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Published online by Cambridge University Press: 27 November 2014
In connection with the financial arrangements of Insurance Offices it is sometimes of advantage to borrow money in order to make permanent investments, or for other reasons, and at other times funds are available which can conveniently be placed on deposit with Bankers or Discount Houses, or elsewhere, pending permanent investment. In the former case the Office should seek to obtain- the money at the cheapest rate, in the latter case the Office should obtain as good a rate of interest as possible for the short period during which the money is deposited.
To such money, borrowed or deposited for short periods is applied the term “Short Money.”
Insurance Offices place their money with their own Bankers, the Discount Houses, the Stock Exchange, and the Joint Stock Banks, and obtain money from their own Bankers, or from the Discount Houses.
* The term “floater” appears to bave been applied originally to short dated gilt-edged bearer securities. At present, however, it is applied to all securities upon which the Banks and Discount Houses are usually willing to make loans at short notice.
“Floaters” must be bearer securities and must be gilt-edged. Generally speaking, those accepted by the Bank of England consist of British Government Securities, and Stocks and Bonds guaranteed by the British Government, Stocks and Bills of the larger British Corporations and Public Boards, Indian Government sterling Securities, and Indian Railway Bonds guaranteed by the Indian Government. The best of the short dated Colonial Securities are sometimes also included.
The range of securities accepted by the other Financial Houses is somewhat wider than that given above, which would itself be narrowed by the Bank of England if it were considered desirable at any time to discourage market loans.
Whether any individual security is acceptable will depend very largely upon the precise circumstances of the application. What would not be accepted from an outsider might readily be taken from a good customer of the Bank. Similarly, a comparatively small parcel of (say) Swansea Corporation Stock might be refused if offered alone, but accepted if offered as part of a much larger parcel.— Eds.