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Commercial Failures.-Owing mainly to the consequences of the general strike and the prolonged coal stoppage of 1926, which did grievous harm to small shopkeepers and merchants in the affected areas, the number of failures in the United Kingdom was greater than in 1926. The total was 7,336, an increase of 157, which compared with decreases of 737 in 1926 and of 68 in 1925. The sums of money involved, however, were practically the same in 1927 as in 1926; liabilities aggregated 4,774,070l., as compared with 4,686,2617. in 1926, while the total assets ranking were 2,051,8241. against 1,972,9891.

Industrial Profits.-The profits of industry were, of course, reduced, owing to the industrial troubles of 1926. The reports of 1,669 companies analysed by the Economist in 1927 showed an aggregate profit of 169,443,651l., a decrease of 5,280,3881., equal to 3 per cent., following an increase in 1926 of 6.3 per cent., and in 1925 of 8.7 per cent. Of the total profits 107,982,476l., or 63.7 per cent., was distributed amongst the Ordinary shareholders, 32,441,9341., or 19.1 per cent., was paid in Preference dividends, and 29,019,2417., or 17-2 per cent., was placed to reserves. The total profits were equal to 10-5 per cent. on the Ordinary and Preference capital combined, against 11.3 per cent. in 1926 and 10-9 per cent. in 1925.

The Budget. The Budget for 1927-28 was an ingeniously manipulated affair. Mr. Winston Churchill, the Chancellor of the Exchequer, faced with a deficit in 1926-27 of 36,000,000l., due, of course, to the strikes, planned to raise 38,000,000l. of new revenue, by raiding the road fund for 12,000,000l., and making certain changes in taxes to bring in 26,000,000l. The principal change in taxes that he introduced provided that the property tax, Schedule "A" of income tax, should be payable in one sum-namely, on January 1-instead of in half-yearly sums on January 1 and July 1. In other words, eighteen months' property tax was to be collected in one year, the increase in revenue amounting to 14,800,000l. The other change of importance was that the period of credit to brewers for payment of duty on home-made beer was reduced from two months to one month. This was to produce 5,000,000l. more revenue to the Exchequer. Other changes included a new duty of 1s. per gallon on British wines, an extra 8d. per lb. on imported unmanufactured tobacco, a duty on imported table ware of translucent pottery of 28s. per cwt.; a tax on imported motor tyres, and an increase of 20 per cent. in the Customs and Excise duty on matches. The sinking fund was raised to 65,000,000l. The total revenue was estimated at 834,830,000l. and the expenditure at 833,390,000l., leaving a surplus of 1,440,000l. On March 31, 1927, the National Debt was estimated at 7,554,750,000l., against 7,558,500,000l. a year previously. The floating debt was reduced by 20,856,000l. during the year, the total on December 31, 1927, being 825,010,000l., as compared with 845,866,000l. The figures are appended :

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The reduction was due to the receipt of sums in cash subscriptions to the issue in January, 1927, of Four per Cent. Consols at 85. The amount of cash subscribed was 81,298,575l., and the amount of stock issued as a result of conversions was 128,060,314l., making a total of 209,358,8891. Four debt conversion or funding operations were carried out during the year. The first in January, already mentioned, the second in September, the third in October, and the fourth at the end of December. In September 65,000,000l. of Four-and-a-Half per Cent. Treasury Bonds were sold at an average price of 991. 78. 5.13d., the proceeds being required to repay National War Bonds which fell due on October 1. Almost immediately after, holders of the Three-and-a-Half per Cent. War Loan and of Five and Four per Cent. National War Bonds due April 1, 1928, were invited to convert into Three-and-a-Half per Cent. Conversion Loan at 741. Holders of only 38 per cent. of the stocks and bonds accepted the offer, but in December a further operation was announced. An issue was made of Five per Cent. Treasury Bonds, 1933-35, at the price of 101, and holders of the Five and Four per Cent. National War Bonds maturing in September, 1928, were invited to exchange their bonds into the new bonds at the rate of 1051. 18. of Five per Cent. Treasury Bonds for each 100l. Five per Cent. National War Bonds, and 991. 10s. of Five per Cent. Treasury Bonds for each 100l. of Four per Cent. National War Bonds. To the Five per Cent. Treasury Bonds was attached an option to convert into Four per Cent. Consols in the second fortnight of July, 1928, at 86, and in the second fortnight of January, 1929, at 88. The issue was a great success. Cash applications amounted to 86,100,000l., and holders of over 70 per cent. of the National War Bonds converted. It was the most successful conversion operation the Treasury had carried out.

Banking.―There was a record turnover of money in 1927, which was due partly to the recovery in trade following the strikes of 1926, but mainly to great financial activity. The grand total of bills, cheques, etc., which passed through the London Bankers' Clearing House in 1927 was 41,550,541,000l., an increase of 1,725,487,000l. on 1926, or 4-3 per cent., and an increase of 1,113,422,000l., or 2.7 per cent. on 1925, which previously held the "record." There was a large movement of funds in connexion with the Government's debt conversion, redemption of National War Bonds, the sale of Treasury Bonds, and an immense turnover of money in the short-loan market. Stock Exchange activity was also very great; the total of 3,980,403,000 for Stock Exchange settling days was greater by 33,335,000l. than that for the previous year, and exceeded to the extent of 240,314,000l. the aggregate for 1925. New capital issues also swelled

the turnover, these being much greater than in any year since 1920. The total of new capital flotations was 314,714,000l., against 253,266,000l. for 1926, and 219,897,000l. for 1925. The destination of the capital raised was as follows in the three years :

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Of the total increase in the money turnover over 1926, 736,770,000l., or 42.6 per cent., occurred in the second quarter of the year. The country cheque clearing, which reflected trade conditions, showed a poor increase in the first quarter, a substantial and even recovery in the next six months, followed by a considerable increase in the last quarter. Taking the provincial clearings, the biggest increases were at Newcastle, Sheffield, and Birmingham, which were higher by 18.9 per cent., 12.5 per cent., and 7.6 per cent. respectively. Manchester, which is the biggest provincial clearing, showed an increase of only 3.3 per cent., and Liverpool, which is the second largest, an increase of 6.9 per cent. The figures for the past two years of the London Bankers' Clearing House are subjoined :

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The totals for the eleven provincial clearings, with the percentage movements on the year, are as follows:

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In the money market the outstanding feature of the year was the lower level of money rates, and a keen demand for banking accommodation. The Bank of England's minimum rate of discount, which had remained at 5 per cent. throughout 1926, was reduced to 4 per cent. on April 21, and remained at that figure for the rest of the year. To bankers the year was less profitable than 1926 owing mainly to the fall in rates and partly to bad debts, the aftermath of the industrial troubles of 1926. Moreover, the great industries such as cotton, coal, iron and steel, and wool, remained more or less depressed throughout the year, and with many of the cotton mills in the hands of the creditors, bad debts were not easy to avoid. Agriculture was also severely depressed. Consequently, provision for bad debts had to be larger in 1927 than in 1926. Competition amongst the banks was keener, especially in the foreign field, where commissions were cut. The banks, in their anxiety to secure deposits, paid higher rates than usual. While the published rate was only 2 per cent., up to 4 per cent. was paid for three months' deposits. Further, the proportion of deposits which bear interest is larger than it used to be; it was formerly less than 50 per cent.; nowadays it is more than 50 per cent. While less was earned on advances, the margin between deposit rates and the bill rate was wider, especially in the last six months, when the discount rate was virtually stabilised at 4 per cent. Most of the banks reported less profit than in 1926, and in one case, the Union Bank of Manchester, the dividend was reduced from 20 to 18 per cent. The figures of the monthly statements issued by the ten London clearing banks for each month are given below:

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There was a keen Continental demand for bills throughout the year. The average rates current in the money market were as follows, comparison being made with the previous six years :

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DISCOUNT RATE (3 MONTHS' BANK BILLS) AVERAGE.

5 4 3 2 12 9 2 14 2 3 9 3 4 2 3 4 8 3 4 4 9

BANKS' DEPOSIT RATE AVERAGE.

4 2 4 1 13 10 1 9 9 2 0 0 2 11 6 3 0 0 2 13 0

SHORT LOAN RATE AVERAGE.

4 12 8 2 5 11 1 18 4 2 13 0 3 11 3 4 0 0 3 14 6

TREASURY BILL RATE AVERAGE.

3 7 11 4 1 11

3 7 11

4 5 2

Currency Notes.-There was a further reduction in the maximum fiduciary circulation of currency notes. As the actual highest fiduciary issue in any year becomes the legal maximum in the following year, it is of interest to note that the highest level touched by the fiduciary issue in 1927 was 244,935,1281. in the week ended June 8. This figure becomes the legal maximum for 1928. Figures for the three years 1927, 1926, and 1925 are subjoined :—

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The principal figures of the Bank of England return are:

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