants. puter: this mechanisation will involve con­ Punched cards are prepared from the loose siderable reorganisation of the department. leaf registers by the Data Office; and from Most of the department is located in a these cards the Computer Office produces the building near St. PauI's Cathedral. The main various documents necessary for the payment office is the Chief Accountant's Office, through of dividends, and despatches the warrants. which is channelled most of the department's These offices will take on added responsibilities considerable correspondence; practically all when the registers are transferred to magnetic communications with the public are by post. tape. A general card index of all holders of stock is maintained by the General Record Office, so Secretary's The Secretary's Department that the department can quickly trace all the Department supplies secretarial services accounts in which a stockholder's name to the Court, the committees, and the Governors appears. This office also controls the Record and Directors. It keeps the Bank's own Office at Roehampton, which houses the older accounts, handles press relations and is respon­ records of all departments of the Bank. sible for organisation and method work. Responsibility for transfers of stock and for The Secretary's Office prepares for meetings the custody of the registers is divided between of the Court and committees and conveys their three offices. The Transfer Office receives and decisions to the departments concerned. examines all transfer forms lodged for registra­ Attached to the office is the Archives Section, tion and prepares new stock certificates. Details which examines the Bank's records and of these transfers are then recorded in the schedules those for permanent retention; it registers, which are at present in loose leaf maintains the various historical collections form and mostly kept by the Consols and War possessed by the Bank, some of which are Stock Office. The registers for Victory Bonds displayed in the Bank's Museum. and certain other securities with characteristics which are not readily amenable to automation Press relations are handled by an Assistant are kept separately by the Certification Office, Secretary, whose staff attends also to the whose main function, however, is to certify circulation within the Bank of summaries of transfer forms by marking them to the effect news and comment from the daily and weekly that a certificate covering the amount of stock press. being transferred has been surrendered. Where The Accounts and Costing Office keeps the appropriate, this office also issues certificates accounts of the Issue and Banking Departments for the balance of stock which is not being and prepares the balance sheets, providing an transferred. There is a section at Head Office, independent check upon the weekly Bank close to the Stock Exchange, which provides Return compiled by the Cashier's Department. special certification facilities for jobbers in the It apportions expenditure and income accord­ gilt-edged market. ing to the various activities of the Bank. Two further offices deal with alterations to The department also contains a separate the registers. The Register Office deals. with Organisation and Method Section, under the legal documents such as powers of attorney, supervision of a Deputy Secretary. This section probates and Court Orders; while the Dividend reviews work processes, studies developments Office is concerned with the recording of in office machinery and advises on security dividend instructions, changes of address and matters. It is also responsible for the installa­ other matters affecting the payment of tion and operation, including systems design dividends. A section of the latter office accounts and programming, of a computer which will for all dividends and redemption moneys­ undertake work for all departments other than the warrants for which have been paid by the the Accountant's Department.

243 Establishment The Establishment Depart- by some 300 men, under a Maintenance Department ment is responsible for the Superintendent and a Chief Engineer. domestic affairs of the Bank other than those Finally, there is a training office for typists of the Printing WorksJI} The total staff of the and for operators of other machines; and Bank is at present about 7,000, of whom 3,000 attached to the department are a General are either industrial staff at the Printing Works Welfare Organiser, the medical officer and or ' technical and services ' staff elsewhere. The nursing staff, and the editor of the house 'banking staff ' is composed of about 1,600 journal, The Old La dy. men and 2,500 women. The department recruits each year some 40 men between the ages of seventeen and twenty-five, of whom Audit The Audit Department is about one-quarter are university graduates and Department responsible directly to the the remainder mostly school-leavers of Governors for internal audits throughout the Advanced level standard. About 30 women of Bank. A firm of accountants is also employed similar educational standards are also on audit work. recruited; all of these compete directly with the men-as do a number of the many other • young women who enter the Bank each year. There is a small supplementary staff, consisting Over the past twenty years, extensive of men and women recruited in middle age. changes have taken place in the departmental The General Office provides a variety of organisation of the Bank and, within many of services for the Bank-for example, staff the departments, in the work of the various records and statistics, and centralised dupli­ offices. These changes have not reflected any cating and distribution. It is also responsible basic change in the Bank's functions-although for the recruitment and administration of they have been partly associated with a wider technical and services staff. interpretation of those functions. Essentially, Two other offices, the Staff Office and the changes in organisation have been necessary Payments Office, deal exclusively with staff. because of the introduction of new techniques, The first is concerned with the recruitment of designed to enable the Bank to operate more the banking staff, and with the supervision of effectively; the transfer of work from one their training and their selection for advance­ department to another, with the aim of greater ment; the second deals with the payment of efficiency; and the impact upon the Bank: of salaries, wages and pensions, and with a variety changes in other institutions. Further changes of staff services such as insurance and savings. will inevitably be necessary, not least as the A fourth office, the Premises Office, is result of increasing use of computers. For responsible for buildings, equipment and this is a continuing process; and the organisa­ domestic services. The services are maintained tion of the Bank must continue to evolve.

(1) Except for certain staff matters, the Printing Works are an independent unit.

244 Court of lirectors The Grernor The Deputi Governor Executive Di.rectOTs Assistants to the Governors n'r""' Advisers to Audit Department the Governors , The Chief of the The Chief The General The Chief The Chief The Secretary The Chief of Economic of the Manager, Cashier Accountant Establishments Intelligence Overseas Printing Department Department Works I I I Economic Overseas Printing Works Cashier',s Accountant's Secretary's Establishment VI� Intelligence Department(a) Department Department Department(a) Department Department(a) I 5 Divisions OfficesI 6 Office. II OfficesI 9 OfficesI 2 OfficesI 5 OfficesI Banking Overseas Production Chief Cashier's Chief Accountant's SecretaTY's General Capital markets General, Exchange Paid Note Discount General Record Accounts and Staff and government Control Costing Accounts Dealing and Accounts Transfer Payments finance Capital and Engineering and Bullion Consols and War Stock Premises Balance of payments Securities, Maintenance Exchange Control Issue Certification Probationary Typists Commodities Staff Manager's Overseas Investment Branch Banks(b) Register National economy Security Glasgow Drawing Dividend Organisation and Bill Data Method Section Securitie.s Computer Dividend Pay and Reference Library Production Loans Preliminaries Treasury Section Resea rch and Development

(a) Advisers are attached to these departments.

(b) Branches at Law Courts (London), Birmingham, Bristol, Leeds, Liverpool, Manchester, Newcastle-upon-Tyne and Southampton.