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 since been increased by £100,000, and now stands at 200 per cent. of capital paid up. The Westminster, as we shall see when we look at the Profit and Loss Account, left the Reserve Fund at the figure shown in the balance-sheet, but put away £625,000, out of a net profit of £2,013,5O2, in allocations to Bank Premises Account, Rebuilding Account, Contingent Fund, and addition to carry forward, besides £100,000 placed to Provident Fund, presumably for the benefit of the employees.

This policy of building up big reserves, the benefits of which to the shareholder have already been dilated on with "damnable iteration," has a disadvantage, also already noted, of giving an appearance of a much higher rate of profit earned than is derived from the capital actually invested. The banks declare dividends on their paid-up capital, but they earn them on capital plus reserve fund plus hidden reserves, all of which have been put in directly or indirectly by the shareholders.

For example, in the report now before us the Westminster directors propose to pay a dividend which will make, with the interim distribution already paid, 20 per cent. for the year on the £20 shares £5 paid, and 12½ per