Old Lady's Cat

Theoretically the Bank of England is a purely private institution. Its stock is owned by private investors and its officers and directors are private individuals. In practice, of course, the Bank of England is a model central bank, subordinating private profits to public weal. And in the 241 years since the bank was founded, tradition has encrusted the Old Lady of Threadneedle Street with powers over British banking that would turn a New

Dealer bright green with envy. When the Old Lady nods, the City, London's Wall Street, hops to her bidding--though not always without a deal of well-mannered grumbling.

Lately there has been grumbling aplenty about the Bank of England's arbitrary dictatorship over new issues of municipal bonds--inspired by its desire to keep the money market open for the British Treasury's vast refunding operations. But the Old Lady was apparently touchy. To still the grumbling the Government's brokers, Messrs. Mullens & Co., released a statement denying the existence of any dictatorship, adding, however, that the Bank of England reviewed proposed issues "in compliance with the request of the Chancellor of the Exchequer."

As every British banker knows, the Old Lady's opinions are tantamount to commands. Indeed, the bank has been known to suggest the names of brokers who would be delighted to handle an issue on the terms prescribed. But no sooner had the City had its chuckle over Messrs. Mullens & Co.'s studied statement, than the treasurer of the City of Glasgow let the cat out of the Old Lady's bag. He published a juicy account of his unavailing efforts to obtain the Bank of England's approval of a big Glasgow refunding issue.

After much tedious talk the Glasgow treasurer had finally threatened to tell the public and his Laborite Council the "truth" about the Old Lady's dictatorship. Hastily the bank had called a third and final conference, which merely gave the spunky treasurer the opportunity to challenge the bank's authority to pass on security issues. Blandly the Old Lady admitted that she did not have a jot of authority. But: unless Glasgow capitulated on the bank's terms, no London banker would underwrite the bonds and they would be forever barred from the London Stock Exchange.

Sticking out his tongue at the arrogant Old Lady, the defiant treasurer retreated to Glasgow. There he did just what Premier Hepburn of Ontario did when the bankers cracked down on him. Last fortnight without benefit of banks or bankers he offered his bonds direct to the public. Last week the books were still open, but when & if the full -L-2,500,000 issue (about $12,000,000) is taken up, Glasgow ratepayers will be relieved of -L-62,500 (about $300,000) in interest charges annually.

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