Treasury Bills

In 1951 the ‘bills’ in a discount house’s portfolio meant, overwhelmingly, British government Treasury bills, which accounted for over 60 per cent of total assets (see Table 4). The item ‘other sterling bills’, which was mainly made up of commercial bills drawn on banks and firms resident in the United Kingdom and on the London offices of overseas banks — but which also included Treasury bills of the Northern Ireland government and bills issued by local authorities — accounted for only one tenth of that figure, i.e. a mere 6 per cent of total assets. By 1969, however, the proportion of British government Treasury bills had fallen by two-thirds, to 22 per cent, while ‘other sterling bills’ had increased nearly sixfold, to 34.6 per cent. By the latter date, of course, there had been other important changes in the composition of discount house portfolios, but for the moment attention is concentrated on the nature and significance of discount house operations in the Treasury bill market and, in the next chapter, on the phenomenon of the gradual reinstatement of the commercial bill as an important means of finance and medium for discount house investment.