In the beginning people had to pay a fee for having money kept safe. Then
goldsmith understood that some of his receipts were always out, circulating
in the hands of the merchants. So the goldsmith always had some cash in
hand, and he started to lend this out. This was the beginning of banks.
№16. The Bank of England.
c) keeps accounts for overseas central banks
The first and most important function of a central bank is to advise the
government on the making of the country's financial policy and then help to
carry it out which means carefully monitoring the money supply. Its
business at first was to receive money on deposit, discount approved bills
of exchange and lend against satisfactory security. At first this lending
was nearly all to the government, and gradually the Bank came to perform
other services on behalf of the government, and so to become regarded as
'banker to the government'.
Then The Bank of England was empowered to open country branches.
From the time of its foundation the Bank had strong links with the
government and these strengthened over the centuries until in 1946 it was
nationalised and became publicly owned.
The Bank of England is controlled by a Court of Directors — similar to a
board of directors running a large public company — made up of the
Governor, the Deputy Governor and sixteen directors. They are all appointed
by the Crown.
As the central bank of the United Kingdom, the Bank of England:
— Implements the monetary policy of the government. It decides what
percentage of bank deposits is held as cash, and what percentage may be
lent.
— Acts as banker to the government. It administers exchange control and
keeps the nation's gold and foreign currency reserves. The Bank keeps the
government's banking accounts, manages the accounts and funds of various
governmental departments.
— Acts as banker to the deposit banks. It keeps the accounts of other
banks.
— Acts as lender of last resort to the discount houses.
Has about 90 accounts for overseas central banks.
№19. Types of bank services.
Banks are among the most important financial institutions in the economy
that produce and sell financial services. Banking covers so many services
that it is difficult to define it. Both types of banking, however, have
three essential functions. They are:
Deposit function—receiving customers deposits and offering interest-
bearing deposits.
Payments function — making payments on behalf of customers for their
purchases of goods and services.
Credit function—tending and investing money. There are some traditional
services that banks offer.
Carrying out currency exchange. In today's financial marketplace trading
in foreign currency is usually carried out by the largest banks due to
currency risk and the expertise needed to carry out cash transactions.
Safekeeping of valuables. During the Middle Ages, banks began the practice
of holding gold, securities, and other valuables owned by their customers
in secure vaults. Customers still leave articles of value, locked boxes,
wills, and many other things in bank strong rooms for safety. The customer
should lock boxes and seal parcels before he hands them in to the bank. The
banker will issue a receipt if so required. The banker hands them back only
against a signature by his customer or a properly-appointed agent whom the
bank knows.
Trust services. This property management function is known as trust
services. Most banks offer both personal trust services to individuals and
families and commercial trust services to corporations and other
businesses.
Among the newest services offered by banks are:
Financial Advising—customers have long asked for financial advice,
particularly, when it comes to the use of credit and the saving and
investing of funds.
Cash Management—over the years banks have found that some of the services
they provide for themselves are also valuable for their customers.
Setting Insurance Policies—most banks either offer selected insurance
policies to their customers or have plans to offer insurance services in
die near future.
Offering Security Brokerage Services—in today's financial marketplace many
banks are doing their best to become true "financial department stores”.
This is one of the main reasons banks began to market security brokerage
services in the 1980s, offering their customers the opportunity to buy
stocks, bonds, and other securities without security dealers or brokers.
It should be clear from the list of services described that the changes
affecting the banking business today are so important that many industry
analysts refer to current trends as "a banking revolution".
№17. Banking in the US.
Banking services were associated with the Gold Rush. The first gold strike
occurred in California in 1848. In the wake came the problems of carrying
mail and gold dust over hundreds of miles. A concern called Adams and
Company opened its office in San Francisco in 1849. The express company
received the miner's gold for the pose of shipment. It weighed the gold,
gave a receipt for it and assumed responsibility for its safety. Thus the
express company’s iron safe became the local bank. About this time in
Sacramento a group also opened a bank. There were three clerks, all armed
with Colt revolvers and knives, and the banking hours were from six in the
evening until ten at night. It was in 1852 that Wells Fargo and Company
was born. In the July of that year two of its senior men arrived in
California, one to be responsible for the express service the other for the
banking. The company forwarded packages, parcels and freights of ail
descriptions between New York and San Francisco, purchased and sold gold
dust, bullion and bills of exchange. It also attended to the payment and
collection of notes, bills and accounts.
It was very different from the goldsmiths and their notes. And yet the
basic functions of providing security, accepting deposits, paying and
collecting bills, were exactly the same. All that has happened since has
been only a development of these basic functions.
At present the Federal Reserve System is the core of the country's
financial institutions, payment processes, markets and instruments. The
system has four basic functions:
(I) influencing the supply of money and credit,
(2) regulating and supervising financial institutions,
(3) serving as a banker and fiscal agent for the government
(4) supplying payments and services to the public through depositary
institutions.
The system is an unusual system of public and private elements and
centralized and decentralized components. At the head of its formal
organization is the Board of Governors, located in Washington, D.C. The
seven members of the board appointed for 14-year terms by the President
with the advice and concent of the Senate. At the next level are the
regional Federal Reserve Banks. The Reserve Banks are not profit motivated.
Instead their policy is based on the System's estimates of the needs of the
economy. The organization of the System also includes The Federal Open
Market Committee. It is the most important money policymaking body because
it exercises broad control over the growth Of the nation's money supply. It
also has charge of the System's Operations both in domestic securities
market and in foreign Exchange markets. Two-fifths of the 12.600 commercial
banks in the US belong to the System. National banks must be members; state-
charted banks may join if they meet certain requirements. Each member bank
holds 3 percent of its capital as stock in its Reserve Bank. About 25.000
other depositary institutions provide American people with banking
services.
№18. Types of banks.
Now there are only a few banks, each with many branches in Great Britain
(the Big Six — Barclays, Coutts, Lloyds, Midland, National Westminster and
Williams and Glyns). They are clearing banks, i.e. they have a seat in the
Clearing House. This is an arrangement for a quick settlement of payments
between different banks. Those banks without a seat in the Clearing House
get their cheques cleared by a bank which has, acting as an agent. Clearing
is the process whereby the amount of a cheque is transferred from the
drawer's bank to the payee's bank. The clearing banks have many competitors
in different sections of their business. These rival bodies want to collect
and use the public's savings for different purposes.
Merchant banks carry on a great variety of business, and each tends lo
specialize in certain activities or in transactions with particular
countries. Some activities, however, are basic to all of them. These are
deposit banking, underwriting, and the management of client funds.
The National Giro is a nationally owned scheme for the fast transfer of
payments through post offices.
One big drawback to the service provided by the clearing hanks is the
restricted hours during which they are open to the public. This led to the
establishment of money shops.
The accent is on the lending and not all money shops provide current
account facilities, although some do; but attention is given to the
provision of personal, home improvement and mortgage loans, life and
general insurance facilities, investment advice, and savings accounts.
Similar lo them are money shops in chain stores, open where the store is
open — the “in-store banks”. Of these the most numerous are those of the
Cooperative Bank, which set up nine 'handybanks' in the Birmingham area and
hopes that within two years there will be 500 of these banking points in
Cooperative stores around the country. Such a handyhank gives facilities
for cashing cheques, depositing money, ordering travel cheques, etc., and
it is open all day Saturday.
№20. The company's structure and development on the basis of "Harper and
Grant Ltd."
The company of Harper & Grant Ltd. was started forty-two years ago by
Ambrose Harper and Wingate Grant. Wingate Grant died many years ago, and
his son Hector is the present Managing Director. Ambrose Harper is the
Chairman. He is very old man and he comes to attend the board meetings and
keep an eye on the business.
The company started by making steel wastepaper bins for offices. These
wastepaper bins are more safer than the old type of basket made of cane or
straw. Wingate Grant captured a big contract with government offices.
From wastepaper bins, Harper & Grant began to manufacture other items of
office equipment: desks, chairs, cupboards, filing cabinets and smaller
objects, such as filing trays, stapling machines and so on, until now when
there are fifty-six different items listed in their catalogue. All items
are made of pressed steel.
The factory consists of. These are divided into the Tool Room, Works
Stores, Press Shop, Machine Shops, Assembly Shop, Paint Shop, Inspection,
Packing and Despatch Departments. There is also the Warehouse.
The firm has a history of slow, steady growth. But Peter Wiles -
Production Manager, and John Martin - Sales Manager think that they should
be more adventurous. They want modernising a business by using modern
things to run a business such as electronic data processing, Discounted
Cash Flow, budgetary control, corporate planning, P.E.R.T. (Project
Evaluation and Review Technique), automation, etc. Harper & Grant Ltd.,
like their rivals, must get right up-to-date and enlarge their business, or
they will be outpaced by a firm whose business organisation is better than
their own.
№11. Pricing policies.
Everybody, who wants to start his own business, must know, that it’s very
important to attract the customers. There are many ways to do it. For
example, to introduce new items of goods.
Economists say that the most important thing for sellers is to charge the
appropriate price for goods. There are two types of pricing policy: price
emphasis(полит акцентиров Р для стимул сбыта) and price de-
emphasis(Робразов на осн ощу-й цен-ти тов).
Price emphasis policy emphasizes low prices. And this encourages sales. We
must know that it has a weak point, because this policy doesn’t provide
extra services. But it let sellers get more money, because this price
determines a big number of sales.
A good example of price emphasis is “loss leader” pricing. It means that a
seller chooses one item and sells it at very low price. There is also off-
even pricing or “odd-pricing”.
Businessman must start with specially low prices in order to compete with
well-known goods. He can raise the price when his customers get accustomed
to a new brand, and they will continue to buy it.
Next type of pricing policy (price de-emphasis) concerns high quality
expensive items. Seller doesn’t call attention to the price at all.
Sometimes when the price rises, it convince some customers that the product
must be of high quality, or will soon become very hard to get. And this may
increase sales.
№ 12 The rights of a customer and the responsibilities of a supplier.
Many people think that complaining about faulty goods or bad service is
never easy. Most of them dislike making a fuss. However, when you are
shopping, it is important to know your rights.
When you buy something from a shop, you are making a contract. But you
want to make sure if this contract means that it's up to the shop to deal
with your complaints if the goods are not satisfactory. The first thing
that comes to your mind is that the goods must not be broken or damaged and
must work properly. The second thing that you find important is that the
goods must be as described - whether on the pack or by the salesman. It
makes you understand the third principle: The goods should be fit for their
purpose. This means the purpose for which most people buy those particular
goods. If you wanted something for a special purpose, you must have said
exactly what for.
You are quite sure that if the shop sells you faulty goods, it has broken
its side of the bargain. And that is absolutely right. In this situation
customer have the right to return the goods and have a complete refund.
At that time if the good is broken and it was your fault than seller
shouldn’t return your money to you. That’ll be his right.
There are four golden rules:
Examine the goods your buy at once. If there are faulty, tell the seller
quickly.
Keep any receipts you are given. If you have to return something, the
receipt will help to prove where and when you bought it.
Don’t be afraid to complain. You are not asking a favour to have faulty
goods put right. The law is on your side.
Be persistent. If your complaint is justified, it is somebody’s
responsibility to put things right.
№13 The cost of growth.
Long-range economic growth depends on producing capital goods. Everyone
who works contributes to the growth of capital resources. Your labor must
be valuable enough to earn more than just the money to cover your wages.
In recent years many people have argued that economic growth is a mixed
blessing.
One of the advantages of economic growth is the creation of new jobs. Some
people have jobs that did not exist 20 years ago. Part of them makes their
living operating the computers. Millions of workers have jobs that
computers have made easier.
However, the introduction of computers spelled unemployment for many
workers, for example for typesetters. It also cut the managers’ stuff, make
the management easier. Unemployment is the most undesirable consequence of
economic growth.
Unemployment causes social and economic problems. Those who lost their
jobs can hardly ever find new full-time job with a good wage. Many of the
workers take jobs delivering flowers, polishing glass, stock-clerking, or
driving taxes. Others do such odd jobs as painting and home repairs to earn
income. Some of them try retraining programs, but find that employers are
reluctant to hire older, experienced persons as beginners.
Retraining in new skills is only one solution to the problem, and not a
simple one. Retraining is more useful to the young than to the old.
