1.

It was not expected that the Bank would make an immediate profit, as heavy preliminary expenses had to be met; at the same time, it was anticipated that there would be a considerable margin between the yield of interest from investments and that paid to depositors.

 

2.

The Act under which the Bank was established refers to "War Loan Investment," and authorises the establishment of Banks to facilitate savings in securities for the purpose of the war. We were under the impression that the Bank would receive at least 5 per cent. interest from moneys invested with the National Debt Commissioners, that being the yield on war loan, while savings certificates gave a still higher yield. The view of the National Debt Commissioners, however, was that the Act restricted the investment to treasury bills, or advances which the Treasury may borrow under a Consolidated Fund Act or Appropriation Act.

 

3.

This view of the National Debt Commissioners had a serious effect. Instead of obtaining 5 per cent. on invested moneys, we received only 4¾ per cent. up to the 30th June, 1917; 4½ per cent. up to the 31st December, 1917; 4¼ per cent. up to the 31st March, 1918; and 3½ per cent. thereafter. On explaining the position in which we were finally placed, viz., allowing 3½ per cent. to depositors and receiving only 3½ per cent. on investments, we were urged to reduce the rate to depositors, and at a later stage pressure was brought to bear by the Chancellor of the Exchequer with that object in view.

 

4.

The Bank Committee were opposed to any reduction in the rate of interest allowed to depositors, and recommended the City Council to stand by its promise and shoulder any loss there might be. This recommendation was unanimously adopted by the Council, and the decision will always stand to its credit. The Council, realising that the situation was so very unsatisfactory, decided to take the first opportunity of securing greater freedom in respect of investment of funds.

 

5.

The Bank, which had been in existence since the 29th September, 1916, ceased to take deposits on the 31st October, 1919. During its short life no less than £603,319 5s. 8d. had been deposited, and £295,708 19s. 1d. withdrawn, and 24,411 depositors enrolled.

 

6.

The temporary Bank closed with a deficiency of £7,149 3s. 11d., which was met by the borough fund, and subsequently repaid by the new Bank, as explained in Chapter 10.