Readings in Money and Banking Part 50

Q. Do you pay the Government in the form of taxes or otherwise, either directly or indirectly, for your privilege of note issue?

A. Yes, we all pay a license duty of 30 for each place at which notes are issued, and a tax of 8_s._ 4_d._ per 100, or a penny per 1, on the average amount of notes in the hands of the public at the close of each week.

Q. Is it your custom to carry a fixed amount in government securities?

A. Yes, but the amount is not rigidly fixed.

Q. Do you discount any but prime bills?

A. Yes; we do all cla.s.ses of business.

Q. Is it your custom to employ surplus funds in purchase of bills from discount houses?

A. Yes; bills accepted by London banks.

Q. Do you rediscount bills for other banks?

A. No; except for foreign or colonial banks who are correspondents.

Q. Is the bank, through its branches, employed by other banks to any considerable extent for the transfer of funds from one city to another?

A. Yes.

Q. What, if any, artificial means are taken by you to secure changes in the volume of currency (notes and coin) to make it responsive to business demands?

A. None are deemed necessary. Our system works automatically. Our note issue is unlimited; we are only required to provide gold to cover the amount in the hands of the public at the close of each week and on the average of each four weeks.

Q. What is the customary charge for acceptance of a ninety-day bill?

A. Five s.h.i.+llings per cent.

Q. Your acceptance const.i.tutes what is known in London as a prime bill?

A. Yes.

Q. Do you pay interest on both current accounts and deposit accounts?

A. It is our custom to pay interest on deposits only. In London, however, it is different; there interest is allowed in special cases on large balances on current accounts if left for some time.

Q. How does the bank rate affect the rate allowed by you on deposit?

A. The Scotch banks all allow the same rate and charge the same rates for discounts and overdrafts, and these are fixed relatively to the Bank of England rate. Our deposit rate is usually 1-1/2 per cent. under the minimum bank rate.

Q. Were most of your branches organised by you or were most of them other inst.i.tutions purchased by you?

A. Most of them were originated by ourselves.

Q. Have you in mind how many branches you had ten years ago?

A. About 136.

Q. What relations do the Scotch banks bear to the Bank of England? Do they deal with it directly?

A. The Royal Bank of Scotland has an account with the Bank of England, which has been in operation since 1728, and it collects bills and cheques for the Bank of England all over Scotland.

Q. Do you regard your system of currency issue as sufficiently elastic for your needs?

A. Yes; there never has been any difficulty. Moreover, no Scotch bank has ever failed to pay its creditors, including the holders of notes, in full.

COMMERCIAL BANK OF SCOTLAND (LIMITED)

INTERVIEW WITH ALEXANDER BOGIE, GENERAL MANAGER[162]

Q. When was the Commercial Bank of Scotland (Limited) founded?

A. In the year 1810.

Q. When does your present charter expire?

A. It is not limited in point of time.

Q. Has the Government any voice in the management of the bank or any interest in it through the owners.h.i.+p of shares?

A. None.

Q. Have the managers of the branches full control of the business in granting discounts, etc.; if not, what discretion is usually given them?

A. Agents have power to grant advances, but subject to the approval of head office. In advances of considerable amount, an agent's duty is to get authority from the head office before granting it. The discretion allowed is dependent on the size of the branch and the nature of the business and the cla.s.s of customer, and on the record of the agent. By our system of reports on advances (weekly, monthly, and quarterly) we keep in close touch with the advances and means of borrowers. The London branch is, of course, on different lines, and our manager there has greater powers than an agent at a branch in Scotland.

Q. Is the business conducted at your branches of the same cla.s.s as at your main office in Edinburgh?

A. Yes; very much the same. The head office has administrative work and supervision of branches, investment, etc., which does not, of course, arise elsewhere.

Q. Do you discount to any considerable amount for individuals and merchants?

A. Yes; it would perhaps be well to point out that in Scotland a large portion of advances made to traders are granted in the form of overdrafts on current accounts. _The number and amount of bills in Scotland are less now than in former years. Cash payments for the purpose of obtaining discount are more frequent, and the number of bills discounted by wholesale houses is reduced in consequence._

Q. Is it your custom to employ surplus funds in purchase of bills from discount houses?

A. Only occasionally, when rates suit.

Q. Do you rediscount bills for other banks?

A. It is not our practice to do so.

Q. To what extent does bank rate govern your discount and loan transactions?

A. In ordinary transactions, altogether. In all transactions the bank rate governs as regards the minimum.