tan banks have their head offices in
London, and do not, as a rule, extend their branches beyond the
suburbs of the metropolis. The metropolitan and provincial banks have
their head offices in London and branches scattered throughout the
provinces, as well as in various parts of the city and suburbs, and
the provincial banks have their head offices in the larger provincial
cities, and each one confines its branches usually to the town and
country districts tributary to the city in which its head office is
situated. Often the provincial banks establish branches in London.
For banking purposes, these banks are the chief reliance of the
agriculture, industry, and commerce of the country, but competing with
and supplementing them are the bill brokers and discount houses, the
private banks, and the foreign and colonial banks. The bill brokers
and discount houses make a business of dealing in foreign and domestic
bills of exchange. They buy in the first instance a large percentage
of the bills brought to market, keep some of them until maturity, and
sell the remainder to the other banks, usually indorsing them first. A
large part of the capital employed in their business is obtained by
loans made from the other banks, subject to call and secured by the
bills they purchase deposited as collateral.
The private banks are the remnant left of the oldest group in the
country. There were private banks in London centuries before the Bank
of England was incorporated, and previous to 1826 the Bank of England
was their only competitor. Since 1844 their number has steadily
diminished. Those which remain have, as a rule, built up a special
constituency, to the special interests of which they cater. Among them
are strong institutions, but as a class their importance in the system
is not great, and is waning.
The foreign and colonial banks are branches of important institutions
in foreign countries and the English colonies which have a
considerable volume of business to transact in London. They serve as
intermediaries between their respective countries and the English
money market, and on account of the enormous volume of foreign
commerce which is financed in London, their number is large, and the
role they play on that market is important.
In the operation of this machinery, the most noteworthy features are
the reserve system, and the administration of the discount rate of the
Bank of England. There is no law on the English statute
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