the world of private banking

68
THE WORLD OF PRIVAtE BANKING
Figure 4.5
Bankers’ balances with Bank of England head office, percentage
swing around estimated reserve floors
first quarter 1867 (following the 1866 crisis) and at £9m. from first quarter 1874
(following the international events of 1873).
Lagging an inferred floor change to the first quarter of a post-crisis year allows
the full (proportional) extent of the increase in reserves in the wake of panic or
severe disruption to be displayed. Figure 4.5 portrays the proportional net swings
around the presumed sequence of rising reserve floors. For any quarterly average
figure of net bankers’ balances, the proportional net swing has been calculated in
the following, two-stage manner: total balances minus the ‘guess estimate’ of the
The 1878 crisis produced only a short-term shock, with bankers’ balances declining
thereafter. However, as the banks’ public liabilities also fell during the aftermath of the
City of Glasgow Bank crash, their cash ratios rose. See M. Collins, ‘The Banking Crisis of
1878’, in Economic History Review, 2nd ser., vol. 42, 1989, p. 521.