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Subject Area: Economics
Topic: Money and Banking

Note A. Liabilities and Cash Reserve of the Chief Banking Systems. - Walter Bagehot, Lombard Street: A Description of the Money Market [1873]

Edition used:

Lombard Street: A description of the Money Market (London: Henry S. King, 1873). Third Edition.

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Note A.
Liabilities and Cash Reserve of the Chief Banking Systems.

The following is a comparison of the liabilities to the public, and of the cash reserve, of the banking systems of the United Kingdom, France, Germany, and the United States. For the United Kingdom the figures are the most defective, as they only include the deposits of the Bank of England, and of the London joint stock banks, and the banking reserve of the Bank of England, which is the only cash available against these liabilities is also the only cash reserve against the similar liabilities of the London private banks, the provincial English banks, and the Scotch and Irish banks. In the case of England, therefore, the method of comparison exhibits a larger proportion of cash to liabilities than what really exists.

(1) ENGLISH BANKING.
Liabilities.£
Deposits of Bank of England, less estimated Joint Stock Bank balances, at December 31, 187229,000,000
Deposits of London Joint Stock Banks at December 31, 1872 (see 'Economist,' February 8, 1873)91,000,000
Total liabilities120,000,000
Reserve of Cash.£
Banking Reserve in Bank of England.13,500,000
Making proportion of cash reserve to liabilities to the public about 11.2 per cent.
(2) BANK OF FRANCE (FEBRUARY, 1873).
Liabilities.£
Circulation110,000,000
Deposits15,000,000
Total liabilities125,000,000
Reserve of Cash.£
Coin and bullion in hand32,000,000
Making proportion of cash reserve to liabilities to the public about 25 per cent.
(3) BANKS OF GERMANY (JANUARY, 1873).
Liabilities.£
Circulation63,000,000
Deposits8,000,000
Acceptances and Indorsements17,000,000
Total liabilities88,000,000
Reserve of Cash.£
Cash in Hand41,000,000
Making proportion of cash reserve to liabilities to the public about 47 per cent.
(4) NATIONAL BANKS OF UNITED STATES (DECEMBER 3, 1873).
Liabilities.£
Circulation67,000,000
Deposits145,000,000
Total liabilities212,000,000
Reserve of Cash.£
Coin and legal tenders in hand26,000,000
Making proportion of cash reserve to liabilities to the public about 12.3 per cent.
SUMMARY.
Liabilities to the publicCash heldProportion of cash to liabilities per cent
££
Bank of England and London Joint Stock Banks120,000,00013,500,00011.2
Bank of France125,000,00032,000,00025.0
Banks of Germany88,000,00041,000,00047.0
National Banks of United States212,000,00026,000,00012.3