BULLION.

New Zealand Mail, Issue 1847, 31 July 1907, Page 13

BULLION.

HOW THE BANE OF ENGLAND HANDLES ITS GOLD. (By Charles luce.) Thirty tons of glittering gold in one room, and seen'with a sweep of the eye «—that was the sight which met my gaze when I visited the Bank of England a few weeks ago. To look npon such Titanic wealth (even to one more or less accustomed to the daily jingling of gold, as I have been) is •appalling. I felt awed and spoke in whispers, as if the very walls resented the intrusion. After the preliminaries of establishing my bona tides to the Banl/ official who escorted me, T was taken immediately to the bullion vaults. On my way through the "yard/' the first thing that arrested my attention was the velvet tain-o’-chanters worn by the porters who handled the bullion. The reason, it appears, i 3 the survival of an old custom, and is this: in the olden days when gold dust was traded in, the porters, by habit or deign, perhaps, would run then’ lingers thro uadi their hair, and on reaching home lit night would, after washing,- collect the rich ' sediment from the basin. To make assurance doubly sure, even under the present regulations, the porters are required to 1 leave their working clothes on the premises; and part of the outfit is the tam-o’-shanter, as furnishing less space for concealing thefts than any other form of hat known at the day" when the Bank’s regulations were fixed. We have invented other hats since, buc the Bank is not fond of change, and a ttam-o’ r shanter it remains. On reaching the vaults, I was handed over to - 'the officials there. There was much clanging of keys, the great irongrilled gates being unlocked by two separate officials. Inside, arranged round the vault in a semi-circle, was truck upon truck loaded with gold bars. On each truck there weie, perhaps, a hundred bars, mostly being worth £I7OO each, and possibly there- were twenty or thirty loads, this number varying, of course, with the Bank’s amount of reserve. Stacked in this same vault I saw bags of gold coin each containing £I OOO, and more bars packed on shelves. Perhaps few of my readers have held in their hands a bar of gold or a bog of a thousand sovereigns, but I can assure them that either is an inconvenient thing to carry. In another part of the -Bank is the directors' vault, which is situated beneath the parlour, in the very centre of the building, as this position is considered the safest. The visitor is not shown this, for in it is the reserve against bank-note issue, and it is necessarily a very sacred precinct. Connected with this vault is" an old story, though tke authorities, I believe, will not vouch for its authenticity. It is said that a man once gained admittance, without the knowledge of the officials, through the medium of a disused sewer. He . found that by raising a slab of stone in the „ fioor he could, if lie chose, deplete the Bank of its store. Fortunately he was honest, and wrote to the authorities with the information that he was prepared to meet them in the vault at midnight; the challenge was accepted, and surely enough/at the appointed hour the stone was momentarily lifted, and from underneath came the mocking Jaugh of the visitor, who departed as suddenly as he had arrived.

On the ground floor is the Bank treasury which is stored with the coin and notes for the Bank’s ordinary business purposes. This is fed from the vaults below. The surprisingly small space which gold coin occupies was exemp t to me by a small safe, which on being opened disclosed <£loo.ooo packed in bags of <£looo, for the use of the Bank of England, and it is the custom for all huge London banks to use this quantify as their standard. In this room alone I was told that <£85,000,000 in com and notes was stored. I was next shown the weighing room. There through the glass partition the visitor can see numbers of machines which are worked by electricity. The jluriing of falling coins is incessant, and here the officials are often required to work overtime. Every gold coin which comes into' the Bank of England, either through the public or through the medium of London bankers, is weighed. Explained shortly, the machine is this: In a slanting groove is placed a quantity of gold coin which fall to the balance by their own weight, the heavy coin being thrown out on one side and the light on the other. The heavy ones are again sent into circulation, and the light ones to the mint for remelting, a charge being made according to weight for the light ones. Many of the larger banks possess these machines for their own purposes. Silver coin which reaches the bank is not weighed, the obviously worn ones being picked out by hand and sent back to the mint, as in the case of o-olcv coin. Large quantities of silver are not stored at the senior institution; in fact, it will not accept from London bankers more than a certain daily quantity, and consequently we see that in the’case of some banks, with their numerous branches, they must have at times a surfeit of silver coin, which is sold to certain firms in London, who make a business of counting it into paner bags of <£s, and further into canvas bag** of <£loo, which are resold. Copper coin is treated in similar fashion. On giving a thought to all this wealth, one asks oneself how all this precious metal has found its way here, and how one cun trace its history from the source? " ,' . . ~ In the first place gold, on leaving the mines is made into rough bars of variJSf sizes, though few exceed 1000 oz., Si mine making its own particular it is then shipped to the Bank of England, which, for purposes of convSiience and as being in the beet position to measure the quantity of gold cimin- into the country, consents to distributing-centre for all purchasers A small common is charged for The safe transit is covered, insurance, "\ fdit * * unattended.

Every precaution is taken; when on board ship, it is placed in a strong-room, next the cabin of the captain, and when in transit by rail it is sent in steel vans attached to the mail rains. Gold is principally purchased by bullion brokers or gold refiners, and it is dealt with as an ordinary marketable commodity, the price being governed by the rules of supply and demand. Let us now follow a transaction of a bullion broker who has bought gold from the mines. From the Bank of England, who have been good enough to receive it pro tern., bullion is carted to the melters. The bullion broker will advance to the mine roughly about seven-eighths of the face value, and the balance later, the percentage depending upon the usual quality previously received, and for this reason. Gold on first reaching this country is impure, the bars varying in quality, unknown quantities of other metals being present, and knowing this as he does, he sends it to the melters and assayers to be tested for the percentage of nure gold and silver present. Arriving" here, it is weighed, melted in blacklead crucibles and re-weighed, and . the loss in the small quantity of dirt—"waste’’—is duly noted. A bar that has the appearance of being of good quality has a email piece chipped ©if which is sent to the assayer, who gauges the exact quantity of pure gold in it by melting the sample with about three times its weight of silver and placing the whole in nitric acicl, which dissolves the silver and leaves the gold. The test piece of pure gold extracted freon the chip will perhaps be about the sire of a pin s head/ This is weighed in scales which are adjusted to weigh even a hair exactly. Aa the chipped piece of metal was weighed before assay, so the exact proportion of pure gold in the whole bar is worked out. In the case of an apparently inferior bar of gold, tiie process is slightly different. Gold mixed with some metals conies to Lie surface, and in others it sinks to' the middle of the bar; and we see that the former test would give an unfair distribution; therefore during the process of melting, the liquid metal is thoroughly stirred, and a small quantity taken out to undergo the same process as the chip. The bars are next sent by the melters to 1 the refiners, who extract all the pure gold and pure sih-er. The account between the bullion broker and the mineowners is now settled, and is based on the weights and on the percelitages of gold and silver found by the assayers. The refiners now deliver to the bullion broker bars of pure gold, who sells it either to the Bank of England, to foreign bankers in London, or perhaps shins it to the Continent or America. tv ben the Bank of England is a buyer, it is sold when the market justifies, or kept in reserve. As the senior banking institution is either directly or indirectly banker to all its kindred institutions in the country, and consequently able to feel the monetary pulse of the wholecommunity, it can, and does, as the directors think fit, convert portions of the bullion into coin, which is done, of course, at the mint. It may not be generally known that private individuals can, on taking gold to the mint, have it coined' free of charge, but in order of priority. No one ever uses the privilege because all interest would bo lost in tae process, which would be lengthy, seeing that his turn would come after that of the Bank of England. From the mint the coin is sent back to the Bank to be distributed ail over the country. The bankers of London obtain their supplies from the senior institution in bags of <£looo, their cashiers going with a porter,.or porters (for a man can only carry <£Booo at the most), as necessity arises. The smaller bank will now weigh the coin into bags of £IOO, and, after retaining sufficient. for use at head office, distribute the required amounts to 1 its branches. A bank, as a rule, has its own conveyance for distribution round about the city, but in the cases of ‘suburban offices farther afield* the cashiers there are in the habit of coming to the head office for the amounts required, and in the remoter parts it is dispatched by rail unattended but insured. It sometimes happens that bar-gold can only be obtained at a high price, in which case bullion brokers will buv foreign coin. There are only four countries in the world who will export their currency—Great Britain, France, Germany, and the United States of America —and in all cases, excepting Great Britain, every obstacle is placed in the way of its leaving the country of its birth. In dispatching it, it ie packed in wooden, iron-bound boxes about eighteen inches long, nine inches wide, and eight inches deep, and a box of this size will contain 8000 coins. The boxes, before storting on tlieir journey, are sealed at the joints with four seals. On reaching this country these boxes are liable to be opened and examined by the Customs officials for contraband goods; it goes duty free, the inferior one is taxed as a luxury. Coin is bought and sold by weight, and not assayed, as the proportion of gold and alloy in foreign coin is known. The boxes, on reaching their destination, are smashed open with a hatchet and then destroyed, for fear of their being used for fraudulent purposes Very rarely is the coin melted here," but usually it ie stored at the Bank of England as reserve gold. Sir Felix Schuster said in a recent paper on the gold reserve of this country, that our national reserve in December, 1906, was about £33,000,000, while the liabili-, ties at all the banks of the United Kingdom are in excess of £800,000,000. He urged that, as the reserve in 1841 was about £14,000,000, the increased reserve was altogether inadequate compared with the enormous growth of banking liabilities. The actual exhaustion of the bullion of a country is no mythical thing. It occurred in 1839 under the free system of note issue, and national bankruptcy was only averted by a large loan of bullion from France. The ordinary client, on presenting a cheque at his bank, whether far or near, may well pause and give a thought to those golden coins he has received m exchange, for the metal of which they are made has been, and will remain, the

predominant factor in the bartering of the world.—“ Pall Mall Magazine.”