The Public Deposits are the Treasury deposits, and it will be observed that these are kept distinct from the Other Deposits. As every return explains, these deposits include Exchequer, Saving Banks, Commissioners of National Debt, and Dividend accounts. When we pay our income tax to the Government it is paid into the Bank of England and swells the Public Deposits, and the Government uses them in the same way as the private individual uses his deposits in his own bank. The Other Deposits are the aggregate deposits of all the Bank of England’s depositors except the Government. They include the Reserves of the banks of the Kingdom and the loans the Bank has made to its various customers. As they include loans they are a composite account. The Seven Day and Other Bills is an item of no importance. On the other side are the assets the Bank holds against these varied liabilities. Government Securities are securities lodged by the Government as a security for loans, and they also include the Bank’s own investments. The Other Securities include bills of discount, and securities of the highest class lodged with the Bank as security for the loan-deposits. The notes are the ordinary Bank of England legal tender notes, and constitute, with the small amount of gold and silver coin, the Reserve of the Bank against its liabilities. In this particular week the ratio of the Reserve to the liabilities was 32⅛ per cent. It will be noted that the Reserve does not consist of coin, but almost entirely of notes. But the notes can be exchanged at the Issue Department for gold, so that they are equivalent to a holding of gold. On the asset side of the return, then, we see the character of the wealth the Bank possesses. This wealth represents the loanable fund of the Bank and totals a huge sum. The deposits are, of course, merely book entries, or book liabilities, or credits, as most call them, and what I call the liquefied form of the wealth held against them. Those who borrow the most extensively from the Bank are bill brokers, and they only borrow in those seasons when the joint stock banks have reached the limit imposed by their reserves and cease lending. Having need of liquid capital and not being in a position to wait until the joint stock banks can lend again, it is with great reluctance the bill brokers borrow from the Bank of England. The reluctance is most natural, because the Bank of England charges higher rates for discounting bills and for lending money on security than the joint stock banks charge. And it also discounts and lends for much shorter periods. This explains the Bank rate, which is of such great importance in the economic life of the nation. It is the minimum rate at which it will discount bills for customers and the brokers, while it will lend only at half per cent. above its minimum rate for discounting.