THE HAMILTON ASSOCIATION. 55 
-by allowing interest on the same, besides which the capitalization 
.of the great Joint Stock Banks is on a much smaller scale. 
The Government account is the largest account which the 
‘Bank enjoys. There generally is at the credit of the Government 
between six and ten million pounds sterling. When the last war 
between Japan and China came to a close and China had to pay 
an indemnity to Japan of ten million pounds sterling, so great 
is the credit of the Bank of England that Japan instructed China 
to deposit this indemnity with the Bank of England on its account, 
and Japan actually issued paper curreney which it ecireulated in 
its own country based upon this deposit. This was a unique com- 
pliment which no other Bank in the world has ever received. 
The Bank controls the discount rate of the United Kingdom. 
Of necessity it must do this, as it carries the only reserve which 
maintains the whole credit system of Great Britain. This dis- 
count rate as it is raised or lowered has a very far-reaching effect. 
All listed securities of whatever kind are influenced by the dis- 
eount rate established by this great Bank. The interest allowed 
by the Joint Stock Banks in England, or the interest which Joint 
Stock Banks charge to their customers are all affected by the open 
discount rate which is determined upon by the Bank directors 
week by week. International exchange and the flow and ebb of 
gold is all affected by this rate, which gives one only a small idea 
of the importance which this institution exerts not only in Eng- 
land but in the whole civilized world. When it raises its rate it 
attracts deposits from abroad. When it is necessary to strength- 
en its reserves, during ordinary times, on account of the competi- 
tion of the Joint Stoek Banks of England, the discount rate it 
establishes is not always responded to promptly; but, in any time 
of crisis, the Bank of England is able to control the market. This 
it must do because it carries the reserves of the country. 
It has now been established over two centuries and the utmost 
confidence is placed in the Bank. as the wealth and credit of the 
British Empire is at its back. It is now, however, a Government 
Bank; it is entirely a distinct corporation by itself and is managed 
by its directors; but, while closely identified with the Govern- 
