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Columbia itotoem'tp t t iljeCtip of ii em gtjrk r [ N E W YORK 2 7 . N. Y . ) SCHOOL OF BUSINESS May twenty ^fourth 1 9 U 6 Mr. Marriner S. Eccles, Chairman, Board of Governors of the Federal Reserve System, Washington, D. C. Dear Governor Eccles: In the New York Times, Friday, May 24, page 30, you were quoted as saying that Britain and Canada both prohibit commercial banks from owning government securities (except short-term) except as these securities are related to savings funds» I would greatly appreciate it if you would be kind enough to inform me of the nature of the rules and regulations in England which relate i*r"the ownership of longterm securities to savings funds. Sincerely yours, B. H. Beckhart Professor of Banking June 6, 1946. Professor B. H. Beckhart, Columbia University, New York 27, New York. Dear Professor Beckhart: Your letter of May 24, 194& requests information concerning the rules and regulations in England which »relate the ownership of long-term securities to savings funds. I regret that I am unable to give you any such reference, as you are no doubt aware, the British monetary and banking authorities exercise their influence over the British commercial banking system with a minimum of formal rules and regulations. In the intimate circle of British banking, dominated by a handful of institutions located in the capital of the country, it has always proved possible to exercise official direction over banking activity and policies largely through informal consultation and guidance. However, as an indication of the results in the case of British commercial bank investments, I would call your attention to the following figures for the time deposits and security holdings of the eleven London clearing banks during recent years: End of year 1941 Time deposits Security holdings (in millions of L) 1161 999 1942 1200 1120 1943 1944 1945 1319 1500 1588 1154 1165 1234 Despite some irregular movements, you will note the rough correspondence between the growth in the banks1 time deposits and in their security holdings, the great bulk of which represent medium and long-term government securities. Over the four years the growth in security holdings was in fact substantially less than the increase in time deposits, which confirms my main thesis that during the war the British have borrowed from their banking system very largely on a snort-term basis. ¿incerely yours, M. b. &ccles, Chairman. JBK:mla
