193 194 readers to the seasonal fluctuations in the reserves, note issues and discount rates of the Bank of England,192 though no attempt was made at that time to assign reasons for these periodic variations or to analyze them statistically. In a masterly essav, read before the Statistical Society of London on April 17, 1866, Jevons showed that the Bank's reserves were subjected to the greatest drain or pressure during the autumn,' particularly during the month of October, and presented detailed tables of the average weekly variations of the reserves, circulation and deposits of the Bank for the period from 1845 to 1861 to substantiate his contention. Jevons attributed the autumnal pressure to the "absorption of money in buying up the product of the harvest," the general quarterly payment of rents, bills and especially the payment of dividends. 195 Mr. Palgrave extended and elaborated upon the studies of Jevons. In his testimony before the Parliamentary Committee of 1875, he presented very elaborate and detailed tables 196 of the seasonal variations in the Bank and market rates of interest, in the circulation of Bank notes in England, and in the liabilities and reserves of the Bank of England. His results are summarized in the charts on the following page. The seasonal variations (with such cyclical and secular tendencies as exist removed) in the Bank and market rates of discount, the reserves and notes of the Bank for the years preceding the Great War are represented in the graph on page 91.197 In analyzing the charts, it will be noted how closely (in spite of the difference in method of computation) the seasonal variations within recent years correspond to those during the middle 192 See Giffen, p. 58, and Jevons, pp. 162 and 164. See also Report from the Select Committee on Bank Acts (1857). Appendix, p. 2, remarks of T. M. Weguelin, Governor of the Bank of England. 193 See Jevons, pp. 160-163. 194 Ibid., p. 183. 195 Ibid., p. 172. 196 Report from the Select Committee on Banks of Issue, 1875, pp. 506, 525, 527 and 529. 197 Sources: Bank and Market Rates, 1899-1913-Financial Review. Bank notes, 1899-1901-London Economist. 1902-1913-Financial Review. Reserves, 1899-1913-London Economist. 110 J F M A M J J A S O N D J BANK RATE 100 90 110 100 J F M A M J J A S O N D J CHART IX: SEASONAL VARIATIONS IN THE RESERVES, NOTE CIRCULATION, BANK AND MARKET RATES IN ENGLAND, 1845-1854. J F M A M J J A S O N D J 75 125 100 BANK RATE 1899-1913- 100 75 JF M A M J J A S O N D J CHART X: SEASONAL VARIATIONS IN THE RESERVES, NOTE CIRCULATION, MARKET AND BANK RATES IN ENGLAND, 1899-1913. of the past century. During January the reserve reaches its lowest point,198 the circulation is apt to be at a maximum either during August or October, and the discount rate a maximum during either November or December.199 The periodic increase in the Scotch note circulation,200 the increased business activity of the Fall months, the demands of the domestic harvest, the payment of dividends, the imports of cotton and the grains from America largely account for the Autumnal pressure.201 The slight pressure which the Bank is subjected to in April may be accounted for by the increase in the Scotch note circulation which regularly takes place then, the demands of the agriculturalists, and the "opening up of those sources of importation which have been locked up by the severity of the winter." 202 Seasonal Variations in Germany and France. The seasonal variations in the notes issued by the Reichsbank are of course (by reason of their greater elasticity) much more accentuated than in the case of the notes of the Bank of England. The notes of the Reichsbank exhibit four upward movements during the year. 203 After the needs of the Christmas trade and the first of the year settlements have been satisfied, they contract rapidly reaching the lowest point of the year during the first part of March. 198 See Palgrave, Bank Rate and the Money Market, p. 83. 199 The practice has seemed to be to raise the Bank rate after the reserve has fallen and not before, so that November which follows a month with a low reserve has the highest rate of discount. See Giffen, p. 65. 200 See Palgrave, Bank Rate and the Money Market, p. 107. 201 See A. H. Gibson, Bank Rate-the Bankers' Vade Mecum, p. 19. 202 Palgrave, Bank Rate and the Money Market, p. 107. 203 See Landmann, pp. 127-130. Sources: Note circulation-The London Economist. Bank and market rates, 1899-1903-Statistiches Jahrbuch für das Deutsche Reich, 1904, pp. 183, 188. 1904-1905-Statistiches Jahrbuch für das Deutsche Reich, 1906, p. 220. 1906-1908-Statistiches Jahrbuch für das Deutsche Reich, 1909, p. 264. 1909-1911-Statistiches Jahrbuch für das Deutsche Reich, 1912, p. 284. 1912-1913-Statistiches Jahrbuch für das Deutsche Reich, 1916, p. 55 and The Financial Review. |