A banker is a middleman who borrows from depositors at a rate in order that he may lend to others at a higher rate, the difference between the two rates being his margin of gross profit. A certain portion of his deposits, we know, he obtains in exchange for granting banking facilities, and upon the rest he allows a rate of interest, while he has to maintain a reserve of so-called cash and gilt-edged securities against the danger of sudden withdrawals and panics. At the moment the companies cannot control the advance rate, or fix from time to time a minimum rate for secured advances; but in London we see that they have succeeded in getting the depositor under their thumb, thereby, of course, increasing their profit margin at his expense. Their next move will probably be an attempt to corner the borrower against tangible securities, as has been successfully accomplished by the banks in Scotland. The number of English banks is rapidly decreasing through absorptions and amalgamations, so, in the end, it is more than probable that we shall see a monopoly, and that all the large banks will one day unite for the purpose of fixing, at each change of the Bank rate, their deposit rate, and, also, their lowest or minimum rate for secured advances. In the provinces the banks, when loanable capital is cheap, are able to lend and to discount at higher rates than in London, so the country deposit rate never falls so low as that of London. Neither, however, does it advance so high when loanable capital is dear, because the provincial banks then find some difficulty in increasing their rates upon bills and loans proportionately. The following table will enable one to see the difference between the rate allowed in London and the country:-- London Deposit Rate, Bank Rate. 1½ below Bank Rate. Country Deposit Rate. 5 3½ 3 4½ 3 2½ to 3 4 2½ 2 to 2½ 3½ 2 2 3 1½ 1½ to 2 2½ 1 1½ 2 ½ 1½ In the country, we must remember, there is no combination or ring of bankers who meet to decide the rate, which, therefore, is not “fixed” from time to time on the basis of the Bank rate, though, of course, the country deposit rate moves up and down in sympathy with the Bank of England’s published rate of discount or official minimum, as it is called. There is, moreover, some competition for deposits in the country, but it is very slight; and, unless the banker think that a man may be useful, he seldom bids appreciably higher than his rivals for his money. The small private banker, it is true, may offer more interest, but a depositor should take care to examine his balance-sheet before he entrusts him with either his spare capital or his savings.