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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.

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